Question Completion
A manufacturer of mountain bikes has the following marginal cost function:
C(q)=600/(0.7q+5)
Answer:
a. The total cost = $3,492.40
b. The profit on the first 30 bikes is:
= $2,507.60
Explanation:
a) Data and Calculations:
Fixed cost for producing the bicycles = $2,800
Number of bicycles produced = 30
Selling price per bike = $200
Marginal cost (C(q)) =600/(0.7q+5)
= 600/ (0.7*30 + 5)
= 600/ (21 + 5)
= 600/26
= $23.08
Total cost = Fixed cost + (C(q))
= $2,800 + $23.08 * 30
= $2,800 + $692.40
= $3,492.40
Profit:
Sales revenue $6,000 ($200 * 30)
Less Total cost 3,492.40
Profit = $2,507.60
Refries Refrigerator Company manufactures ice-makers for installation in refrigerators. The costs per unit for 20,000 units of ice-makers, are as follows:
Direct materials. ....... $7
Direct labor.......... $12
Variable overhead ......$5
Fixed overhead............$10
Total costs ...................$34
Cool Compartments Inc. has offered to sell 20,000 ice-makers to Refrigerator Company for $28 per unit. If Refrigerator accepts Cool Compartments' offer, the facilities used to manufacture ice-makers could be used to produce water filtration units. Revenues from the sale of water filtration units are estimated at $80,000, with variable costs amounting to 60% of sales. In addition, $6 per unit of the fixed overhead associated with the manufacture of ice-makers could be eliminated. For Refrigerator Company to determine the most appropriate action to take in this situation, the total relevant costs of make vs. buy, respectively, are:____.
a. $600,000 vs. $560,000.
b. $648,000 vs. $528,000.
c. $600,000 vs. $528,000.
d. $680,000 vs. $440,000.
Answer:
c. $600,000 vs. $528,000.
Explanation:
The computation of the relevant cost of make & buy is given below:
Total relevant cost of making the product is
= (cost per unit - unavoidable fixed cost per unit ) × 20,000 units
= ($34 - $4 ) × 20,000 units
= $600,000.
And, Total relevant cost of buying is
= (cost of buy per unit × 20,000 units ) - Contribution sale of water filtration = ( $28 × 20,000 units ) - ($80,000 - 60% of $80,000)
= $528,000
hence, the option c is correct
Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year:
Sales Operating Income Total Assests Current Liabilities
Snow Sports $57,00,000 1010,500 4,300,000 450,000
Non- Snow Sport 8500000 1332500 6500,000 750,000
Required:
a. Calculate each division's ROI.
b. Top management has extra funds to invest. Which division will most likely receive those funds? Why?
c. Can you explain why one division's ROI is higher? How could management gain more insight?
Answer:
Sports Company
a. Division's ROI:
SnowSports = 23.5%
Non-SnowSport = 20.5%
b. Naturally, management will invest in Division SnowSports. The company earns more returns on its investment in the division.
c. One division's ROI on investment because it earned more returns from the division when compared with its investment. This shows that SnowSports is more efficient than the other division in the use of resources.
Management can gain more insight by computing the Assets Turnover ratio and the operating leverage.
Explanation:
a) Data and Calculations:
Sales Operating Total Assets Current Liabilities
Income
Snow Sports $5,700,000 1,010,500 4,300,000 450,000
Non- SnowSport 8,500,000 1,332,500 6,500,000 750,000
ROI (Return on Investments) = Operating income/Total assets * 100
Snow Sports = $1,010,500/$4,300,000 * 100 = 23.5%
Non-SnowSport = $1,332,500/$6,500,000 * 100 = 20.5%
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 5,100,000 $ 9,100,000 $ 8,200,000 Average operating assets $ 1,020,000 $ 2,275,000 $ 1,640,000 Net operating income $ 214,200 $ 746,200 $ 118,900 Minimum required rate of return 17.00 % 32.80 % 14.00 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 19% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity
Answer:
1. Return on Investment = Net operating income (NOI)/Average operating assets (AOA) * 100
Division A = 21%
Division B = 32.8%
Division C = 7.25%
2. Residual income (loss) = Operating Income - (Operating Assets x Target Rate of Return)
Division A = $40,800
Division B = $0
Division C = ($110,700)
3-a. If performance is being measured by ROI, Divisions A and C will accept the opportunity, while Division B will reject it because the actual rate of return of 19% is less than the minimum required rate of return of 32.8%.
3-b. Divisions A and C will accept the opportunity, while Division B will reject it.
