Answer:
Way Cool
1. Using ABC, the overhead cost per unit for each product line:
Model 145 Model 212
Overhead cost per unit $496.19 $245.72
2. The total cost per unit for each product line, if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212:
Model 145 Model 212
Total cost per unit $746.19 $425.72
3. If the market price for Model 145 is $820 and the market price for Model 212 is $480, the profit or loss per unit for each model:
Model 145 Model 212
Profit per unit $73.81 $54.28
Explanation:
a) Data and Calculations:
Process Activity Overhead Cost Driver Quantity
Components Changeover $ 500,000 Number of batches 800
Machining 279,000 Machine hours 6,000
Setups 225,000 Number of setups 120
Total $ 1,004,000
Finishing
Welding $ 180,300 Welding hours 3,000
Inspecting 210,000 Number of inspections 700
Rework 75,000 Rework orders 300
Total $ 465,300
Support
Purchasing $ 135,000 Purchase orders 450
Providing space 32,000 Number of units 5,000
Providing utilities 65,000 Number of units 5,000
Total $ 232,000
Additional production information concerning its two product lines follows:
Model 145 Model 212 Total
Units produced 1,500 3,500 5,000
Welding hours 800 2,200 3,000
Batches 400 400 800
Number of inspections 400 300 700
Machine hours 1,800 4,200 6,000
Setups 60 60 120
Rework orders 160 140 300
Purchase orders 300 150 450
Overhead Rates per Activity Pool:
Components Changeover $ 500,000/800 = $625
Machining 279,000/6,000 = $46.50
Setups 225,000/120 = $1,875
Total $ 1,004,000
Finishing
Welding $ 180,300/3,000 = $60.10
Inspecting 210,000/700 = $300
Rework 75,000/300 = $250
Total $ 465,300
Support
Purchasing $ 135,000/450 = $300
Providing space 32,000/5,000 = $6.40
Providing utilities 65,000/5,000 = $13
Total $ 232,000
Total overheads = $
Model 145 Model 212
Units produced 1,500 3,500
Welding hours $48,080 (800*$60.10) $132,220 (2,200*$60.10)
Batches 250,000 (400*$625) 250,000 (400*$625)
Number of inspections 120,000 (400*$300) 90,000 (300*$300)
Machine hours 83,700 (1,800*$46.50) 195,300 (4,200*$46.50)
Setups 112,500 (60*$1,875) 112,500 (60*$1,875)
Rework orders 40,000 (160*$250) 35,000 (140*$250)
Purchase orders 90,000 (300*$300) 45,000 (150*$300)
Total overhead costs $744,280 $860,020
Units produced 1,500 3,500
Overhead cost per unit $496.19 $245.72
Total production costs:
Model 145 Model 212
Direct costs per unit $250 $180
Total direct costs $375,000 $630,000
Total overhead costs $744,280 $860,020
Total production costs $1,119,280 $1,490,020
Units produced 1,500 3,500
Total cost per unit $746.19 $425.72
Model 145 Model 212
Market price per unit $820.00 $480.00
Total cost per unit 746.19 $425.72
Profit per unit $73.81 $54.28
Energy Manufacturing Inc. provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $320,000 16,000 hours Account billing $200,000 4,000,000 lines Account verification accounts $173,250 70,000 accounts Correspondence letters $24,000 4,000 letters Total costs $717,250 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 4,200 hours 2,700 hours Account billing lines 900,000 lines 750,000 lines Account verification accounts 8,000 accounts 6,000 accounts Correspondence letters 1,400 letters 1,800 letters How much of the account inquiry cost will be assigned to Department A
Answer: $84,000
Explanation:
Cost per hour for Account inquiry = Account inquiry cost / Activity cost - drivers
= 320,000 / 16,000 hours
= $20 per hour
Department A has 4,200 hours of account inquiry. Cost will be:
= 4,200 * 20
= $84,000
Moonbeam Company manufactures toasters. For the first 8 months of 2020, the company reported the following operating results while operating at 75% of plant capacity:
Sales (350,000 units) $4,375,000
Cost of goods sold 2,600,000
Gross profit 1,775,000
Operating expenses 840,000
Net income $ 935,000
Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed. In September, Moonbeam receives a special order for 15,000 toasters at $7.60 each from Luna Company. Acceptance of the order would result in an additional $3,000 of shipping costs but no increase in fixed costs.
Instructions
a. Prepare an incremental analysis for the special order.
b. Should Moonbeam accept the special order?
