Answer:
8.19%
Explanation:
Calculation to determine the company's WACC
First step is to calculate the CAPM rate of equity
Using this formula
CAPM rate of equity = Risk free rate + market risk premium * beta
Let plug in the formula
CAPM rate of equity=3.75%+(11.7%-3.75%)*0.93
CAPM rate of equity=11.14%
Second step is to calculate the DDM rate of equity
Using this formula
DDM rate of equity= Expected dividend next year/Price today + Growth rate
Let plug in the formula
DDM rate of equity=3/64.8+5.3%
DDM rate of equity=9.93%
Third step is to calculate the Cost of equity using this formula
Cost of equity = Average of CAPM and DDM
Let plug in the formula
Cost of equity=(11.14%+9.93%)/2
Cost of equity= 10.54%
Fourth Step is to calculate the Cost of debt (after tax)
Cost of debt (after tax) using financial calculator to compute YTM
PV -1047.5
FV 1000
PMT 1000*6.5%/2 32.5
N 22*2 44
Compute I 3.05%
YTM =3.05%*2 6.10%
Tax rate = 23%
Hence,
Rate of debt (after tax) = 6.1%*(1-23%)
Rate of debt (after tax) = 4.70%
Fifth step is to calculate the Rate of preferred stock using this formula
Rate of preferred stock = Annual dividend/Current price
Let plug in the formula
Rate of preferred stock=4.65/94.3
Rate of preferred stock=4.93
Sixth step is to calculate the Weight
Market value
Source
equity 240000*64.8= 15552000
debt 1047.5*9300= 9741750
preferred stock 8300*94.3=782690
Total 26076440
equity 15552000/26076440= 59.64%
debt 9741750/26076440=37.36%
preferred stock 782690/ 26076440=3.00%
Now let calculate compute WACC
WACC= weight * cost
equity 59.64%*10.54%=6.28%
debt 37.36%* 4.70% =1.76%
preferred stock3.00%*4.93%=0.15%
WACC = 8.19%
(6.28%+1.76%+0.15%)
Therefore the company's WACC is 8.19%
Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women. To use price discrimination to increase profits, the producers should charge lower prices to _____ because their demand is more _____. men; inelastic than that of women women; inelastic than that of men women; elastic than that of men men; elastic than that of women
Answer:
men; elastic than that of women
Explanation:
Price discrimination is when the same product is sold at different prices to customers in different markets
types of price discrimination
1. first degree price discrimination : here sellers charge each consumer at their willingness to pay in order to eliminate consumer surplus.
2. second degree price discrimination : here firms offer different prices depending on the quantity purchased. e.g. giving discounts for bulk purchases.
3, third degree price discrimination : firms charge different prices to different groups of customers. e.g. having a certain price for senior citizens, students
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Men have an elastic demand for tickets to Broadway shows
Women have an inelastic demand for tickets to Broadway shows
Since men have an elastic demand, if prices are reduced, the demand for tickets would increase and total profits of producers would increase
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $5,400 credit. c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $1,900 debit.
Question Completion:
Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.
Days Past Due
Total 0 1 to 30 31 to 60 61 to 90 Over 90
Accounts
receivable $570,000 $396,000 $90,000 $36,000 $18,000 $30,000
Percent uncollectible 1% 2% 5% 7% 10%
a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method.
Answer:
Daley Company
a. The estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method is:
= $11,820.
b. Adjusting Journal Entry:
Debit Bad debts expense $6,420
Credit Allowance for Doubtful Accounts $6,420
To record bad debts expense and bring Allowance balance to $11,820.
c. Adjusting Journal Entry:
Debit Bad debts expense $13,720
Credit Allowance for Doubtful Accounts $13,720
To record bad debts expense and bring Allowance balance to $11,820.
