Answer:
See below
Explanation:
Given selling price per unit = $300,000/5,000 units = $60
1. Increase selling price by 10% with no change in total variable costs or sales volume
Selling price = $60 × 1.1 = $66
Sales revenue = $66 × 5,000 units = $330,000
Increase in sales revenue = $330,000 - $300,000 = $30,000
Here, as costs remains the same, Net income will increase as much as the increase as sales revenue which is $30,000
2. Reduce variable cost to 56% of sales
New variable cost = $330,000 × 56% = $184,800
Saving in variable cost = $223,000 - $184,800 = $38,200
Here, as the fixed cost and sales revenue remains the same, net income will increase as much as the saving in variable cost which is $38,200
3. Reduce fixed cost by $18,000
As the variable cost and sales revenue remains the same, net income will increase as much as the savings in fixed cost which is $18,000
Income Statement The following account balances were taken from the adjusted trial balance for Urgent Messenger Service, a delivery service firm, for the fiscal year ended November 30, 20Y1: Depreciation Expense $6,700 Fees Earned 355,800 Insurance Expense 1,270 Miscellaneous Expense 2,680 Rent Expense 50,900 Salaries Expense 178,900 Supplies Expense 2,280 Utilities Expense 19,400 Prepare an income statement for Urgent Messenger Service.
Answer:
$93,670
Explanation:
Preparation of an income statement for Urgent Mess
INCOME STATEMENT
Urgent messenger service
for the year ended november 30, 20Y1
REVENUE :
Fees earned $355,800
Less expenses :
depreciation expense ($6,700)
insurance expense ($1,270)
miscellaneous expense ($2,680)
rent expense ($50,900)
salaries expense ($178,900)
supplies expense ($2,280)
utilities expense ($19,400)
TOTAL EXPENSES ($262,130)
NET INCOME $93,670
($355,800-$262,130)
Therefore the income statement for Urgent Mess will be $93,670
The net income of Urgent Messenger Service is $93,670.
INCOME STATEMENT
REVENUE:
Fees earned $355,800
Expenses :
Depreciation expense ($6,700)
insurance expense ($1,270)
Miscellaneous expense ($2,680)
Rent expense ($50,900)
Salaries expense ($178,900)
Supplies expense ($2,280)
Utilities expense ($19,400)
Total Expenses ($262,130)
Net Income $93,670
In conclusion, the net income of Urgent Messenger Service is $93,670.
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brainly.com/question/24498019
What are THREE purposes of monetary policy? A to eliminate competition B. to promote price stability c. to eliminate unemployment D. to devalue foreign currency E, to promote economic growth F to control federal spending
Answer:
c. to eliminate unemployment,B. to promote price stability and F. to control federal spending
Explanation:
Peter wishes to create a retirement fund from which he can draw when he retires and the same amount at each anniversary of his retirement for years. He plans to retire years from now. What investment need he make today if he can get a return of per year, compounded annually
Answer:
$65,742.60
Explanation:
Note: The full question is "Peter wishes to create a retirement fund from which he can draw $20,000 when he retires and the same amount at each anniversary of his retirement for 10 years. He plans to retire 20 years from now. What investment need he make today if he can get a return of 5% per year, com- pounded annually?"
At first, we need to find the PV of withdrawals and there are 11 withdrawals starting 20 years from now.
PV = PMT/r * 1 - 1/(1+r)^n. This formula gives the PV one period before the first withdrawal. That is 19 years from now because the first withdrawal is 20 years from now.
PMT = 20,000, n = 11,
r = 0.05
PV19 = 20,000/0.05 * [1 - 1/(1+0.05)^11]
PV19 = 400,000 * 0.4153207109
PV19 = 166,128.28436
Now, we need to discount this back to toda
PV0 = PV19/(1 + r)^n; n = 19, r = 0.05
PV0 = 166,128.28436/(1 + 0.05)^1
PV0 = $65,742.6033421702
PV0 = $65,742.60
So, Peter needs to make $65,742.60 today.
On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $2,050,000 at 11% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021:$6,000,000, 16% bonds$4,000,000, 11% long-term note Construction expenditures incurred during 2021 were as follows:January 1 $ 840,000March 31 1,440,000June 30 1,088,000September 30 840,000December 31 640,000Required:Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
Answer:
Highlands Company
The interest capitalized is:
= $294,140.
