The equation describes the value of an investment after years. For the investment, give the initial value, the continuous growth rate, the annual growth factor, and the annual growth rate. Round your answer for the annual growth factor to four decimal places, and your answer for the annual growth rate to two decimal places. The initial value is 1100 . The continuous growth rate is . The annual growth factor is . The annual growth rate is .
Answers
Answer:
The continuous growth rate is 4.2%.
The annual growth factor is 0.04289.
The annual growth rate is given as 4.23%.
Explanation:
As the complete question is not given, the complete question is found online and the solution is then implemented. The complete question is attached.
The equation is given as
[tex]V=1100e^{0.042t}[/tex]
The continuous growth rate is given as by comparing it with the value of [tex]V=V_oe^{kt}[/tex]
Here K is the continuous growth rate thus K is 0.042. or 4.2%.
The continuous growth rate is 4.2%.
The annual growth factor is given as
[tex]V_o(1+r)^t=V_oe^{0.042t}\\(1+r)^t=(e^{0.042})^t\\1+r=e^{0.042}\\1+r=1.04289\\r=1.04289-1\\r=0.04289[/tex]
The annual growth factor is 0.04289.
The annual growth rate is given as 4.23%.
Related Questions
Which facilities or amenities are most commonly available on a cruise chip?
Answers
Answer:
Generally, all cruise ship amenities have dining, entertainment, shopping or sporting facilities. There are bars and lounges as well, with some ships providing casinos and other adult-themed entertainment facilities.
Explanation:
For a given product demand, the time-series trend equation is 53 - 4 x. The negative sign on the slope of the equation:
a. is a mathematical impossibility.
b. is an indication that the forecast is biased, with forecast values lower than actual values.
c. is an indication that product demand is declining.
d. implies that the coefficient of determination will also be negative.
e. implies that the cumulative error will be negative.
Answers
Answer: is an indication that product demand is declining.
Explanation:
The negative sign on the slope of the time-series trend equation simply explains that the product demand is declining.
A negative slope indicates that two variables are negatively related which implies that when the value of x increases, rhen the value of y decreases, and vice versa. When putting this in a graph, the line falls when the line that's on the line graph shifts from left to right.
The correct option is C
Which career is likely to earn the highest salary
Answers
These are the professions that receive high salaries in our country, in Turkey.
Tamarisk, Inc. purchased a delivery truck for $29,200 on January 1, 2020. The truck has an expected salvage value of $2,200, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 16,100 in 2020 and 12,800 in 2021.
1. Calculate depreciation expense per mile under units-of-activity method.
2. Compute depreciation expense for 2020 and 2021 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double- declining-balance method.
3. Prepare the journal entry to record 2020 depreciation.
4. Assume that Marigold uses the straight-line method. Show how the truck would be reported in the December 31, 2020, balance sheet.
Answers
Answer:
1. Depreciation expense per mile = $0.27 per mile
2-1. The straight-line method
We have:
Depreciation expense for 2020 = $3,375
Depreciation expense for 2021 = $3,375
2-2. Units-of-activity method
We have:
Depreciation expense for 2020 = $4,347
Depreciation expense for 2021 = $3,456
2-3. The double-declining-balance method
We have:
Depreciation expense for 2020 = $7,300
Depreciation expense for 2021 = $5,475
3. See the journal entries below.
4. Net book value = $25,825
Explanation:
1. Calculate depreciation expense per mile under units-of-activity method.
Depreciation expense per mile = (Purchase price delivery truck - Expected salvage value) / Expected driven miles = ($29,200 - $2,200) / 100,000 = $0.27 per mile
2. Compute depreciation expense for 2020 and 2021 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double- declining-balance method.