Explanation:
a) Data and Calculations:
Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
Division A Division B Division C
Sales $ 5,100,000 $ 9,100,000 $ 8,200,000
Average operating assets $ 1,020,000 $ 2,275,000 $ 1,640,000
Net operating income $ 214,200 $ 746,200 $ 118,900
Minimum required rate of return 17.00 % 32.80 % 14.00 %
1. Return on Investment = Net operating income (NOI)/Average operating assets (AOA) * 100
= 21% 32.8% 7.25%
Division A = 21% ($214,200/$1,020,000 * 100)
Division B = 32.8% ($746,200/$2,275,000 * 100)
Division C = 7.25% ( $118,900/$1,640,000 * 100)
2. Residual income (loss) = Operating Income - (Operating Assets x Target Rate of Return)
Division A = $40,800 ($214,200 - ($1,020,000 * 17%) )
Division B = $0 ($746,200 - ($2,275,000 * 32.8%))
Division C =($110,700) ( $118,900 - ($1,640,000 * 14%))
Investment opportunity that would yield a 19% rate of return:
Division A Division B Division C
Sales $ 5,100,000 $ 9,100,000 $ 8,200,000
Average operating assets $ 1,020,000 $ 2,275,000 $ 1,640,000
Net operating income (19%) $ 193,800 $ 432,250 $ 311,600
Minimum required rate of return 17.00 % 32.80 % 14.00 %
3-a. If performance is being measured by ROI, Divisions A and C will accept the opportunity, while Division B will reject it because the actual rate of return of 19% is less than the minimum required rate of return of 32.8%.
3-b. Divisions A and C will accept the opportunity, while Division B will reject it.
Residual income (loss) = Operating Income - (Operating Assets x Target Rate of Return)
Division A = $20,400 ($193,800 - ($1,020,000 * 17%))
Division B = ($313,950) ($432,250 - ($2,275,000 * 32.8%))
Division C = $82,600 ($311,600 - ($1,640,000 * 14%))
Factory Overhead Volume Variance Dvorak Company produced 5,100 units of product that required 3.5 standard hours per unit. The standard fixed overhead cost per unit is $2.50 per hour at 18,750 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Answer:
$2,250 Favourable
Explanation:
Calculation to determine the fixed factory overhead volume variance
Fixed factory overhead volume variance=$2.50 × [18,750 hrs. – (5,100 units × 3.5 hrs.)]
Fixed factory overhead volume variance=$2.50×[18,750 hrs. – 17,850 hrs]
Fixed factory overhead volume variance=$2.50×900
Fixed factory overhead volume variance=$2,250 Favourable
Therefore the fixed factory overhead volume variance will be $2,250 Favourable
In order to safeguard the public health, environment, public beaches, water quality, and economy of south San Diego County, California, and Tijuana, Mexico, federal agencies in the United States and Mexico developed four alternatives for treating wastewater prior to discharge into the ocean. The project will minimize untreated wastewater flows that have caused chronic and substantial pollution in the Tijuana River Valley, the Tijuana River National Estuarine Research Reserve, coastal areas used for agriculture and public recreation, and areas designated as critical habitat for federal- and state-listed endangered species. For the costs and benefits estimated, which alternative should be selected on the basis of a B/C analysis at 6% per year and a 40-year project period?
Pond System Expand Plan Advanced Prima Partial Secondary
Capital cost, $5.8 76 2 48
M&O cost, $/year 5.5 5.3 2.1 4.4
Benefits, $/year 11.1 12.0 2.7 8.3
Answer:
Following are the solution to these question:
Explanation:
Follows are the AW calculation to the total cost and add according to the rank of the increasing costs.
[tex]= 58 (0.06646) + 5.5\\= \$ 9.35[/tex]
[tex]AWexpand = 76(\frac{A}{P}, 6\%, 40) + 5.3[/tex]
[tex]= 2 (0.06646) + 2.1\\\\= \$ 2.23\\\\[/tex]
[tex]AWprimary = 2(\frac{A}{P}, 6\%, 40) + 2.1\\\\[/tex]
[tex]= 2 (0.06646) + 2.1\\\\= \$ 2.23\\\\[/tex]
[tex]AW partial = 48(\frac{A}{P}, 6\%, 40) + 4.4\\\\[/tex]
[tex]= 48 (0.06646) + 4.4\\\\= \$ 7.59[/tex]
Calculating the benefits of the directly estimate on the DN of the first alternative and rank as follows: DN, Primary, Partial, Pond, Expand
[tex]Primary \ DN: \frac{\Delta B}{с} = \frac{2.7}{2.23}= 1.21 \ eliminate\ DN\\\\Partial \ Primary: \frac{\Delta B}{с} =\frac{(8.3-2.7)}{(7.59-2.23)}= 1.04 \ eliminate \ Primary\\\\Pond \ Partial: \frac{\Delta B}{с} = \frac{(11.1 - 8.3)}{(9.35-7.59)}= 1.59 \ eliminate \ Partial\\\\Expand \ Pond: \frac{\Delta B}{с} = \frac{(12.0 - 11.1)}{(10.35 - 9.35)}= 0.90\ eliminate\ Expand\\\\[/tex]
select the Pond system
Product A consists of two units of Subassembly B, two units of C, and one unit of D. B is composed of four units of E and two units of F. C is made of two units of H and three units of D. H is made of five units of E and two units of G. To produce 100 units of A, determine the numbers of units of B, C, D, E, F, G, and H required using the low-level coded product structure tree.
