Answer: b. Prices for “600 minute energy” are reduced
Explanation:
The drinks have similar elasticities so they are substitutes. This means that reducing the price of one will cause people to demand less of the other drink. By reducing the price of "Blue Cow", there will be less demand for "600 minute energy".
To increase total sales therefore, the effects of the decrease in the price of Blue Cow must be counteracted. To do so, the price of 600 minute energy must be reduced as well. This way people will demand the two drinks more. This reduction will draw in people buying other drinks apart from these 2 thereby increasing total sales.
Assume Strands, a local hair salon, provides cuts, perms, and hairstyling services. Annual fixed costs are $150,000, and variable costs are 40 percent of sales revenue. Last year's revenues totaled $300,000.
(a) Determine its break-even point in sales dollar
(b) Determine last year's margin of safety in sales dollars.
(c) Determine the sales volume required for an annual profit of $80,000.
Round your answer to the nearest dollar.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Annual fixed costs are $150,000, and variable costs are 40 percent of sales revenue. Last year's revenues totaled $300,000.
To calculate the break-even point in dollars, we need to use the following formula:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 150,000 / [(300,000*0.6)/300,000]
Break-even point (dollars)= $250,000
Now, we can determine the margin of safety:
Margin of safety= (current sales level - break-even point)
Margin of safety= 300,000 - 250,000= $50,000
Finally, the sales dollar required to reach $80,000 profit:
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
Break-even point (dollars)= (150,000 + 80,000) / 0.6
Break-even point (dollars)= $383,333.33
Compute the payback for each of these two seperate investments:
a. A new operating system for an existing machine is expected to cost $250000 and have a useful life of 6 years. The system yields an incremental after-tax income of $72115 each year after deducting its straight line depreciation. The predicted salvage value of the system is $10000.
b. A machine costs $200,000, has a $13,000 salvage value, is expected to last eight years, and will generate an after-tax income of $39,000 per year after straight-line depreciation.
Answer:
a. 2.23
b. 3.21
Explanation:
a. Answer to Part A
Payback Period = Investment / Annual Cash Inflow
= 250000 / 112115
= 2.23
Answer to Part B
Payback Period = Investment / Annual Cash Inflow
= 200000 / 62375
= 3.21
Working Note
Particulars Case A Case B
After Tax Income 72115 39000
Add: Depreciation 40000 23375
Cash Inflow 11,2115 62375
Particulars Case A Case B
Cost of Machine 250000 200000
Less: salvage Value 10000 13000
Depreciable Value 240000 187000
Life of the Asset 6 8
Annual Depreciation 40000 23375
Fisher meeting with Bill Gates, CEO - Microsoft, to form alliances to develop new photo software that helped customers manipulate images, was an example of -
Answer: External horizontal diversification
Explanation:
External horizontal diversification is when new products or services are added to a company because they may appeal to the customers. This is a strategy that is used to increase the dependence of firm on certain segments of the market.
This was used when Fisher met with Bill Gates, CEO - Microsoft, to form alliances to develop new photo software that helped customers manipulate images.
Bogart Company is considering two alternatives. Alternative A will have revenues of $147,400 and costs of $103,400. Alternative B will have revenues of $188,200 and costs of $121,600. Compare Alternative A to Alternative B showing incremental revenues, costs, and net income.
Answer:
B is better than A
Explanation:
Here, we want to compare “A” to “B”. It means if B’s amount is higher than A’s amount, it should be positive; If B’s amount is lower than A’s amount, it should be negative.
Net income for each alternative = Revenues – Costs
Since the net income is positive, B is better than A.
Please check attachment for for actual tabular calculations
Roll over each item on the left to read the description. Identify whether each of the statements is an argument for or an argument against a specific exchange rate regime, then place each item in the correct place on the chart.
