Answer:
b. $(16,170)
Explanation:
The net present value of the investment is present value of net cash flows discounted at the company's desired rate of return of 10% minus the initial investment outlay of $490,000 as shown thus:
NPV=($180,000*0.909)+($120,000*0.826)+($100,000*0.751)+($90,000*0.683)+($120,000*0.621)-$490,000
NPV= $473,830-$490,000
NPV= $(16,170)
It is obvious that the correct option in this case is B
Bryant Company sells a wide range of inventories, which are initially purchased on account. Occasionally, a short-term note payable is used to obtain cash for current use. The following transactions were selected from those occurring during the year.
a. On January 10, purchased merchandise on credit for $30,000. The company uses a perpetual inventory system.
b. On March 1, borrowed $64,000 cash from City Bank and signed a promissory note with a face amount of $64,000, due at the end of six months, accruing interest at an annual rate of 8.50 percent, payable at maturity.
Required:
For each of the transactions, indicate the accounts, amounts, and effects on the accounting equation.
Answer:
Finance charge = $2,720
Transaction a: This increases assets by $30,000 and also the liabilities by $30,000.
Transaction b: This increases assets by $64,000, increases liabilities by $66,720, but reduces Stockholder's Equity by $2,720.
Explanation:
Note: See the attached excel file for the accounting equation.
In the attached excel file, the finance charge of $2,720 is calculated as follows:
Finance charge = Amount borrowed * Interest rate * (Number of months the promissory will due / Number of months in a year) = $64,000 * 8.50% * (6 / 12) = $2,720
The effect of each transaction on the accounting equation are discussed below:
Transaction a: This increases assets by $30,000 and also the liabilities by $30,000.
Transaction b: This increases assets by $64,000, increases liabilities by $66,720, but reduces Stockholder's Equity by $2,720.
Simon Company's year-end balance sheets follow.
At December 2017 2016 2015
Assets
Cash $25,396 $29,685 $30,922
Accounts receivable, net 89,900 63,000 57,000
Merchandise inventory 100,500 84,000 60,000
Prepaid expenses 8,178 7,792 3,436
Plant assets, net 200,810 190,337 164,142
Total assets $434,784 $374,814 $315,500
Liabilities and Equity
Accounts payable $107,179 $62,710 $41,230
Long-term notes payable secured by mortgages on plant assets
80,922 85,345 69,028
Common stock, $10 par value 162,500 162,500 162,500
Retained earnings 84,183 64,259 42,742
Total liabilities and equity $434,784 $374,814 $315,500
The company's income statements for the years ended December 31, 2017 and 2016, follow. Assume that all sales are on credit:
For Year Ended December 31 2017 2016
Sales $565,219 $446,029
Cost of goods sold $344,784 $289,919
Other operating expenses 175,218 112,845
Interest expense 9,609 10,259
Income taxes 7,348 6,690
Total costs and expenses 536,959 419,713
Net income $28,260 $26,316
Earnings per share $1.74 $1.62
Compute days' sales uncollected.
Answer:
2017 Days' Sales Uncollected 49.37 days
2016 Days' Sales Uncollected 49.10 days
Explanation:
Computation for days' sales uncollected
Using this formula
Days' Sales Uncollected=Average receivables / Credit sales x 365 days
Let plug in the formula
2017 Days' Sales Uncollected= $76,450 / $565,219 x 365
2017 Days' Sales Uncollected= 49.37 days
[($89,900+$63,000)/2=$76,450]
2016 Days' Sales Uncollected= $60,000 / $446,029 x 365 days
2016 Days' Sales Uncollected= 49.10 days
[($63,000+$57,000)/2=$60,000]
Therefore 2017 Days' Sales Uncollected will be 49.37 days and 2016 Days' Sales Uncollected will be 49.10 days
Simon Company's year-end balance sheets follow. At December 2017 2016 2015 Assets. To compute the days' sales uncollected, we need to calculate the average accounts receivable and divide it by the average daily sales.
Average Accounts Receivable:
2017:
(Beginning Accounts Receivable + Ending Accounts Receivable) / 2
= ($63,000 + $89,900) / 2
= $76,450
2016:
(Beginning Accounts Receivable + Ending Accounts Receivable) / 2
= ($57,000 + $63,000) / 2
= $60,000
Average Daily Sales:
2017: Net Sales / 365
= $565,219 / 365
= $1,547.15
2016: Net Sales / 365
= $446,029 / 365
= $1,221.53
Days Sales Uncollected:
2017: Average Accounts Receivable / Average Daily Sales
= $76,450 / $1,547.15
= 49.48 days
2016: Average Accounts Receivable / Average Daily Sales
= $60,000 / $1,221.53
= 49.12 days
Therefore, the days sales uncollected for Simon Company are approximately 49.48 days in 2017 and 49.12 days in 2016.