Explanation:
a) Data and Calculations:
Borrowings on January 1 = $2,050,000 at 11%
Debt outstanding throughout 2021:
16% bonds = $6,000,000
11% long-term note = $4,000,000
Construction expenditures:
January 1 $ 840,000
March 31 1,440,000
June 30 1,088,000
September 30 840,000
December 31 640,000
Date Expenditure Weights Weighted-Average
January 1 $ 840,000 12/12 $840,000
March 31 1,440,000 9/12 1,080,000
June 30 1,088,000 6/12 544,000
September 30 840,000 3/12 210,000
December 31 640,000 0/12 0
Accumulated weighted-average expenditure = $2,674,000
Interest capitalized for 2021, using the specific interest method = $ ($2,674,000 * 11%)
= $294,140
Vaughn Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,088,000 on March 1, $1,236,000 on June 1, and $3,090,260 on December 31. Vaughn Company borrowed $1,083,960 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2,493,000 note payable and an 10%, 4-year, $3,319,800 note payable. Compute the weighted-average interest rate used for interest capitalization purposes.
Answer:
9.57 %
Explanation:
The computation of the weighted-average interest rate used for interest capitalization purposes is shown below:
Particulars Loan Amount Interest
9 % 5 year note payable $2,493,000 ($2,493,000 × 9 %) = $224,370
10 % 4 year note payable $3,319,800 ($3,319,800 × 10 %) = $331,980
Total $5,812,800 $556,350
Now
Weighted- average interest rate is
= $556,350 ÷ $5,812,800
= 9.57 %
SCHMIDT MACHINERY COMPANY
Standard Cost Sheet
Product: XV-1
Descriptions Quantity Cost Rate Subtotal Total
Direct materials
Aluminum 4 pounds $25/pound $100
PVC 1 pound 40/pound 40
Direct labor 5 hours 40/hour 200
Variable factory overhead 5 hours 12/hour 60
Total variable manufacturing cost $400
Fixed factory overhead 5 hours 24/hour 120 120
Standard manufacturing cost per unit $520
Standard variable selling and administrative cost per unit I pound 50
* Budgeted fixed factory overhead cost = $120,000
Assume that Schmidt Machinery Company had the standard costs reflected in Exhibit 14.5. In a given month, the company used 3,470 pounds of aluminum to manufacture 935 units. The company paid $28.90 per pound during the month to purchase aluminum. At the beginning of the month, the company had 54 pounds of aluminum on hand. At the end of the month, the company had only 34 pounds of aluminum in its warehouse. Schmidt used 4,400 direct labor hours during the month, at an average cost of $41.90 per hour.
Required:
Compute for the month the following variances:
1. The purchase-price variance for aluminum. Indicate whether this variance is favorable (F) or unfavorable (U).
2. The usage variance for aluminum. Indicate whether this variance is favorable (F) or unfavorable (U).
3. The direct labor rate variance. Indicate whether this variance is favorable (F) or unfavorable (U).
4. The direct labor efficiency variance. Indicate whether this variance is favorable (F) or unfavorable (U).
Answer:
See below
Explanation:
1. Purchase price variance
Standard price per pound = $25
Actual price per pound = $28.9
Quantity of aluminium purchased = Closing inventory + Quantity used - Opening inventory
= 34 + 3,470 - 54
= 3,450 pounds
Purchase price variance = (Standard price - Actual price) × Quantity purchased
= ($25 - $28.9) × 3,450
= -$3.9 × 3,450
= $13,455 (U)
2. Usage variance
Standard quantity of Aluminium for actual production
= 935 units × 4 pounds each
= 3,740 pounds
Usage variance = (Standard quantity of material used - Actual quantity used) × Standard price per unit
= (3,740 - 3,470) × $25
= 270 × $25
= $6,750 (F)
3. Direct labor rate variance
= (Standard rate per hour - Actual rate per hour)
× Actual hours for production
= ($40 - $41.9) × 4,400
= -$1.9 × 4,400
= $8,360 (U)
4. Efficiency variance
Standard hours for actual production
= 935 units × 5 per hour
=4,675 hours
Labor efficiency variance = (Standard hours for actual production - Actual hours for actual production) × Standard rate per hour
= (4,675 - 4,400) × $40
= 275 × $40
= $11,000 (F)
An electronics firm is currently manufacturing an item that has a variable cost of $.50 per unit and a selling price of $1.00 per unit. Fixed costs are $14,000. Current volume is 30,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable cost would increase to $.60, but volume should jump to 50,000 units due to a higherquality product. Should the company buy the new equipment
Answer: The company should not buy the new equipment
Explanation:
For the 1st case:
Revenue = Selling price × Number of units
= 1 × 30000
= $30,000
Total cost = Fixed cost + Variable cost
= 14000 + (0.5 × 30000)
= 14000 + 15000
= $29000
Profit = Revenue - Cost
= $30000 - $29000
= $1000
For the 2nd case:
Revenue = Selling price × Number of units
Revenue = Selling price × Number of units
= 1 × 50000
= $50,000
Total cost = Fixed cost + Variable cost
= 20000 + (0.6 × 50000)
= 20000 + 30000
= $50000
Profit = Revenue - Cost
= $50000 - $50000
= $0
Based on the calculation above, the company should not buy the new equipment as no profit will be made while currently a profit of $1000 is made.