2-1. The straight-line method
Annual depreciation expense = (Purchase price of the delivery truck - Expected salvage value) / Estimated useful life = ($29,200 - $2,200) / 8 = $3,375
Therefore, we have:
Depreciation expense for 2020 = Annual depreciation expense = $3,375
Depreciation expense for 2021 = Annual depreciation expense = $3,375
2-2. Units-of-activity method
Depreciable amount = Purchase price of the delivery truck - Expected salvage value = $29,200 - $2,200 = $27,000
Therefore, we have:
Depreciation expense for 2020 = Depreciable amount * (Actual miles driven in 2020 / Expected driven miles) = $27,000 * (16,100 / 100,000) = $4,347
Depreciation expense for 2021 = Depreciable amount * (Actual miles driven in 2021 / Expected driven miles) = $27,000 * (12,800 / 100,000) = $3,456
2-3. The double-declining-balance method
Straight-line method depreciation rate = 1 / Estimated useful life = 1 / 8 = 0.1250, or 12.50%
Double-declining-balance method depreciation rate = Straight-line method depreciation rate * 2 = 12.50% * 2 = 25%
Therefore, we have:
Depreciation expense for 2020 = Purchase price of the delivery truck * Double-declining-balance method depreciation rate = $29,200 * 25% = $7,300
Depreciation expense for 2021 = (Purchase price of the delivery truck - Depreciation expense for 2020) * Double-declining-balance method depreciation rate = ($29,200 - $7,300) * 25% = $5,475
3. Prepare the journal entry to record 2020 depreciation.
3-1. The straight-line method
Date Particulars Debit ($) Credit ($)
2020 Depreciation expense 3,375
Accumulated dep. – Delivery truck 3,375
(To record 2020 depreciation expense.)
3-2. Units-of-activity method
Date Particulars Debit ($) Credit ($)
2020 Depreciation expense 4,347
Accumulated dep. – Delivery truck 4,347
(To record 2020 depreciation expense.)
3-3. The double-declining-balance method
Date Particulars Debit ($) Credit ($)
2020 Depreciation expense 7,300
Accumulated dep. – Delivery truck 7,300
(To record 2020 depreciation expense.)
4. Assume that Marigold uses the straight-line method. Show how the truck would be reported in the December 31, 2020, balance sheet.
Tamarisk, Inc.
Balance sheet (Partial)
As at the Year Ended December 31, 2020
Details $
Fixed Assets
Delivery truck 29,200
Accumulated depreciation (3,375)
Net book value 25,825
Define corporate culture. What are the components of a good corporate culture? Why do you think that corporate culture has such a huge impact on the success of a company? Please share your thoughts.
Answers
Answer:
Corporate culture, also known as company culture, refers to a set of beliefs and behaviors that guide how a company’s management and employees interact and handle external business transactions.
Cash Flows from Investing Activities would involve all of the following except:
A. The purchase of buildings.
B. The receipt of interest income on short-term investments.
C. The purchase of marketable securities.
D. The proceeds from the sale of equipment.
Answers
Answer:
B
Explanation:
there are three types of cash flows:
1. Investing cash flow - It involves the use of long term cash. it is the cash flow generated from the purchase and sale of fixed asset e.g. Sale of plant assets.
2. operating cash flow - it shows the net amount of cash generated from a company's normal business operation
3. financing cash flow - it shows the net amount of funding a company receives over a given period e.g. issuance of common stock
g Last year Lexington had sales of $884,000 and paid taxes of $50,000. Because of the low interest rate environment, the firm also borrowed some money from the local bank and paid $36,000 in interest expense. In addition, the firm incurred Variable Costs and Fixed Costs of $447,000 and $400,000 respectively. If sales increase by 5%, what should be the increase in earnings per share
Answers
Answer:
Lexington
The increase in earnings per share is 44.59%.
Explanation:
a) Data and Calculations:
Last Year 5% increase
Sales revenue $884,000 $928,200
Variable costs 447,000 469,350
Contribution $437,000 $458,850
Fixed costs 400,000 400,000
Operating income $37,000 $58,850
Interest expense 36,000 36,000
Income before tax 1,000 22,850
Income taxes 50,000 50,000
Net loss $49,000 $27,150
Increase = 44.59% ($21,850/$49,000 * 100)
Michael Corporation manufactures railroad cars, which is its only product. The standards for the railroad cars are as follows:
Standard tons of direct material (steel) per car 4
Standard cost per ton of steel $ 17.00
During the month of March, the company produced 1,650 cars.