Level 0 100 units of A
Level 1 units of B
units of C
Level 2 units of F
units of H
units of D
Level 3 units of E
units of G
Answer:
[tex]B = 200\ units[/tex] [tex]C = 200\ units[/tex]
[tex]F = 400\ units[/tex] [tex]H = 400\ units[/tex]
[tex]D = 700\ units[/tex] [tex]E = 2800\ units[/tex]
[tex]G = 800\ units[/tex]
Explanation:
Given
[tex]A = 100\ units[/tex]
See attachment for right presentation of question
Solving (a): The low level coded product structure tree
This is plotted by considering the hierarchy or level of each product item and their corresponding units.
See attachment (2)
Solving (b): The number of units of each.
To do this, we multiply the units of the given product by the number of unit the fall under.
So, we have:
Products B and C are directly under A, so we multiply their units by units of A.
[tex]B = 2 * A = 2 * 100[/tex]
[tex]B = 200\ units[/tex]
[tex]C = 2 * A = 2 * 100[/tex]
[tex]C = 200\ units[/tex]
Product F is directly under B, so we multiply its units by units of B.
[tex]F = 2 * B = 2 * 200[/tex]
[tex]F = 400\ units[/tex]
Product H is directly under C, so
[tex]H = 2 * C = 2 * 200[/tex]
[tex]H = 400\ units[/tex]
Product D has of 3 units of C and 1 unit of A. So:
[tex]D = 3 * C + 1 * A[/tex]
[tex]D = 3 * 200 + 1 * 100[/tex]
[tex]D = 700\ units[/tex]
Product E has of 4 units of B and 5 units of H. So:
[tex]E = 4 * B + 5 * H[/tex]
[tex]E = 4 *200 + 5 * 400[/tex]
[tex]E = 2800\ units[/tex]
Product G has 2 units of H.
So:
[tex]G = 2 * H = 2 * 400[/tex]
[tex]G = 800\ units[/tex]
Suppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises:
Beantown
Advertise Doesn't Advertise
Expresso Advertise 8, 8 15, 2
Doesn't Advertise 2, 15 9, 9
For example, the upper right cell shows that if Expresso advertises and Beantown doesn't advertise, Expresso will make a profit of $15 million, and Beantown will make a profit of $2 million. Assume this is a simultaneous game and that Expresso and Beantown are both profit-maximizing firms.
If Expresso decides to advertise, it will earn a profit of $ ____________ million if Beantown advertises and a profit of $ _________ million if Beantown does not advertise. If Expresso decides not to advertise, it will earn a profit of $ ____________ million if Beantown advertises and a profit of $_________ million if Beantown does not advertise.
Answer:
$15 Million
$8 Million
Explanation:
Payoff Matrix is as follows: Beantown
Expresso Advertise = Advertise Doesn't Advertise
(8,8) (15,2)
Doesn't Advertise (2,15) (9,9)
If Expresso decides to advertise, it will earn a profit of $2 million if Beantown
advertises, it follows the strategy (Advertise, Advertise)
He earns a profit of $15 million if Beantown does not Advertise, here it follows the strategy (Advertise, Doesn't Advertise).
Jeremy Ortiz is an employee of Insulor Flooring, where his job responsibilities include selling service contracts to customers. Jeremy is single with two withholding allowances. He receives an annual salary of $36,000 and receives a 3 percent commission on all sales. During the semimonthly pay period ending September 29, 20XX, Jeremy sold $20,000 of service contracts.
Required:
Complete the payroll register for the September 29 pay period.
Answer:
Pay recorded for September 29 is $2,100
Explanation:
Jeremy Ortiz is paid based on two sources of income. The first being the annual salary of $36,000 and the second is the commission on all the service contracts sold, which is 3%.
Since the pay period is of semimonthly (15 days), the annual salary would be divided by 24 instead of the regular 12 months. This would mean that salary of $1,500 ($36,000 / 24) would be recorded in the payroll register.
For the commission, the sales done during this semimonthly period was $20,000 of service contracts. The commission at 3% of all sales would be $600 ($20,000 x 3%).
Total pay recorded in the payroll register for the September 29 period would be $2,100 ($1,500 + $600).