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The management of National Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2022, the accounting records show these data.
Inventory, January 1 (10,000 units) $35,000
Cost of 120,000 units purchased 468,500
Selling price of 98,000 units sold 750,000
Operating expenses 124,000
Units purchased consisted of 35,000 units at $3.70 on May 10; 60,000 units at $3.90 on August 15; and 25,000 units at $4.20 on November 20. Income taxes are 28%.
Required:
Prepare comparative condensed income statements for 2022 under FIFO and LIFO.
Answer:
National Inc.
Comparative condensed income statements for 2022
FIFO LIFO
Sales $750,000 750,000
Less Cost of Sales ($371,200) ($394,500)
Gross Profit $378,800 $355,500
Less Expenses
Operating expenses ($124,000) ($124,000)
Operating Profit $254,800 $231,500
Income tax expense ($71,344) ($64,820)
Net Income (Loss) $183,456 $166,680
Explanation:
FIFO
Assumes that the units to arrive first will be sold first. Therefore, the Cost of Goods Sold will be based on the earlier (old) prices.
Cost of Sales = 10,000 x $3.50 + 35,000 x $3.70 + 53,000 x $3.90 = $371,200
LIFO
Assumes that the units to arrive last will be sold first, Hence the Cost of Goods Sold will be based on the later (new) prices.
Cost of Sales = 25,000 x $4.20 + 60,000 x $3.90 + 15,000 x $3.70 = $394,500
You are looking at a one-year loan of $13,000. The interest rate is quoted as 9.6 percent plus three points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay three points to the lender up front and repay the loan later with 9.6 percent interest.
Required:
What rate would you actually be paying here?
Answer: 10.3%
Explanation:
The borrower is to pay 3 points on the loan to get it which means that the effective total they are getting is:
= 13,000 * ( 1 - 3%)
= $12,610
The borrower will also have to pay an interest of 7% so the total to pay back is:
= 13,000 * ( 1 + 7%)
= $13,910
Interest actually paid:
= Amount to paid back / Amount to be received - 1
= (13,910 / 12,610) - 1
= 10.3%
Alan does not want to lend his car to his co-worker, Linda, because he believes that all women are irresponsible drivers. Which of the following barriers to accepting diversity does this scenario illustrate?
a.Backlash
bPrejudice
c.Harassment
d.Pluralism
If the par value of 15-year bond is $5,000 with coupon rate $5% but the market rate/discount rate is 5.5%, the value of the bond is more or less than $5,000? Why?
Answer: Less than $5,000
Explanation:
The Bond described above is a discount bond. Discount bonds are bonds that sell below their par value because the market rate for the bond is higher than the coupon rate.
This happens when investors believe a bond to be riskier than the company says and so attach a higher return to it than its coupon rate. As a result, the price of the bond will be less than the par value because the higher market rate will discount the bond cashflows more than the coupon rate would.
Brian's Performance Pizza is a small restaurant in New York City that sells gluten-free pizzas. Brian's very tiny kitchen has barely enough room for the three ovens in which his workers bake the pizzas. Brian signed a lease obligating him to pay the rent for the three ovens for the next year. Because of this, and because Brian's kitchen cannot fit more than three ovens, Brian cannot change the number of ovens he uses in his production of pizzas in the short run.
However, Brian's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Brian lets them know how many workers he needs for each day of the week. In the short run, these workers are_______ inputs and the ovens are_______ inputs.
Answer:
Variable and Fixed
Explanation:
Variable inputs are those which can be changed/altered in the short-run. The demand for these inputs can be changed with a change in production.
However, fixed inputs are those inputs which cannot be changed/altered in the short-run. The demand for these inputs remains unchanged in the short-run. It can only be changed in the long-run.
Since Brain has signed a lease obligation for the next three years, it cannot change the number of ovens in the short-run. This number of oven's is a fixed input at least for three years.
While, Brain can easily change the number of workers he wants to hire. Therefore, number of workers is a variable input in the short-run.
Thus, we can conclude that in the short run, these workers are variable inputs and the ovens are fixed inputs.