2/5 points awarded Government adjusts Fluctuation with limits Scored Reduces uncertainty Argument for Argument Against Market-based Floating exchange rate Uncertainty Market-based Unknown elements Continual government intervention Fixed exchange rate No uncertainty Continual government intervention Managed-float Difficult Fluctuation with limits Difficult Pegged exchange rate Limited options Government adjusts Limited options Target Zone Reduces uncertainty Unknown elements No uncertainty
Answer:
Floating exchange rate
Here the market decides the value of the currency as it trade freely in the market based on supply and demand.
Argument For;
Market Based - It is market based therefore it reflects the true value of the currency.
Argument Against;
Uncertainty - As it trades according to the whims of supply and demand, telling which direction it will go in terms of value is a difficult undertaking therefore financial decisions based on such are riskier.
Fixed exchange rate
Here the value of the currency is fixed either to the value of another currency or to the price of gold.
Argument For;
No Uncertainty - As the currency is tied to another currency which is usually more stable or gold, the rate of the currency is more predictable.
Argument Against;
Unknown Elements
Managed float
In this exchange rate regime, the Central bank of a country intervenes in the Foreign exchange market to push or pull the currency in the direction that it prefers.
Argument For;
Government intervention - The Government Intervention ensures that the currency's value remains stable as well as allowing the Central bank to maintain a good balance of payments.
Argument Against;
Difficult - Maintaining the currency within the band preferred in a difficult undertaking that requires constant intervention in the Forex market.
Pegged exchange rate
The Central bank in this instance pegs the currency to a basket of currencies after setting an exchange rate it would prefer and then intervenes in forex market to keep it that way.
Argument For;
Reduces uncertainty - The movement of the currency is more predictable due to it being pegged to a basket of currencies.
Argument Against;
Continual government intervention - As this requires the currency to remain at a certain value, the government will keep intervening to ensure that it stays at that exact level.
Target zone
Here the Central Bank allows the currency to fluctuate on the market albeit with limits placed on how much it can do so.
Argument For;
Fluctuation with limits - By combining fixed regimes with floating regimes, the currency can maintain a semblance of true value whilst still be less uncertain.
Argument Against;
Limited options.
Floating exchange rate
Here the market determines the value of the currency as it trades willingly in the market based on supply and demand.
What are Supply and Demand?
Argument For;
Market-Based - It is market-based thus it reflects the true value of the currency.
Argument Against;
Uncertainty - As it trades according to the impulses of supply and demand, suggesting which direction it will go in terms of significance is a difficult undertaking therefore financial decisions based on such are riskier.
Fixed exchange rate
Here when the value of the currency is fixed either to the value of another currency or to the price of gold.
Argument For;
No Uncertainty - As the currency is tied to another currency which is usually additional stable or gold when the rate of the currency is more predictable.
Argument Against;
Unexplored Elements
Managed float
In this interaction rate regime, when the Central bank of a country intervenes in the Foreign exchange market to push or pull the currency in the direction that it prefers.
Argument For;
Government intervention - When The Government Intervention ensures that the currency's value stays stable as well as allows the Central bank to maintain a good balance of payments.
Argument Against;
Difficult - When the Maintaining the currency within the band is preferred in a difficult undertaking that is required constant intervention in the Forex market.
Pegged exchange rate
The Central bank in this instance pegs the currency to a basket of currencies after setting an interaction rate it would prefer and also then intervenes in the forex market to keep it that way.
Argument For;
Reduces uncertainty - When The movement of the currency is more predictable due to it being pegged to a basket of currencies.
Argument Against;
Continual government intervention - Now, As this requires the currency to remain at a certain value, the government will keep intervening to ensure that it stays at that exact level.
Target zone
When Here the Central Bank allows the currency to fluctuate on the market albeit with limits placed on how much it can do so.
Argument For;
Fluctuation with limits - By combining improved regimes with floating regimes, the currency can maintain a semblance of true value whilst still being less uncertain.
Argument Against;
Limited choices.
