Answer:
MPC = 0.75
MPS = 0.25
Disposable income = amount spent on consumption + amount saved
Marginal Propensity to Consume + Marginal Propensity to Save = 1
Explanation:
Marginal propensity to consume is the proportion of disposable income that is spent on consumption
Marginal propensity to consume = amount consumed / disposable income
Marginal propensity to save is the proportion of disposable income that is saved
Marginal propensity to save = amount saved / disposable income
MPC + MPS = 1
Disposable income = amount spent on consumption + amount saved
MPC = 600 / 800 = 0.75
MPS = 200 / 800 = 0.25
what is jute sacks ?
Explanation:
A burlap sack or gunny sack, also known as a gunny shoe or tow sack, is an inexpensive bag, traditionally made of hessian fabric formed from jute, hemp or other natural fibers. Modern-day versions of these sacks are often made from synthetic fabrics such as polypropylene.
On June 30, 2020, Lynch Co. declared and issued a 15 percent stock dividend. Prior to this dividend, Lynch had 50,000 shares of $10 par value common stock issued and outstanding. The market value of Lynch Co.'s common stock on June 30, 2020, was $24 per share. As a result of this stock dividend, by what amount would Lynch's total stockholders' equity increase (decrease)? Group of answer choices
Answer:
$75,000 decrease
Explanation:
The total stockholders' equity decreases by the same amount of dividend distributed. This is so because distributions are made out of the Retained earnings which is a reserve set aside for stockholders and constitutes stockholders' equity.
So we have to calculate the value of dividend distributed. Dividends are calculated using book values instead of market value of stocks as follows :
Dividend = 50,000 x $10 x 15 % = $75,000
49. Marcy Company declared a 100% common stock dividend on January 1, 2005, when the market price of the stock was $7.50. The entry to record this dividend will: A) debit Retained Earnings,$100,000 B) credit Common Stock Dividend Distributable,$50,000 C) credit Contributed Capital in excess of par, Common Stock, $25,000 D) credit Common Stock Dividend Distributable, $100,000 E) Since this is considered a stock split, no journal entry is made
Answer:
C) credit Contributed Capital in excess of par, Common Stock, $25,000
Explanation:
Missing word "Preferred Stock - 6% cumulative, $20 par value, 10,000 shares authorized, 5,000 shares issued and outstanding . .$100,000. Contributed Capital in excess of par value, Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000. Common Stock, $5 par value, 20,000 shares authorized, 10,000 shares issued and outstanding. . . . . . . . . . . . . . . . . 50,000. Contributed Capital in excess of par value, Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000. Total Contributed Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 850,000. Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150,000. Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000,000"
The journal entry to record the stock dividend will be:
Date Account Titles Debit Credit
Retained earnings $75,000
(10000*7.50*100%)
Common stock dividends distributable $50,000
(10000*100%*$5)
Contributed Capital in excess of par value, $25,000
Common Stock (10000*100%*(7.5-5))
Copper Hill Inc. manufactures laser printers within a relevant range of production of 70,000 to 100,000 printers per year. The following partially completed manufacturing cost schedule has been prepared:
Complete the following cost schedule: Round your answers to two decimal places.
Number of Printers Produced 70,000 90,000 100,000 Total costs: Total variable costs $350,000 $fill in the blank 1 $fill in the blank 2 Total fixed costs 630,000 $fill in the blank 3 $fill in the blank 4 Total costs $980,000 $fill in the blank 5 $fill in the blank 6 Cost per unit: Variable cost per unit $fill in the blank 7 $fill in the blank 8 $fill in the blank 9 Fixed cost per unit $fill in the blank 10 $fill in the blank 11 $fill in the blank 12 Total cost per unit $fill in the blank 13 $fill in the blank 14 $fill in the blank 15
Answer:
70,000 90,000 100,000
Total variable costs $350,000 $450,000 $500,000
Total fixed costs $630,000 $630,000 $630,000
Total Costs $980,000 $1,080,000 $1,130,000
variable costs per unit $5 $5 $5
fixed cost costs per unit $9 $7 $6.30
total cost per unit $14 $12 $11.30
Explanation:
Fixed costs are costs that do not vary with output. e,g, rent, mortgage payments
If production is zero or if production is a million, Mortgage payments do not change - it remains the same no matter the level of output.