Related production data for the month follows:
Actual materials purchased and used (tons) 6,650
Actual direct materials total cost $ 115,000
What is the direct materials quantity variance for the month?
A) $ 850 favorable
B) $ 850 unfavorable
C) $ 1,950 favorable
D) $ 1,950 unfavorable
Answers
Answer:
Direct material quantity variance= $850 unfavorable
Explanation:
Giving the following information:
Standard tons of direct material (steel) per car 4
Standard cost per ton of steel $ 17.00
During March, the company produced 1,650 cars.
Actual materials purchased and used (tons) 6,650
To calculate the direct material quantity variance, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (4*1,650 - 6,650)*17
Direct material quantity variance= $850 unfavorable
On January 1, 2019, QRS Company granted 80,000 stock options to certain executives. The options may be exercised on or after December 31, 2022, and expire on January 1, 2026. Each option can be exercised to acquire one share of $1 par common stock for $5. The fair value of each options was estimated to be $3 on the grant date. What amount should QRS recognize as compensation expense for 2020
Answers
Answer:
The amount QRS should recognize as compensation expense for 2020 is $80,000.
Explanation:
NS = Number of shares granted as stock option = 80,000
FV = Fair value of the options on the date of grant = $3
N = Number of years from December 31, 2022 to January 1, 2026 = 3
Therefore, we have:
Total compensation expenses = NS * FV = 80,000 * $3 = $240,000
Amount QRS should recognize as compensation expense for 2020 = Total compensation expenses / n = $240,000 / 3 = $80,000
Which of the following is incorrect?
a. Future value means earning interest on interest.
b. External equity and dividends can be used as plug variables in a financial plan.
c. A financial plug variable is the designated source of external financing needed to deal with any shortfall or surplus in financing and thereby bring the balance sheet into balance.
d. There are two primary mechanisms for electing directors: cumulative voting and straight voting.
e. The rate required in the market on a bond is the yield to maturity.
Answers
Answer:
b. External equity and dividends can be used as plug variables in a financial plan.
Explanation:
When the external equity and dividend is applied like the plus variables in the financial plan so as a plug variable it represent the external financing source i.e. dividend that required to deal with any deficit or surplus in the financing and the external equity is not a source of the external financing
Therefore the option b is considered
One reason why "protecting domestic jobs" is a poor argument against free trade is because A. there is little evidence that trade protection saves domestic jobs. B. the cost of protecting jobs is much higher than the value of the jobs. C. labor in other countries is not priced lower than U.S. labor. D. any outsourcing of jobs from the U.S. is completely offset by outsourcing of jobs from other countries.
Answers
Answer: Cost of protecting jobs is much higher than the value of the jobs.
Explanation:
Protectionism is when the local industries in a country are protected against foreign competition in order to help them grow.
One of the main ideas behind free trade is for the consumers to be provided with affordable and low prices goods when there's a free movement of goods between the countries.
It should be noted that an increase in the labour cost will also.bring about an increase in the value of jobs and this can result to the goods being sold at a higher price. Therefore the correct option is B "cost of protecting jobs is much higher than the value of the jobs".
Answer:
A
Explanation:
Chris Co. produces sports equipment and is currently producing 1,000 mini long boards annually. A supplier has offered to produce the boards for Chris Co. for $300 per board. Chris Co. incurs unit-level costs of $280 per unit. Chris also spends $25,000 on product design each year and incurs $50,000 of facility-level costs. The avoidable production cost for Chris to produce one mini long board is
Answers
Answer: $305
Explanation:
The avoidable production cost for Chris to produce one mini long board goes thus:
Unit Level Cost = $280
Add: Product Level Cost = $25,000 / 1000 units = $25
Then, the avoidable cost to produce one unit will be:
= $280 + $25
= $305
The management of Penfold Corporation is considering the purchase of a machine that would cost $270,000, would last for 5 years, and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 12% on all investment projects. The net present value of the proposed project is closest to:______.
a. $(11,700).
b. $(53,700).
c. $(269,997).
d. $(113,700).