A firm is a pure monopoly when: Group of answer choices there are only a few other very large firms selling similar products. it can sell all it can produce at any price it chooses. it is the only seller of a product that has very few close substitutes and entry into the market in the long run is unrestricted. it is the only seller of a unique product and barriers to entry prevent other sellers from entering the market in the long run.
Answer: it is the only seller of a unique product and barriers to entry prevent other sellers from entering the market in the long run.
Explanation:
A pure monopoly is referred to as a single supplier of a particular product in an industry. In such market, there no no substitute exists and such firms usually have a large market share.
They are price makers, profit maximizer, discriminate on prices and have a high barriers to entry. Due to their economies of scale, they prevent other sellers from entering the market in the long run.
ABC Corporation has total assets of 120 million, total liabilities of 80 million, Goodwill of 12 million, and 4 millions of shares outstanding. If you believe the reasonable price to tangible book value should be 1.6 for this company, what is the implied share price of ABC
Answer: $16
Explanation:
Implied share price = Book value per share * Price to tangible book value
Book value per share = (Assets - Liabilities) / Number of shares outstanding
= (120 - 80) / 4
= $10
Implied share price = 10 * 1.6
= $16
Cullumber Company incurred the following costs while manufacturing its product.
Materials used in product $121,000 Advertising expense $46,000
Depreciation on plant 61,000 Property taxes on plant 15,000
Property taxes on store 7,600 Delivery expense 22,000
Labor costs of assembly-line workers 111,000 Sales commissions 36,000
Factory supplies used 24,000 Salaries paid to sales clerks 51,000
Work in process inventory was $13,000 at January 1 and $16,600 at December 31. Finished goods inventory was $61,000 at January 1 and $45,700 at December 31.
Required:
Compute cost of goods manufactured.
Answer:
$328,400
Explanation:
Cost of Goods Manufactured is calculated in Manufacturing Account as follows :
Cost of Goods Manufactured = Beginning Work In Process Inventory + Total Manufacturing Costs - Ending Work In Process Inventory
therefore,
Cost of Goods Manufactured = $13,000 + ($121,000 + $61,000 + $15,000 + $111,000 + $24,000) - $16,600
= $328,400
Last summer, Maria decided to join a bowling league with some colleagues from work. They formed a team and bowled together several times to get to know one another better. The week before the league started, the team had to come up with a name. During a meeting to discuss this, Maria and her teammate Tim got into a heated debate because Maria wanted their name to be The Lucky Strikes, whereas Tim wanted the team name to be The Pin City Pimps. While yelling at each other, it became clear that Maria thought she should be the team manager because she had formed the team. Tim was just as adamant that he should be team manager because he is the more experienced bowler.
1. As Sunita and Hubert argue about the team name, what stage of development is their bowling team in?
a. Storming
b. Norming
c. Performing
d. Forming
2. If a team leader wanted to help a team such as Sunita’s get through the storming stage of team development, he or she should take which of the following actions? Check all that apply.
a. Encourage participation by all team members.
b. Help the team discourage free riding.
c. Disband the team.
d. Watch for blocking, or disruptive, behaviors and help prevent them.
In order to motivate our sales force to increase sales, we decided to increase our commissions and salaries and increase marketing. At the same time, our supplier increased its prices, and we felt we could pass that cost increase on to our customers in the form of price increase. However, with the additional pressure to make sales, coupled with the increased sales price, we had to loosen credit terms on sales. We also had to lease a little more distribution space and acquire another truck to handle the volume increase. Our shipping expense relates to gasoline on deliveries. Luckily, gas prices went down from what we originally expected this year.
In the table below, classify EACH ACCOUNT on the budget according to whether the variances in the performance report are consistent or inconsistent with the client’s story, or unexplained by the client’s story. Place an "X" in the appropriate column. If the Revenue/Spending Variance and Activity Variance differ with respect to one account (i.e., one is consistent and one is inconsistent) then indicate which belongs in which column.
Consistent
Inconsistent
Unexplained
Sales revenue
Cost of Goods Sold
Commission
Shipping Expense
Bad debt expense
Salaries
Lease of distribution center
Depreciation of fleet and equip
Advertising
Office rent, phone, internet
Answer:
Sales Revenue - Inconsistent
Cost of Goods Sold - Inconsistent
Commission - Consistent
Shipping expense - Inconsistent
Bad debt expense - Unexplained
Salaries - Consistent
Lease of distribution center - Consistent
Depreciation of fleet and equipment - Inconsistent
Advertising - Consistent
Office rent, Phone, Internet - Inconsistent
Explanation:
The increase in selling price will result in change in the revenue figure. The cost of distribution is increased due to handling the addition volume. This will result in an increase in shipping expense and cost of goods sold. Salaries and commission of the staff will remain consistent as there will be no change due to increase of selling price.