Explanation:
a) Data and Calculations:
Ageing of Accounts Receivable:
Days Past Due
Total 0 1 to 30 31 to 60 61 to 90 Over 90
Accounts
receivable $570,000 $396,000 $90,000 $36,000 $18,000 $30,000
Percent uncollectible 1% 2% 5% 7% 10%
Allowance $11,820 $3,960 $1,800 $1,800 $1,260 $3,000
Bad Debts Expense:
Allowance for Doubtful Accounts:
b. c.
Unadjusted balance $5,400 credit $1,900 debit
Adjusted balance 11,820 credit 11,820 credit
Bad debts expense $6,420 $13,720
Pina Company has the following two temporary differences between its income tax expense and income taxes payable.
2020 2021 2022
Pretax financial income $864,000 $917,000 $909,000
Excess depreciation expense on tax return (30,400) (38,500) (9,800 )
Excess warranty expense in financial income 19,400 10,100 8,300
Taxable income $853,000 $888,600 $907,500
The income tax rate for all years is 20%.
a. Assuming there were no temporary differences prior to 2017, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019.
b. Indicate how deferred taxes will be reported on the 2019 balance sheet. Martinezâs product warranty is for 12 months.
c. Prepare the income tax expense section of the income statement for 2019, beginning with the line "Pretax financial income."
Answer:
multiply ur answer by 0.2 if you want to solve for the income tax rate
Explanation:
f-1. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2020, Scenic sold equipment (that originally cost $170,000 but had a $84,000 book value on that date) to Placid Lake for $118,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31, 2021, consolidation of these two companies to eliminate the impact of the intra-entity transfer
Answer:
Journal 1
Debit : Other Income $34,000
Credit : Equipment $34,000
Journal 2
Debit : Accumulated depreciation $6,800
Credit : depreciation $6,800
Explanation:
Step 1 : Eliminate the Income resulting from sale and the additional value of equipment sitting in the buyer books
Income = Selling Price - Carrying Amount
where,
Carrying Amount = Cost - Accumulated depreciation
= $84,000
therefore,
Income = $118,000 - $84,000 = $34,000
Journal;
Debit : Other Income $34,000
Credit : Equipment $34,000
Step 2 : Eliminate the unrealized profit as a result of additional asset value
unrealized profit = income ÷ remaining useful life
= $34,000 ÷ 5
= $6,800
Journal;
Debit : Accumulated depreciation $6,800
Credit : depreciation $6,800
You have your choice of two investment accounts. Investment A is a 6-year annuity that features end-of-month $1,980 payments and has an interest rate of 7 percent compounded monthly. Investment B is an annually compounded lump-sum investment with an interest rate of 9 percent, also good for 6 years.
How much money would you need to invest in B today for it to be worth as much as Investment A 6 years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$112,166
Explanation:
the future value of Investment A:
payment = $1,980
n = 6 x 12 = 72
i = 9% / 12 = 0.75%
FVIFA = [(1 + i)ⁿ- 1 ] / i = [(1 + 0.0075)⁷² - 1 ] / 0.0075 = 95.007
future value = $1,980 x 95.007 = $188,114
now we need to determine the PV of investment B:
PV = $188,114 / (1 + 9%)⁶ = $112,166
Answer: $105,264.24
Explanation:
Step 1) Calculate Future Value of Investment A
Rate: .07/12 = .58%
Payment: $1,980
Term: 72 (6 years * 12 months)
Future Value: ?
In excel -> FV(.58,72,-1980,0)
Future Value = $176,538.67
Step 2) Calculate Present Value of Investment B using Investment A Future Value
Rate: .09
Payment: $0
Term: 6
Future Value: $176,538.67 (from step 1)
PV(.09,6,0,-176538.67)
Present Value = $105,264.24
Thats your answer!! ^^^^^
You can also use the formula or calculator, but I've found excel is the easiest/fastest.
Cheers!
The SML helps determine the risk-aversion level among investors. The higher the level of risk aversion, the ____________ the slope of the SML. Which of the following statements best describes the shape of the SML if investors were not at all risk averse?
a. The SML would have a positive slope, but the slope would be flatter than it would be if investors were risk.
b. The SML would be a horizontal line.
c. The SML would have a positive slope, but the slope would be steeper than it would be if investors were risk averse.
d. The SML would have a negative slope.