Hourly wage costs and payments for production inputs are variable costs
Variable costs are costs that vary with production
If a producer decides not to produce any output, there would be no need to hire labour and thus no need to pay hourly wages.
fixed cost would remain the same regardless of the number of output. Fixed cost would be $630,000 for 90,000 and 10,000 unit of output
fixed cost per unit = total fixed cost / output
$630,000 / 70,000 = $9
$630,000 / 90,000 = $7
$630,000 / 100,000 = $6.30
to determine the total variable cost for quantities, 90,000 and 10,000, the average variable cost has to be determined
Average variable cost = total variable cost / output
$350,000 / 70,000 = $5
Average total cost = average fixed cost + average variable cost
total variable cost for output 90,000 = $5 x 90,000 = $450,000
total variable cost for output 100,000 = $5 x 100,000 = $500,000
total cost = total fixed cost + total variable cost
total cost for output 90,000 = $450,000 + $630,000 = $1,080,000
total cost for output 100,000 = $500,000 + $630,000 = $1,130,000
Roy Wilton is a CPA who recently made a poor investment. When researching the investment, Roy examined the financial statements of the firm, but did not read the accompanying footnotes, and therefore didn’t comprehend the broader context underlying those financial statements. Which of the following is true with respect to the enhancing qualitative characteristic of understandability in this case?
a. This demonstrates a violation of understandability, given that Roy did not comprehend all relevant information.
b. This does not demonstrate a violation of understandability, as Roy did not bother to read the footnotes but could have understood them if he did so.
c. This does not demonstrate a violation of understandability, but rather completeness, as Roy’s understanding was incomplete.
d. This demonstrates a violation of understandability, as CPAs should be able to rely on the financial statements alone.
Answer: This does not demonstrate a violation of understandability, as Roy did not bother to read the footnotes but could have understood them if he did so
Explanation:
Even though Roy examined the financial statements of the firm, as stated above, he didn't read the accompanying footnotes, and hence, he did not comprehend the underlying context of the financial statements.
Therefore, in this case this doesn't demonstrate a violation of understandability, due to the fact that Roy did not bother to read the footnotes but could have understood them if he did so.
According to concept of understandability in accounting, the information that are given in financial statements must be understandable by the financial statements and users.
During 2022, Tamarisk, Inc. reported cash provided by operations of $826000, cash used in investing of $713000, and cash used in financing of $198000. In addition, cash spent on fixed assets during the period was $287000. Average current liabilities were $676000 and average total liabilities were $1785000. No dividends were paid. Based on this information, what was Tamarisk free cash flow? ($628000). $539000. ($150000). $113000.
Answer:
b. $539,000
Explanation:
Free cash flow = Cash flow from operating activities - Capital expenditures
Free cash flow = $826,000 - $287,000
Free cash flow = $539,000
Therefore, based on this information, Tamarisk Inc. free cash flow is $539,000
Given the following information: Percent of capital structure: Preferred stock 10 % Common equity (retained earnings) 40 Debt 50 Additional information: Corporate tax rate 34 % Dividend, preferred $ 7.00 Dividend, expected common $ 2.50 Price, preferred $ 104.00 Growth rate 8 % Bond yield 9 % Flotation cost, preferred $ 9.40 Price, common $ 76.00 Calculate the weighted average cost of capital for Digital Processing Inc.
Answer: 8.23%
Explanation:
Firstly, we will calculate the cost of debt which will be:
= Yield (1-Tax rate)
= 9% × (1-0.34)
= 9% × 0.66
= 5.94%
Then, the Cmcost of preferred stock will be:
= 7/(104-9.40)
= 7/(94.6)
= 7.39%
We will also get the value of the cost of equity which will be:
= (Dividend expected common/Price common) + growth rate
= (2.50/76) + 8%
= 3.29% + 8%
= 11.29%
For Debt:
Cost after tax: 5.94
Weight = 50%
Weighted cost = 5.94 × 50% = 2.97
For Preferred stock:
Cost after tax: 7.39
Weight = 1%
Weighted cost = 7.39 × 10% = 0.74
For Common equity
Cost after tax: 11.29
Weight = 40%
Weighted cost = 11.29 × 40% = 4.52
Weighted average cost of capital = 2.97 + 0.74 + 4.52 = 8.23%
Project Z will result in unit sales of 2,250, at a price of $650 each. The variable cost (VC) of each unit is $325. The cost accountant will allocate overhead on the existing plant to Project Z at a rate of $21 per unit. A special piece of equipment must be leased for $75,000 per year for purposes related solely to Project Z. Project Z will reduce sales of the same company’s Project X by 900 units (selling price of $950 with variable cost of $510 and overhead allocation of $32 per unit). What is the total incremental cash flow for Project Z?
According to supporters of globalization,
a.
Free trade encourages countries to be economically independent.
b.
Free trade will result in countries specializing in the production of those goods and services they can produce most efficiently.
c.
The costs of free trade outweigh the benefits.
d.
The dislocation of jobs resulting from free trade can be avoided by increasing domestic wages.
e.
The labor supply is easily controlled on a global basis.
Answer:
According to supporters of globalization,
b.
Free trade will result in countries specializing in the production of those goods and services they can produce most efficiently.
Explanation:
Globalization has been described as a phenomenon that encourages increased interaction and integration of peoples, companies, and governments from different backgrounds. This phenomenon or process is propelled by free international trade and investments. The emerging advances in information technology has made globalization possible.