Lens Junction sells lenses for $44 each and is estimating sales of 16,000 units in January and 17,000 in February. Each lens consists of 2 pounds of silicon costing $2.50 per pound, 3 oz of solution costing $3 per ounce, and 15 minutes of direct labor at a labor rate of $18 per hour. Desired inventory levels are: Jan. 31 Feb. 28 Mar. 31 Beginning inventory Finished goods 4,300 4,800 4,900 Direct materials: silicon 8,300 9,200 9,000 Direct materials: solution 11,000 12,200 12,900
Complete Question:
1. Prepare a sales budget. Lens Junction Sales Budget For the Two Months Ending February 28, 20XX January February Expected Sales (Units) Sales Price per Unit Total Sales Revenue Total
2. Prepare a production budget. Lens Junction Production Budget For the Two Months Ending February 28, 20XX January February Expected Sales Total Required Units Required Production Total
3. Prepare direct materials budget for silicon. Lens Junction For the Two Months Ending Fabrant Materials, Purinat for Silinn February Expected Sales Total Required Units Required Production Total
4.Prepare direct materials budget for silicon.
Answer:
Lens Junction
1. Lens Junction Sales Budget For the Two Months Ending February 28, 20XX
January February
Expected Sales (Units) 16,000 17,000
Sales Price per Unit $44 $44
Total Sales Revenue $704,000 $748,000
2. Lens Junction Production Budget For the Two Months Ending February 28, 20XX
January February
Expected Sales Total 16,000 17,000
Ending Inventory 4,800 4,900
Required Units 20,800 21,900
Beginning Inventory 4,300 4,800
Required Production Total 16,500 17,100
3 & 4. Lens Junction Direct Materials Budget For the Two Months Ending February
January February
Silicon Solution Silicon Solution
Expected Sales 32,000 48,000 34,000 51,000
Ending inventory 9,200 9,000 12,200 12,900
Total Required 41,200 57,000 46,200 63,900
Beginning inventory 8,300 11,000 9,200 12,200
Units Required 32,900 46,000 37,000 51,700
Explanation:
a) Data and Calculations:
Sales price of lenses per unit = $44
Estimated sales of lenses in January and February respectively = 16,000 and 17,000
Direct materials for each lense:
2 pounds of silicon at $2.50 per pound = $5.00
3 oz of solution at $3.00 per ounce = $9.00
Total cost of direct materials per unit = $14
15 minutes direct labor at $18 per hour = $4.50
Desired inventory levels:
Beginning inventory of finished goods:
January 4,300
February 4,800
March 4,900
Beginning inventory of direct materials:
Silicon Solution
January 8,300 11,000
February 9,200 12,200
March 9,000 12,900
Which of the following show negative cash flow?
Answer:
where are the answer choices
The following data are available relating to the performance of Seminole Fund and the market portfolio: Seminole Market Portfolio Average return 18 % 14 % Standard deviations of returns 30 % 22 % Beta 1.4 1.0 Residual standard deviation 4.0 % 0.0 % The risk-free return during the sample period was 6%. If you wanted to evaluate the Seminole Fund using the M2 measure, what percent of the adjusted portfolio would need to be invested in T-Bills
Answer:
0.8%
Explanation:
Calculation to determine what percent of the adjusted portfolio would need to be invested in T-Bills
Using this formula
M2 =(Rp - Rf) * σ m / σ p - (Rm - Rf)
Whrere,
Rp represent Return on Seminole Fund (14%)
Rf represent Risk free rate of return(6%)
Rm represent Return on Market Portfolio(18%),
σ m represent Standard Deviation of return on market portfolio (22%)
σ p represent Standard Deviation of return on fund (30%)
Let plug in the formula
M2= (18 - 6) * 22 / 30 - (14 - 6)
M2= (12 * 0.73 ) - 8
M2= 8.8 - 8
M2= 0.8%
Therefore the percent of the adjusted portfolio that would need to be invested in T-Bills is 0.8%
When the existing spot rate exceeds the exercise price, a call option is ____, and a put option is ____. Group of answer choices out of the money; in the money out of the money; out of the money in the money; in the money in the money; out of the money
Answer:
in the money; out of the money.
Explanation:
Secondary market can be defined as a market where various investors sell and buy securities from other investors.
Some examples of secondary market around the world are New York Stock Exchange (NYSE), NASDAQ, London Stock Exchange (LSE) and National Stock Exchange (NSE).
On the other hand, the primary market refers to the market where these securities that are being sold are issued or created.
In trading and investment, a stock option can be defined as a contract that states that the buyer as the right to buy (call) or sell (put) an asset at a particular price at any time but necessarily obligational. Thus, it is strictly at the discretion of the buyer (investor).
Generally, in a long (buy) position, a buyer hopes that the price of stocks will rise because he or she will typically profit from a rise in price.