Answer:
a. The SML would have a positive slope, but the slope would be flatter than it would be if investors were at risk.
Explanation:
The SML would have a positive slope, but the slope would be flatter than it would be if investors were risked The SML would be a horizontal line O The SML would have a positive slope, but the slope would be steeper than it would be if investors were risk-averse O The SML would have a negative slope.
Question 13 of 20
Todd's manager has asked him to write a report on ways to increase safety in
the warehouse. Todd used the Internet to research statistics and
recommendations for improving safety in the workplace. He feels like he
pulled together a really strong document and that his manager will be
pleased. However, when he is called into his manager's office, his manager is
concerned and tells him that he has been unethical in his work. What did
Todd do?
A. He likely used the Internet for research, and violated company
confidentiality rules.
B. He likely did not cite his research, and committed plagiarism.
C. He likely told his co-workers he was writing a report, and violated
co-worker's privacy.
D. He likely completed the report on time, and likely violated
company honesty policy
Answer:
he answer is : He likely did not cite his research, and committed plagiarism. Todd's manager has asked him to write a report on ways to increase safety in the warehouse. Todd used the Internet to research statistics and recommendations for improving safety in the workplace. He feels like he pulled together a really strong document and that his manager will be pleased. However, when he is called into his manager's office, his manager is concerned and tells him that he has been unethical in his work. He likely did not cite his research, and committed plagiarism. It is the practice of taking someone else's work or ideas and passing them off as one's own.
Explanation:
Job Order Cost Accounting Entries for a Service Business Media Connect Inc. provides advertising services for clients across the nation. Media Connect is presently working on four projects, each for a different client. Media Connect accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 40% of media purchases. On April 1, the four advertising projects had the following accumulated costs:
April 1 Balances
First Bank $40,000
Reliable Airlines 18,000
Motel 26 33,000
Blue Mountain Beverages 27,000
During April, Media Connect incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:
Direct Labor Media Purchases
First Bank $115,000 $ 480,000
Reliable Airlines 84,000 320,000
Motel 26 110,000 200,000
Blue Mountain Beverages 125,000 300,000
At the end of April, both the First Bank and Reliable Airlines campaigns were completed. The costs of completed campaigns are added to the cost of services account. Determine each of the following for the month:
a. Direct labor costs.
b. Media purchases.
c. Overhead applied.
d. Cost of completed First Bank and Reliable Airlines campaigns.
Total Costs
First Bank $
Reliable Airlines $
Answer:
A. $434,000
B. $1,300,000
C. $520,000
D. First bank $827,000
Reliable Airlines $550,000
Explanation:
A. Calculation to determine the Direct labor costs.
Direct Labor
First Bank $115,000
Reliable Airlines 84,000
Motel 26 110,000
Blue Mountain Beverages 125,000
Total $434,000
B. Calculation to determine the Media purchases
Media Purchases
First Bank $ 480,000
Reliable Airlines 320,000
Motel 26 200,000
Blue Mountain Beverages 300,000
Total $1,300,000
C. Calculation to determine the Overhead applied
Overhead applied=$1,300,000*40%
Overhead applied=$520,000
D. Calculation to determine the Total cost for First bank and Reliable Airlines
First bank=$40,000+$115,000+$ 480,000+($ 480,000*40%)
First bank=$40,000+$115,000+$ 480,000+$192,000
First bank=$827,000
Reliable Airlines=$18,000+84,000+320,000+(320,000*40%)
Reliable Airlines=$18,000+84,000+320,000+$128,000
Reliable Airlines=$550,000
Therefore Total cost for is First bank $827,000 and Reliable Airlines is $550,000
Following are data for BioBeans and GreenKale, which sell organic produce and are of similar size. BioBeans GreenKale Average total assets $ 215,000 $ 166,500 Net sales 105,000 33,300 Net income 15,050 3,900 Required: 1a. Compute the profit margin for both companies. 1b. Compute the return on total assets for both companies. 2. Based on analysis of these two measures, which company is the preferred investment
Answer:
1a. We have:
BioBeans' profit margin = 14.33%
GreenKale's profit margin = 11.71%
1b. We have:
BioBeans' return on total assets = 7%
GreenKale's return on total assets = 2.34%
2. BioBeans is the preferred investment.
Explanation:
1a. Compute the profit margin for both companies.