Juan's investment portfolio was valued at $125,640 at the beginning of the year. during the year, juan received $603 in interest income and $298 in dividend income. juan also sold shares of stock and realized $1,459 in capital gains. juan's portfolio is valued at $142,608 at the end of the year. all income and realized gains were reinvested. no funds were contributed or withdrawn during the year. what is the amount of income juan must declare this year for income tax purposes?
Answer:
$2,360
Explanation:
Calculation to determine the amount of income juan must declare this year for income tax purposes
Using this formula
Income tax =Interest Income+Dividend Income+Capital gain
Let plug in the formula
Income tax=$603+$298+$1,459
Income tax=$2,360
Therefore the amount of income juan must declare this year for income tax purposes is $2,360
Hoda is creating a report in Access using the Report Wizard. Which option is not available for adding fields using the wizard?
Tables
Queries
Reports
All are available options.
Answer:
Report is not available
Explanation:
From the given options, only the Reports is not an available option for adding fields using the wizard.
To create a report using the wizard, you have to navigate through
Create -> Reports Group -> Report Wizard
The attached image will be displayed after clicking the report wizard.
See that the available options to select are (Tables/Queries).
Hence, (c) is true
Alpha Communications, Inc., which produces telecommunications equipment in the United States, has a very strong local market for its circuit board. The variable production cost is $130, and the company can sell its entire supply domestically for $170. The U.S. tax rate is 40 percent. Alternatively, Alpha can ship the circuit board to its division in Germany, to be used in a product that the German division will distribute throughout Europe. Information about the German product and the division’s operating environment follows.
Selling price of final product: $360
Shipping fees to import circuit board: $20
Labor, overhead, and additional material costs of final product: $115
Import duties levied on circuit board (to be paid by the German division): 10% of transfer price
German tax rate: 60%
Assume that U.S. and German tax authorities allow a transfer price for the circuit board set at either U.S. variable manufacturing cost or the U.S. market price. Alpha’s management is in the process of exploring which transfer price is better for the firm as a whole.
Required:
1. Compute overall company profitability per unit if all units are transferred and U.S. variable manufacturing cost is used as the transfer price. Show separate calculations for the U.S. operation and the German division.
2. Repeat requirement (1). assuming the use of the U.S. market price as the transfer price. Which of the two transfer prices is better for the firm?
3. Assume that the German division can obtain the circuit board in Germany for $155.
a. If you were the head of the German division, would you rather do business with your U.S. division or buy the circuit board locally? Why?
b. Rather than proceed with the transfer, is it in the best interest of Alpha to sell its goods domestically and allow the German division to acquire the circuit board in Germany? Why? Show computations to support your answer.
Answer:
1-If the transfer price is set equal to the U.S. variable manufacturing cost, Alpha Communications will have a profit of $32.80 per circuit board with US Share as $0 and German Share as $32.80.
2-If the transfer price is set equal to the U.S. market price, Alpha Communications will have a profit of $39.20 per circuit board with US Share as $24 and German Share as $15.20. The transfer price as US market price is more effective for the Alpha Communications.
3:a- If the German division can obtain the boards in Germany for 155, it is better for the German division because due to lack of additional shipping fee and import duty, this price is more feasible for the German division.
3:b- If the company decide to sell the US circuit boards locally and allow German division to obtain the circuit boards in Germany, then Alpha Communication will have a profit of $60 per circuit board with US Share as $24 and German Share as $36.
Explanation:
1-If the transfer price is set equal to the U.S. variable manufacturing cost, Alpha Communications will have a profit of $32.80 per circuit board. The calculations are as follows:
US Operation:
Sales Revenue(Price set to variable manufacturing cost): $130
Variable Manufacturing Cost: : ($130)
_________________________________________________
Contribution Margin : $ 0
German Operation:
Selling Price: $360
Transfer Price: ($130)
Additional Cost: ($115)
Shippng Cost: ($20)
Import Duty (10% of Transfer Price): 10% x 130=0.1x130= ($13)
_________________________________________________
Income Before Tax: $82
Income Tax (60% of Income Before Tax):60%x82 ($49.20)
___________________________________________________
Income After Tax $32.80
2-If the transfer price is set equal to the U.S. market price, Alpha Communications will have a profit of $39.20 per circuit board. The transfer price as US market price is more effective for the Alpha Communications. The calculations are as follows:
US Operation:
Sales Revenue(Price set to variable manufacturing cost): $170
Variable Manufacturing Cost: : ($130)
_________________________________________________
Income Before Tax : $ 40
Income Tax (40% of Income Before Tax):40%x40 :($16)
_________________________________________________
Income After Tax: : $24
German Operation:
Selling Price: $360
Transfer Fee: ($170)
Additional Cost: ($115)
Shippng Cost: ($20)
Import Duty (10% of Transfer Price): 10% x 170=0.1x170= ($17)
_________________________________________________
Income Before Tax: $38
Income Tax (60% of Income Before Tax):60%x38 ($22.80)
___________________________________________________
Income After Tax $15.20
Total Income By Alpha Communication: $24+$15.20=$39.20
3-a: If the German division can obtain the boards in Germany for 155, it is better for the German division because due to lack of additional shipping fee and import duty, this price is more feasible for the German division.