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The Park Avenue Corporation currently makes a part required in its finished product. The company uses 2,116 units of this part annually. Park Avenue Corp has been approached by a vendor to provide this part for $13.04 each. The following cost information is provided
Direct Materials per unit $6.34
Direct Labor per unit $7.30
Variable Factory Overhead per unit $2.50
Fixed Factory Overhead per unit $7.50
How much would Park Avenue Corporation save by having the vendor make the part, instead of making it themselves?
Answer:
If the company buys the part, it will save $$6,559.6
Explanation:
Giving the following information:
Purchase price= $13.04
The company uses 2,116 units of this part annually.
Production:
Direct Materials per unit $6.34
Direct Labor per unit $7.30
Variable Factory Overhead per unit $2.50
We weren't provided with information regarding the fixed costs. I will assume that non of the fixed overhead costs are avoidable, therefore, they are irrelevant to the decision making process.
Buy:
Total cost= 2,116*13.04= $27,592.64
Production:
Total cost= 2,116*(6.34 + 7.3 + 2.5)= $34,152.24
If the company buys the part, it will save $$6,559.6
In the case when the company buys the part, it will save $6,559.6.
Calculation of the value of part:Since
Purchase price= $13.04
Direct Materials per unit $6.34
Direct Labor per unit $7.30
Variable Factory Overhead per unit $2.50
Now
For Buy:
Total cost= 2,116*13.04= $27,592.64
For Production:
Total cost= 2,116*(6.34 + 7.3 + 2.5)= $34,152.24
So, we can say that In the case when the company buys the part, it will save $6,559.6.
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The purchase price of a natural gas-fired commercial boiler (capacity X) was $181,000 eight years ago. Another boiler of the same basic design, except with capacity 1.42X, is currently being considered for purchase. If it is purchased, some optional features presently costing $28,000 would be added for your application. If the cost index was 162 for this type of equipment when the capacity X boiler was purchased and is 221 now, and the applicable cost capacity factor is 0.8, what is your estimate of the purchase price for the new boiler
Answer:
$308,500.85
Explanation:
$181,000 eight years ago in real dollars was $181,000 / 162 = $111,728.40
new boiler with a 1.42X capacity x capacity factor = 1.42 x 0.8 = 1.136 (the price of the new boiler is 1.136 times the old boiler)
current price of the new boiler in real dollars = 1.136 x $111,728.40 = $126,923.46
real dollars converted to current nominal dollars = $126,923.46 x 2.21 = $280,500.85
price of the new boiler + additional optional features = $280,500.85 + $28,000 = $308,500.85
Kingsbury Manufacturing has net sales revenue of $850,000, cost of goods sold of $344,600, and all other expenses of $328,300. The gross profit percentage is closest to:
Answer:
56.46%
Explanation:
The computation of the gross profit percentage is shown below
Gross profit percentage is
= (Sales - cost of goods sold) ÷ (Sales) × 100
where,
Sales is $850,000
And, the cost of goods sold is $344,600
Now placing these values to the above formula
So, the gross profit percentage is
= ($850,000 - $344,600) ÷ ($850,000) × 100
= $505,400 ÷ $850,000 × 100
= 56.46%
A sporting goods store purchased $10,150 worth of ski boots in October. The store had $4,350 of ski boots in inventory at the beginning of October and expects to have $3,800 of ski boots in inventory at the end of October to cover part of anticipated November sales. What is the budgeted cost of goods sold for October
Answer:
The budgeted cost of goods sold for October is $9,600.
Explanation:
Prepare a Budgeted Costs of Goods Sold for October as follows :
Budget Purchases $10,150
Add Budgeted Closing Stock $3,800
Needed $13,950
Less Budgeted Opening Stock ($4,350)
Budgeted Cost of Goods Sold $9,600
Conclusion :
The budgeted cost of goods sold for October is $9,600.