However, a short (buy) position, a buyer hopes that the price of stocks will fall because he or she will typically profit from a fall in price.
A spot rate is the cash or exchange rate placed on a contract in the stock exchange market.
When the existing spot rate exceeds the exercise price, a call option is in the money, and a put option is out of the money.
Answer:
a a b c
Explanation:
Shondura Inc. focuses on both local responsiveness and standardization in global business. The company typically begins with a strong emphasis in a single strategy and then works to minimize the downsides associated with that strategy as much as possible as they begin to implement the second strategy. Which of the following is best exemplified in this case?
a. A multidomestic strategy
b. A global strategy
c. An arbitrage strategy
d. A transnational strategy
Answer:
d. A transnational strategy
Explanation:
A transnational strategy refers to a set of plans and actions that are decided by the business to perform them beyond domestic borders. The plans are set to perform the actions across the international borders. By applying this set of strategy, the connection is established among the nations dealing with the same operation.
In the give case, transnational strategy has been applied by Shondura Inc.
In its first year, Barsky Corporation made charitable contributions totaling $30,000. The corporation's taxable income before any charitable contribution deduction was $250,000. In its second year, Barsky made charitable contributions of $15,000 and earned taxable income before the contribution deduction of $300,000. Assume neither year is 2020. Required: Compute Barsky's allowable charitable contribution deduction and its final taxable income for its first year. Compute Barsky's allowable charitable contribution deduction and its final taxable income for its second year
Answer:
Year 1:
total income before charitable contributions = $250,000
limit on charitable contributions = $250,000 x 10% = $25,000
taxable income after charitable contributions = $250,000 - $25,000 = $225,000
charitable contributions carried forward = $30,000 - $25,000 = $5,000
Year 2:
total income before charitable contributions = $300,000
limit on charitable contributions = $300,000 x 10% = $30,000
taxable income after charitable contributions = $300,000 - $15,000 - $5,000 = $280,000
A Quality Analyst wants to construct a sample mean chart for controlling a packaging process. He knows from past experience that whenever this process is under control, package weight is normally distributed with a mean of twenty ounces and a standard deviation of two ounces. Each day last week, he randomly selected four packages and weighed each:
Day Weight (ounces)
Monday 23 22 23 24
Tuesday 23 21 19 21
Wednesday 20 19 20 21
Thursday 18 19 20 19
Friday 18 20 22 20
What are the upper and lower control limits for these data?
a. UCL = 22.644 LCL = 18.556
b. UCL = 22.700 LCL = 18.500
c. UCL = 22.755 LCL = 18.642
d. UCL = 21.814 LCL = 19.300
Answer:
a. UCL = 22.664 LCL = 18.556
Explanation:
The sample mean for the given data is :
( 23 + 20 + 19 + 20 + 21 ) / 5 = 20.6
Upper control limit is :
Sample mean + standard deviation
20.6 + 2 = 22.6
Lower Control Limit is :
Sample mean - Standard Deviation
20.6 - 2 = 18.6
Identify which of the following are primary activities and which are support activities in a value chain. Review Later A Inbound movement of materials Sales and promotion of products/services Management of cash inflows and outflows Movement of final products to customers Acquisition of materials from external source Quality assurance, control systems and work culture Maintenance of products Research and development Primary activities Support activities
Answer:
According to Michael Porter's value chain, Primary Activities are meant to create more value than they cost so that the company makes a profit while the support activities are meant to support the primary activities.
Primary Activities include:
Inbound movement of materials Sales and promotion of products/services Movement of final products to customers Maintenance of productsSupport Activities
Management of cash inflows and outflowsAcquisition of materials from external sourceQuality assurance, control systems and work culture Research and developmentLatasha's Performance Pizza is a small restaurant in San Francisco that sells gluten-free pizzas. Latasha's very tiny kitchen has barely enough room for the two ovens in which her workers bake the pizzas. Latasha signed a lease obligating her to pay the rent for the two ovens for the next year. Because of this, and because Latasha's kitchen cannot fit more than two ovens, Latasha cannot change the number of ovens she uses in her production of pizzas in the short run.
However, Latasha's decision regarding how many workers to use can vary from week to week because her workers tend to be students. Each Monday, Latasha lets them know how many workers she needs for each day Of the week, In the short run, these workers are __________inputs, and the ovens are ___________ Inputs.
Answer: variable; fixed
Explanation:
In the short run, these workers are variable inputs, and the ovens are fixed Inputs.
In the short run, variable inputs in production can be changed to adapt to the changing economic conditions while fixed inputs cannot. In the long run however, all inputs are variable and so can be changed.
As this is the short run and the workers can be changed, they are the variable inputs.
The ovens however, cannot be changed so the ovens are the fixed inputs.