A person who files bankruptcy ends up paying a 6% higher fixed interest rate on a 30-year home loan than a person
who has not filed bankruptcy. The person who files bankruptcy pays a 12% interest rate on their home loan. If the loan
amount is $150,000, how much more in total interest do they pay than the person who has not filed bankruptcy?
A. $258,375.30
B. $643.59
C. $149,536.52
D. $231,693.52
Answer:
D 231,692.52
Explanation:
got it right on edge21
Based on the interest rates given to the person who has filed for bankruptcy and the person who hasn't, the additional amount in total interest that the person with bankruptcy will pay is D. $231,693.52.
What would the person who declared bankruptcy pay?The amount that they pay can be found as:
Loan amount = Amount x ( 1 - ( 1 + rate) ^ -number of periods) / rate
Rate is: Number of periods:
= 12% / 12 = 30 x 12
= 1% per month = 360 months
The amount paid monthly is:
150,000 = Amount x ( 1 - (1 + 1%) ⁻³⁶⁰) / 1%
150,000 = Amount x 97.218331079
Amount = 150,000 / 97.218331079
= $1,542.92
What would the person who has never declared bankruptcy pay?They pay a 6% less than the person who has declared bankruptcy so they will pay:
= 12% - 6%
= 6%
Rate is therefore:
= 6% / 12
= 0.5%
Amount paid monthly is:
150,000 = Amount x ( 1 - (1 + 0.5%) ⁻³⁶⁰) / 0.5%
150,000 = Amount x 166.7916143923
Amount = 150,000 / 166.7916143923
= $899.33
What is the difference in interest?= (Amount paid by person with previous bankruptcy - Person with no history of bankruptcy) x 360 months
= (1,542.92 - 899.33) x 360
= $231,693.52
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Sunland Company is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $24 and Sunland would sell it for $62. The cost to assemble the product is estimated at $26 per unit and the company believes the market would support a price of $87 on the assembled unit. What decision should Sunland make
Answer: Sell before assembly, the company will be better off by $1 per unit.
Explanation:
To solve the above question, we need to calculate the incremental profit or loss first. This will be:
= After assembling sales value - Unassembled unit sales value - Coat if further processing
= $87 - $62 - $26
= -$1
Since there is an incremental loss of $1, then the correct answer is "Sell before assembly, the company will be better off by $1 per unit".
Assume that your father is now 40 years old, that he plans to retire in 20 years, and that he expects to live for 25 years after he retires, that is, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $75,000 has today. (He realizes that the real value of his retirement income will decline year-by-year after he retires.) His retirement income will begin the day he retires, 20 years from today, and he will then receive 24 additional annual payments. Inflation is expected to be 4% per year from today forward; he currently has $200,000 saved; and he expects to earn a return on his savings of 7% per year, annual compounding. To the nearest dollar, how much must he save during each of the next 20 years (with deposits being made at the end of each year) to meet his retirement goal
Answer:
Explanation:
People deserve a break, Just give them time.
The Rosa model of Mohave Corp. is currently manufactured as a very plain umbrella with no decoration. The company is considering changing this product to a much more decorative model by adding a silk-screened design and embellishments. A summary of the expected costs and revenues for Mohave's two options follows:
Rosa Umbrella Decorated Umbrella
Estimated demand 22,000 units 22,000 units
Estimated sales price $24.00 $34.00
Estimated manufacturing cost per unit
Direct materials $14.50 $16.50
Direct labor 3.50 6.00
Variable manufacturing overhead 2.50 4.50
Fixed manufacturing overhead 5.00 5.00
Unit manufacturing cost $25.50 $32.00
Additional development cost $10,000
Required:
1. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations.
2. Should Mohave add decorations to the Rosa umbrella?
3-a. Suppose that the higher price of the decorated umbrella is expected to reduce estimated demand for this product to 20,000 units. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations.
3-b. Should Mohave add decorations to the Rosa umbrella?
Answer:
Mohave Corp.
1. The increase in profit if Mohave sells the Rosa Umbrella with the additional decorations is:
= $67,000.
2. Mohave should add the decorations to the Rosa Umbrella. It makes some profits unlike when the Umbrella is without decorations.
3a. The increase in profit if Mohave sells the Rosa Umbrella with the additional decorations is:
= $63,000.
3b. Mohave should still add the decorations to the Rosa Umbrella. It makes some profits unlike when the Umbrella is without decorations.