At the lower tranfer price of 130, the total impact of transfer is given by
Transfer Price: $130
Shippng Cost: $20
Import Duty (10% of Transfer Price): 10% x 130=0.1x130= $13
___________________________________________________
Total Impact $163
It is more than the local available price, Thus the company should purchase their circuit board locally.
3-b If the company decide to sell the US circuit boards locally and allow German division to obtain the circuit boards in Germany, then Alpha Communication will have a profit of $60 per circuit board.
US Operation:
Sales Revenue(Price set to variable manufacturing cost): $170
Variable Manufacturing Cost: : ($130)
_________________________________________________
Income Before Tax : $ 40
Income Tax (40% of Income Before Tax):40%x40 :($16)
_________________________________________________
Income After Tax: : $24
German Operation:
Selling Price: $360
Local Circuit Board Price ($155)
Additional Cost: ($115)
_________________________________________________
Income Before Tax: $90
Income Tax (60% of Income Before Tax):60%x38 ($54)
___________________________________________________
Income After Tax $36
Total Income By Alpha Communication: $24+$36=$60.0
Quartz Corporation is a relatively new firm. Quartz has experienced enough losses during its early years to provide it with at least eight years of tax loss carryforwards. Thus, Quartz’s effective tax rate is zero. Quartz plans to lease equipment from New Leasing Company. The term of the lease is four years. The purchase cost of the equipment is $970,000. New Leasing Company is in the 30 percent tax bracket. There are no transaction costs to the lease. Each firm can borrow at 10 percent.
a. What is Quartz’s reservation price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Reservation price $
b. What is New Leasing Company’s reservation price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Reservation price $
Answer:
a. Quartz’s reservation price = $306,006.68
b. New Leasing Company’s reservation price = $234,034.25
Explanation:
Given:
Cost = Cost of the equipment = $970,000
n = number of years of lease term = 4
r = cost of borrowing rate = 10%, or 0.10
t = tax rate = 30%, or 0.30
DF = Discounting factor or PV of $1 = ((1-(1/(1 + r))^n)/r) = ((1-(1/(1 + 0.10))^5)/0.10) = 3.16986544634929
a. What is Quartz’s reservation price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The implication of the zero effective tax rate is that depreciation tax shield foregone does not exist. In addition, there is no difference between the after-tax lease payment and the pre-tax payment, and there is also no difference between the pre-tax cost of debt and the after-tax cost.
Quartz’s reservation price can therefore be calculated by setting net advantage to leasing (NAL) equal to zero and solve as follows:
NAL = 0 = Cost – (PMT * DF) ………… (1)
Substituting the relevant values into equation (1), we have:
0 = $970,000 – (PMT * 3.16986544634929)
$970,000 = PMT * 3.16986544634929
PMT = $970,000 / 3.16986544634929
PMT = $306,006.68
Quartz’s reservation price = PMT = $306,006.68
b. What is New Leasing Company’s reservation price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Depreciation tax shield = (Cost / n) * t = ($970,000 / 4) * 30% = $72,750
New r = After-tax debt cost = r * (1 - t) = 0.10 * (1 - 0.30) = 0.07
New DF = ((1-(1/(1 + New r))^n)/New r) = ((1-(1/(1 + 0.07))^5)/0.07) = 4.10019743594759
The New Leasing Company’s reservation price can therefore be calculated by setting NPV to zero as follows:
NPV = 0 = -Cost + (PMT * (1 – t) * New DF) + (Depreciation tax shield * New DF)
0 = -$970,000 + (PMT * (1-0.30) * 04.10019743594759) + ($72,750 * 4.10019743594759)
$970,000 - ($72,750 * 4.10019743594759) = PMT * (1-0.30) * 04.10019743594759
$671,710.636534813 = PMT * 2.87013820516331
PMT = $671,710.636534813 / 2.87013820516331
PMT = $234,034.25
New Leasing Company’s reservation price = PMT = $234,034.25
Oriole Corporation has retained earnings of $682,100 at January 1, 2020. Net income during 2020 was $1,558,700, and cash dividends declared and paid during 2020 totaled $81,300. Prepare a retained earnings statement for the year ended December 31, 2020. Assume an error was discovered: land costing $89,160 (net of tax) was charged to maintenance and repairs expense in 2019.