Condensed financial data of Swifty Company for 2020 and 2019 are presented below. SWIFTY COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 2020 2019 Cash $1,770 $1,170 Receivables 1,780 1,300 Inventory 1,570 1,880 Plant assets 1,870 1,710 Accumulated depreciation (1,210 ) (1,190 ) Long-term investments (held-to-maturity) 1,290 1,430 $7,070 $6,300 Accounts payable $1,200 $900 Accrued liabilities 200 250 Bonds payable 1,430 1,580 Common stock 1,860 1,730 Retained earnings 2,380 1,840 $7,070 $6,300 SWIFTY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue $6,820 Cost of goods sold 4,640 Gross margin 2,180 Selling and administrative expenses 910 Income from operations 1,270 Other revenues and gains Gain on sale of investments 80 Income before tax 1,350 Income tax expense 550 Net income 800 Cash dividends 260 Income retained in business $540 Additional information: During the year, $80 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020. Prepare a statement of cash flows using the direct method.
Answer:
Swifty Company
Explanation:
a) Data and Calculations:
SWIFTY COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 2020 2019
Cash $1,770 $1,170
Receivables 1,780 1,300
Inventory 1,570 1,880
Plant assets 1,870 1,710
Accumulated depreciation (1,210 ) (1,190 )
Long-term investments
(held-to-maturity) 1,290 1,430
Total assets $7,070 $6,300
Accounts payable $1,200 $900
Accrued liabilities 200 250
Bonds payable 1,430 1,580
Common stock 1,860 1,730
Retained earnings 2,380 1,840
Total liabilities and equity $7,070 $6,300
SWIFTY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue $6,820
Cost of goods sold 4,640
Gross margin 2,180
Selling and administrative expenses 910
Income from operations 1,270
Other revenues and gains
Gain on sale of investments 80
Income before tax 1,350
Income tax expense 550
Net income 800
Cash dividends 260
Income retained in business $540
Additional Information:
a) Issue of Common stock for plant assets = $80
Adjustments for cash transactions:
Receipts:
Customers = $1,300 + $6,820 - $1,780 = $6,340
Sale of investment = $1,430 - $1,290 = $140
Common stock = $1,860 - $1,730 - $80 = $50
Payments:
Suppliers = $900 + $4,330 - $1,200 = $4,030
Expenses = $250 + $910 - $200 = $960
Bonds = $1,580 - $1,430 = $150
Plant = $1,870 - $80 - $1,710 = $80
Purchases = $1,570 + 4,640 - $1,880 = $4,330
Statement of Cash Flows for the year ended December 31, 2020:
Cash flows from operating activities:
Receipt from customers $6,340
Payment to suppliers (4,030)
Payment for services (960)
Income tax expense (550)
Net cash from operating activities 800
Cash flows from investing activities:
Receipt from sale of investments $140
Purchase of plant assets (80)
Net cash from investing activities 60
Cash flows from financing activities:
Issue of Common stock $50
Payment to bondholders (150)
Payment to stockholders (260)
Net cash from financing activities (360)
Net cash flows $500
Botany Bay Corporation (BBC) of Australia seeks to borrow US$ 30 comma 000 comma 000 in the eurodollar market. Funding is needed for two years. Investigation leads to three possibilities. Compare the alternatives and make a recommendation.
1. Botany Bay could borrow the US$ 30,000,000 for two years at a fixed 5 % rate of interest.
2. Botany Bay could borrow the US$ 30,000,000 at LIBORplus1.500 %. LIBOR is currently 3.500 %, and the rate would be reset every six months.
3. Botany Bay could borrow the US$ 30,000,000 for one year only at 4.500 %. At the end of the first year, Botany Bay would have to negotiate for a new one-year loan.
For Alternative 1, the interest cost per year is $ blank for the first year and $ blank for the second year.