Answer:
Moonbeam Company
a) Incremental Analysis for the Special Order:
Sales (15,000) at $7.60 $114,000
Variable cost of sales 5.20 78,000
Variable overhead 1.92 28,800
Total variable costs ($106,800)
Contribution $7,200
b) Moonbeam should accept the special order. It makes a contribution of $7,200 to the defraying of the fixed costs.
Explanation:
a) Data and Calculations:
operating results while operating at 75% of plant capacity:
Total Unit
Sales (350,000 units) $4,375,000 $12.50
Cost of goods sold 2,600,000
Variable (70%) $1,820,000 5.20
Fixed (30%) 780,000
Gross profit 1,775,000
Operating expenses 840,000
Variable (80%) $672,000 1.92
Fixed (20%) 168,000
Net income $ 935,000
Incremental Analysis for the Special Order:
Sales (15,000) at $7.60 $114,000
Variable cost of sales 5.20 78,000
Variable overhead 1.92 28,800
Total variable costs ($106,800)
Contribution $7,200
b) Incremental analysis concentrates on the variable elements of costs. The method disregards all fixed costs as they are regarded as sunk or past costs, and therefore, irrelevant to the decision at hand.
Suppose you are deciding whether you should go to college. If you go to college, you will pay $10,000 total in tuition, textbooks, and room and board every year for 4 years, with the first payment being made immediately and then the next three payments 1 year apart. Upon graduating, you expect to get a job earning $50,000 per year for the next 40 years. Assume that your first paycheck arrives exactly 1 year after you start working and you continue getting paid annually thereafter. Also assume that there are no raises in that particular field. If you do not go to college, you can start working immediately. The pay, however, is lower. You would expect to work for 44 years and earn $34,000 per year, with your first paycheck arriving exactly 1 year from now, and you continue getting paid annually thereafter. For the questions below, round all numbers to two decimals. See Hint Part 1 (1 point) Assume the interest rate is 7%. If you were to attend college, the present value of your tuition payments would total $ See Hint (1 point) Part 2 Suppose you go to college and graduate after 4 years. Because you will work for 40 years after you graduate, and because 40 years is a long time, treating the stream of payments as a perpetuity will provide a reasonable approximation of the present value of the payment stream. The present value of your annual earnings of $50,000 as a college graduate is $ See Hint (1 point) Part 3 The net present value of going to college is $ See Hint (1 point) Part 4 If you do not go to college, you will be working even longer than before. Once again, you may treat the stream of income from your job as a consol or perpetuity. The present value of your annual earnings of $34,000 if you don't go to college is ______$
Answer:
Part 1
Present value of tuition payments:
= 10,000 + (10,000 / (1 + 7%)) + (10,000 / 1.07²) + (10,000 + 1.07³)
= $36,243.16
Part 2
This is a deferred perpetuity because you only start getting paid when you start work 4 years later:
Present value of deferred perpetuity:
= Amount / Discount rate ( 1 / (1 + discount rate)^n
= 50,000 / 0.07 * (1 / 1.07)⁴
= $544,925.15
Part 3
Net present value of going to college:
= Present value of salary - cost of college
= 544,925.15 - 36,243.16
= $508,681.99
Part 4
This is not a deferred perpetuity so your present value is:
= Amount/ discount rate
= 34,000 / 0.07
= $485,714.29
Charlotte's Crochet Shoppe has 11,300 shares of common stock outstanding at a price per share of $65 and a rate of return of 11.21 percent. The company also has 340 bonds outstanding, with a par value of $1,000 per bond. The pretax cost of debt is 5.93 percent and the bonds sell for 94.2 percent of par. What is the firm's WACC if the tax rate is 39 percent
Answer:
Please see below
Explanation:
Given that;
Common stock outstanding = 11,300
Price per share = $65
Number of bonds outstanding = 340
Bonds sell for $94.2 percent of par
Par value per bond = $1,000
Market value of common stock = Common stock outstanding × Price per share
= 11,300 × $65
= $734,500
Market value of debt:
Number of bonds outstanding × [Percent of par × Par value]
= 340 × [0.942 × $1,000]
= 340 × $942
= $320,280
Total market value:
= Market value of common stock + Market value of debt
= $734,500 + $320,280
= $1,054,780
WACC:
= [(Market value of debt ÷ Total market value) × Pretax cost of debt × (1 - Tax rate)] + [(Market value of common stock ÷ Total market value) × Rate of return]
= [($320,280 ÷ $1,054,780) × 0.00593 × (1 - 0.39)] + [($734,500 ÷ $1,054,780) × 0.1121]
= [(0.303646258) × 0.0036173 + [0.00780612545]
= 0.0010983796 + 0.00780612545
= 0.008904505
= 0.89%
Ana and Shen need to decide which one of them will need to take time off work to complete the rather urgent task of shearing their llamas. Ana is pretty good with a pair of shears; she can shear the llamas in one hour. Shen is somewhat slow; it takes him six hours to shear the llamas. Ana earns $120 per hour as a business consultant, while Shen earns $15 per hour as a lifeguard.