General Motors Corporation reported the following information in its 10-K report:
Inventories at December 31 ($ millions) 2008 2007
Productive material, work in process, and supplies $4,849 $6,267
Finished product, service parts, etc. 9,426 10,095
Total inventories at FIFO 14,275 16,362
Less LIFO allowance (1,233) (1,423)
Total automotive and other inventories, less allowances $13,042 $14,939
The company reports its inventory using the LIFO costing method during 2007 and 2008.
Required:
a. At what dollar amount are inventories reported on its 2008 balance sheet?
b. At what dollar amount would inventories have been reported in 2008 if FIFO inventory costing had been used?
Answer:
General Motors Corporation
a) Inventories are reported on its 2008 balance sheet at $13,042.
b) Inventories would have been reported on its 2008 balance sheet at $14,275 if FIFO inventory costing had been used.
Explanation:
a) Data and Analysis:
Inventories at December 31 ($ millions) 2008 2007
Productive material, work in process, and supplies $4,849 $6,267
Finished product, service parts, etc. 9,426 10,095
Total inventories at FIFO 14,275 16,362
Less LIFO allowance (1,233) (1,423)
Total automotive and other inventories, less allowances $13,042 $14,939
b) LIFO = Last-in, First-out. This inventory method assumes that items that were brought into the store last were the first to be sold. This presupposes that the cost of goods sold will be determined by the most recent items, while the ending inventory will be determined by the latter items.
c) FIFO = First-in, First-out: This is the opposite of LIFO. The inventory method assumes that items that were bought first would be the first to be sold. This method presupposes that the cost of goods sold will be determined by the first items in store, while the ending inventory will be determined by the cost of the most items.
Turnbull Co. is considering a project that requires an initial investment of $1,708,000. The firm will raise the $1,708,000 in capital by issuing $750,000 of debt at a before-tax cost of 11.1%, $78,000 of preferred stock at a cost of 12.2%, and $880,000 of equity at a cost of 14.7%. The firm faces a tax rate of 40%. What will be the WACC for this project
Answer:
11.06%
Explanation:
Calculation to determine What will be the WACC for this project
First step is to calculate the Weight of Debt
Weight of Debt = $750,000 / $1,708,000
Weight of Debt = 0.4391
Second step is to calculate the Weight of Preferred Stock
Weight of Preferred Stock = $78,000 / $1,708,000
Weight of Preferred Stock = 0.0457
Third step is to calculate the Weight of Equity
Weight of Equity = $880,000 / $1,708,000
Weight of Equity = 0.5152
Fourth step is to calculate After Tax Cost of Debt
After Tax Cost of Debt = 11.1% * (1 – 0.40)
After Tax Cost of Debt = 6.66%
Now let calculate WACC using this formula
WACC = (Weight of Debt * After Tax Cost of Debt) + (Weight of Preferred Stock * Cost of Preferred Stock) + (Weight of Equity * Cost of Equity)
Let plug in the formula
WACC = (0.4391 * 0.0666) + (0.0457 * 0.1220) + (0.5152 * 0.1470)
WACC = 0.02924406+0.0055754+0.0757344
WACC =0.1106*100
WACC =11.06%
You are 25 years old and are considering full-time study for an MBA degree. Tuition and other direct costs will be $60,000 per year for two years. In addition, you will have to give up your current job that has a salary of $50,000 per year. Assume tuition is paid and salary received at the end of each year. By how much does your salary have to increase (in real terms) as a result of getting your MBA degree to justify the investment? Assume a real interest rate of 2% per year, ignore taxes, assume that the salaries for both jobs increase at the rate of inflation (i.e. they stay constant in real terms), and that you retire at 65. Note: the $1 for T periods annuity formula is (1/r)*[1-1/(1+r)^T]. g
Answer:
$8,403.73
Explanation:
The job will be started at the age of 27 ( 25 years + 2 years ) and retirement will be at the age of 65.
Hence the employment years are 38 years ( 65- 27 ).
Cost of MBA program = Direct cost + Opportunity cost = $60,000 + $50,000 = $110,000
At the age of 27, the total cost of the program will be
Total Cost of MBA program = Cost of program in first year + Cost of program in last year = $110,000 + ( $110,000 x ( 1 + 2% ) ) = $110,000 + $112,200 = $222,200
Use the following formula to calculate teh required salary
Calculate the annuity factor
Annuity factor = (1/r)*[1-1/(1+r)^T] = (1/2%)*[1-1/(1+2%)^38] = 26.440640602064
Now use the following formula to calculate the required salary
Required salary = Total cost of MBA program / Annuity factor for 38 years at 2% = $222,200 / 26.440640602064 = $8,403.73
Andrew is deciding whether to remain in the home he has lived in for the past ten years, which is located very near his work, or to move into a newer home that is located in the suburbs farther from his job. The old house was purchased for $160,000 and has a market value of $220,000. The new home can be purchased for $285,000. Which of the following is not relevant to Andrew's decision?
a. Driving distance to work
b. Cost of the old house
c. Market value of the old house
d. Cost of the new house
Answer:
The decision that is not relevant to Andrew is:
b. Cost of the old house.