Brief Exercise 5-12 Crane Beverage Company reported the following items in the most recent year. Net income $48,300 Dividends paid 6,320 Increase in accounts receivable 11,860 Increase in accounts payable 7,470 Purchase of equipment (capital expenditure) 8,710 Depreciation expense 4,470 Issue of notes payable 22,850 Compute net cash provided by operating activities, the net change in cash during the year
Answer:
Crane Beverage Company
Statement of Cash Flows
Particulars Details Amount
Cash Flow from Operating Activities:
Net Income $48,300
Adjustments to reconcile net income to
cash flow from operating activities:
Depreciation $ 4,470
Increase in Accounts receivable -$11,860
Increase in Accounts payable $7,470 $80
Net Cash Flow From Operating Activities (A) $48,380
Cash Flow from Investing Activities:
Purchase of Equipment -$8,710
Net Cash Flow From Investing Activities (B) -$8,710
Cash Flow from Financing Activities:
Issue of note payable $22,850
Dividend paid -$6,320
Net Cash Flow From Financing Activities (C) $16,530
Net Change in Cash (A + B+ C) $56,200
Free Cash flow = Net cash provided by operating activities - Purchase of equipment - Dividend paid
= $48,380 -$8,710 - $6,320
= $33,350
The ideal marketing objective is ________. idealistic, quantifiable, and consumer-oriented situational, unattainable, and internal time specific, realistic, and quantifiable realistic, qualitative, and competitive quantifiable, research-based, and without regard to ethics
Answer:
The correct answer is: Time specific, realistic and quantifiable.
Explanation:
To begin with, a good marketing campaign must follow certain objectives in order to be fully successfull or at least as high as possible. Therefore that the best objectives to look for regarding marketing expertises are the facts that the objectives are realistic, so that means that it can be possible done by the budget of the company; quantifiable, so that means that the company can measure the benefits of using the campaign and see that the costs were worthy; and finally, time specific objectives, so that means that the company can know if their goals are being accomplished in the time expected.
Xia Co. manufactures a single product. All raw materials used are traceable to specific units of product. Current information for company follows: Beginning raw materials inventory $ 22,000 Ending raw materials inventory 25,000 Raw material purchases 99,000 Beginning work in process inventory 34,000 Ending work in process inventory 44,000 Direct labor 124,000 Total factory overhead 99,000 Beginning finished goods inventory 74,000 Ending finished goods inventory 54,000 The company's cost of direct materials used, cost of goods manufactured and cost of goods sold is:
Answer:
Instructions are below.
Explanation:
First, we need to calculate the direct material used in production:
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 22,000 + 99,000 - 25,000
Direct material used= $96,000
Now, we can determine the cost of goods manufactured:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 34,000 + 96,000 + 124,000 + 99,000 - 44,000
cost of goods manufactured= $309,000
Finally, the cost of goods sold:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 74,000 + 309,000 - 54,000
COGS= $329,000
g The aggregate supply curve shifts A. rightward if the money wage rate falls. B. leftward if the aggregate demand curve shifts leftward. C. rightward if potential GDP decreases. D. leftward if potential GDP increases. E. rightward if the money wage rate rises.
Answer:
The correct option to the question above is option A "rightward if the money wage rate falls."
Explanation:
The aggregate supply curve is a graphical illustration of how the total quantity of goods and services is available for a given price and time.
When the aggregate supply curve shifts to the right, it increases. While, when the aggregate supply curve shifts to the left, it decreases.
An increase in the aggregate supply curve shows a fall in price, which makes a high price level resulting in a greater supply of real GDP.
Money wages is the amount of money paid in wages. Money wages is indirectly proportional to real wages. The aggregate supply curve decreases if the money wage rate increases and the aggregate supply curve increases when the money wage rate falls.
Aggregate supply is affected by GDP. When A GDP decreases, it also decreases aggregate supply.
Matthew owns 30 percent of the outstanding stock of Lindman and has the ability to significantly influence the investee's operations and decision making. On January 1, 2015, the balance in the Investment in Lindman account is $335,000. Amortization associated with this acquisition is 9,000 per year. In 2015, Lindman earns an income of $90,000 and declares cash dividends of $30,000. Previously, in 2014, Lindman had sold inventory costing $24,000 to Matthew for $40,000. Matthew consumed all but 25 percent of this merchandise during 2014 and used the rest during 2015. Lindman sold additional inventory costing $28,000 to Matthew for $50,000 in 2015. Matthew did not consume 40 percent of these 2015 purchases from Lindman until 2016.