Profit margin = Net income / Net sales ........... (1)
Using equation (1), we have:
BioBeans' profit margin = $15,050 / $105,000 = 0.1433, or 14.33%
GreenKale's profit margin = $3,900 / $33,300 = 0.1171, or 11.71%
1b. Compute the return on total assets for both companies.
Return on total assets = Net income / Average total assets ............ (2)
Using equation (1), we have:
BioBeans' return on total assets = $15,050 / $215,000 = 0.07, or 7%
GreenKale's return on total assets = $3,900 / $166,500 = 0.0234, or 2.34%
2. Based on analysis of these two measures, which company is the preferred investment?
Since the profit margin and return on total assets of BioBeans are greater than the profit margin and return on total assets of GreenKale, this indicates that BioBeans is the preferred investment.
The plant manager has asked you to do a cost analysis to determine when currently owned equipment should be replaced. The manager stated that under no circumstances will the existing equipment be retained longer than two more years and that once it is replaced, a contractor will provide the same service from then on at a cost of $97,000 per year. The salvage value of the currently owned equipment is estimated to be $37,000 now, $30,000 in 1 year, and $19,000 two years from now. The operating cost is expected to be $85,000 per year. Using an interest rate of 10% per year, determine when the defending equipment should be retired. Annual Worth of Defender, Year 1
Answer:
Year 1 Annual Worth of Defender -$95,700
Explanation:
Calculation to determine when the defending equipment should be retired
Year 1 Total Annual worth=-$37,000(AP 10%,1)-$85,000+($30,000 (AP 10%,1)
Year 1 Total Annual worth=-$37,000(1.10)-$85,000+$30,000(1.000)
Year 1 Total Annual worth= -$95,700
Therefore Total Annual worth of currently owned equipment for year 1 is -$95,700
Year 2 Total Annual worth=-$37,000(AP 10%,2)-$85,000+($30,000 (AP 10%,2)
Year 2 Total Annual worth=-$37,000(0.57619)-$85,000+$19,000(0.47619)
Year 2 Total Annual worth=-$97,217
Therefore the Total Annual worth of currently owned equipment for year 2 is $-97,271
Therefore Based on the above calculation the
the economic service life of equipment will be year 1 reason been that Year 1 Total annual worth of costs of the amount of -$95,700 is lesser in a situation where the equipment is been retained for 1 year.
The carrying value of bonds at maturity always equals: Multiple Choice the amount of discount or premium. the amount of cash originally received in exchange for the bonds plus any unamortized discount or less any premium. the par value of the bond. the amount of cash originally received in exchange for the bonds. the amount in excess of par value.
Answer: the par value of the bond
Explanation:
The carrying value of bonds at maturity will always be equal to the par value of the bond. The carrying value of a bond is simply refered to as the bond's face value or par value plus the premiums taht are unamortized.
We should note that during the time of maturity of the bond, there'll have been an ammortization of the discounts or premiums, while the bond's par value will be left.
The carrying value of bonds at maturity always equals to the amount of cash originally received in exchange for the bonds plus any unamortized discount or less any premium. Thus, option (b) is correct.
At maturity, bonds' carrying values will always be the same as their par values. The face value or par value of a bond plus any unamortized premiums are simply referred to as the bond's carrying value.
To put it another way, it is the total of a bond's face value, any unamortized premiums, and any unamortized discounts, if any. The par value, interest rate, and remaining maturity period of the bond must all be known before calculating the carrying value using the effective interest rate technique.