Answers
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Initial investment= $270,000
Cash flow= $60,000
Number of years= 5
Discount rate= 12%
To calculate the net present value (NPV), we need to use the following formula:
NPV= -Io + ∑[Cf/(1+i)^n]
∑[Cf/(1+i)^n]:
Cf1= 60,000/1.12= 53,571.43
Cf2= 60,000/1.12^2= 47,831.63
.....
Cf5= 60,000/1.12^5= 34,045.61
∑[Cf/(1+i)^n]= 216,286.57
Now, the NPV:
NPV= -270,000 + 216,286.57
NPV= -53,713.43
Suppose the risk-free rate of return is 3.5 percent and the market risk premium is
7 percent. Stock U, which has a beta coefficient equal to 0.9, is currently selling
for $28 per share. The company is expected to grow at a 4 percent rate forever,
and the most recent dividend paid to stockholders was $1.75 per share. Is Stock
U correctly priced? Explain.
Answers
Answer:
kaya nyo po iyan
Explanation:
nice habbsjsxgjshsbvda
During 2019, Coronado Industries expected Job No. 26 to cost $300000 of overhead, $500000 of materials, and $200000 in labor. Coronado applied overhead based on direct labor cost. Actual production required an overhead cost of $370000, $610000 in materials used, and $260000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?
Answers
Answer:
See below
Explanation:
Given the above information, first we will compute the predetermined overhead rate
Predetermined overhead rate
= Estimated manufacturing overhead / Estimated labor
= $300,000/$200,000
= 1.5
The next step is to apply the
= [(1.5 × $260,000) + $260,000 + $610,000]
= $390,000 + $260,000 + $610,000
= $1,260,000
Pharmicon, Inc., a pharmaceutical firm, discovered a complete cure for the common cold. The medicine could be put into a pill that would be taken once a day for a week. Knowing these results, directors of Pharmicon decided to delay the press release and bought thousands of shares of Pharmicon stock. After the purchases, Pharmicon issued a press release about the pill. The price of the stock skyrocketed. When the SEC found out about the purchases and the delay in the press release, it sued Pharmicon for violating Rule 10b-5. The court in this case would most likely rule in favor of Group of answer choices
Answers
Question Completion:
a. the SEC, because the information about the cure was material and was not disclosed to the public prior to the directors' purchase of the stock.
b.Pharmicon, because the information was not material.
c.the SEC, because owning company stock is a conflict of interest for the directors.
d.Pharmicon, because they issued a press release to the public
Answer:
Pharmicon, Inc.
The court in this case would most likely rule in favor of:
a. the SEC, because the information about the cure was material and was not disclosed to the public prior to the directors' purchase of the stock.
Explanation:
SEC's Rule 10b-5 forbids insider trading and, therefore, enables the SEC to sue individuals who use the privileged information they acquire about an entity's security to buy or sell the entity's securities. The information may be acquired illegally or legally, provided it is not publicly available. Insider trading exists when a professional breaches a fiduciary duty or betrays the trust and confidence reposed in him by trading on a security based on material, nonpublic information about the security.
Exercise 12-1 Payback Method [LO12-1] The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1 $ 15,000 $ 1,000 2 $ 8,000 $ 2,000 3 $ 2,500 4 $ 4,000 5 $ 5,000 6 $ 6,000 7 $ 5,000 8 $ 4,000 9 $ 3,000 10 $ 2,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in
Answers
Question Completion:
Requirement #2 would the payback period be affected if the cash inflow in the last year were several times as large
Answer:
Unter Corporation
1. Payback period of the investment is:
= 7 years.