For Alternative 2, the interest cost per year is $ blank for the first year and $ blank for the second year.
For Alternative 3, the interest cost per year is $ blank for the first year and $ blank for the second year.
Answer: See explanation
Explanation:
Alternative 1:
Principal = $30,000,000
Fixed Interest Rate = 5%
Number of Years = 2 Years
Interest Per Year = 5% × $30,000,000
= 0.05 × $30,000,000
= $1,500,000
Interest Cost per year for 1st year = $1,500,000
Interest Cost per year for 2nd year = $1,500,000
2. Alternative 2:
Principal = $30,000,000
LIBOR Rate = 3.5%
Interest Rate will be:
= LIBOR Rate + 1.5%
= 3.5% + 1.5%
= 5%
Number of Days = 6 months = 1m6 × 30 days = 180 Days
Interest Per Year = Principal × (LIBOR Rate/100) × Number of Days in Interest Period
Interest per Year = $30,000,000 × (0.05) × (180/360)
= $30,000,000 × 0.05 × 0.5
= $750,000
Interest Cost per year for 1st year = $750,000
Interest Cost per year for 2nd year = $750,000
3. Alternative 3:
Principal = $30,000,000
Fixed Interest Rate = 4.5%
Number of Years = 1 Year
Interest Per Year will be:
= 4.5% of $30,000,000
= $1,350,000
Interest Cost per year for 1st year = $1,350,000
Interest Cost per year for 2nd year = $0
Dinklemyer Corporation uses direct labor hours as its single cost driver. Actual overhead costs and actual direct labor hours for the first five months of the current year are as follows. Month Actual Total Overhead Actual Direct Labor Hours January $ 975,000 19,250 February 950,000 18,400 March 860,000 17,000 April 700,000 12,375 May 760,000 13,200 a. Compute the company's estimated variable manufacturing overhead cost per direct labor hour. b. Estimate the company's total monthly fixed manufacturing overhead cost. c. Estimate the company's total manufacturing overhead for June through August if 40,000 total direct labor hours are budgeted for that specific three-month period.
Answer:
a. Estimated variable manufacturing overhead cost per direct labor hour = $40 per hour
b. Total monthly fixed manufacturing overhead cost = $205,000
c. Total manufacturing overhead for June through August = $2,215,000
Explanation:
a. Compute the company's estimated variable manufacturing overhead cost per direct labor hour.
Difference between high and low overhead = January overhead - April overhead = $975,000 - $700,000 = $275,000
Difference between high and low Direct Labor Hours = January Direct Labor Hours - April Direct Labor Hours = 19,250 - 12,375 = 6,875
Therefore, we have:
Estimated variable manufacturing overhead cost per direct labor hour = Difference between high and low overhead / Difference between high and low Direct Labor Hours = $275,000 / 6,875 = $40 per hour
b. Estimate the company's total monthly fixed manufacturing overhead cost.
Total monthly fixed manufacturing overhead cost = High overhead - (Estimated variable manufacturing overhead cost per direct labor hour * High direct labor) = $975,000 - ($40 * 19,250) = $205,000
c. Estimate the company's total manufacturing overhead for June through August if 40,000 total direct labor hours are budgeted for that specific three-month period.
Total manufacturing overhead for June through August = (Total monthly fixed manufacturing overhead cost * Number of Months from June to August) + (Estimated variable manufacturing overhead cost per direct labor hour * Budgeted direct labor hours) = ($205,000 * 3) + ($40 * 40,000) = $2,215,000
Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in 2017, or by 20%. Its assets totaled $2 million at the end of 2016. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2016, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 3%, and the forecasted retention ratio is 30%. Use the AFN equation to forecast the additional funds Carlsbad will need for the coming year. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest cent.
Answer:
$246,000
Explanation:
Calculation to determine the additional funds Carlsbad will need for the coming year
First step is to calculate the 2020 retained earnings using this formula
2020 retained earnings= net income margin* sales* retention ratio
Let plug in the formula
2020 retained earnings= 3%*6000000*30%
2020 retained earnings= $54,000
Now let calculate the AFN using this formula
AFN = Increase in assets-Increase in spontaneous liabilities -Retained earnings
Let plug in the formula
Increase in assets =$2,000,000*20% =$400,000
Increase in spontaneous liabilities= (250000+250000)*20%=100000
AFN= 400000-100000-$54000
AFN =$246,000
Therefore the additional funds Carlsbad will need for the coming year is $246,000
On January 1, 2018, Frontier Corporation purchased for $474,000, equipment having a useful life of ten years and an estimated salvage value of $24,000. Adventure has recorded depreciation of the equipment on the straight-line method. On December 31, 2025, the equipment was sold for $84,000. What is the journal entry to record this sale
Answer:
Frontier Corporation
Journal Entry to record the sale:
Debit Cash $84,000
Credit Sale of Equipment $84,000
To record the sale of the equipment.