Therefore, option (b) is correct.
Learn more about on bonds, here:
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Many employees say that their managers give them clear and sufficient directions, as well as goals for their work.
True
False
Answer:
True
Explanation:
This is a true statement, as the leader is responsible for managing and directing his team, although there are several different leadership styles, the leader will always be an example of conduct and professionalism for his subordinates, the behavior of every manager should therefore reflect the company's values.
The transformational leadership style can be described as an example of a manager who provides clear and sufficient guidance, as well as goals for carrying out the work, as this leader is the one who, through his energetic and positive personality, contributes to the development of employees and team collaboration, making employees feel valued, motivated and consequently more productive.
On January 1, 2018, Alamar Corporation acquired a 39 percent interest in Burks, Inc., for $228,000. On that date, Burks's balance sheet disclosed net assets with both a fair and book value of $327,000. During 2018, Burks reported net income of $79,000 and declared and paid cash dividends of $29,000. Alamar sold inventory costing $26,000 to Burks during 2018 for $42,000. Burks used all of this merchandise in its operations during 2018. Prepare all of Alamar's 2018 journal entries to apply the equity method to this investment.
Answer:
Date Account Title Debit Credit
Jan 1, 2018 Investment in Burks, Inc $228,000
Cash $228,000
Date Account Title Debit Credit
Dec. 31, 2018 Investment in Burks, Inc $30,180
Revenue from investment $30,180
Working:
= Net income of Burks * Ownership percentage
= 79,000 * 39%
= $30,180
Date Account Title Debit Credit
Dec. 31, 2018 Dividend receivable $11,310
Investment in Burks, Inc $11,310
Working
= Dividends declared * Ownership percentage
= 29,000 * 39%
= $11,310
Date Account Title Debit Credit
Jan 1, 2018 Cash $11,310
Dividend Receivable $11,310
Consider the following statements when answering this question I. Increases in the demand for a good, which is produced by a competitive industry, will raise the short-run market price. II. Increases in the demand for a good, which is produced by a competitive industry, will raise the long-run market price. I is true, and II is false. I and II are true. I is false, and II is true. I and II are false.
Answer:
I and II are true
Explanation:
I. Increases in the demand for a good, which is produced by a competitive industry, will raise the short-run market price
In the short run of the competitive industry when the market demand for goods rises then the price of these goods will also increase. This is because the price equals marginal revenue. Therefore, when price rises then marginal revenue will increase and as a result, the marginal cost curve moves up and firms produce more quantity of goods. This statement is therefore true.
II. Increases in the demand for a good, which is produced by a competitive industry, will raise the long-run market price
The effect of the increase in goods demand is the same in the long run of the competitive industry as it is in the short run. Therefore, a rise in demand would raise the price of the goods above ATC (Average Total Cost). Hence, the above statement is also true.
According to the most favored nation clause (Article I of GATT), which of the following is true?
A. Tariffs on products imported from countries belonging to the WTO must be lower than tariffs on the same products imported from countries that are not members of the WTO.
B. A country can lower tariffs on imports from countries with most favored nation trading status without changing tariffs on imports from other members of the WTO.
C. If a country gives a trade advantage to one partner, then this advantage must be extended to all its trading partners belonging to the WTO.
D. If a country imposes higher tariffs on one trading partner, then those high tariffs must be imposed on all its trading partners belonging to the WTO.
Answer:
C. If a country gives a trade advantage to one partner, then this advantage must be extended to all its trading partners belonging to the WTO.
Explanation:
The correct option is - C. If a country gives a trade advantage to one partner, then this advantage must be extended to all its trading partners belonging to the WTO.
Reason -
Most-favoured-nation (MFN): treating other people equally Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.