2. No. The payback period would not be affected if the cash inflow in the last year were several times as large. The payback period was reached in the 7th year, which is three years before the last year. No cash inflows after the 7th year will have any impact on the payback period.
Explanation:
a) Data and Calculations:
Cash flows:
Year Investment Cash Inflow
1 $ 15,000 $ 1,000
2 $ 8,000 $ 2,000
3 $ 2,500
4 $ 4,000
5 $ 5,000
6 $ 6,000
7 $ 5,000 $25,500
8 $ 4,000
9 $ 3,000
10 $ 2,000
Total $23,000 $34,500
Absorption and Variable Costing Comparisons: Production Equals Sales Assume that Smuckers manufactures and sells 30,000 cases of peanut butter each quarter.
The following data are available for the third quarter of 2017.
Total fixed manufacturing overhead.......................................................90,000
Fixed selling and administrative expenses........... .. . .. . .. . . . . .. . . . . . 20,000
Sale price per case..................................................................................32
Direct materials per case .......................................................................15
Direct labor per case ........................................................................6
Variable manufacturing overhead per case ..........................................3
a. Compute the cost per case under both absorption costing and variable costing.
b. Reconcile any differences in income. Explain.
c. Compute te net income under both absorption costing and variable costing.
Answers
Answer:
a. Cost per case under Absorption costing:
= Direct materials per case + Direct labor per case + Variable manufacturing overhead per case + Fixed manufacturing overhead per case
= 15 + 6 + 3 + 90,000/ 30,000 cases
= $27
Cost per case under Variable costing:
= Direct materials per case + Direct labor per case + Variable manufacturing overhead per case
= 15 + 6 + 3
= $24
b. First we need to calculate income under both methods:
Under Absorption costing:
= Sales - Cost of goods sold - Selling and Admin expenses
= (30,000 cases * 32) - (30,000 * 27) - 20,000
= $130,000
Under Variable Costing:
= Sales - Cost of Goods sold - Fixed manufacturing overhead - Selling and Admin expenses
= (30,000 * 32) - (30,000 * 24) - 90,000 - 20,000
= $130,000
There is no difference in income because the cases manufactured equals the cases sold.
Imagine that two goods are available to you: servants (X) and robots (Y). You like servants three times as much as robots. If your domestic help budget is $4,000 per month, the price (wage) of servants is $1500 per person per month, and the price (rent) of robots is $400 per unit per month, what is the value of the MktRS (market rate of substitution)
Answers
Answer: 3
Explanation:
The marginal rate of substitution simply means the rate at which one good will be exchanged for another good based on the current market price.
Since you like servants three times as much as robots, this implies that the utility that one gets from one servant is exactly like the utility that will be gotten from three robots.
Therefore, the utility function will be:
U = 3X + Y
Then, the marginal rate of substitution will be:
= MUX/MUY
= 3
The Iberia Tire Company has 3,000 tires in its inventory which are considered obsolete. Each tire originally cost the company $35 and the normal selling price was $45 per tire. Management is considering two options to reduce these inventory levels. Option one is to sell the tires directly to car dealerships for $30 per tire as opposed to the normal selling price of $45 per tire. The other option is to offer their current customers a $10 per tire rebate on their purchase. In addition to the $10 rebate, the program would cost the company approximately $24,000 to manage. They predict that either option will rid them completely of their excess The decision to sell directly to the car dealerships over offering the rebate will result in:_______