Others:
Debit Sale of Equipment $474,000
Credit Equipment $474,000
To transfer the equipment account to the Sale of Equipment account.
Debit Accumulated Depreciation $360,000
Credit Sale of Equipment $360,000
To transfer the accumulated depreciation to the Sale of Equipment account.
Debit Loss from Sale of Equipment $30,000
Credit Sale of Equipment $30,000
To close the Sale of Equipment account to income statement.
Explanation:
a) Data and Calculations:
January 1, 2018: Purchase of equipment = $474,000
Estimated useful life = 10 years
Estimated salvage value = $24,000
Depreciable amount = $450,000 ($474,000 - $24,000)
Straight-line Annual Depreciation Expense = $45,000 ($450,000/10)
Accumulated depreciation after 8 years = $360,000 ($45,000 * 8)
Net book value of equipment = $114,000 ($474,000 - $360,000)
December 31, 2015: Proceeds from sale of equipment = $84,000
Analysis:
Cash $84,000 Sale of Equipment $84,000
Sale of Equipment $474,000 Equipment $474,000
Accumulated Depreciation $360,000 Sale of Equipment $360,000
Loss from Sale of Equipment $30,000 Sale of Equipment $30,000
Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred.
Sept. 6 Purchased calculators from Dragoo Co. at a total cost of $1,680, terms n/30.
Sept. 9 Paid freight of $60 on calculators purchased from Dragoo Co.
Sept. 10 Returned calculators to Dragoo Co. for $58 credit because they did not meet specifications.
Sept. 12 Sold calculators costing $580 for $810 to Fryer Book Store, terms n/30.
Sept. 14 Granted credit of $45 to Fryer Book Store for the return of one calculator that was not ordered. The calculator costs $33.
Sept. 20 Sold calculators costing $570 for $740 to Heasley Card Shop, terms n/30.
Journalize the September transactions. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Answer:
Date Account Titles Debit Credit
Sept 6. Inventory $1,680
Accounts Payable $1,680
Sept 9. Inventory $60
Cash $60
Sept 10 Accounts Payable $58
Inventory $58
Sept 12 Accounts Receivable $810
Sales Revenues $810
Cost of Goods Sold $580
Inventory $580
Sept 14 Sales returns $45
Accounts Receivable $45
Inventory $33
Cost of Goods Sold $33
Sept 20 Accounts Receivable $740
Sales Revenues $740
Cost of Goods Sold $570
Inventory $570
On August 1, Year 1, SuperCool Software (SCS) began developing a software program to allow individuals to customize their investment portfolios. Technological feasibility was established on January 31st of year 2, and the program was available for release on March 31, year 2. Development costs were incurred as follows:August 1 through December 31, Year 1 $ 4,000,000January 1 through January 31, Year 2 600,000February 1 through March 31, Year 2 900,000SCS expects a useful life of five years for the software and total revenues of $10,000,000 during that time. During Year 2, SCS recognized $2,000,000 in revenue, included in the $10,000,000 total revenue estimate.Calculate the required amortization for Year 2 (Hint: calculate using both methods, choose the greater number)
Answer:
$180,000
Explanation:
Calculation to determine the required amortization for Year 2
(1)Using Percentage-of-revenue method
Percentage-of-revenue method=($2,000,000/$10,000,000)*$900,000
Percentage-of-revenue method= 20% *$900,000
Percentage-of-revenue method= $180,000
(2) Using Straight-line method
Straight-line method=$900,000 × 1/5 × 9/12
Straight-line method= $135,000
Therefore based on the above calculation the required amortization for Year 2 will be $180,000 using The percentage-of-revenue method reason been that the method help to produces higher amortization of the amount of $180,000.
Let corn denote per capita consumption of corn in bushels at the county level, let price be the price per bushel of corn, let income denote per capita county income, and let rainf all be inches of rainfall during the last corn-growing season. The following simultaneous equations model imposes the equilibrium condition that supply equals demand:
corn = α1 price + β1 income + u1
corn = α2 price + β2 rainfall + γ2 rainfall 2 + u2 .