On January 2, Dixie, Inc., pays a salvage company $1,000 to haul away a machine costing $28,000 with accumulated depreciation of $28,000. Complete the necessary journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
No Date General Journal Debit Credit
1 Jan. 2 Gain on disposal of machinery 1,000
Accumulated depreciation 28,000
Answer:
Dr Accumulated depreciation-Machinery 28,000
Dr Loss on disposal 1000
Cr Cash 1000
Cr Machinery 28,000
Explanation:
Based on the information given the appropriate journal entry to record the transaction on On January 2 is :
On January 2
Dr Accumulated depreciation-Machinery 28,000
Dr Loss on disposal 1000
Cr Cash 1000
Cr Machinery 28,000
Customer: An entity that describes a customer. An instance occurs for unique customers only using name, date of birth, and login name as customer_id primary key.
Online: An entity that describes a customer purchasing activity online. An instance occurs when the customer completes the transaction. Customers can purchase more than once.
Visits: An entity that describes a customer purchase in a physical store. An instance occurs if a customer makes or purchase or checks-in using an app. Customers can visit more than once per day.
Satisfaction: An entity that represents data from a recent customer satisfaction survey. An instance occurs when a customer takes the survey. A customer is tracked by login name and can only take the survey one time.
Use the information to match the following relationships. Answers can be reused more than once.
1. The relationship between Customer and Online.
2. The relationship between Customer and Satisfaction.
3. The relationship between Online and Visits.
4. The relationship between Visits and Satisfaction
A. prototype
B. one-to-one
C. Zero-sum
D. one-to-many
E. TOO many F. many-to-many.
Answer:
1. The relationship between customer and Online - One to one
2. The relationship between customer and Satisfaction - One to many
3. The relationship between online and visits - Many to many
4. The relationship between Visits and satisfaction - Prototype
Explanation:
The relation ship with customer is often one to one. The customers are required to fill the satisfaction surveys which enable the business to understand their value in the eyes of its customers and try to improve their level of service to their customers. The customer satisfaction is important for any business as the satisfied customer may bring more customers.
What factor might an Irrational decision maker consider when making economic decisions?*
A emotions
B perceptions
C sunk costs
D any of the above
According to the video, an interactive website needs to be able to do what things? Check all that apply. invite people to provide information remove unwanted viewers send information, products, and services automatically play videos process payments send viewers to other websites
Answer:
A,C,E
Explanation:
Answer:
A,C,E
Explanation:
The balance in the Work in Process Inventory at any point in time equals Multiple Choice the costs for jobs finished during the period but not yet sold. the manufacturing cost of jobs ordered but not yet started into production. the sum of the manufacturing costs for all jobs in process but not yet completed. the manufacturing costs of all jobs started during the period, completed or not. the sum of the materials, labor and overhead costs paid during the period.
Answer:
the sum of the costs of all jobs started but not yet completed
Explanation:
Work in process inventory can be regarded as those materials that are partially completed within a production cycle. The materials are direct labour costs as well as factory overheads, raw materials along with cost needed to develop the material till it becomes final product. It should be noted that The balance in the Work in Process Inventory at any point in time equals the sum of the costs of all jobs started but not yet completed
Manrow Growers, Inc., owns equipment for sowing and harvesting its organic fruit, vegetables, and tree nuts that are sold to local restaurants and grocery stores. At the beginning of 2019, an asset account for the company showed the following balances:
Equipment $350,000
Accumulated depreciation through 2018 165,000
During 2019, the following expenditures were incurred for the equipment:
Major overhaul of the equipment on January 1, 2019, that improved efficiency $42,000
Routine maintenance and repairs on the equipment 5,000
The equipment is being depreciated on a straight-line basis over an estimated life of eight years with a $20,000 estimated residual value. The annual accounting period ends on December 31.
Required:
Record the adjusting entry for depreciation on the equipment during 2018.