Explanation:
a) Data and Calculations:
Rosa Umbrella Decorated Umbrella
Estimated demand 22,000 units 22,000 units
Estimated sales price $24.00 $34.00
Estimated manufacturing cost per unit
Direct materials $14.50 $16.50
Direct labor 3.50 6.00
Variable manufacturing overhead 2.50 4.50
Fixed manufacturing overhead 5.00 5.00
Unit manufacturing cost $25.50 $32.00
Additional development cost $10,000
Total revenue $528,000 $748,000
Total manufacturing cost 561,000 704,000
Additional development costs 10,000
Operating profit ($33,000) $34,000
Increase in profit = $67,000 = ($33,000) - $34,000
Decreased Demand to 20,000:
Total revenue $528,000 $680,000
Total manufacturing cost 561,000 640,000
Additional development costs 10,000
Operating profit ($33,000) $30,000
Increase in profit = $63,000 = ($33,000) - $30,000
Colbert operates a catering service on the accrual method. In November of year 1, Colbert received a payment of $9,000 for 18 months of catering services to be rendered from December 1st of year 1 through May 31st of year 3. When must Colbert recognize the income if his accounting methods are selected to minimize income recognition?
a. $500 is recognized in year 1, $6,000 in year 2, and $2,500 in year 3.
b. $500 is recognized in year 1 and $8,500 in year 2.
c. $9,000 is recognized in year 3.
d. $2,500 is recognized in year 1 and $6,500 in year 2.
e. $9,000 is recognized in year 1.
Answer:
b) $500 is recognized in year 1 and $8,500 in year 2.
Explanation:
Calculation to determine When must Colbert recognize the income if his accounting methods are selected to minimize income recognition?
Calculation for amount recognized in year 1
Payment in year 1= $9,000 ÷ 18 months
Payment in year 1= $500
Therefore Based on the above calculation the amount recognized in year 1 will be $500
Calculation for the amount recognized in year 2
Payment in year 2 = $9,000 - $500
Payment in year 2= $8,500
Therefore The amount recognized in year 2 will be $8,500
Can someone please help me
Answer:
A. $1,178.705
B. $1,753.05
C. $1,474.305
Explanation:
a. Calculation to determine the monthly mortgage payment of $159,500, 25-year loan at 7.5 percent.
Using this formula
Installment=Loan amount/1,000*(Table value 7.5% for 25 years)
Let plug in the formula
Installment=$159,500/$1,000*7.39
Installment=$1,178.705
Therefore the monthly mortgage payment of $159,500, 25-year loan at 7.5 percent will be $1,178.705
b. Calculation to determine the monthly mortgage payment of $217,500, 20-year loan at 7.5 percent.
Using this formula
Installment=Loan amount/1,000*(Table value 7.5% for 20 years)
Let plug in the formula
Installment=$217,500/$1,000*8.06
Installment=$1,753.05
Therefore the monthly mortgage payment of $217,500, 20-year loan at 7.5 percent will be $1,753.05
c. Calculation to determine the monthly mortgage payment of $199,500, 25-year loan at 7.5 percent.
Using this formula
Installment=Loan amount/1,000*(Table value 7.5% for 25 years)
Let plug in the formula
Installment=$199,500/$1,000*7.39
Installment=$1,474.305
Therefore the monthly mortgage payment of $199,500, 25-year loan at 7.5 percent will be $1,474.305
How can you control inventory costs through proper planning and balancing inventory levels?
In order to control inventory costs, you need to consider the inventory A)_____ which may include the cost of renting a storage facility. You should also check the turnover rate, which is the pace at which you
B)_____ your inventory.
A. Ordering cost, storage cost, cost of capital
B. Store, order, replace
Answer:
i think its storage cost and replace
Explanation:
update i was right got 5/5
Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $380,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year (all purchases and services were acquired on account):
a. Raw materials purchased for use in production, $275,000.
b. Raw materials requisitioned for use in production (all direct materials), $260,000.
c. Utility bills were incurred, $74,000 (95% related to factory operations, and the remainder related to selling and administrative activities).
d. Salary and wage costs were incurred:
Direct labor (1,100 hours) $305,000
Indirect labor $105,000
Selling and administrative salaries $185,000
e. Maintenance costs were incurred in the factory, $69,000.
f. Advertising costs were incurred, $151,000.
g. Depreciation was recorded for the year, $87,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment).
h. Rental cost incurred on buildings, $112,000 (85% related to factory operations, and the remainder related to selling and administrative facilities).
i. Manufacturing overhead cost was applied to jobs.
j. Cost of goods manufactured for the year, $920,000.
k. Sales for the year (all on account) totaled $1,950,000. These goods cost $950,000 according to their job cost sheets.