Required:
a. What amount of equity method income would Matthew recognize in 2015 from its ownership interest in Lindman?
b. What is the equity method balance in the Investment in Lindman account at the end of 2015?
Answer:
Matthew and Lindman
a. Equity method Income for 2015:
Add 30% share of Lindman Income ($90,000 x 30%) = $27,000
Less share in unrealized profit in Inventory -2,640
Less share in cash dividends ($30,000 x 30%) -9,000
Less Amortization of cost of acquisition -9,000
Net Income from Investment in Lindman $6,360
b. Equity method balance in the Investment in Lindman account at the end of 2015:
Balance in Investment in Lindman account = $341,360
Explanation:
a) Data and Calculations:
Matthew owns 30% percent in Lindman with significant influence
Accounting of ownership interest: Equity Method
1/1/2015 Balance in the Investment in Lindman account = $335,000
Add 30% share of Lindman Income ($90,000 x 30%) = 27,000
Less share in unrealized profit in Inventory -2,640
Less share in cash dividends ($30,000 x 30%) -9,000
Less Amortization of cost of acquisition -9,000
Balance in Investment $341,360
b) Unrealized profit in Inventory:
Profit in Inventory = $22,000 ($50,000 - 28,000)
Less Realized profit 13,200 ($22,000 x 60%)
Unrealized profit 8,800 ($22,000 x 40%)
Share of Unrealized profit $2,640 ($8,800 x 30%)
c) Matthew uses the equity method for accounting for its 30% acquisition of the outstanding stock of Lindman because it is within the 20% to 50% band for accounting for investment in a subsidiary with the method. Secondly, Matthew has significant influence in Lindman's operations and decision making, making it additionally qualified for the equity method.
With this method, Matthew takes into account its 30% share in the Net Income of Lindman and adjusts this with its share of any unrealized profit (loss) in inventory arising from intercompany transactions. Since Lindman has declared a cash dividend of $30,000, Matthew's share from the dividend is subtracted from the share in net income of Lindman. The amortization cost associated with the acquisition of 30% share in Lindman is also subtracted to arrive at the net income due to Matthew, which increases its equity balance.
1. Do you think that punishments deter crime? Why or why not? Do you think there is a better way to reduce crime than punishment?
Explanation:
In my honest opinion i don not think punishment deter crime, but it does to a great extent reduce the rate of crime, if actually punishment deter crime, then there will not be offenders anymore.
Another possible way to reduce crime than punishment is to place a fine for offender to pay and also place offenders on community service, in this way offenders get to move freely in the society while they get to pay a huge sum for the offence they have committed
Answer:
I really believe that punishments reduce crime, if someone has done something wrong they have to be punished because, if not, how are they going to know that what they have done is wrong? So, in this way, some criminals stop committing crimes because they see that what they have done is not good and has consequences.
Punishment is known to be a bad stimulus to reduce crime; instead, education has been much more effective, because in this way criminals learn what they can do to improve their lives.
Explanation:
Which type of business is likely to have purchasing activities related primarily to consumable goods rather than products that will later be resold to consumers?
A. Printing business
B. Service oriented business
C. Retail business
D. Manufacturing business
Answer:
B. Service oriented business
Which type of business is likely to have purchasing activities related primarily to consumable goods rather than products that will later be re-sold to customers? Answer is service oriented business
Explanation:
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Say you own an asset that had a total return last year of 12 percent. If the inflation rate last year was 5 percent, what was your real return?
Answer:
Real rate of return= 0.07 = 7%
Explanation:
Giving the following information:
Say you own an asset that had a total return last year of 12 percent. The inflation rate last year was 5 percent.