Answer: See explanation
Explanation:
The adjusting entry for depreciation on the equipment during 2018 will be calculated as:
Depreciation = (Equipment cost - Estimated residual value) / Estimated life
= ($350000 - $20000) / 8
= $41250
Debit: Depreciation = $41250
Credit: Accumulated depreciation = $41250
(To record depreciation for the year)
A speculator purchases a put option for a premium of $4, with an exercise price of $30. The stock is presently priced at $29, and rises to $32 before the expiration date. What is the maximum profit per unit to the speculator who owned the put option assuming he or she exercises the option at the ideal time
Answer: - $3
Explanation:
We should note that the holder of a put will gain when the share price is below the exercise price.
Since the gain with regards to the question is ($30 - $29) = $1 and the premium paid is 4, then the maximum profit per unit will be:
= Gain - Premium paid
= $1 - $4
= -$3.
how can the size of the industrial/service sector and the agriculture employment rate indicate the level of industrialization?
Answer:
as agriculture is in the primary sector an increase in the employment of that sector can indicate its in the primary sector .
Explanation:
industrialisation is the increase in the importance of the secondary sector of industry.
Blu-Rays can be produced at a constant marginal cost of $5 per disk, and Superhero Studios is releasing the Blu-Rays for its last two major films. The Blu-Ray for Obscure-Man is priced at $20 per disk, and the Blu-Ray for Team-Up Flick 17: The Final Chapter, Part 1 is priced at $30 per disk. What are the price elasticities of demand for these two movies
Answer:
Obscure-Man = -1.33Team-Up Flick 17: The Final Chapter, Part 1 = -1.2Explanation:
Price elasticity based on the variables given here, can be calculated using the formula:
= Price / (Marginal cost - Price)
Obscure-Man:
= 20/ (5 - 20)
= -1.33
Team-Up Flick 17: The Final Chapter, Part 1:
= 30 / (5 - 30)
= -1.2
A manufacturer has an estimated practical capacity of 90,000 machine hours, and each unit requires two machine hours. The following data apply to a recent accounting period: Actual variable overhead$ 240,000 Actual fixed overhead$ 442,000 Actual machine hours worked 88,000 Actual finished units produced 42,000 Budgeted variable overhead at 90,000 machine hours$ 200,000 Budgeted fixed overhead$ 450,000 Of the following factors, the manufacturer's production volume variance is most likely to have been caused by: A. A wage hike granted to a production supervisor. B. A newly imposed initiative to reduce finished goods inventory levels. C. Acceptance of an unexpected sales order. D. Temporary employment of workers with lower skill levels than originally anticipated.
Answer:
Of the following factors, the manufacturer's production volume variance is most likely to have been caused by:
D. Temporary employment of workers with lower skill levels than originally anticipated.
Explanation:
a) Data and Calculations:
Estimated practical capacity = 90,000 machine hours
Machine hours per unit = 2
Estimated production units based on capacity = 45,000 (90,000/2)
Budgeted Actual
Variable overhead = $200,000 $240,000
Actual fixed overhead = $450,000 $442,000
Machine hours 90,000 88,000
Units produced 45,000 42,000
Estimated units to be produced based on standard machine hour
= 44,000 units (88,000/2)
Variance between standard units to be produced and actual = 2,000 (44,000 - 42,000) Unfavorable
Scoring: Your score will be based on the number of correct matches. There is no penalty for incorrect or missing matches.
Match each of the following transactions to the journal in which it would be entered.
Clear All
Revenue journal Cash receipts journal Purchases journal Cash payments journal General journal Recognized depreciation on the building Journalized the adjusting entry for supplies used during the period Closed the revenue account at the end of the period Received cash from the bank in exchange for a note payable Withdrew cash for personal use (by owner)
Answer:
Matching transactions to the journal in which they would be entered:
Transactions Journal Type
1. Recognized depreciation on the building General Journal
2. Journalized the adjusting entry for supplies
used during the period General Journal
3. Closed the revenue account at the end
of the period General Journal
4. Received cash from the bank in exchange
for a note payable Cash Receipts Journal
5. Withdrew cash for personal use (by owner) Cash Payments Journal
Explanation:
Revenue journal records revenue transactions.
Cash receipts journal records all cash receipts.
