Answer:
A. 100,000 equivalent units
Explanation:
Calculation for what the Total equivalent units for Material P under the weighted-average method are calculated to
First step is to calculate the Unit transferred out
Unit transferred out = 28,000+72,000-16,000
Unit transferred out =84,000
Now let calculate the Total equivalent units for Material P
Total Equivalent unit of material P = 84,000+16,000
Total Equivalent unit of material P = 100,000
Therefore the Total equivalent units for Material P under the weighted-average method are calculated to 100,000 equivalent units
The balance sheet of Sheffield Company at December 31, 2019, includes the following.
Notes receivable $51,200
Accounts receivable 195,600
Less: Allowance for doubtful accounts 24,600 $222,200
Transactions in 2020 include the following.
1. Accounts receivable of $151,300 were collected including accounts of $67,500 on which 4% sales discounts were allowed.
2. $5,670 was received in payment of an account which was written off the books as worthless in 2019.
3. Customer accounts of $24,800 were written off during the year.
4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $20,900. This estimate is based on an analysis of aged accounts receivable.
Required:
Prepare all journal entries necessary to reflect the transaction above.
Answer:
S/n Accounts titles Debit Credit
1. Cash[$151,300 - ($67,500*4%)] $148,600
Sales Discounts ($67,500*4%) $2,700
Accounts Receivable $151,300
2. Accounts Receivable $5,670
Allowance for Doubtful Accounts $5,670
Cash $5,670
Accounts Receivable $5,670
3. Allowance for Doubtful Accounts $24,800
Accounts Receivable $24,800
4. Bad Debt Expense $15,430
Allowance for Doubtful Accounts $15,430
Workings:
$24,600 + $5,670 - $24,800 = $5,470
$20,900 - $5,470 =
Prefix Supply Company received a 120-day, 8% note for $450,000, dated April 9, from a customer on account. Assume 360 days in a year. a. Determine the due date of the note. b. Determine the maturity value of the note. $fill in the blank a69834fa4fcefa6_2 c. Journalize the entry to record the receipt of the payment of the note at maturity. If an amount box does not require an entry, leave it blank. fill in the blank d7bbac03b019006_2 fill in the blank d7bbac03b019006_3 fill in the blank d7bbac03b019006_5 fill in the blank d7bbac03b019006_6 fill in the blank d7bbac03b019006_8 fill in the blank d7bbac03b019006_9
Answer and Explanation:
The computation is shown below:
a The Due date
= (21 days in april + 31 days in may + 30 days in june + 31 days in july + 7 days in august
So the due date is August 7
b The maturity value is
= $450,000 + ($450,000 × 8% × 120 ÷ 360)
= $462,000
c The journal entry is
Cash $462,000
To Notes Receivable $450,000
To Interest Revenue $12,000
(Being the receipts of the payment of the note at maturity is recorded)
A note or promissory note is a written promise to pay a certain amount of money on a future date. A future date is called a maturity date.
What do you mean by maturity of a note?The maturity date of the note is the time and day when interest and principal must be paid in full and must be paid.
The calculation of the maturity date is shown below:
a. The Due date of the note is:
= (21 days in April + 31 days in may + 30 days in June + 31 days in July + 7 days in August
So the due date is August 7
b. The maturity value is
[tex]= \$450,000 + (\$450,000 \times 8\% \times \frac{120}{360} ) \\\\= \$462,000[/tex]
c. The journal entry is
Cash $462,000
To Notes Receivable $450,000
To Interest Revenue $12,000
(Being the receipts of the payment of the note at maturity is recorded)
Hence, The calculation of maturity date, maturity value, and the journal for the receipt of the payment of the note at maturity is passed as shown.