The effect of the inflation rate is counterproductive to the rate of return. It diminishes purchasing power.
Real rate of return= nominal interest rate - inflation rate
Real rate of return= 0.12 - 0.05
Real rate of return= 0.07 = 7%
Ivanhoe provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation $1,500 per month Advertising $350 per month Insurance $2,770 per month Weed and feed materials $17 per lawn Direct labor $9 per lawn Fuel $2 per lawn Ivanhoe charges $70 per treatment for the average single-family lawn. Correct answer. Your answer is correct. Determine the company’s break-even point in number of lawns serviced per month. Break-even point Entry field with correct answer 110 lawns LINK TO TEXT LINK TO TEXT Incorrect answer. Your answer is incorrect. Try again. Determine the company’s break-even point in dollars.
Answer:
Explanation:
To start with, we need to get the value for total fixed cost and total variable cost
Total fixed costs = Depreciation + Advertising + Insurance
= $1,500 + $350 + $2,770
= $4,620
Total variable costs per unit = Weed and feed materials + Direct labor + Lawn Fuel
= $17 + $9 + $2
= $28 per lawn
We also need to compute the contribution margin ratio
= Sales per unit - Variable cost per unit / Sales per unit
= (70 - 28) / 70
= 0.6
= 60%
Therefore;
1. Break even sales
A 30 year $1,000 par 4 3/4% Treasury Bond is quoted at 95-11 - 95-15. The note pays interest on Jan 1st and Jul 1st. A customer buys 1 bond at the ask price. What is the current yield, disregarding commissions
Answer:
4.98%
Explanation:
Calculation for the current yield
First step
Since the the bond was purchased at 95 +15/32nds this means that we have to find the bond percentage.
Calculated as
Bond Percentage = 95 + 15/32nds
Bond percentage =95.46875%
Second step is to multiply the bond percentage by $1,000
95.46875% *$1,000
= $954.6875
The last step is to find the current yield
Current yield=$47.50 /$954.6875
Current yield = 4.98%
Therefore the current yield will be 4.98%
Consider a fast food café of your choice. Apply 4 V’s of Operation. Describe each V as ‘High’, ‘Low’ or ‘Moderate’ with one liner reason.
Answer:
4 V's of Operation
The 4 V's of operation are Volume, Variety, Variation, and Visibility. Let us take Mrs. Happy Food Cafe with over 100 outlets in Fiacton Town, as an example to illustrate the 4 V's of operation.
Volume: As a food cafe, the volume of production that will be required for some foods and drinks is so high that their provision requires repetitive tasks. Based on this, procedures are normally standardized in order to achieve low cost for foods and drinks. However, it is harder to standardize services, since personal touches are added by the servers based on their individual perceptions and abilities.
Variety: Mrs. Happy Food Cafe tries to bring some variety in her offerings to satisfy the various needs of her customers. While variety is naturally low in the Food Cafe sector, some cafes like Mrs. Happy Good Cafe, try to satisfy customers' demands by varying the foods with Continental, African, Latino cuisines and dishes.
Variation: At Mrs Happy Food cafes, the food and drinks do not vary much as customers expect to be served the same quality of services at any of their cafes. This is because the processes are standardized to achieve low cost. So, the variation is moderate.
Visibility: Customers of Mrs Happy Food cafes are not able to see and track their experiences of the the processes for the food preparation that they order. But, they can track the processes for the services because services are consumed as they are offered. So, visibility is 'Moderate," as it is divided between the hard goods and the soft goods. With respect to goods visibility is 'Low.' However, with respect to the services the customers' visibility of processes is high.
Explanation:
The 4 V's of operation describe the different characteristics of the processes that various entities use to transform their inputs into outputs of goods and services. They may be high, low, or moderate. They include, volume, variety, variation, and visibility.
Use the following information for Shafer Company to compute inventory turnover for year 2.
Year 2 Year 1
Net sales $656,000 $584,600
Cost of goods sold 390,200 361,010
Ending inventory 79,400 81,080
Answer:
Inventory turnover for year 2 is 4.91 times.