Which is the supply equation, and which is the demand equation? Explain.
Answer:
corn = α1 price + β1 income + u1 <=== Demand equation
corn = α2 price + β2 rainfall + γ2 rainfall 2 + u2 <=== Supply equation.
Explanation:
Given:
corn = α1 price + β1 income + u1 …………………………………………. (1)
corn = α2 price + β2 rainfall + γ2 rainfall 2 + u2 …………………….. (2)
From the above, equation (1) is the demand equation while equation (2) the supply equation.
Equation (1) is the demand equation because parts of the factors determining the demand for a product are the price of the product itself and the income of the buyers. However, rainfall is NOT one of the factors determining the demand for a product.
Equation (2) is the supply equation because parts of the factors determining the supply a product are the price of the product itself and other factors such as rainfall for corn in this case. However, income of the buyers is NOT one of the factors determining the supply for a product.
If the toothpaste market is monopolistically competitive, product differentiation would not take the form of: production of many varieties of toothpaste, including those with whitening agents. quality differences among the various brands. setting the price of the product well below the price charged by the rivals. differentiation in the locations where certain toothpastes are available.
Answer:
setting the price of the product well below the price charged by the rival
Explanation:
A monopolistic competition is when there are many firms selling differentiated products in an industry. A monopoly has characteristics of both a monopoly and a perfect competition. the demand curve is downward sloping. it sets the price for its goods and services.
An example of monopolistic competition are restaurants
When firms are earning positive economic profit, in the long run, firms enter into the industry. This drives economic profit to zero
If firms are earning negative economic profit, in the long run, firms leave the industry. This drives economic profit to zero
in the long run, only normal profit is earned
If a monopolistically competitive sets price below competitors, losses would be made. So, there is no incentive to do this
Companies that use debt in their capital structure are said to be using financial leverage. Using leverage can increase shareholder returns, but leverage also increases the risk that shareholders bear. Consider the following case: Sombra Corp. is considering a project that will require $600,000 in assets. The project will be financed with 100% equity. The company faces a tax rate of 35%. What will be the ROE (return on equity) for this project if it produces an EBIT (earnings before interest and taxes) of $145,000
Answer:
ROE = 15.7%
Explanation:
Return on Equity (R.O.E). Equity capital is the capital provided by the ordinary shareholders. So the ROE measures, in percentage, the amount made as profit for every one Dollar of equity capital invested . That is, how much return is earned (in %) on every dollar of equity capital invested.
It is calculated as follows:
ROE= (Profit/equity capital )× 100
Profit = EBIT - Tax = 145,000- (35%×145,000)=94,250
ROE = 94,250/600,000× 100 =15.7%
ROE = 15.7%
What can students do to “get smarter” refer to 5 characteristics of Grit
In risk management what does risk control include
Blumen Textiles Corporation began April with a budget for 22,000 hours of production in the Weaving Department. The department has a full capacity of 29,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of April was as follows: Variable overhead $50,600 Fixed overhead 34,800 Total $85,400 The actual factory overhead was $86,400 for April. The actual fixed factory overhead was as budgeted. During April, the Weaving Department had standard hours at actual production volume of 23,000 hours. Determine the variable factory overhead controllable variance and the fixed factory overhead volume variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.
Answer:
A. 1300 Favorable
B. $7,200 UnFavorable
Explanation:
A. Calculation to determine the variable factory overhead controllable variance
First step is to calculate the Budgeted rate of variable overhead
Budgeted rate of variable overhead = $50,600/22,000
Budgeted rate of variable overhead= $2.3per hour
Second step is to calculate the Standard variable overhead for actual production
Standard variable overhead for actual production = 23,000 x $2.3
Standard variable overhead for actual production = $52,900
Now let calculate the Variable factory overhead controllable variance using this formula
Variable factory overhead controllable variance = Standard variable overhead - Actual variable overhead
Let plug in the formula
Variable factory overhead controllable variance= $52,900 - ($86,400 - 34,800)
Variable factory overhead controllable variance= 1300 Favorable
Therefore Variable factory overhead controllable variance is 1300 Favorable
B. Calculation to determine the fixed factory overhead volume variance.
First step is to calculate the Predetermined fixed overhead rate using this formula
Predetermined fixed overhead rate = 34,800/29,000
Predetermined fixed overhead rate = $1.20 per hour
Second step is to calculate the Fixed overhead applied
Using this formula
Fixed overhead applied = Standard hours x Standard rate
Let plug in the formula
Fixed overhead applied= 23,000 x $1.20
Fixed overhead applied= $27,600
Now let calculate the Fixed overhead volume variance using this formula
Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead
Let plug in the formula
Fixed overhead volume variance= $27,600 - 34,800
Fixed overhead volume variance= $7,200 UnFavorable
Therefore The Fixed overhead volume variance is $7,200 UnFavorable
As a marketing manager what efforts you can put in place that can shape your companies brand to meet dramatic developments occurring in the marketplace everyday?