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Clarisa, an engineering manager, wants to purchase a resort accommodation to rent to skiers. She is considering the purchase of a three-bedroom lodge in upper Montana that will cost $250,000. The property in the area is rapidly appreciating in value because people anxious to get away from urban developments are bidding up the prices. If Clarisa spends an average of $500 per month for utilities and the investment increases at a rate of 2% per month, how long would it be before she could sell the property for $100,000 more than she has in
Answer:
18.5 months approximately
Explanation:
initial investment x (1 + appreciation rate)ⁿ = initial investment + $100,000 + ($500 x n)
$250,000 x (1 + 2%)ⁿ = $350,000 + $500n
1.02ⁿ = $350,000/$250,000 + $500n/$250,000
1.02ⁿ = 1.4 + 0.002n
I tried to solve it by trial and error:
50 months:
2.69 ≠ 1.5
40 months:
2.21 ≠ 1.48
30 months:
1.81 ≠ 1.46
20 months:
1.49 ≈ 1.44 ⇒ getting closer
18 months:
1.43 ≈ 1.44 ⇒ almost
18.5 months:
1.44 = 1.44 ✓
In order to get hired as an assembly line specialist, the applicant will have to show that they can perform their task in less than 5 minutes after 1000 tries. During the interview, the applicant was asked to perform their future job five times. The applicant was able to complete the task in 10.8 minutes and the company was to estimate their learning curve to be 90%. Given this information, how much time will the applicant take to perform the task a 1000th time
Answer:
The Applicant will take 3.78 minutes to perform the task a 1000th time.
Explanation:
The Learning curve is the graphical representation that determines that how much time someone takes to learn a special skill.
The time on the 1,000th applicant can be calculated as follow
[tex]T_{1000}[/tex] = [tex]T_{1}[/tex] x [tex]1000^{((log LCR/log2)}[/tex]
Where
[tex]T_{1}[/tex] = 10.8 minutes
LCR = Learning Curve Rate = 90% = 0.90
[tex]T_{1000}[/tex] = 10.8 minutes
Placing values in the formula
[tex]T_{1000}[/tex] = 10.8 minutes x [tex]1000^{((log 0.90/log2)}[/tex]
[tex]T_{1000}[/tex] = 10.8 minutes x [tex]1000^{(-0.152003093)}[/tex]
[tex]T_{1000}[/tex] = 10.8 minutes x 0.349937689
[tex]T_{1000}[/tex] = 3.779327044 minutes
[tex]T_{1000}[/tex] = 3.78 minutes
On July 15, 2019, Matrix Corp. sells 20,000 snow shovels to a distributor for $15 per shovel. The distributor pays the amount on July 15, 2019, and has the right to return any of the snow shovels for any reason within 180 days for a full refund. Matrix uses the expected value method and estimates that 8% of the snow shovels will be returned and it is probable that no more than 8% of the shovels will be returned. How much sales revenue should Matrix recognize on July 15, 2019, from this sale
Answer:
the sales revenue recognized is 276,000
Explanation:
The computation of the sales revenue recognized is shown below;
= (20,000 × $15) - (20,000 × $15 × 8%)
= $300,000 - $24,000
= $276,000
Hence, the sales revenue recognized is 276,000
The income statement of Whitlock Company is presented here.
Whitlock Company Income Statement For the Year Ended November 30, 2020
Sales revenue $7,700,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,400,000
Total cost of goods sold 4,900,000
Gross profit 2,800,000
Operating expenses 1,150,000
Net income $1,650,000
Additional information:
a. Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.
b. Prepaid expenses increased $150,000 during the year.
c. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
d. Accrued expenses payable decreased $100,000 during the year.
e. Operating expenses include depreciation expense of $70,000.
Required:
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2020, for Whitlock Company, using the indirect method.
Answer:
$1,130,000
Explanation:
Preparation of the operating activities section of the statement of cash flows for the year ended November 30, 2020, for Whitlock Company,
Cash flows from operating activities
Net Income $1,650,000
Adjustments to reconcile net income to net cashProvided by operating activities:
Add Depreciation expense $70,000
Add Loss on disposal of equipmentIncrease in accounts receivable $200,000
Less Increase in inventory($500,000)
Add Decrease in prepaid expenses------Increase in prepaid expenses $150,000
Less Decrease in accounts payable($340,000)
Less Increase in accrued exp payable($100,000)
Net cash provided by operating activities $1,130,000
Therefore the operating activities section of the statement of cash flows for the year ended November 30, 2020, for Whitlock Company is $1,130,000
explain the various functions of an entrepreneur
Which item shows a credit balance in the Trial Balance?