A. A $21,000 increase in profits.
B. A $9,000 increase in profits.
C. A $15,000 decrease in profits.
D. A $24,000 decrease in profits.
Answers
Answer:
B. A $9,000 increase in profits
Explanation:
Calculation to determine what The decision to sell directly to the car dealerships over offering the rebate will result in:
First step is to calculate the net selling prices for each group
Car dealership total price of sales = 3000 × 30 Car dealership total price of sales =$90,000
Current customers;
First step is to calculate the price of 1 tire
Price of 1 tire = $45 - $10 rebate
Price of 1 tire = $35
Total selling price = 35 × 3000
Total selling price= $105,000
Second step is to calculate net amount gotten from sales to customers
Net income= $105,000 - $24,000
Net income= $81,000
Now let calculate what the decision to sell directly to the car dealerships over offering the rebate will result in:
Decision to sell = 90,000 - 81,000
Decision to sell= $9,000 increase in profits
Therefore the decision to sell directly to the car dealerships over offering the rebate will result in:$9,000 increase in profits
Calculate the annual cash flows of a $2 million, 10-year fixed-payment deferred annuity earning a guaranteed 8 percent per year if annual payments are to begin at the end of the sixth (6th) year.
Answers
Answer:
$437,946.42
Explanation:
Present Value of Deferred Annuity = $2,000,000
Value at the end of Year 5 = $2,000,000*(1.08)^5
Value at the end of Year 5 = $2,938,656.15
Calculation of Annual Payment from Annuity using the TVM
Annual payment = PMT [PV, FV, N, I]
Annual payment = PMT [2,938,656.15, 0, 10, 0.08]
Annual payment = $437,946.42
So, the Annual Payment from annuity is $437,946.42.
A trial balance before adjustment included the following:
Debit Credit
Accounts receivable $133,000
Allowance for doubtful accounts $1,080
Sales 471,000
Sales returns and allowances 5,200
Required:
Prepare journal entries assuming that the estimate of uncollectible is determined by taking (1) 4% of gross accounts receivable.
Answers
A company issues the following bonds on June 1, 2002. Series A (counts as two) Series B $50 million BBB June 1, 2030 June 1, 2008 100 Par Value Rating Maturity Call date Call price $50 million BBB June 1, 2030 Non-callable -- If both bonds have the same market liquidity, the yield-to-maturity on the Series A bond should be [ ] than yield-to-maturity on Series B bond. a) higher b) lower c) the same d) either higher or lower(depending notherfactors)
Answers
Answer: a. Higher
Explanation:
Series A is a callable bond which means that the company will be able to buy it back after a certain period of time at a price dictated in the contract.
This provision is an advantage to the Issuer but not the investors so the Issuer will have to pay the investors more to get them to buy the bond even with the presence of this provision.
This additional payment will come in the form of a higher yield. This is why callable bonds have higher yields than non-callable comparable bonds.
On March 1, 2020, the Teal Company received a $45,000 payment for annual magazine subscriptions (the subscriptions run from the March, 2020 edition through the February 2021 edition). Upon receipt of the payment, Teal Company credited the amount to sales revenue. Provide any entries necessary to correctly state sales revenue on the 2020 income statement. Show your computation.
Answers
Answer:
The company has incorrectly credited the sales revenue account at the time of the receipt of payment. So, the journal entry to record the transaction is as follows:
Date Particulars Debit Credit
March 1, 20 Sales Revenue A/c $45,000
To Unearned Sales Revenue A/c $45,000
(To record Unearned sales revenue)
Which situation best describes an oligopoly?
A. A city government selects one company to provide clean water for
its residents.
B. A large oil company buys all of its competitors and shuts them
down permanently.
C. A group of vendors compete to sell the same drinks to fans at a
baseball game.
D. A few large airlines work together to set high prices and eliminate
new competitors.
Answers
Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling price is $42 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 18,000 units of the product at $32 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co.
Required:
a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order.
b. Briefly explain the reason why accepting this additional business will increase operating income.
c. What is the minimum price per unit that would produce a positive contribution margin?
Answers
Answer:
18000*2
Explanation:
Green Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $43 to buy from farmers and $14 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $19 or processed further for $18 to make the end product industrial fiber that is sold for $51. The beet juice can be sold as is for $34 or processed further for $22 to make the end product refined sugar that is sold for $51.
Required:
What is the financial advantage (disadvantage) for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar?