The balances in the inventory accounts at the beginning of the year were:
Raw materials $45,000
Work in process $36,000
Finished Goods $75,000
Required:
a. Prepare journal entries to record the above data.
b. Post your entries to T-accounts.
c. Prepare a schedule of cost of goods manufactured.
d. Prepare an income statement for the year.
Answer:
Froya Fabrikker A/S of Bergen, Norway
a. Journal Entries
a. Debit Raw materials $275,000
Credit Accounts payable $275,000
To record purchase of raw materials on account.
b. Debit WIP $260,000
Credit Raw materials $260,000
To record materials requisitioned for production.
c. Debit Manufacturing overhead $70,300
Debit Selling and admin. $3,700
Credit Utilities expense $74,000
To close utilities expenses.
d. Debit WIP $305,000
Debit Manufacturing overhead $105,000
Debit Selling and Admin. $185,000
Credit Payroll Expense $595,000
To close payroll expenses.
e. Debit Manufacturing overhead $69,000
Credit Maintenance expense $69,000
To close maintenance expense.
f. Debit Selling and admin. $151,000
Credit Advertising expense $151,000
To close advertising expense.
g. Debit Manufacturing overhead $69,600
Debit Selling and admin. $17,400
Credit Depreciation expense $87,000
To close depreciation expense.
h. Debit Manufacturing overhead $95,200
Debit Selling and admin $16,800
Credit Rent expense $112,000
To close rent expense.
i. Debit WIP $418,000
Credit Manufacturing overhead applied $418,000
To record manufacturing overhead applied to production at $380 for 1,100 direct labor-hours.
j. Debit Finished goods $920,000
Credit WIP $920,000
To transfer completed goods to finished goods inventory.
k. Debit Accounts receivable $1,950,000
Credit Sales revenue $1,950,000
To record sale of goods on account.
Debit Cost of goods sold $950,000
Credit Finished goods $950,000
To record the cost of goods sold.
b. T-accounts
Raw materials
Account Titles Debit Credit
Beginning balance $45,000
Accounts payable 275,000
Work in Process $260,000
Work in process
Account Titles Debit Credit
Beginning balance $36,000
Raw materials 260,000
Payroll expense 305,000
Manufacturing
overhead applied 418,000
Finished goods inventory $920,000
Finished Goods
Account Titles Debit Credit
Beginning balance $75,000
Work in Process 920,000
Cost of goods sold $950,000
Cost of goods sold
Account Titles Debit Credit
Finished goods $950,000
Accounts Payable
Account Titles Debit Credit
Raw materials $275,000
Manufacturing overhead
Account Titles Debit Credit
Utilities expense $70,300
Payroll expense 105,000
Maintenance exp 69,000
Depreciation exp. 69,600
Rent expense 95,200
Work in Process $418,000
Overhead applied 8,900
Sales Revenue
Account Titles Debit Credit
Accounts receivable $1,950,000
Accounts Receivable
Account Titles Debit Credit
Sales revenue $1950,000
Selling and admin.
Utilities expense $3,700
Payroll expense 185,000
Advertising exp. 151,000
Depreciation exp. 17,400
Rent expense 16,800
Utilities Expense
Manufacturing overhead $70,300
Selling and admin. 3,700
Payroll Expense
Work in Process $305,000
Manufacturing overhead 105,000
Selling and admin. 185,000
Maintenance expense
Manufacturing overhead $69,000
Advertising expense
Selling and admin. $151,000
Depreciation expense
Manufacturing overhead $69,600
Selling and admin. 17,400
Rent expense
Manufacturing overhead $95,200
Selling and admin. 16,800
c. Schedule of Cost of Goods Manufactured:
Beginning WIP $36,000
Raw materials 260,000
Payroll expense 305,000
Manufacturing
overhead applied 418,000
Ending WIP (99,000)
Finished goods $920,000
d. Income Statement for the year ended December 31
Sales Revenue $1,950,000
Cost of goods sold 950,000
Gross profit $1,000,000
Selling and Administrative expenses:
Utilities expense $3,700
Payroll expense 185,000
Advertising exp. 151,000
Depreciation exp. 17,400
Rent expense 16,800 $373,900
Net income $626,100
Explanation:
a) Data and Calculations:
Estimated manufacturing overhead = $380,000
Estimated direct labor-hours = 1,000
Actual direct labor-hours = 1,100
Predetermined overhead rate = $380 ($380,000/1,000)
Analysis of Transactions:
a. Raw materials $275,000 Accounts payable $275,000
b. WIP $260,000 Raw materials $260,000
c. Manufacturing overhead (Utility) $70,300 Selling and admin. $3,700 Utilities expense $74,000
d. WIP (direct labor) $305,000 Manufacturing overhead (indirect labor) $105,000 Selling and Admin. $185,000 Payroll Expense $595,000
e. Manufacturing overhead (maintenance) $69,000 Maintenance expense $69,000
f. Selling and admin. $151,000 Advertising expense $151,000
g. Manufacturing overhead $69,600 Selling and admin. $17,400 Depreciation expense $87,000
h. Manufacturing overhead $95,200 Selling and admin $16,800 Rent $112,000
i. WIP $418,000 Manufacturing overhead applied $418,000 ($380 * 1,100)
j. Finished goods $920,000 WIP $920,000
k. Accounts receivable $1,950,000 Sales revenue $1,950,000
Cost of goods sold $950,000 Finished goods $950,000
Beginning balances:
Raw materials $45,000
Work in process $36,000
Finished Goods $75,000
Expalin two advantages of Marginal Costing.