O
A/P
A/R
Expesnes
O Land
Answer:
Asset and expense accounts appear on the debit side of the trial balance whereas liabilities, capital and income accounts appear on the credit side.
Answer:
A/P
Explanation:
A/R is assets, A/P is liability.
This year Don and his son purchased real estate for an investment. The price of the property was $630,000, and the title named Don and his son as joint tenants with the right of survivorship. Don provided $358,000 of the purchase price and his son provided the remaining $272,000. Has Don made a taxable gift and, if so, in what amount
Answer:
$28,000
Explanation:
Calculation for Don taxable gift amount
Taxable gift amount=[$358,000 − ($630,000)/2] − $15,000
Taxable gift amount=[$358,000 −$315,000] − $15,000
Taxable gift amount=$43,000-$15,000
Taxable gift amount=$28,000
Therefore Don has made a taxable gift of the amount of $28,000
Taco Ranch uses a process cost system and the FIFO cost flow assumption. Production begins in the crafting department where materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. On November 1st, the beginning work in process inventory consisted of 10,000 units which were 60% complete and had a cost of $190,000, $100,000 of which were material costs. During November, the following occured:
Materials added $225,000
Conversion costs incurred $45,000
Units completed and transferred out in November $40,000
Units in ending work in process November 30 (20% complete) $25,000
1. What are the equivalent units of production for materials and conversion costs in the Crafting Department for the month of November?
2. What are the costs assigned to the ending work in process inventory on November 30?
3. What are the costs assigned to units completed and transferred out during November?
Answer:
no puedo tengo fuboll
Explanation:
Taco Ranch uses a process cost system and the FIFO cost flow assumption.
Equivalent Units for Materials:
Units completed and transferred out during November = 40,000 units
Units in ending work in process (20% complete)
= 25,000 units × 20% = 5,000 equivalent units
Total equivalent units for materials = Units completed and transferred out + Units in ending work in process
Total equivalent units for materials
= 40,000 units + 5,000 equivalent units
Total equivalent units for materials = 45,000 equivalent units
Equivalent Units for Conversion Costs:
Since conversion costs are incurred uniformly throughout the process, the equivalent units for conversion costs are the same as the total equivalent units for materials, which is 45,000 equivalent units.
Costs Assigned to Ending Work in Process Inventory on November 30:
To determine the costs assigned to the ending work in process inventory on November 30, we need to calculate the cost per equivalent unit for materials and conversion costs.
Cost per Equivalent Unit for Materials = Total material costs / Total equivalent units for materials
Cost per Equivalent Unit for Materials = $100,000 / 45,000 equivalent units
Cost per Equivalent Unit for Materials = $2.22 per equivalent unit (rounded to two decimal places)
Cost per Equivalent Unit for Conversion Costs = Total conversion costs / Total equivalent units for conversion costs
Cost per Equivalent Unit for Conversion Costs = $45,000 / 45,000 equivalent units
Cost per Equivalent Unit for Conversion Costs = $1 per equivalent unit
Now, we can calculate the cost assigned to the ending work in process inventory:
Ending Work in Process Inventory Cost = Cost per Equivalent Unit for Materials × Equivalent Units in Ending Work in Process
Ending Work in Process Inventory Cost = $2.22 × 5,000 equivalent units
Ending Work in Process Inventory Cost = $11,100
Costs Assigned to Units Completed and Transferred Out During November:
The costs assigned to units completed and transferred out during November include both material and conversion costs.
Total cost per equivalent unit = Cost per Equivalent Unit for Materials + Cost per Equivalent Unit for Conversion Costs
Total cost per equivalent unit = $2.22 + $1
Total cost per equivalent unit = $3.22
Cost of Units Completed and Transferred Out = Total cost per equivalent unit × Units completed and transferred out during November
Cost of Units Completed and Transferred Out = $3.22 × 40,000 units
Cost of Units Completed and Transferred Out = $128,800
Therefore, the costs assigned to the ending work in process inventory on November 30 is $11,100 and the costs assigned to units completed and transferred out during November is $128,800.