Keeping in mind that either Ana or Shen must take time off work to shear the llamas, who has the lowest opportunity cost of completing the task?
A. Ana
B. Shen
C. Ana and Shen face identical opportunity costs
Answer:
B
Explanation:
We have to consider the opportunity cost of both parties
Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
If Ana chooses to shear, she would be forgoing an income $120
If Shen chooses to shear for 6 hours, she would be forgoing an income ($15 x 6) = 90
Shen has a lower opportunity cost and should shear
4. What would be the best pricing strategy for a deli opening in a competitive business
district where the lunchtime rush is the bulk of the business? Explain your answer
Answer:
During the times of opening, the business can offer lucrative and attractive discounts and deals such as buy one get one free deals or opening offers or different deals and discounts to gain competitive business advantage.
Explanation:
Applying Closing Procedures Assume you are in the process of closing procedures for Echo Corporation. You have already closed all revenue and expense accounts to the Retained Earnings account. The total debits to Retained Earnings equal $308,800 and total credits to Retained Earnings equal $347,400. The Retained Earnings account had a credit balance of $99,000 at the start of this current year. What is the post-closing ending balance of Retained Earnings at the end of this current year
Answer:
See below
Explanation:
Given the above details, post closing ending balance of retained earnings would be calculated by
= Debit balance in the retained earning + credit in the retained earnings - Credit balance in the retained earnings
= $308,800 + $99,000 - $347,400
= $60,400
24. The Milham Corporation has two divisions—North and South. The divisions have the following revenues and expenses: North South Sales $540,000 $880,000 Variable costs $250,000 $550,000 Contribution Margin $290,000 $330,000 Traceable fixed costs $250,000 $80,000 Allocated common corporate costs $100,000 $50,000 Net operating income (loss) ($60,000) $200,000 Management at Milham is considering the elimination of the North Division. If the North Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected. Given these data, the elimination of the North Division would result in an increase or decrease to net operating income of:
Answer:
The elimination of the North division would result in an increase to net operating income of $100,000 for the South division.
Explanation:
Please see computation of the company's overall net profit
= South sales - South variable costs - South traceable fixed costs - South allocated common corporate cost - North allocated common corporate cost
= $880,000 - $550,000 - $80,000 - $50,000 - $100,000
= $100,000 profit.
N.B
Since the North division has been eliminated, all the items for North division would all be ignored except its allocated common corporate cost.
Market Inc. has two divisions, Talbot and Heather. Following is the income statement for the past month: Talbot Heather Total Sales$280,000 $168,000 $448,000 Variable Costs 168,000 67,000 235,000 Contribution Margin 112,000 101,000 213,000 Fixed Costs (allocated) 112,500 67,500 180,000 Profit Margin$(500) $33,500 $33,000 What would Market's profit margin be if the Talbot division was dropped and all fixed costs are unavoidable
Answer:
$(79,000)
Explanation:
Calculation to determine What would Market's profit margin be if the Talbot division was dropped and all fixed costs are unavoidable
Using this formula
Market's profit margin =Contribution margin - Fixed costs
Let plug in the formula
Market's profit margin=$101,000-$180,000
Market's profit margin=$(79,000)
Therefore What would Market's profit margin be if the Talbot division was dropped and all fixed costs are unavoidable is $(79,000)
Consider a mutual fund with $219 million in assets at the start of the year and with 12 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of $6 million. The stocks included in the fund's portfolio increase in price by 7%, but no securities are sold, and there are no capital gains distributions. The fund charges 12b-1 fees of 0.50%, which are deducted from portfolio assets at year-end. a. What is the net asset value at the start and end of the year
Answer:
Missing word "What is the Rate of return"
a. Asset at the end of the year = (Asset at the start of the year + Increase in value) * 12b-1 charges
Asset at the end of the year = ($219 million+ ($219 million * 7%)) * (1-0.50%)
Asset at the end of the year = ($219 million + $15.33 million) * 0.9950
Asset at the end of the year = $234.33 million * 0.9950
Asset at the end of the year = $233.16 million
Net asset value at the end of the year = Asset at the end of the year / Number of shares
Net asset value at the end of the year = $233.15835 million / 12 million
Net asset value at the end of the year = $19.430
b. Rate of return = (Net asset value at the end of the year + dividend per share - Net asset value at the start of the year) / Net asset value at the start of the year
Rate of return = ($19.430 + ($6 / 12) - $18.250) / $18.250
Rate of return = ($19.430 + $0.50 - $18.250) / $18.250
Rate of return = $1.68 / $18.250
Rate of return = 9.20%
Question 10 of 10
Which of the following is a true statement based upon the principle of the
time value of money?