Answer:
$2,248,660
Explanation:
According to the scenario, computation of the given data are as follows,
Particulars Amount
Retained Earning $682,100
Correction of repairs expense (Add) $89,160
Net income (Add) $1,558,700
Dividend Paid (Less) $81,300
Net retained earning $2,248,660
Matthew is the CEO of an international company. He oversees business operations in eleven countries across the globe. Which information system will he use to make strategic decisions about his company as per the four-level pyramid model?
A.
decision support system
B.
executive information system
C.
transaction processing system
D.
office support system
E.
management information system
Answer:
D. Executive Information System
Click to watch the Tell Me More Learning Objective 5 video and then answer the questions below. 1. The entry to record the amortization of a patent would include a debit to __________ and a credit to __________. Amortization Expense; Patents Amortization Expense; Accumulated Amortization Patents; Accumulated Amortization Patents Expense; Accumulated Amortization 2. The exclusive right to publish and sell a literary, artistic, or musical composition is granted by a patent. trademark. copyright. franchise.
Answer:
1. Amortization Expense; Patents.
2. Copyright.
Explanation:
Patent can be defined as the exclusive or sole right granted to an inventor by a sovereign authority such as a government, which enables him or her to manufacture, use, or sell an invention for a specific period of time.
Generally, patents are used on innovation for products that are manufactured through the application of various technologies.
Basically, the three (3) main ways to protect an intellectual property is to employ the use of
I. Trademarks.
II. Patents.
III. Copyright.
Copyright law can be defined as a set of formal rules granted by a government to protect an intellectual property by giving the owner an exclusive right to use while preventing any unauthorized access, use or duplication by others.
Filling the missing words or texts in the question, we have;
1. The entry to record the amortization of a patent would include a debit to amortization expense and a credit to patents. Amortization in financial accounting is used to periodically lower the book value of a loan principal or an intangible asset such as intellectual property over a set period of time.
2. Copyright: the exclusive right to publish and sell a literary, artistic, or musical composition is granted by a patent.
how market forces would act to return the market to state of equilibrium at the new equilibrium position.
Answer:
market forces would shift upwards or downwards
Explanation:
during a situation of high demand, supply would shift to the right in order to achieve more sales or in a situation of high supply the demand can be shifted to the right by decreasing prices. At low supply demand can be shifted leftwards by increasing prices and when demand is lower, supply falls due to lower sales
Market factors would change to the upside or downside would act to return the market to state of equilibrium at the new equilibrium position.
What do you mean by equilibrium?When economic forces are in balance, there is said to be an economic equilibrium. In the absence of outside influences, economic variables essentially hold true to their equilibrium levels. Market equilibrium and economic equilibrium are two different concepts.
The set of economic factors that the economy is normally driven toward by supply and demand and other conventional economic processes is known as economic equilibrium.
The concept of economic equilibrium can also be used to describe a wide range of elements, including interest rates or overall consumer spending.
The point of equilibrium denotes a theoretical state of rest where all economic activities that "should" occur have actually happened, given the initial conditions of all significant economic variables.
Economists who think of economic processes as akin to physical phenomena like velocity, friction, heat, or fluid pressure draw the notion of equilibrium from the physical sciences. Nothing else changes once a system's physical forces are in equilibrium.
Learn more about equilibrium, here
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During the current year, the company purchased equipment for $212,000 on October 1. It is estimated the equipment will have a useful life of 8 years and a salvage value of $12,000. Estimated production is 40,000 units and estimated working hours are 20,000. During the current year, the company uses the equipment for 525 hours and the equipment produced 1,000 unites. The company uses December 31 as its fiscal year end.
Part 1: For the current year, compute depreciation expense using the straight-line method.
Part 2: For the current year, compute depreciation expense using the activity method (units of output).
Part 3: For the current year, compute depreciation expense using the activity method (working hours).
Answer:
$6250
$5000
$5250
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($212,000 - $12,000) / 8 = $25,000
The machine was used for only 3 months in the fiscal year. Thus, the depreciation expense = $25,000 x (3/12) = $6250
Activity method based on output = (output produced that year / total output of the machine) x (Cost of asset - Salvage value)
(1000 / 40,000) x ($212,000 - $12,000) = $5000
Activity method based on hours worked = (hours worked that year / total hours of the machine) x (Cost of asset - Salvage value)
($212,000 - $12,000) x (525 / 20,0000) = $5250
Gelb Company currently manufactures 47,000 units per year of a key component for its manufacturing process. Variable costs are $6.25 per unit, fixed costs related to making this component are $85,000 per year, and allocated fixed costs are $84,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 47,000 units and buying 47,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier
Answer:
Gelb Company
1. The total incremental cost of making and buying 47,000 units is:
= $204,850.