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Beginning inventory, purchases, and sales data for DVD players are as follows: November 1 Inventory 52 units at $79 10 Sale 35 units 15 Purchase 27 units at $83 20 Sale 25 units 24 Sale 13 units 30 Purchase 39 units at $86 The business maintains a perpetual inventory system, costing by the first-in, first-out method.
Determine the cost of the goods sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated.
Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column and LOWER unit cost first in the Inventory.
Answer:
November 1 Inventory 52 units at $79
November 10 Sale 35 units
COGS = 35 x $79 = $2,765Inventory balance = 17 x $79 = $1,343November 15 Purchase 27 units at $83
November 20 Sale 25 units
COGS = (17 x $79) + (3 x $83) = $1,592Inventory balance = (24 x $83) = $1,992November 24 Sale 13 units
COGS = 13 x $83 = $1,079Inventory balance = 11 x $83 = $913November 30 Purchase 39 units at $86
Inventory balance = $913 + (39 x $86) = $4,267Samson Wholesale Beverage Company regularly factors its accounts receivable with the Milpitas Finance Company. On April 30, 2021, the company transferred $800,000 of accounts receivable to Milpitas. The transfer was made without recourse. Milpitas remits 90% of the factored amount and retains 10%. When Milpitas collects the receivables, it remits to Samson the retained amount less a 4% fee (4% of the total factored amount). Samson estimates the fair value of the last 10% of its receivables to be $60,000.
Required:
Prepare the journal entry for Samson Wholesale Beverage for the transfer of accounts receivable on April 30, assuming the sale criteria are met.
Answer:
Debit Cash for $720,000
Debit Receivable from factor for $28,000
Debit Loss on sale of receivables for $52,000
Credit Accounts receivable for $800,000
Explanation:
From the question, the following can first be calculated:
Cash = Accounts receivable * Percentage remitted by Milpitas = $800,000 * 90% = $720,000
Receivable from factor = Estimated fair value of the last 10% of receivables - 4% of the total factored amount = $60,000 - (4% * $800,000) = $60,000 - $32,000 = $28,000
Loss on sale of receivables = Accounts receivable - Cash - Receivable from factor = $800,000 - $720,000 - $28,000 = $52,000
The journal entry for Samson Wholesale Beverage for the transfer of accounts receivable on April 30, assuming the sale criteria are met will look as follows:
General Ledger Debit ($) Credit ($)
Cash 720,000
Receivable from factor 28,000
Loss on sale of receivables 52,000
Accounts receivable 800,000
(To record the transfer of Accounts receivable.)
Jacques, who is age 45, has just resigned from his current job. He worked for Ace, which sponsors a cash balance plan and a standard 401(k) plan. Each of the plans uses the longest permitted vesting schedule and both plans are top heavy. He has a balance of $40,000 in the cash balance plan, has deferred $20,000 into the 401(k) plan and has employer matching contributions of $10,000. If he has been employed for three years, but only participating in the plans for the last two years, how much does he keep if he leaves today
Answer: hahaha
Explanation:
how would you purchase of inventory on credit affect the income statement?
Answer:
The purchase of credit increases both accounts payable and inventory, which are balance sheet accounts. It would, therefore, have no effect on the income statement.
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Elite Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial clients. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service.
Twenty employees worked a total of 41,000 hours last year, 30,000 on residential jobs and 11,000 on commercial jobs. Wages were $16 per hour for all work done. Any materials used are included in overhead as supplies. All overhead is allocated on the basis of labor-hours worked, which is also the basis for customer charges. Because of increased competition for commercial accounts,EL&P can charge $60 per hour for residential work, but only $45 per hour for commercial work.
If overhead for the year was $205,000, what were the profits of the residential and commercial services using labor-hours as the allocation base?
Answer:
Results are below.