A. The value of money does not increase or decrease as time
passes.
B. Money loses value over time if not used.
C. It is always best to receive money at a later point in time rather
than an earlier point in time.
O D. Money increases in value as time passes so long as it is not
invested.
Answer:
B. Money loses value over time if not used.
Explanation:
Money loses value over time and the reason why is inflation.
Inflation is the general increase in the price of the goods and services within an economy. Inflation causes money to lose value over time if not used because it reduces the purchasing power of money. This is why money should be used if it is not to be spent, mainly as a form of investment with the goal of earning an interest rate that is higher than inflation, or at least, equal to inflation.
Answer:
B. Money loses value over time if not used.
Explanation:
Money loses value over time and the reason why is inflation. Inflation is the general increase in the price of the goods and services within an economy. Inflation causes money to lose value over time if not used because it reduces the purchasing power of money. This is why money should be used if it is not to be spent, mainly as a form of investment with the goal of earning an interest rate that is higher than inflation, or at least, equal to inflation.
On January 1, 2021, Red Flash Photography had the following balances: Cash, $25,000; Supplies, $9,300; Land, $73,000; Deferred Revenue, $6,300; Common Stock $63,000; and Retained Earnings, $38,000. During 2021, the company had the following transactions:
1. February 15 Issue additional shares of common stock, $33,000.
2. May 20 Provide services to customers for cash, $48,000, and on account, $43,000.
3. August 31 Pay salaries to employees for work in 2021, $36,000.
4. October 1 Purchase rental space for one year, $25,000.
5. November 17 Purchase supplies on account, $35,000.
6. December 30 Pay dividends, $3,300.
The following information is available on December 31, 2021:
a. Employees are owed an additional $5,300 in salaries.
b. Three months of the rental space has expired.
c. Supplies of $6,300 remain on hand.
d. All of the services associated with the beginning deferred revenue have been performed.
Required:
a. Record each of the transactions listed above.
b. Record the adjusting entries.
c. Prepare an income statement for the year ended December 31, 2022, in the 'Income Statement'
d. Prepare the statement of Stockholder's Equity For the year ended December 21, 2021.
Answer:
Red Flash Photography
a. Journal Entries:
1. Feb. 15:
Debit Cash $33,000
Credit Common Stock $33,000
2. May 20:
Debit Cash $48,000
Debit Accounts Receivable $43,000
Credit Service Revenue $91,000
3. Aug. 31:
Debit Salaries Expense $36,000
Credit Cash $36,000
4. Oct. 1:
Debit Prepaid Rent $25,000
Credit Cash $25,000
5. Nov. 17:
Debit Supplies $35,000
Credit Account Payable $35,000
6. Dec. 30:
Debit Dividends $3,300
Credit Cash $3,300
b. Adjusting Journal Entries:
a. Debit Salaries Expense $5,300
Credit Salaries Payable $5,300
b. Debit Rent Expense $6,250
Credit Prepaid Rent $6,250
c. Debit Supplies Expense $38,000
Credit Supplies $38,000
d. Debit Deferred Revenue $6,300
Credit Service Revenue $6,300
c. Income Statement for the year ended December 31, 2022:
Service Revenue $97,300
Salaries Expense 41,300
Rent Expense 6,250
Supplies Expense 38,000
Dividends 3,300 $88,850
Net Income $8,450
d. Statement of Stockholders' Equity
For the year ended December 31, 2022:
Common Stock $96,000
Beginning retained earnings 38,000
Net Income 8,450
Dividends (3,300)
Ending Equity $139,150
Explanation:
a) Data and Calculations:
Trial balance
Account Titles Debit Credit
Cash $25,000
Supplies $9,300
Land $73,000
Deferred Revenue $6,300
Common Stock $63,000
Retained Earnings $38,000
Totals $107,300 $107,300
Analysis of Transactions:
1. Feb. 15: Cash $33,000 Common Stock $33,000
2. May 20: Cash $48,000 Accounts Receivable $43,000 Service Revenue $91,000
3. Aus. 31: Salaries Expense $36,000 Cash $36,000
4. Oct. 1: Prepaid Rent $25,000 Cash $25,000
5. Nov. 17: Supplies $35,000 Account Payable $35,000
6. Dec. 30: Dividends $3,300 Cash $3,300
Adjustments:
a. Salaries Expense $5,300 Salaries Payable $5,300
b. Rent Expense $6,250 Prepaid Rent $6,250
c. Supplies Expense $38,000 Supplies $38,000 ($9,300+35,000-6,300)
d. Deferred Revenue $6,300 Service Revenue $6,300
T-accounts:
Cash
Account Titles Debit Credit
Beginning balance $25,000
Common stock 33,000
Service Revenue 48,000
Salaries $36,000
Prepaid Rent 25,000
Dividends 3,300
Ending balance 41,700
Prepaid Rent
Account Titles Debit Credit
Cash $25,000
Rent Expense $6,250
Ending balance 18,750
Accounts Receivable
Account Titles Debit Credit
Service Revenue $43,000
Supplies
Account Titles Debit Credit
Beginning balance $9,300
Accounts payable 35,000
Supplies Expense $38,000
Ending balance $6,300
Land
Account Titles Debit Credit
Beginning balance $73,000
Deferred Revenue
Account Titles Debit Credit
Beginning balance $6,300
Service Revenue $6,300
Accounts Payable
Account Titles Debit Credit
Supplies $35,000
Salaries Payable
Account Titles Debit Credit
Salaries expense $5,300
Common Stock
Account Titles Debit Credit
Beginning balance $63,000
Cash 33,000
Ending balance $96,000
Retained Earnings
Account Titles Debit Credit
Beginning balance $38,000
Service Revenue
Account Titles Debit Credit
Cash $48,000
Accounts Receivable 43,000
Deferred Revenue 6,300
Income Summary $97,300
Salaries Expense
Account Titles Debit Credit
Cash $36,000
Salaries Payable 5,300
Income Summary $41,300
Rent Expense
Account Titles Debit Credit
Prepaid Rent $6,250
Income Summary $6,250
Supplies Expense
Account Titles Debit Credit
Supplies $38,000
Income Summary $38,000
Dividends
Account Titles Debit Credit
Cash $3,300
Retained earnings $3,300
Adjusted Trial Balance
Account Titles Debit Credit
Cash $41,700
Prepaid Rent 18,750
Accounts receivable 43,000
Supplies 6,300
Land 73,000
Accounts payable $35,000
Salaries payable 5,300
Common Stock 96,000
Retained earnings 38,000
Service Revenue 97,300
Salaries Expense 41,300
Rent Expense 6,250
Supplies Expense 38,000
Dividends 3,300
Totals $271,600 $271,600
Which is the most important factor on which motor carriers compete?
Answer:
The correct response is "railroad". A further explanation is given below.
Explanation:
The other passenger transport market is railways, is because rail services are easier and have already been commonly used instead of motor carriers as well as providers.Railways don't always occupy all geographic locations of the nation, but in certain areas of the country, they were a theme or a trend.A large food chain owns a number of pharmacies that operate in a variety of settings. Some are situated in small towns and are open for only 8 hours a day, 5 days per week. Others are located in shopping malls and are open for longer hours. The analysts on the corporate staff would like to develop a model to show how a storeâs revenues depend on the number of hours that it is open. They have collected the following information from a sample of stores.
Hours of Operation Average Revenue ($)
40 5958
44 6662
48 6004
48 6011
60 7250
70 8632
72 6964
90 11097
100 9107
168 11498
Required:
a. Use a linear function to represent the relationship between revenue and operating hours and find the values of the parameters using the LSGRG solver that provide the best fit to the given data. What revenue does your model predict for 120 hours?
b. Suggest a two-parameter nonlinear model for the same relationship and find the parameters using the LSGRG solver that provide the best fit. What revenue does your model predict for 120 hours? Which if the models in (a) and (b) do you prefer and why?