2. Gelb should buy this component from the outside supplier. It is far cost-effective.
Explanation:
a) Data and Calculations:
Required quantity of key component per year = 47,000 units
Variable costs per unit = $6.25
Avoidable fixed costs per year = $85,000
Unavoidable fixed costs per year = $84,500
Purchase price of component from outside supplier = $3.70 per unit
Incremental cost of making or buying the 47,000 units:
Make Buy Incremental Costs
Variable costs $293,750 $173,900 $119,850
Avoidable fixed costs 85,000 0 85,000
Total relevant costs $378,750 $173,900 $204,850
A firm has the following account balances for this year. Sales for the year are $500,000. Projected sales for next year are $545,000. The percentage of sales approach is used for pro forma purposes. All balance sheet accounts, except long-term debt and common stock, change according to that approach. The firm plans to decrease the long-term debt balance by $5,000 next year. Retained earnings is expected to increase by $3,500 next year. What is the projected external financing need?
a) $10,520
b) $14,720
c) $18,520
d) $20,720
e) $25,620
Answer:
b) $14,720
Explanation:
Note: The missing words are attached below for understanding
Determining the increase in the sales:
Percentage increase in sales = (New sales - Old sales) / Old sales
= ($545,000 - $500,000) / $500,000
= 9%
Determining the new balances of assets and liabilities:
Current assets = $48,000*109% = $52,320
Fixed assets = 158000*109% = $172,220
Total assets = $52,320 + $172,220 = $224,540
Financed by:
The current liabilities = $48000*109% = $52,320
Long-term debt = $83,000 - $5,000 = $78,000
Common stock = $36,000
Retained earnings = $40,000 + $3,500 = $43,500
Total liabilities & the equity = $52,320 + $78,000 + $36,000 + $43,500 = $209,820
External financing needed = Total assets - Total liabilities and equity
External financing needed = $224,540 - $209,820
External financing needed = $14,720
Branch Adjustment account is in the nature of :
Real account
O Nominal account
Personal account
>
O None of these
Answer:
B. Nominal Account.
Explanation:
Branch accounting is a system of bookkeeping that uses a system of separate branch accounting. This branch is also known as the operating locations of an organization.
The account which uses branch adjustment accounting is a nominal account. The nominal account is the general ledger account that closes its account at the end of every year, using branch accounting.
Therefore, option B is correct.
A group of young patrons come into the venue after a sports event. They are loud and excited, celebrating a win for their team. Some of the patrons seem as though they have already been drinking, and the other patrons in the venue have noticed this group. A) How do you respond to these patrons? Issue the group with a warning to make sure they know the type of behaviour that the venue expects. B) One of the patrons comes to the bar to order a few jugs of pre-mix alcoholic drinks for the group. Refuse service to the patron and explain why serving alcohol in this manner is irresponsible. C) The patron is not happy that you have refused him service and he pressures you to serve the group the jugs of alcohol. More of the patron’s friends come over to the bar and start to make a scene, talking loudly for the rest of the venue to hear. D) How do you respond to this? E) After you ask some of the patrons to leave the venue, others from the group start to get upset. They are getting more aggressive and you do not think you can handle the situation on your own. How do you respond to this?
Answer:
The following is how I would deal with the issue of drinking and other associated issues among the Patron in the venue.
A) How do you respond to these patrons?
O. Issue the group with a warning to make sure they know the type of behaviour that the venue expects.
B) One of the patrons comes to the bar to order a few jugs of pre-mix alcoholic drinks for the group. Refuse service to the patron and explain why serving alcohol in this manner is irresponsible.
O. I would refuse to serve the group with the mix which they wanted because they are already drunk going by their behaviour. This would also help to prevent total intoxication in the group which would end up endangering the road users should they decide to go home by driving. The best option would be to ensure that, they took taxi back to their various homes rather than driving themselves.
C) The patron is not happy that you have refused him service and he pressures you to serve the group the jugs of alcohol. More of the patron’s friends ........D) How do you respond to this?
O. By subtle reminder to them that, they are becoming a public nuisance in the venue, and would end up calling the police should the continue with their acts.
E) After you ask some of the patrons to leave the venue, others from the group start to get upset. They are getting more aggressive and you do not think you can handle the situation on your own. How do you respond to this?
O. By informing my overall supervisor why at same time putting a call across to the police about the potential breakdown of order in the venue which has a very high chance of leading to fight or injury.
Explanation:
Assume that IBM leased equipment that was carried at a cost of $120,000 to Swander Company. The term of the lease is 6 years beginning December 31, 2019, with equal rental payments of $30,044 beginning December 31, 2019. The fair value of the equipment at commencement of the lease is $150,001. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Assume the sales-type lease was recorded at a present value of $150,001.
Prepare IBM’s December 31, 2016, journal entries at commencement of the lease.
December 31, 2016:
Account Name Debit Credit
December 31, 2016
Account Name Debit Credit
Answer:
Date Account titles and Explanation Debit Credit
Dec 31, 19 Lease receivables $150,001
Cost of goods sold $120,000
Sales $150,001
Equipment $120,000
(To record the lease)
Dec 31, 19 Cash $30,044
Lease receivables $30,044
(To record the receipt of lease installment)
On September 15, 2021, the Scottie Company board of directors declared a 8% stock dividend on common shares. The shares are to be distributed on October 10, 2021, to shareholders of record on October 1, 2021. The market price per share on the date of declaration was $24.4 while the market price on the date of distribution was $26.4. The common stock has a par of $5 per share and there were 1,200,000 shares outstanding prior to the declaration of the stock dividend.