Explanation:
a) The cost of the old house ($160,000) is not relevant to Andrew decision challenges. It is a sunk or past cost. Past costs are not relevant because they do not make a difference in the decision or the alternative to choose. Since Andrew will be impacted by the driving distance to work from his new house, the market value of the old house, and the cost of the new house, these are relevant in Andrew's decision.
Assume the following information for Windsor Corp.
Accounts receivable (beginning balance) $139,000
Allowance for doubtful accounts (beginning balance) 11,450
Net credit sales 940,000
Collections 917,000
Write-offs of accounts receivable 5,600
Collections of accounts previously written off 1,600
Uncollectible accounts are expected to be 9% of the ending balance in accounts receivable.
Required:
Prepare the entries to record sales and collections during the period.
Answer:
To record the Sales
Dr. Account Receivables 940,000
Cr. Sales 940,000
To record the Collection
Dr. Cash 917,000
Cr. Account Receivables 917,000
Explanation:
To record the sales we need to debit the account receivables as the sales are made on credit and credit the sale to record the sale.
To record the Collection from the customers we need to debit the cash account to record the receipt of cash ab credit the account receivables to decrease the value of account receivables by the amount of collection.
Blue Point Company is formulating its marketing expense budget for the month of September. Sales in units for August amounted to 4,000; sales volume in September is expected to increase by 10%. So far for the current year, fixed marketing expense per month amounted to $5,000 of salaries and $1,500 of depreciation. Variable marketing expense amount to $.15 paid in cash in the month of sale. What is the estimated cash payment for marketing expense in the month of September
Answer:
See below
Explanation:
Computation of estimated cash payment expense is seen below
Variable expenses
Sales in unit for August 4,000
Sales in unit September 4,000 × 110% = 4,400
Total variable expense 4,400 × $0.15 = $660
Fixed expense per quarter
Salaries $5,000 × 3 = $15,000
Depreciation $1,500 × 3 = $4,500
Total = $19,500
Budget total = $20,160
Estimated cash payment = $20,160 - $4,500 = $15,660
The following statements provide some analysis of policy regarding the global financial crisis of the late 2000s. Categorize each statement as positive or normative. Statement Positive or Normative?
a. The financial crisis was caused by faulty mathematical models that encouraged excessive risk taking.
b. The lack of effective regulation contributed to a risk-seeking culture in the financial services industry.
c. Central banks should have imposed tighter regulations on banks to prevent the financial crisis.
d. Executives of banks that received financial assistance from the government should not have received bonuses.
Answer:
Positive statement
Positive statement
normative statement
normative statement
Explanation:
Positive Economics is objective and statements are usually based on facts and economic theory. They can be tested.
For example, the statement - the lack of effective regulation contributed to a risk-seeking culture in the financial services industry- can be test empirically
Normative economics is based value judgements, opinions and perspectives. For example, the statement - Central banks should have imposed tighter regulations on banks to prevent the financial crisis- is based on opinion. Everyone would have an opinion on what the Central bank should have done
Evan phoned his representative when he received his most recent statement on his deferred annuity. Evan is 65 and purchased the fixed annuity seven years ago to be a conservative part of his portfolio. Evan has read and heard a lot about how the market is beginning to take off and that variable annuities have considerable growth potential. He wants to get out of the fixed annuity and purchase a variable annuity to earn a higher return. The representative should:
Answer: Review Evan's investor profile factors and other facts to determine a suitable course of action to address his concerns and needs
Explanation:
The options include:
A. Recommend that Evan consider an exchange into a variable life insurance policy because it has growth potential with a death benefit.
B. Recommend that Evan surrender the annuity and invest in bond mutual funds because they work similar and cost less.
C. Review Evan’s investor profile factors and other facts to determine a suitable course of action to address his concerns and needs.
D. Update his investor profile factors and risk tolerance, and discuss with Evan the long term focus of a variable annuity and how it will outperform the fixed annuity within the first couple of years.
Based on the information given in the question, the best thing that the representative should do will be to review Evan's investor profile factors and other facts to determine a suitable course of action to address his concerns and needs.
When Evan's investor profile factors is checked, then the representative can then inform Evans about the appropriate thing to do and if it's appropriate for him to purchase a variable annuity to earn a higher return.
Going ahead by getting out of the fixed annuity and purchasing a variable annuity without reviewing Evan's investor's profile isn't appropriate.