Answer:
A.)
ŷ = 47.07049X + 4435.08375 ;
10084
B.)
y = - 9964.5212 + 4251.34435In(x) ;
10389
C.)
Logarithmic model
Explanation:
Given :
Hours of Operation (X) :
40
44
48
48
60
70
72
90
100
168
Average Revenue Y) :
5958
6662
6004
6011
7250
8632
6964
11097
9107
11498
The best fit Given by a linear model for the data is:
ŷ = 47.07049X + 4435.08375
Average Revenue for 120 hours, X
ŷ = 47.07049(120) + 4435.08375
ŷ = 10083.54255 = 10084
A non-linear model which could be used is a logarithmic model:
General form of a Logarithmic model : y=A+Bln(x)
Equation of best fit :
y = - 9964.5212 + 4251.34435In(x)
Average Revenue for 120 hours, X
y = - 9964.5212 + 4251.34435In(120)
y = - 9964.5212 + 20353.275
y = 10388.754 = 10389
Using the correlation Coefficient value :
Linear mode = 0.8731
Logarithmic model = 0.9084
The logarithmic model is preferred as it has a greater correlation Coefficient value Than the linear model.
ims Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 5,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 68,500 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 33,000 units in the ending work in process inventory of the Assembly Department that were 60% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month
Answer:
60,300
Explanation:
Calculation to determine the equivalent units for conversion costs in the Assembly Department for the month
Conversion
Units transferred to the next department 40,500
(5,000 + 68,500 - 33,000 )
Add Ending work in process 19,800
Conversion: (33,000 units × 60%)
Equivalent units of production 60,300
(40,500+19,800)
Therefore the equivalent units for conversion costs in the Assembly Department for the month is 60,300
On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $2,400,000 at 6% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021:
$8,000,000, 11% bonds
$2,000,000, 6% long-term note
Construction expenditures incurred during 2021 were as follows:
January 1 $980,000
March 31 1,580,000
June 30 1,256,000
September 30 980,000
December 31 780,000
Required:
Calculate the amount of interest capitalized for 2021 using the specific interest method.
Answer:
$207,800
Explanation:
Date Expenditure Weight Average
January 1 $980,000 12/12 $980,000
March 31 $1,580,000 9/12 $1,185,000
June 30 $1,256,000 6/12 $628,000
Sept. 30 $980,000 3/12 $245,000
Dec. 31 $780,000 0/12 $0
Total $3,038,000
Calculation of average interest rate for general debt
Amount Rate Interest
Bonds $8,000,000 11% $880,000
Long term rate $2,000,000 6% $120,000
Total $10,000,000 $1,000,000
Average interest rate = $1,000,000 / $10,000,000
Average interest rate = 10%
Calculation of interest capitalized
Note: General debt = $3,038,000 - $2,400,000 = $638,000
Average Interest rate Capitalized interest
Specific debt $2,400,000 6% $144,000
General debt $638,000 10% $63,800
Total $207,800
Stewart Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plant-wide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. From the following information, using a single plant-wide rate, determine the overhead rate per unit for Product A:
Overhead Direct Labor Product
Hours (dlh) A B
Painting Dept. $248,000 10,000 dlh 16 dlh 4 dlh
Finishing Dept. 72,000 10,000 4 16
Totals $320,000 20,000 dlh 20 dlh 20 dlh
======== ========== ====== ======
a. $496.00 per unit
b. $320.00 per unit
c. $144.00 per unit
d. $640.00 per unit
Answer:
Allocated MOH= $320
Explanation:
Giving the following information:
Overhead Direct Labor Product
Hours (dlh) A B
Painting Dept. $248,000 10,000 dlh 16 dlh 4 dlh
Finishing Dept. 72,000 10,000 4 16
Totals $320,000 20,000 dlh 20 dlh 20 dlh
First, we need to calculate the plantwide overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 320,000 / 20,000
Predetermined manufacturing overhead rate= $16 per direct labor hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 16*20
Allocated MOH= $320
The quota rent is the: A. difference between the demand price and the supply price at the quota limit. B. minimum rent that the owner of a building must receive before he or she is willing to rent out the building. C. opportunity cost of using a quota-controlled service or of buying a good that is subject to an import quota. D. rent received by landlords who own rent-controlled apartments.