Explanation:
Inventory turnover measures liquidity of company`s inventory
Inventory turnover = Cost of goods sold / Ending inventory
= $390,200 / $79,400
= 4.91 times
Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect Andy's demand for ____________.
Answer:
Andy's demand for beer will increase.
Explanation:
Andy’s demand for beer will increase because it is given that pizza and beer are complements. Therefore, there is an inverse relationship between the price of one complement goods and the number of other complement goods. Here, we can see that price of one good ( say pizza) decreases so the demand for other goods (say beer) will increase because there is an inverse relationship between these commodities.
Financial Statements of a Manufacturing Firm
The following events took place for Focault Inc. during July 20Y2, the first month of operations as a producer of road bikes:
Purchased $320,000 of materials
Used $275,000 of direct materials in production
Incurred $236,000 of direct labor wages
Applied factory overhead at a rate of 75% of direct labor cost
Transferred $652,000 of work in process to finished goods
Sold goods with a cost of $630,000
Sold goods for $1,120,000
Incurred $252,800 of selling expenses
Incurred $100,000 of administrative expenses
A. Prepare the July income statement for Focault. Assume that Focault uses the perpetual inventory method.
Focault Inc.
Income Statement
For the Month Ended July 31
Revenues $
Cost of Goods Sold
Gross Profit $
Selling and administrative expenses:
Selling Expenses $
Administrative Expenses
Total selling and administrative expenses
Income from Operations $
B. Determine the inventory balances at the end of the first month of operations.
Materials inventory, July 31
Work in process inventory, July 31
Finished goods inventory, July 31
Answer:
Required A.
Focault Inc.
Income Statement For the Month Ended July 31
Revenues $1,120,000
Cost of Goods Sold ($630,000)
Gross Profit $ 490,000
Selling and administrative expenses:
Selling Expenses ($252,800)
Administrative Expenses ($100,000)
Income from Operations $137,2000
Required B
Materials inventory, July 31 = $45,000
Work in process inventory, July 31 = $36,000
Finished goods inventory, July 31 = $22,000
Explanation:
Raw Materials T - Account
Debit :
Purchases $320,000
Totals $320,000
Credit:
Used in Production $275,000
Ending Balance $45,000
Totals $320,000
Manufacturing Cost Schedule
Raw Materials $275,000
Direct labor $236,000
Overheads ($236,000 × 75%) $177,000
Total Manufacturing Cost $688,000
Less Cost Transferred to Finished Goods ($652,000)
Ending Work In Process $36,000
Finished Goods T - Account
Debit :
Cost of Goods Manufactured $652,000
Totals $652,000
Credit :
Trading Account : Cost of Sales ($630,000)
Ending Balance $22,000
Totals $652,000
You are scheduled to receive $35,000 in two years. When you receive it, you will invest it for 6 more years at 7 percent per year. How much will you have in 8 years?
Answer:
$52,526
Explanation:
In two years i have $35,000.
the amount invested thus the Principle amount is $35,000
Pv = $35,000
r = 7 %
PMT = $0
n = 6
Fv = ?
Note that The 8 th year is the sixth year of this investment.
FV = PV × (1 + r) n
= $35,000 × ( 1 + 0.07) 6
= $52,525.56
= $52,526
Powell Company issued a $1,200,000, 7 %, 10-year bond payable at face value on January 1, 2018. Interest is paid semiannually on January 1 and July 1.