Answers
Answer:
Financial advantage $5
Explanation:
The computation of the financial advantage (disadvantage) for the company is shown below:
Combined sales value ($51 + $51) $102
Less: further processing ($18 + $22) -$40
Sugar beets cost -$43
Cost to crush -$14
Financial advantage $5
We simply deduct all cost from the revenue so that the financial advantage or disadvantage could come
At the beginning of year 1, Kare Company initiated a quality improvement program. Considerable effort was expended over two years to reduce the number of defective units produced. By the end of the second year, reports from the production manager revealed that scrap and rework had both decreased. The president of the company was pleased to hear of the success but wanted some assessment of the financial impact of the improvements. To make this assessment, the following financial data were collected for the two years. Year 1 Year 2 Sales $ 10,000,000 $ 10,000,000 Scrap 400,000 300,000 Rework 600,000 400,000 Product inspection 100,000 125,000 Product warranty 800,000 600,000 Quality training 40,000 80,000 Materials inspection 60,000 40,000 Required: a. Classify the costs as prevention, appraisal, internal failure, and external failure. b-1. Compute total quality cost as a percentage of sales for each of the two years. b-2. By how much has profit increased because of quality improvements between Year 1 and Year 2
Answers
Answer:
a. The costs can be classified as follows:
Prevention: Quality training
Appraisal: Product inspection and Material inspection
Internal Failure: Scrap and rework
External Failure: Product Warranty
b-1. We have:
Total quality cost as a percentage of sales for Year 1 = 1.60%
Total quality cost as a percentage of sales for Year 2 = 1.65%
b-2. Profit has increased by $295,000 because of quality improvements between Year 1 and Year 2.
Explanation:
a. Classify the costs as prevention, appraisal, internal failure, and external failure.
The costs can be classified as follows:
Prevention: Quality training
Appraisal: Product inspection and Material inspection
Internal Failure: Scrap and rework
External Failure: Product Warranty
b-1. Compute total quality cost as a percentage of sales for each of the two years.
Total quality cost as a percentage of sales = ((Product inspection + Material inspection) / Sales) * 100 ………………. (1)
Using equation (1), we have:
Total quality cost as a percentage of sales for Year 1 = (($100,000 + $60,000) / 10,000,000) * 100 = 1.60%
Total quality cost as a percentage of sales for Year 2 = (($125,000 + $40,000) / 10,000,000) * 100 = 1.65%
b-2. By how much has profit increased because of quality improvements between Year 1 and Year 2?
To calculate the profit associated to quality, only costs associated to quality are deducted from Sales as follows:
Profit associated to quality = Sales - Scrap - Rework - Product inspection - Materials inspection ……… (1)
Using equation (1), we have:
Profit associated to quality for Year 1 = $10,000,000 - $400,000 - $600,000 - $100,000 - $60,000 = $8,840,000
Profit associated to quality for Year 2 = $10,000,000 - $300,000 - $400,000 - $125,000 - $40,000 = $9,135,000
Therefore, we have:
Increase in profit because of quality improvements = Profit associated to quality for Year 2 - Profit associated to quality for Year 1 = $9,135,000 - $8,840,000 = $295,000
Therefore, profit has increased by $295,000 because of quality improvements between Year 1 and Year 2.
Boenisch Corporation produces and sells a single product with the following characteristics: The company is currently selling 8,000 units per month. Fixed expenses are $406,000 per month. Management is considering using a new component that would increase the unit variable cost by $3. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change
Answers
Answer: Increase by $2,000
Explanation:
Current net operating income is:
= Contribution margin - Fixed costs
= (68 * 8,000) - 406,000
= $138,000
If component is added, Variable cost increases by $3 to $105. New contribution margin is:
= 170 - 105
= $65
Units sold increases by 400 to 8,400.
Net operating income becomes:
= (65 * 8,400) - 406,000
= $140,000
Net operating income increased by:
= 140,000 - 138,000
= $2,000
, determining whether an organization has fulfilled a certain objective is most closely associated with which of the following management functions
Answers
Explanation:
Beureacracy functions
In this type of functions there is institutions that governs what each one does and also the laws and orders are followed to maintain a higher productivity