Explanation:
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 205,000 / 41,000
Predetermined manufacturing overhead rate= $5 per direct labor hour
Now, we can calculate the profit of each service:
Residential:
Revenue= 30,000*60= 1,800,000
Direct labor costs= 30,000*16= (480,000)
Overhead= 5*30,000= (150,000)
Gross profit= $1,170,000
Commercial:
Revenue= 11,000*45= 495,000
Direct labor costs= 11,000*16= (176,000)
Overhead= 5*11,000= (55,000)
Gross profit= $264,000
The Work-in-Process inventory account of a manufacturing firm shows a balance of $3,250 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $510 and $310 for materials, and charges of $410 and $670 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:
Answer:
$1.25
Explanation:
With regards to the above and given that;
Direct material = $510 310
Direct labor = $410 $670
Manufacturing overhead?
Work in process = Direct material + Direct labor + manufacturing overhead
$3,250 = $820 + $1,080 + MOH
$3,250 - $1,900 = MOH
MOH = $1,350
Overhead rate = MOH/Direct labor hour
= $1,350/1080
= $1.25
Roget Factory has budgeted factory overhead for the year at $15,500,000. It plans to produce 2,000,000 units of product. Budgeted direct labor hours are 1,050,000, and budgeted machine hours are 750,000. Using a single plantwide factory overhead rate based on direct labor hours, the factory overhead rate for the year is
Answer:
$14,76
Explanation:
Using a single plantwide factory overhead rate based on direct labor hours, the factory overhead rate for the year is $14,76.
E7.5 (LO 2) (Recording Sales Gross and Net) On June 3, Arnold Company sold to Chester Company merchandise having a sale price of $3,000 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $90, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company. Instructions a. Prepare journal entries on the Arnold Company books to record all the events noted above under each of the following bases. 1. Sales and receivables are entered at gross selling price. 2. Sales and receivables are entered at net of cash discounts. b. Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment until July 29.
accrual basis financial statements every June 30 and December 31. On 1/1/2001 the company issued bonds to the public. The bonds are due at the end of 20 years, on 12/31/2020. The face value of the bonds is $100,000 and the annual coupon rate is 12%. Coupon payments are made to the bondholders semi-annually every June 30 and December 31, beginning 6/30/2001. The bonds were issued to yield 10% annual rate. You can use our present value tables presented in class, Tables 2 and 4. What is the book value of Bonds Payable on 1/1/2001
Answer:
$85,553
Explanation:
January 1, 2021
Dr Cash 114.963
Cr Bonds payable 100,000
Cr Premium on bonds payable 14,963
market price:
$100,000 / (1 + 5%)⁴⁰ = $14,205
$6,000 x 19.793 (PVIFA, 5%, 40 periods) = $100,758
market price = $114,963
amortization of bond premium = ($114,963 x 5%) - $6,000 = -$252
amortization of bond premium = ($114,711 x 5%) - $6,000 = -$264
carrying value = $100,000 - $14,447 = $85,553
Determinants of Interest Rate for Individual Securities The Wall Street Journal reports that the rate on 3-year Treasury securities is 8.30 percent, and the 6-year Treasury rate is 8.45 percent. From discussions with your broker, you have determined that expected inflation premium is 3.70 percent next year, 3.95 percent in Year 2, and 4.15 percent in Year 3 and beyond. Further, you expect that real interest rates will be 4.10 percent annually for the foreseeable future. What is the maturity risk premium on the 6-year Treasury security
Answer:
20%
Explanation:
Calculation for What is the maturity risk premium on the 6-year Treasury security
Maturity risk premium=
8.45% = 4.15% + 4.10% + MP
MP = 8.45% − (4.15% + 4.10%)
MP=8.45%-8.25%
MP=0.20*100
MP=20%
Therefore the maturity risk premium on the 6-year Treasury security will be 20%
Pinder Co. produces and sells high-quality video equipment. To finance its operations, Pinder issued $25,000,000 of five-year, 7% bonds, with interest payable semiannually, at a market (effective) interest rate of 9%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar. $fill in the blank 1
Answer:
Bond Price or Present value = $23021820.4557 rounded off to $23021820
Explanation:
To calculate the quote/price of the bond today, the present value, we will use the formula for the price of the bond. As the bond is a semi annual bond, the semi coupon payment, semi annual number of periods and semi annual YTM will be,
Coupon Payment (C) = 25000000 * 0.07 * 6/12 = $875000
Total periods (n) = 5 * 2 = 10
r or YTM = 0.09 * 6/12 = 0.045 or 4.5%
The formula to calculate the price of the bonds today is attached.