Answer:
Marketing is a broad subject with various techniques and tools. Thus, there can be a lot of methods through which a marketing manager can stabilize the operations of company to some extent. The main methods are as follows :
1. Use of social media :
Almost every second individual in our society is actively engaged in social media. Therefore, it is an efficient as well as relatively less expensive method of targeting the audience.
2. Knowing the audience :
One best way to hedge the market uncertainties is to completely understand the behavior of your customers. Thus, one can conduct research on different levels to understand customer preference.
Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below:
Sales $18,600,000
Net operating income $5,200,000
Average operating assets $35,200,000
Required:
1. Compute the margin for Alyeska Services Company.
2. Compute the turnover for Alyeska Services Company.
3. Compute the return on investment (ROI) for Alyeska Services Company.
Answer and Explanation:
The computation is shown below:
a. The margin is
= Net operating income ÷ Sales
= $5,200,000 ÷ $18,600,000
= 27.96%
b. The turnover is
= Sales ÷ average operating assets
= $18,600,000 ÷ $35,200,000
= 0.53 times
c. The return on investment is
= Net operating income ÷ average operating assets
= $5,200,000 ÷ $35,200,000
= 14.77%
Hence, the above formulas to be applied
Grassley Corporation allocates administrative costs on the basis of staff hours. Short-run monthly usage and anticipated long-run monthly usage of staff hours for Operating Departments 1 and 2 follow. Department 1 Department 2 Total Short-run usage (hours) 40,000 60,000 100,000 Long-run usage (hours) 45,000 55,000 100,000 If Grassley uses dual-cost accounting procedures and variable administrative costs total $200,000, the amount of variable administrative cost to allocate to Department 1 would be
Answer:
$80,000
Explanation:
Calculation to determine what the amount of variable administrative cost to allocate to Department 1 would be
Variable administrative cost to allocate to Department 1=(40,000 ÷100,000) x $200,000
Variable administrative cost to allocate to Department 1=0.4×$200,000
Variable administrative cost to allocate to Department 1= $80,000
Therefore The Variable administrative cost to allocate to Department 1 would be $80,000
The sales tax you pay when you gas up your car is regressive.
True.
False
Answer:
True
Explanation:
Regressive taxes place more burden on low-income earners. Since they are flat taxes, they take a higher percentage of income on the poor than on high-income earners. Taxes on most consumer goods, sales, gas, and Social Security payroll are examples of regressive taxes.
In June 2015, the unemployment rate declined to 5.3 percent from 5.5 percent in May. The labor force participation rate also declined from May to June, from 62.9 percent to 62.6 percent. If the labor force participation rate had remained unchanged from May to June, the unemployment rate for June 2015 would be
Answer: A. greater than 5.3 percent because the value in the numerator of the formula for the unemployment rate would increase more than the value in the denominator.
Explanation:
The unemployment rate is calculated by dividing the number of those who are unemployed but actively seeking employment by the labor force.
= Unemployed / Labor force
If the labor force participation rate had remained unchanged then that would mean that the denominator for the unemployment rate did not change while unemployment did.
The unemployment rate will therefore be greater than 5.3% because the numerator which is the unemployment figure, would have increase more than the denominator.
Match the following functions with their descriptions.
A. It allows companies to organize and share information
B. It provides instantaneous tracking by containing identifying information
C. It provides complete visibility of product location Provides access to global markets, suppliers and distribution channels
D. It enables exchange of documents in a standard
Answer:
A. ERP
B. RFID
C. Barcodes
D. E-business
E. EDI
Explanation:
Here is the complete question :
Match the following functions with their descriptions.
(E-Business, EDI, Bar Codes, ERP, RFID)
A. It allows companies to organize and share information
B. It provides instantaneous tracking by containing identifying information
C. It provides complete visibility of product location
D. Provides access to global markets, suppliers and distribution channels
E. It enables exchange of documents in a standard format
Enterprise resource planning (ERP) is a software used to organise a business core processes
Electronic Data Interchange (EDI) is used to exchange business documents in a standardised format electronically
Types of EDI
Direct EDI EDI via value added networks (VANs)Web EDI Mobile EDIAdvantages of EDI
It increases business efficiency It reduces operating costsDisadvantages of EDI
Initial setup cost is usually quite highRadio-frequency identification (RFID) is used to identify and track tags that are attached to items
Barcodes are used as a means of identification of a product. They can identify the country a product is manufactured.