Answer:
A. difference between the demand price and the supply price at the quota limit.
Explanation:
In Economics, there are primarily two (2) factors which affect the availability and the price at which goods and services are sold or provided, these are demand and supply.
The law of demand states that, the higher the demand for goods and services, the higher the price it would be sold all things being equal. On the other hand, law of supply states that the higher the price of goods and services, the lower the supply.
A quota rent can be defined as the economic rent that is typically being received by the owner of the imported goods subjected to quota.
The quota rent is the difference between the demand price and the supply price at the quota limit.
Indigo Company sold 10,000 Super-Spreaders on during 2017, at a total price of $885,200, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $350,500. The assurance warranties extend for a 3-year period and are estimated to cost $65,100. During 2017, warranty related costs amounted to $15,600. Indigo also sold extended warranties (service-type warranties) related to 3,000 spreaders for 2 years beyond the 2-year period for $25,200. Given this information, determine the amounts to report for the following at December 31, 2017: sales revenue, cost of goods sold, warranty expense, unearned warranty revenue, warranty liability, and cash.
Answer:
Indigo Company
Sales Revenue = $885,200
Cost of goods sold = $350,500
Warranty Expense = $65,100
Unearned warranty revenue = $25,200
Warranty liability = $49,500 ($65,100 - $15,600)
Cash = $544,300 ($885,200 + $25,200 - $350,500 - $15,600)
Explanation:
a) Data and Calculations:
Income Statement for the year ended December 31, 2017 (Partial)
Sales Revenue $885,200
Cost of goods sold 350,500
Gross profit $534,700
Warranty Expense 65,100
Net income $469,600
Balance Sheet as of December 31, 2017 (Partial)
Assets:
Cash $544,300
Liabilities:
Retained earnings $469,600
Unearned warranty revenue 25,200
Warranty liability 49,500
Total liabilities $544,300
Assume a market is currently at the equilibrium price and quantity, and a price ceiling is set below equilibrium price. Which of the following statements is true:
Select the correct answer below:
A. The quantity demanded will rise and the quantity supplied will fall, causing a shortage.
B. There is nothing causing the price to fall from the equilibrium level.
C. There is nothing preventing the price from rising to its equilibrium level.
D. The quantity supplied will rise and the quantity demanded will fall, causing a surplus.
Answer:
Option A: The quantity demanded will rise and the quantity supplied will fall, causing a shortage.
Explanation:
Price ceilings helps to hinder a price from rising above a known level. The assumption under it is that if a price ceiling is fixed (set) below the equilibrium price of the goods, this will definitely lead to quantity demanded exceeding quantity supplied. And when this happens, the result will be excess demand or shortages will come about. The use of Price floors hinders a price from going down below a certain level.
Bryant leased equipment that had a retail cash selling price of $750,000 and a useful life of six years with no residual value. The lessor spent $605,000 to manufacture the equipment and used an implicit rate of 8% when calculating annual lease payments of $150,219 beginning January 1, the beginning of the lease. Lease payments will be made January 1 each year of the lease. Incremental costs of consummating the lease transaction incurred by the lessor were $22,500. What is the effect of the lease on the lessor’s earnings during the first year, not including any effect of depreciation no longer required on the asset under lease (ignore taxes)? (Input decreases to income as negative amounts. Round Interest revenue to the nearest whole dollar.)
Answer: $170,482.48
Explanation:
Effect of lease:
= Sales - Cost of goods sold (cost to manufacture) + Interest revenue - Selling expense
Interest revenue = (Selling price - Interest paid) * Interest rate
= (750,000 - 150,219) * 8%
= $47,982.48
Effect of lease = 750,000 - 605,000 + 47,982.48 - 22,500
= $170,482.48
A building with an appraisal value of $136,787 is made available at an offer price of $157,859. The purchaser acquires the property for $34,148 in cash, a 90-day note payable for $27,610, and a mortgage amounting to $58,126. The cost basis recorded in the buyer's accounting records to recognize this purchase is
Answer:
the cost basis recorded to recognize this purchase is $119,884
Explanation:
The computation of the cost basis recorded to recognize this purchase is shown below:
= Acquired property in cash + note payable + mortgage
= $34,148 + $27,610 + $58,126
= $119,884
Hence, the cost basis recorded to recognize this purchase is $119,884
You invest $1,000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a T-bill with a rate of return of 0.04. What percentages of your money must be invested in the risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 0.20
Answer:
50%, 50%
Explanation:
% of money invested in risky asset = Portfolio standard deviation/Standard deviation of risky asset
% of money invested in risky asset = 0.20/0.40
% of money invested in risky asset = 50.00%
% of money invested in risk free asset = 1 - 50.00%
% of money invested in risk free asset = 50.00%
There are currently 499 students enrolled in Webster Elementary School, and the number of students is increasing at the rate of 15 students per year. Currently the annual expense to educate one student is $1,252, and the expense to educate one student is decreasing at the rate of $43 per year. Use the product rule to determine the rate at which the total expense to educate the students at Webster Elementary School is currently changing per year.