Answer:
. Facilitates cost control – By separating the fixed and variable costs, marginal costing provides an excellent means of controlling costs. 3. Avoids arbitrary apportionment of overheads – Marginal costing avoids the complexities of allocation and apportionment of fixed overheads which is really arbitrary.
Toyota manufactures in Japan most of the vehicles it sells in the United Kingdom. The base platform for the Toyota Tundra truck line is ¥1,650,000. The spot rate of the Japanese yen against the British pound has recently moved from ¥197/£ to ¥190/£. How does this change the price of the Tundra to Toyota's British subsidiary in British pounds?
Answer and Explanation:
The computation of the change in price is shown below:
Original import price
= 1,650,000 ÷ 197
= 8375.63
The new import price is
= 1,650,000 ÷ 190
= 8,684.21
Now the percentage change in price is
= (8,684.21 - 8375.63) ÷ 8375.63
= 3.68%
This would be equal to the percentage change in the Japanese yen as the price of the truck remains unchanged
Company A is a manufacturer with sales of $3,400,000 and a 60% contribution margin. Its fixed costs equal $1,600,000. Company B is a consulting firm with service revenues of $3,500,000 and a 25% contribution margin. Its fixed costs equal $410,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales.
Answer:
DOL of Company A= 4.63
DOL of Company B=1.88
Company A benefits more from a 20% increase in sales
Explanation:
The degree of operating leverage measures the volatility in the operating profit of a business as result of the proportion of fixed cost to its total costs.
The operating Leverage = Contribution margin/Operating income
Contribution = Contribution % × sales value
Operating income = Contribution - Fixed cost
Company A
Contribution margin= 60%× 3,400,000 = 2,040,000
Operating income = 60%× 3,400,000 - 1,600,000= 440,000
DOL =2,040,000 /440,000 = 4.634
DOL of Company A= 4.63
Company B
Contribution margin= 25%× 3,500,000=875000
Operating income = 875,000 - 410,000 =465000
DOL = 875,000 /465,000 × 100 =1.88
DOL=1.88
If both companies experience an increase of 20%, the corresponding increase in profit would be:
Company A= 4.63× 20= 92.6%
Company B = 1.88 × 20 = 37.6%
Company A benefits more
DOL of Company A= 4.63
DOL of Company B=1.88
Company A benefits more from a 20% increase in sales
When international companies choose a place for production facilities, ___________, ___________, and ___________ factors are all important considerations on the strategic decision of where production should occur. country-specific, technological, product local government, environmental, product federal government, environmental, logical
The factors that international companies consider in choosing a place for locating their production facilities are country-specific, technological, and product factors.
An international company is located in more than one country. It may have production facilities in more than one country with its headquarters at the home country.
Such an international company usually considers some factors to determine where production facilities should be located. Some of the factors relate to the specific countries under consideration.
Another factor considered is the maturity of technological advancement in the countries that it is considering. This shows the importance of technology in aiding production, improving efficiency, and increasing the company's profitability.
The company should also review the level of product demand in the local market, the availability of raw materials, and the level of skilled manpower for production activities.
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The Crane Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to do so, Crane has decided to locate a new factory in the Panama City area. Crane will either buy or lease a site depending upon which is more advantageous. The site location committee has narrowed down the available sites to the following three very similar buildings that will meet their needs.
Building A: Purchase for a cash price of $617,800, useful life 26 years.