Required:
Prepare any necessary journal entries to record the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 Record declaration of common stock dividend. Note: Enter debits before credits. General Journal Debit Credit Date September 15, 2021 Record entry View general Journal Clear entry
Answer:
Date General Journal Debit Credit
Sept 15 Stock dividend $2,342,400
(1,200,000*8%*24.4)
Common Stock dividend distributable $480,000
(1,200,000*8%*5)
Paid in capital in excess of par- $1,862,400
Common Stock
Oct 1 No Journal entry
Oct 10 Common Stock dividend $480,000
distributable
Common Stock $480,000
Production Budget and Direct Materials Purchases Budget
Jani Subramanian, owner of Jani's Flowers and Gifts, produces gift baskets for various special occasions. Each gift basket includes fruit or assorted small gifts (e.g., a coffee mug, deck of cards, novelty cocoa mixes, scented soap) in a basket that is wrapped in colorful cellophane. Jani has estimated the following unit sales of the standard gift basket for the rest of the year and for January of next year.
September 250
October 200
November 230
December 380
January 100
Jani likes to have 10% of the next month's sales needs on hand at the end of each month. This requirement was met on August 31.
Two materials are needed for each fruit basket:
Fruit 1 pound
Small gifts 6 items
The materials inventory policy is to have 10% of the next month's fruit needs on hand and 30% of the next month's production needs of small gifts. (The relatively low inventory amount for fruit is designed to prevent spoilage.) Materials inventory on August 31 met this company policy.
Required:
1. Prepare a production budget for September, October, November, and December for gift baskets. (Note: Round all answers to the nearest whole unit.)
Jani's Flowers and Gifts
Production Budget for Gift Baskets
For September, October, November, and December
September October November December
Sales
Desired ending inventory
Needed
Less: Beginning inventory production
Total
2. Prepare a direct materials purchases budget for the two types of materials used in the production of gift baskets for the months of September, October, and November. (Note: Round answers to the nearest whole unit.)
Jani's Flowers and Gifts
Direct Materials Purchases Budget
For September, October, and November
Fruit: September October November
Production
Pounds of fruit
Required for production
Desired ending inventory
Total needs
Less: Beginning inventory
Pounds purchased
Small gifts:
Production
Items required
Needed for production
Desired inventory
Total needs
Less: Beginning inventory
Items purchased
Answer:
Jani's Flowers and Gifts
1. Jani's Flowers and Gifts
Production Budget for September, October, November, and December for Gift Baskets:
Sept Oct. Nov. Dec.
Estimated sales units 250 200 230 380
Estimated ending inventory 20 23 38 10
Units available for sale 270 223 268 390
Beginning inventory 25 20 23 38
Production required 245 213 245 352
2. Jani's Flowers and Gifts
Direct Materials Purchases Budget
For September, October, and November
Sept Oct. Nov.
Fruit (1 pound):
Production requirement 245 213 245
Ending inventory: 21 25 35
Total needs 266 238 280
Beginning inventory: 25 21 25
Pounds purchased 241 217 255
Small Gifts (6 items each):
Production requirement 1,470 1,278 1,470
Ending inventory: 383 441 634
Total needs 1,853 1,719 2,104
Beginning inventory: 441 383 441
Items Purchased 1,412 1,336 1,663
Explanation:
a) Data and Calculations:
Sept Oct. Nov. Dec. Jan.
Estimated sales units 250 200 230 380 100
Estimated ending inventory 20 23 38 10
Units available for sale 270 223 268 390
Beginning inventory 25 20 23 38 10
Production required 245 213 245 352
Jani's Flowers and Gifts
Direct Materials Purchases Budget
For September, October, and November
Sept Oct. Nov. Dec.
Fruit 1 pound:
Production requirement 245 213 245 352
Ending inventory: 21 25 35 106
Total needs 266 238 280 458
Beginning inventory: 25 21 25 35
Pounds purchased 241 217 255 423
Small Gifts 6 items each:
Production requirement 1,470 1,278 1,470 2,112
Ending inventory: 383 441 634 1,899
Total needs 1,853 1,719 2,104 4,011
Beginning inventory: 441 383 441 634
Items Purchased 1,412 1,336 1,663 3,377
Use the following information for VPI Co. to prepare a statement of cash flows for the year ended December 31 using the indirect method.