Purchases journal records all purchases on account.
Cash payments journal records all cash payments.
General journal is used for all transactions, especially those that cannot be recorded in any of the other specialized journals.
Outdoor Gear Corporation manufactured 1,000 coolers during October. The following variable overhead data relates to October: Variable overhead spending variance $1,300 Unfavorable Variable overhead efficiency variance $182 Unfavorable Budgeted machine hours allowed for actual output 608 machine hours Actual cost per machine hour $28 Budgeted cost per machine hour $26Calculate the variable overhead flexible-budget variance. $1,118 favorable $1,118 unfavorable $1,482 unfavorable $1,482 favorable
Answer:
$1,482 unfavorable
Explanation:
Calculation to determine the variable overhead flexible-budget variance
Using this formula
Variable overhead flexible-budget variance=Variable overhead spending variance Unfavorable + Variable overhead efficiency variance Unfavorable
Let plug in the formula
Variable overhead flexible-budget variance=$1,300 (U) + $182 (U)
Variable overhead flexible-budget variance= $1,482 (U)
Therefore the variable overhead flexible-budget variance is $1,482 unfavorable
Trainees are put through a two-month school. The fixed cost of running one session of this school is $150,000. Any number of sessions can be run during the year but must be scheduled so that the airline always has enough flight attendants. The cost of having excess attendants is simply the salary that they receive, which is $15,000 per month. How many sessions of the school
Answer:
The airline training school can run maximum of 10 sessions.
Explanation:
There can be 10 sessions which can be held at the training school. The airline school needs to have enough attendants so that they do not run a session in spare capacity. If a session is run with few attendants then it will cost $15,000 per session which is an additional cost burden for the airline training school.
Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 1's contribution to overhead as a percent of sales is:
Dept. Sales Cost of Goods Sold Direct Expenses Indirect Expenses
1 1,080,000 708,000 102,000 88,000
2 480,000 158,000 48,000 108,000
3 780,000 308,000 158,000 28,000
a) 56.7%
b) 25.0%
c) 34.7%
d) 34.0%
e) 61.6%
Answer:
b) 25.0%
Explanation:
Calculation to determine what Department 1's contribution to overhead as a percent of sales is
First step is to calculate the Contribution to overhead
Using this formula
Contribution to overhead=Sales - Cost of goods sold - Direct expenses
Let plug in the formula
Contribution to overhead=1,080,000 - $708,000 - 102,000
Contribution to overhead= $270,000
Now let calculate the Contribution to overhead as a percent of sales using this formula
Contribution to overhead as a percent of sales=Contribution to overhead/Sales
Let plug in the formula
Contribution to overhead as a percent of sales=$270,000/$1,080,000
Contribution to overhead as a percent of sales= 25%
Therefore Department 1's contribution to overhead as a percent of sales is 25%
Wallace Company provides the following data for next year: MonthBudgeted Sales January$ 120,000 February 108,000 March 132,000 April 144,000 The gross profit rate is 35 % of sales. Inventory at the end of December is $ 21,600 and target ending inventory level are 20 % of next month's sales, stated at cost. What is the amount of purchases budget for January
Answer:
$70440
Explanation:
Given data :
Month Budgeted sales
January $120,000
February $108,000
March $132,000
April $144,000
Gross profit rate = 35% of sales
Inventory at end of December = $21600
Target ending inventory level = 20% of next month sales
Determine the amount of purchases budget for January
First step : calculate
Cost of goods for January = Budgeted sales - Gross profit
= $120,000 - $42,000 = $78000
Next : determine ending inventory in January
= 20% * ( Budgeted sales in Feb * 65% )
= 20% * ($108000 * 65%) = $14040
Determine budgeted purchase using the Relation below
Cost of goods sold = Beginning inventory + Budgeted purchases - Ending inventory
78,000 = 21600 + Budgeted purchases - 14040
therefore
Budgeted purchases for January = ( 78,000 + 14040 - 21600 )
= $70440