Requirements
1. Journalize the issuance of the bond payable on January 1, 2018.
2. Journalize the payment of semiannual interest on July 1, 2018.
Answer:
1.Dr Cash 1,200,000
Cr Bonds Payable 1,200,000
2. Dr Interest Expense 42,000
Cr Cash 42,000
Explanation:
1. Preparation of the Journal entry to record the issuance of the bond payable on January 1, 2018.
Since the company issued the amount of $1,200,000 this means that the transaction will be recorded as:
January 1 2018
Dr Cash 1,200,000
Cr Bonds Payable 1,200,000
( To record Issued bonds at par)
2. Preparation of the Journal entry to record the payment of semiannual interest on July 1, 2018.
Since the company issued the amount of $1,200,000 with 7 %, and 10-year bond payable at face value, this means the transaction will be recorded as;
July 1 2018
Dr Interest Expense 42,000
Cr Cash 42,000
($1,200,000 × 0.07 × 6/12)
(To record paid semiannual interest payment)
Poe Company is considering the purchase of new equipment costing $80,000. The projected net cash flows are $35,000 for the first two years and $30,000 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine. 1 0.9091 0.9091 2 0.8264 1.7355 3 0.7514 2.4869 4 0.6830 3.1699
Answer:
$23,773.65
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested
NPV can be calculated using a financial calculator :
cash flow in year 0 = $-80,000.
Cash flow in year 1 and 2 = $35,000.
Cash flow in year 3 and 4 = $30,000.
I = 10%
NPV = $23,773.65
To find the NPV 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
Sager Industries is considering an investment in equipment that will replace direct labor. The equipment has a cost of $86,000 with a $7,000 residual value and a 10-year life. The equipment will replace three employees who has an average total wages of $15,810 per year. In addition, the equipment will have operating and energy costs of $4,190 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.
Answer:
130.77%
Explanation:
depreciation expense per year using straight method = (purchase cost - salvage value) / useful life = ($86,000 - $7,000) / 10 = $7,900
total costs = depreciation expense + operating and energy costs = $7,900 + $4,190 = $12,090
average rate of return = total savings / total costs = $15,810 / $12,090 = 1.30769 = 130.77%
Scenario 9-1 For a small country called Boxland, the equation of the domestic demand curve for cardboard is Q D = 200 − 2P , where Q D represents the domestic quantity of cardboard demanded, in tons, and P represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is Q S = -60 + 3P , where Q S represents the domestic quantity of cardboard supplied, in tons, and P again represents the price of a ton of cardboard. Refer to Scenario 9-1. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard a. benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. b. benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. c. harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. d. benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00.
Answer: a. benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50.
Explanation:
Equilibrium price will be at level where quantity demanded equals quantity supplied.
200 − 2P = -60 + 3P
200+60 = 5P
5P = 260
P = $52
Equilibrium Quantity Demanded = 200 − 2P = 200 - 2 * 52 = 96 units
In a no-trade situation the demand in Boxland is 96 units at a price of $52. If they were to buy at the world price of $45, they would benefit;
= (96 * 52) - (96 * 45)
= 4,992 - 4,320
= $672
Producers however would produce the following at a price of $45;
Q S = -60 + 3P
= -60 + 3(45)
= 75 units
They would be supplying less units and be hurt.
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours 30,400 Total fixed manufacturing overhead cost $ 425,600 Variable manufacturing overhead per machine-hour $ 5.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 20 Direct materials $ 590 Direct labor cost $ 1,180 The amount of overhead applied to Job T687 is closest to:
Answer:
The amount of overhead applied to Job T687 is closest to: $280.
Explanation:
Predetermined rate = Budgeted Overheads / Budget Activity
= $ 425,600 / 30,400
= $14.00 per machine-hour
Applied overheads to job T687 = Predetermined rate × Actual machine hours used
= $14.00 × 20
= $280
Conclusion :
The amount of overhead applied to Job T687 is closest to: $280.
Kite Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (3,000 units) $ 180,000 Variable expenses 108,000 Contribution margin 72,000 Fixed expenses 62,400 Net operating income $ 9,600 The contribution margin ratio is closest to:
Answer:
40%
Explanation:
Contribution margin = Contribution ÷ Sales × 100
= 72,000 ÷ $180,000 × 100
= 0.4 × 100
= 40%
Please not that other information given in the question are not relevant in arriving at the contribution margin ratio hence will be ignored.