Bond Price = 875000 * [( 1 - (1+0.045)^-10) / 0.045] +
25000000 / (1+0.045)^10
Bond Price or Present value = $23021820.4557 rounded off to $23021820
The market equilibrium quantity without the $1.50 excise tax is ______________ units. The market equilibrium quantity with the $1.50 excise tax is ______________ units. The change in equilibrium quantity due to the $1.50 excise tax is ______________ units. (Note: Red colored supply curve should be Qs with no tax and Green supply curve is Qs with tax. Error below in labeling)
Answer:
Equilibrium quantity without excise tax is 130 units.
Equilibrium quantity with excise tax is 110 units.
The change in equilibrium quantity is 20 units decrease due to excise tax.
Explanation:
The quantity demanded without tax is 130 units because this is equilibrium point where quantity supplied equals to quantity demanded. The quantity demanded with tax is 110 units because the price will increase by $1.50 due to excise tax. The new price would be $4.50 after excise tax so the quantity will be declined to 110 units.
Solver provides sensitivity analysis information on all of the following except the a. range of values for objective function coefficients which do not change optimal solution. b. impact on optimal objective function value of changes in constrained resources. c. amount by which the right hand side of the constraints can change and still the shadow price is accurate. d. impact on right hand sides of changes in constraint coefficients.
Answer:
The correct answer is OPTION D (impact on right hand sides of changes in constraint coefficients).
Explanation:
Solver is an excel program that can be used to solve systems of equations even solve for multiple equations, using a powerful iteration technique in a bid to get a closer approximation to the solution of a problem.
A sensitivity report is one of the three reports that can be generated using the solver which can solve for the effect of how changes in the constraints no matter how small could still affect the overall solution.
The objective function is a target cell.
The solver doesn't provide information on how the impact on the right-hand sides of changes in constraint coefficients as information showed is that as long as there is a positive less than or equal constraints, increasing the values of the right-hand side values of constraints would not change the optimal solution.
Rex, a cash basis calendar year taxpayer, runs a bingo operation that is illegal under state law. During 2020, a bill designated H.R. 9 is introduced into the state legislature, which, if enacted, would legitimize bingo games. In 2020, Rex had the following expenses: Operating expenses in conducting bingo games $247,000 Payoff money to state and local police 24,000 Newspaper ads supporting H.R. 9 3,000 Political contributions to legislators who support H.R. 9 8,000 Of these expenditures, Rex may deduct:
Answer:
$247,000
Explanation:
Based on the information given we were told that the Operating expenses that was used in conducting bingo games was the amount of $247,000 which means that the amount that Rex may DEDUCT is the OPERATING EXPENSES amount of $247,000.
Hence, OPERATING EXPENSES can simply be defined as the amount of money that is been use to run or operate a business, company or organization such as paying for office rent , buying of office Equipment, delivery expenses , Employee wages expense among others.
Therefore Rex may deduct $247,000
A postretirement asset is computed as the excess of the expected postretirement benefit obligation over the fair value of plan assets. fair value of plan assets over the accumulated postretirement benefit obligation. accumulated postretirement benefit obligation over the fair value of plan assets. accumulated postretirement benefit obligation over the fair value of plan assets, but not vice versa.
Answer:
fair value of plan assets over the accumulated postretirement benefit obligation
Explanation:
CalMark is a privately held company, so there is no information about beta available. However, a company in the same business with a debt to equity ratio the same as that of CalMark is publicly traded and has a beta which is two times that of the market. If the risk free rate is 4%, and the market risk premium is 5%, what is the estimated cost of existing equity for CalMark
Answer:
r - Calmark = 14%
Explanation:
Based on the comparative company analysis and using the CAPM we can calculate the required rate of return for CalMark. The comparative company analysis means to use the companies similar to the subject company to assume various ratios and factor about the subject company.