Electronic business (E-business) has accelerated the rate of global integration. It has increased the access to global markets, suppliers and distribution channels.
Joan filed her individual income tax return 4½ months after it was due. She did not request an extension of time for filing. Along with her return, Joan remitted a check for $750, which was the balance of the taxes she owed with her return. Disregarding interest, calculate the total penalties that Joan will be required to pay, assuming the failure to file was not fraudulent
Answer:
$187.50
Explanation:
Calculation to determine the total penalties that she will be required to pay
Based on the information if she remitted a check for the amount of $750 the total penalties that she will be required to pay, if it was assumed that the failure to file was not fraudulent will be calculated as:
Total penalties=[$750*(5%*5)]
Total penalties=$750*0.25
Total penalties= $187.50
Therefore the total penalties that she will be required to pay is $187.50
. During 2007, Eaton Corp. started a construction job with a total contract price of $7,000,000. It was completed on December 15, 2008. Additional data are as follows: 2007 2008 Actual costs incurred in current year $2,700,000 $3,050,000 Estimated remaining costs 2,700,000 — Billed to customer 2,400,000 4,600,000 Received from customer 2,000,000 4,800,000 Under the completed-contract method, what amount should Eaton recognize as gross profit for 2008?
Answer:
$1,250,000
Explanation:
Calculation to determine what amount should Eaton recognize as gross profit for 2008
Using this formula
2008 Recognized gross profit=Total contract price- 2007 Actual costs incurred in current year -2008 Actual costs incurred in current year
Let plug in the formula
2008 Recognized gross profit=$7,000,000 - $2,700,000 - $3,050,000
2008 Recognized gross profit=$1,250,000
Therefore The amount that Eaton should recognize as gross profit for 2008 is $1,250,000
The actual cost of direct materials is $47.50 per pound. The standard cost per pound is $51.75. During the current period, 7,200 pounds were used in production. The standard quantity for actual units produced is 7,100 pounds. How much is the direct materials price variance? A. $30,600 favorable B. $30,600 unfavorable C. $30,175 favorable D. $30,175 unfavorable
Answer:
A. $30,600 favorable
Explanation:
The computation of the direct material price variance is shown below:
Direct Materials Price Variance = Actual quantity used × (Actual Cost - Standard Cost)
= 7,200 pounds ×($47.50 per pound - $51.75 per pound)
= $30,600 Favorable
Hence, the direct material price variance is $30,60 favorable
So the same should be considered
The financial statements of Friendly Fashions include the following selected data (in millions): ($ in millions except share data) 2021 2020 Sales $ 8,143 $ 9,234 Net income $ 159 $ 628 Stockholders' equity $ 2,000 $ 2,240 Average Shares outstanding (in millions) 720 - Dividends per share $ 0.30 - Stock price $ 9.90 - Required: Calculate the following ratios for Friendly Fashions in 2021.
Answer:
A. Return on equity 7.5%
B. Dividend yield 3.03%
C. Earnings per share $0.22
D. Price-earnings ratio 45
Explanation:
A. Calculation to determine the Return on equity
First step is to calculate the Average stockholders equity using this formula
Average stockholders equity = ( Beginning stockholders equity + Ending stockholders equity)/2
Let plug in the formula
Average stockholders equity= (2,240+2000)/2
Average stockholders equity= $2,120 millions
Now let calculate the Return on equity using this formula
Return on equity=Net Income / Average stockholders equity
Let plug in the formula
Return on equity=159 / 2,120
Return on equity= 7.5%
B. Calculation to determine the Dividend yield
Using this formula
Dividend yield=Dividend per share / Stock price
Let plug in the formula
Dividend yield=0.30/ 9.90
Dividend yield= 3.03%
C. Calculation to determine the Earnings per share
Using this formula
Earnings per share=Net Income / Average shares outstanding
Let plug in the formula
Earnings per share=159/ 720
Earnings per share= $0.22
D. Calculation to determine Price-earnings ratio
Using this is formula
Price-earnings ratio=Stock price / Earnings per share
Let plug in the formula
Price-earnings ratio=9.90 / 0.22
Price-earnings ratio= 45