Building B: Lease for 26 years with annual lease payments of $71,870 being made at the beginning of the year.
Building C: Purchase for $650,400 cash. This building is larger than needed; however, the excess space can be sublet for 26 years at a net annual rental of $6,980. Rental payments will be received at the end of each year. The Crane Inc. has no aversion to being a landlord.
Required:
In which building would you recommend that The Nash Inc. locate, assuming a 12% cost of funds?
Answer:
building b
Explanation:
Nash would buy the cheapest building
The present value of building 2 and 3 has to be determined
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Building b
cash flow each year from year 1 to 26 = $-71,870
I = 12%
PV = . 567461.08
Building c
Cash flow in year 0 = $-650,400
cash flow each year from year 1 to 26 = $6,980
I = 12%
Pv = 595288.29
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
building b is the cheapest
The Paralympic committee’s marketing team developed a mass-communication TV spot to raise awareness of the Paralympic brand. This type of TV spot is an example of ________.
A- Advertising
B- Guerilla marketing
C- Digital Marketing
Ahmed Company purchases all merchandise on credit. It recently budgeted the following month-end accounts payable balances and merchandise inventory balances. Cash payments on accounts payable during each month are expected to be: May, $1,600,000; June, $1,490,000; July, $1,425,000; and August, $1,495,000.
Accounts Payable Merchandise Inventory
May 31 $150,000 $250,000
June 30 200,000 400,000
July 31 235,000 300,000
August 31 195,000 330,000
Use the available information to compute the budgeted amounts of (1) Merchandise purchases for June, July, and August (2) Cost of goods sold for June, July, and August.
Answer:
Explanation:
The merchandise purchase can be determined by using the formula:
Purchase = Cash payments + Ending Accounts Payable - Beginning Accounts Payable
For June:
Purchase = $(1490000 + 200000 - 150000)
Purchase = $(1690000 - 150000)
Purchase = $1540000
For July:
Purchases: $(1425000+235000 - 200000)
Purchases = $(1660000 - 200000)
Purchases = $1460000
For August:
Purchases: $(1495000 + 195000 - 235000)
Purchases: $(1690000 - 2235000)
Purchases: $1455000
The cost of goods sold = Beginning Inventory + Purchase - Ending inventory
For June:
Cost of goods sold= $(250000 + 1540000 - 400000)
Cost of goods sold= $(1790000 - 400000)
Cost of goods sold = $1390000
For July:
Cost of goods sold = $(400000 + 1460000 - 300000)
Cost of goods sold = $(1860000 - 300000)
Cost of goods sold = $1560000
For August:
Cost of good sold = $(300000+ 1455000 - 330000)
Cost of good sold = $(1755000 - 330000)
Cost ofgood sold = $1425000
Selected financial data regarding current assets and current liabilities for Queen's Line, a competitor in the cruise line industry, is provided: ($ in millions) Current assets: Cash and cash equivalents $ 410 Current investments 65 Net receivables 204 Inventory 136 Other current assets 145 Total current assets $ 960 Current liabilities: Accounts payable $ 1,032 Short-term debt 744 Other current liabilities 869 Total current liabilities $ 2,645 Required: 1. Calculate the current ratio and the acid-test ratio for Queen's Line. (Enter your answers in millions, not in dollars. For example, $5,500,000 should be entered as 5.5.)
Answer and Explanation:
The calculation of the current ratio and the acid ratio is shown below;
The current ratio is
= Current assets ÷ current liabilities
= $960 ÷ $2,645
= 0.3629 times
The quick ratio is
= Quick assets ÷ current liabilities
Here quick assets is
= Current assets - inventory - other current assets
= $960 - $136 - $145
= $679
So, the quick rato or acid test ratio is
= $679 ÷ $2,645
= 0.2567 times
The E.N.D. partnership has the following capital balances as of the end of the current year: Pineda $ 180,000 Adams 160,000 Fergie 150,000 Gomez 140,000 Total capital $ 630,000 Answer each of the following independent questions: Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $183,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners
Answer:
Goodwill Calculation
Amount paid to Fergie $183,000
Less: Fergie Capital $150,000
Goodwill $33,000
Fergie's share is 20% in Goodwill. Total Goodwill = $33,000 / 20% = $165,000
Calculation of Capital Balance After Fergie's retirement
Pineda Adams Fergie Gomez Total
Opening Balance $180,000 $160,000 $150,000 $140,000 $630,000
Add: Goodwill $49,500 $49,500 $33,000 $33,000 $165,000
(Distributed - 3:3:2:2)
Less: Amount Paid - - ($183,000) - ($183,000)
Balance $229,500 $209,500 - $173,000 $612,000
should you be concerned about data security? in a recent survey _______ americans reported that they do not trust businesses with their personal information online.
a) less than 30%
b) more than 75%
c) approximately 60%
e) approximately 45%
In a recent survey more than 75% Americans reported that they do not trust businesses with their personal information online. People should you be concerned about data security.