The formula to calculate the cost of equity which is also known as the required rate of return (r) is,
r = rRF + Beta * rpM
Where,
rRF is the risk free raterpM is the market risk premiumThe beta for market is always equal to 1. So a beta twice of the market will be 2.
r - Calmark = 4% + 2 * 5%
r - Calmark = 14%
Aggies Candle Factory has recently been awarded a new contract with a large retailor in Doylestown. Demand for the candles is 25,0000 which a larger order than the company has ever handled before. They have called a business strategy meeting to ensure success of this project.; the Operations Manager has presented two different manufacturing options for consideration by the board:
Option A is highly automated with fixed costs of $25,000 and variable costs of $.1/candle.
Option B uses hand labor with fixed costs of $10,000 and variable costs of $.5/candle.
Which option should the board select and why?
Answer: Option A
Explanation:
From the question, the demand given is 250,000
For Option A,
Fixed cost = $25000
Variable cost = $0.1 per candle
Total cost = Fixed cost + Variable cost
Total cost = $25000 + ($0.1 × 250,000)
= $25,000 + $25,000
= $50,000
For Option B,
Fixed cost = $10000,
Variable cost = $0.5 per candle
Total cost = Fixed cost + Variable cost
Total cost = $10000 + ($0.5 × 250,000)
= $10,000 + $125,000
= $135,000
Therefore, the board should select option A as the total cost is cheaper than option B.
If the price of an item decreases, producers will create fewer of the item. This is due to the
A.
Law of Demand
B.
Law of Supply
C.
Law of Price
D.
Consumer Choice
Answer:
the answer is B,law of supply
Calculate the consumer surplus in the market for gasoline if the market price is $3.50. Price ($ per gallon) Quantity of gasoline (millions of gallons) 0 40 80 120 160 200 240 280 320 360 400 440 480 520 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 Demand Price Consumer surplus
Answer:
The consumer surplus in the market for gasoline is $250 million
Explanation:
Consuemr Surplus
It is the difference between the consumer is willing to pay for the commodity and the actual market price.
The consumer surplus can be calculated as follow
Consumer Surplus = 0.50 x ( Maximum Price - Market Price ) x Quantity
Where
Maximum Price = $6.00
Market Price = $3.50
Quantity = 200 million gallons
Placing values in the formula
Consumer Surplus = 0.50 x ( $6.00 - $3.50 ) x 200
Consumer Surplus = $250 million
Note: The graph in the question was missing, it is attached for your reference.
Loanstar had 150 units in beginning inventory before starting 950 units and completing 900 units. The beginning work in process inventory consisted of $2,000 in materials and $4,000 in conversion costs before $7,900 of materials and $13,280 of conversion costs were added during the month. The ending WIP inventory was 100% complete with regard to materials and 30% complete with regard to conversion costs. Use the above information to complete a production cost report. Enter all amount as positive values.
Answer:
Loanstar
Production Report:
Units Materials Conversion Total
Beginning WIP 150 $2,000 $4,000 $6,000
Started 950 7,900 13,280 21,180
Total 1,100 $9,900 $17,280 $27,180
Completed 900 900 900
Ending WIP 200 200 (100%) 60 (30%)
Total equivalent units 1,100 960
Cost per equivalent unit $9 $18
Cost assigned to:
Units completed $8,100 $16,200 $24,300
Ending WIP 1,800 1,080 2,880
Total cost of production $9,900 $17,280 $27,180
Explanation:
a) Data and Calculations:
Units Materials Conversion Total
Beginning WIP 150 $2,000 $4,000 $6,000
Started 950 7,900 13,280 21,180
Total 1,100 $9,900 $17,280 $27,180
Completed 900 900 900
Ending WIP 200 200 (100%) 60 (30%)
Total equivalent units 1,100 960
Cost per equivalent unit $9 $18
Cost assigned to:
Units completed $8,100 $16,200 $24,300
Ending WIP 1,800 1,080 2,880
Total cost of production $9,900 $17,280 $27,180