Cash balance at prior year-end $40,000
Gain on sale of machinery $2,000
Increase in inventory 5,000
Cash received from sale of machinery 9,500
Depreciation expense 4,000
Increase in accounts payable 1,500
Cash received from issuing stock 8,000
Net income 23,000
Cash paid for dividends 1,000
Decrease in accounts receivable 3,000
Answer:
VPI CO
Statement of Cash flows
For the Current year ended December 31
Cash flow from Operating activities
Net Income $23,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation Expense $4,000
Gain on sale of Machinery $(2,000)
Changes in Current Operating assets and liabilities
Decrease in Accounts Receivable $3,000
Increase in Inventory $(5,000)
Increase in Accounts Payable $1,500
Net cash Provided by operating activities $24,500
Cash flows from Investing Activities
Cash Received from Sale of Machinery $9,500
Net cash Provided by Investing activities $9,500
Cash flows from financing Activities
Cash Received from Issuing Stock $8,000
Cash Paid for Dividend $(1,000)
Net cash Provided by financing activities $7,000
Net increase in Cash $41,000
Cash Balance at Prior Year-end $40,000
Cash Balance at Current Year-end $81,000
Connolly Company produces two types of lamps, classic and fancy, with unit contribution margins of $13 and $21, respectively. Each lamp must spend time on a special machine. The firm owns four machines that together provide 18,000 hours of machine time per year. The classic lamp requires 0.20 hours of machine time, the fancy lamp requires 0.50 hours of machine time.
How many of each type of lamp must be sold to optimize total contribution margin?
a. 90,000 classic lamps; 0 fancy lamps
b. 0 classic lamps; 9,000 fancy lamps
c. 18,000 classic lamps; 0 fancy lamps
d. 0 classic lamps; 30,000 fancy lamps
e. 10,000 classic lamps; 10,000 fancy lamps
Answer:
a. 90,000 classic lamps; 0 fancy lamps
Explanation:
To determine the optimise total contribution, we need to calculate the contribution margin per hour of machine time for both the lamps. Then the result of whichever is higher would be produced.
Moreover, as there is no limitation on how many lamps can be produced, therefore, we would assume that we can make as many as we want up to the limit of machine-hours available. The calculation is done as follows:
Contribution margin per hour of machine time for classic lamp = Contribution/machine hours to build one classic lamp
Contribution margin per hour of machine time for classic lamp = 13 / 0.2
Contribution margin per hour of machine time for classic lamp = 65
Contribution margin per hour of machine time for fancy lamp = Contribution/machine hours to build one fancy lamp
Contribution margin per hour of machine time for fancy lamp = 21 / 0.5
Contribution margin per hour of machine time for fancy lamp = 42
Since classic lamp has the higher contribution margin per hour. Therefore, all the machine hours would be used to make classic lamps.
= 18,000 / 0.2
= 90,000
Hence, 90,000 classic lamps would be sold while no fancy lamps will be sold to optimise total contribution (which would be 65 x 18,000 = $1,170,000).
Which type of market
buys goods and
services to produce
public services or to
transfer them to others
who need them?
a.
retail
b.
consumer
C.
government
d.
wholesaler
government i think correct me if im rwong l
Scott Bestor is an accountant for Westfield Company. Early this year, Scott made a highly favorable projection of sales and profits over the next 3 years for Westfield's hot-selling computer PLEX. As a result of the projections Scott presented to senior management, the company decided to expand production in this area. This decision led to dislocations of some plant personnel who were reassigned to one of the company's newer plants in another state. However, no one was fired, and in fact the company expanded its workforce slightly. Unfortunately, Scott rechecked his projection computations a few months later and found that he had made an error that would have reduced his projections substantially. Luckily, sales of PLEX have exceeded projections so far, and management is satisfied with its decision. Scott, however, is not sure what to do. Should he confess his honest mistake and jeopardize his possible promotion
Answer:
Scott Bestor should confess his honest mistake.
Explanation:
Two of most important attributes that are required from an accountant are integrity and trustworthiness.
Refusing to tell the management his honest mistake in order not jeopardize his possible promotion is a short-run gain to him. But confessing his honest mistake has a long run gain as this will preserve his integrity and trustworthiness forever. In addition, it is unethical and a sign of disloyalty for an accountant not to disclose all the information relevant to the company based on his position as an account.
Therefore, Scott Bestor should confess his honest mistake rather than sacrificing his integrity and trustworthiness as well as the ethic of his profession for a short-term gain (i.e. promotion).
During year 3, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows: FIFO Weighted-average January 1, year 3 $71,000 $77,000 December 31, year 3 $79,000 $83,000 Orca's income tax rate is 30%. In its year 3 financial statements, what amount should Orca report as the gain or loss on the cumulative effect of this accounting change
Answer:
$0
Explanation:
Since the inventory method changes that means there is no cumulative effect treatment to be done on the income statement. Rather this, the change in the accounting is mentioned, so the retrospective application to the early period would be presented
So neither there would be gain nor loss for this change in the accounting
Hence, the answer should be zero