What is data security?Data security refers to the process of protecting data from unauthorized access and corruption throughout its lifecycle. For all apps and platforms, data encryption, hashing, tokenization, and key management are all data security solutions.
Thus, option B, more than 75% is correct.
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#SPJ2
hich of the following constitutes a proposal of actions required by an
hieve its objectives?
A. Financial resources
B. Leading
C. Organising
D. Planning
Answer:
not sure but i think the answer is c)
Explanation:
Answer:
B
Explanation:
Lower property taxes
Braxton Enterprises currently has debt outstanding of million and an interest rate of . Braxton plans to reduce its debt by repaying million in principal at the end of each year for the next five years. If Braxton's marginal corporate tax rate is , what is the interest tax shield from Braxton's debt in each of the next five years?
Answer:
Interest tax shield in year 0 = $1.155 million
Interest tax shield in year 1 = $0.924 million
Interest tax shield in year 2 = $0.693 million
Interest tax shield in year 3 = $0.462 million
Interest tax shield in year 4 = $0.231 million
Interest tax shield in year 5 = 0
Explanation:
Here is the complete question :
Braxton Enterprises currently has debt outstanding of $55 million and an interest rate of 6%. Braxton plans to reduce its debt by repaying $11 million in principal at the end of each year for the next five years. If Braxton's marginal corporate tax rate is 35%, what is the interest tax shield from Braxton's debt in each of the next five years?
interest tax shield is a reduction in tax paid as a result of interest paid on debt
interest tax shield = (debt amount x interest rate x tax rate)
Interest tax shield in year 0 = $55 million x 0.06 x 0.35 = $1.155 million
Debt in year 1 = $55 million - 11million = $44 million
Interest tax shield in year 1 = $44 million x 0.06 x 0.35 = $0.924 million
Debt in year 2 = $44 million - 11million = $33 million
Interest tax shield in year 2 = $33 million x 0.06 x 0.35 = $0.693 million
Debt in year 3 = $33 million - 11million = $22 million
Interest tax shield in year 3 = $22 million x 0.06 x 0.35 = $0.462 million
Debt in year 4 = $22 million - $11 million = $11 million
Interest tax shield in year 4 = $11 million x 0.06 x 0.35 = $0.231 million
Debt in year 5 = $11 million - $11 million = 0
Interest tax shield in year 5 = 0 x 0.06 x 0.35 = 0
Standard quantity 7.0 liters per unit Standard price $ 1.50 per liter Standard cost $ 10.50 per unit The company budgeted for production of 2,800 units in April, but actual production was 2,900 units. The company used 21,200 liters of direct material to produce this output. The company purchased 19,100 liters of the direct material at $1.60 per liter. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for April is
Answer:
$1,350U
Explanation:
Calculation to determine what The materials quantity variance for April is
Using this formula
Materials quantity variance=(AQ-SQ)*SP
Let plug in the formula
Materials quantity variance=[21,200 liters-(2,900 units*7.0 liters )*$ 1.50
Materials quantity variance{(21,200-20,300)*$1.50
Materials quantity variance=900*$1.50
Materials quantity variance=$1,350 U
Therefore the Materials quantity variance is $1,350 Unfavorable
A business that is less profitable than similar businesses, or with lower sales or higher expenses than similar businesses, may have difficulty competing.
True
False
Answer:
True
Explanation:
Assume initially that the price of X (the quantity of which is measured on the horizontal axis) is $9 and the price of Y (the quantity of which is measured on the vertical axis) is $4. If the price of X now declines to $6, the budget line will Multiple Choice be unaffected. shift outward on the vertical axis. shift inward on the horizontal axis. shift outward on the horizontal axis.
Answer:
The budget line will shift outward on the horizontal axis.
Explanation:
One of the laws of the demand is that the lower the price of a good, the higher the quantity of that good that is purchased.
From the question, a decline in the price of X from $9 to $6, will lead to an increase in the quantity of X that is bought.
Since the price of Y still remains at $4, if the price of X now declines to $6, the budget line will shift outward on the horizontal axis.