Answer: Cost is decreasing at $2,677 per year.
Explanation:
The number of students in the school is increasing by 15 students a year.
The cost of that is:
= 15 * 1,252
= $18,780
The cost is also decreasing at a rate of $43 per student per year. There are currently 499 students. The total decrease is therefore:
= 43 * 499
= $21,457
The change is:
= Increase in cost - Decrease in cost
= 18,780 - 21,457
= - $2,677
Cost is decreasing at $2,677 per year.
Which of the following would not be considered an advantage of a sole proprietorship?
A. Decisions can be made quickly without having to consult others.
B. A proprietor is also responsible for his or her own health insurance
C. There are no legal formalities if the business dissolves
D. All of the profits from the business go right to the owner.
Answer: Unit 4: starting a business
C
D
B
D
D
C
B
A
A
D
Explanation:
Suppose there is one firm in a market with linear demand function. The firm has a constant marginal cost of $9. The firm is currently charging $15 per unit, where the elasticity of demand is 3. The new CEO of this firm suspects that the current pricing strategy of this firm might not be profit maximizing. He hires you as an economic consultant to offer advice to this firm. Base on the information given, is the firm currently maximizing profits (choosing a monopoly price and quantity)? If not, should the firm raise its price or lower its price? Explain.
Answer:
We employ the fact that Pprofit Maximizing Price = Marginal cost * (ed/ed + 1)
Price = $9 * (-3 / (-3 + 1))
Price = $9 * (-3/-2)
Price = $9 * 1.5
Price = $13.5
As we can see that the profit maximizing price is 13.5. Whereas, the current price of $15 which is not profit maximizing. So the firm should reduce the price to 13.5 per unit so as to be maximizing profit.
Which customer behavior should alert an employee to the possibility of shoplifting?
asking a lot of questions
aimless wandering
carrying a cell phone
shopping alone
Answer:
Aimless wandering
Explanation:
Answer:
cybercrime
both employees and outsiders
Aimless wandering
A security guard
Many security breaches ........
intellectual property theft
stealing ideas, information, or creative products
add a watermark
embezzling
Flood damage in the Brush Creek area averages $7,000 annually. Civil engineers with floodplain expertise have designed a series of small dams to restrain the flow. They will cost $25,000 and will involve annual maintenance charges of $500. What is the anticipated benefit/cost ratio if the interest rate is 6 %, the service life is 10 years, and the salvage value is $5,000
Answer:
1.89
Explanation:
The benefit cost ratio is used to determine the profitability of an investor. It is determined by dividing the present value of benefit by the present value of cost
Benefit cost ratio (BC) = present value of benefits / present value of costs
if BC is greater than 1, the project is profitable
If BC is less than 1, the project is not profitable
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Present value of benefitsCash flow each year from year 1 to 9 = $7,000
Cash flow in year 10 = $7000 + 5000 = $12,000
I = 6%
PV = $54,312.58
Present value of costsCash flow in year 0 = $25,000
Cash flow each year from year 1 to 10 = $500
I = 6%
PV = $28,680.04
Benefit cost ratio = $54,312.58 / $28,680.04 = 1.89
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
During 2020 the Pharoah Company had a net income of $85100. In addition, selected accounts showed the following changes: Accounts Receivable $2700 increase Accounts Payable 900 increase Buildings 3900 decrease Depreciation Expense 1400 increase Bonds Payable 7900 increase What was the amount of cash provided by operating activities
Answer:
Cash provided by operating activities $84,700
Explanation:
The computation of the amount of cash provided by operating activities is shown below:
Net income $85,100
Add: depreciation expense $1,400
Less: increase in account receivable -$2,700
Add: Increase in account payable $900
Cash provided by operating activities $84,700
How is the economy measured using the circular flow model in the resource market?
A. National Income Accounting
B. Consumer Price Index
C. Gross Domestic Product
D. Revenue and Taxes