Answer:
a) At a price $55, the firm would produce 3 units of output.
At a price of $120, the firm would produce 6 units of output.
At a price of $200, the firm would produce 7 units of output.
The rule is Price = Marginal Cost for a competitive firm
b) The per-unit economic profit (or loss) is calculated by subtracting ATC at a particular level of output from the product price. This per-unit economic profit is then multiplied by the number of units of output to determine the economic profit for the competitive firm.
i) At the product price of $200, the average total costs are $146 , so per-unit economic profit is $54 . Multiplying this amount by the number of units of output results in an economic profit of $378 .
Explanation:
At P = 200, output produced is 7 units
ATC is $146
Per-unit economic profit = 200 - 146 = $54
Hence, Total economic profit = $54 x 7 = $378
ii) At the product price of $120, the average total costs are $140 , so per-unit economic losses are $ -20. Multiplying this amount by the number of units of output results in an economic loss of $-100.
Explanation: At P = 20, output produced will be 5 units. 6th unit will not be produced as it will result in even greater loss.
Total loss = ($140 - $120) x 5 = $100
To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in accrued expenses is added to operating expenses other than depreciation.
a. True
b. False
Answer:
True
Explanation:
To determine cash payments under direct method the decrease in accrued expenses is added to the operating expenses payable . Accrued expense mean expenses incurred but not yet paid. A decrease in accrued expenses would suggest that accrued expenses have been paid therefore there has been an outflow of cash which will be added to cash paid for operating expenses.
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 5,900 units per year. The cost of each unit is $102, and the inventory carrying cost is $9 per unit per year. The average ordering cost is $29 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 118 units. (This is a corporate operation, and there are 250 working days per year).
Required:
a. What is the EOQ?
b. What is the average inventory if the EOQ is used?
c. What is the optimal number of orders per year?
d. What is the optimal number of days in between any two orders?
e. What is the annual cost of ordering and holding inventory?
f. What is the total annual inventory cost, including cost of the 6,000 units?
Answer: Please find answers below
Explanation:
(a) Economic order quantity EOQ = [tex]\sqrt{2 X Annual Demand X Ordering Cost) / Carrying Cost)}[/tex]
= [tex]\sqrt{2 X 5,900 X 29 / 9 }[/tex] = [tex]\sqrt{38,022.222}[/tex]
= 194.99 units
(b) Average number of units = Economic order quantity / 2
= 194.99 / 2
= 97.496 units
(c) Optimal number of orders = Annual Demand / Economic order quantity
= 5,900units / 194.99 units =30.26
(d) Optimal number of days between two orders = Number of working days / Optimal number of orders
= 250 days / 30.26
= 8.26
Total ordering cost = Cost per order X Number of orders
= $29 X 30.26
= $ 877.54
Total holding cost = Average inventory X carrying cost per unit
= 194.99 /2 X $9
= $877.455
(e) Annual cost of ordering and holding inventorY =Total ordering cost + Total carrying cost
= $ 877.54 + $877.455
= $ 1,754.995 ≈ $1,755
(f) Total annual inventory cost =Total ordering cost +Total holding cost + Actual cost of 5900 units at $102 per unit
= $ 877.54 + $877.455 + (5,900 x 102) = $1754.995 +601,800= $603,554.995≈$603,555
Total annual inventory cost =Total ordering cost +Total holding cost + Actual cost of 6000 units at $102 per unit
= $ 877.54 + $877.455 + (6000 x 102) = $1754.995 +612,000= $613,754.995≈$613,755
General Electric (GE) has earnings per share of $2.98 and dividends per share of $0.35. Its return on assets (ROA) is 14.6% and its return on equity (ROE) is 18.2%. What is its sustainable rate of growth?
Answer:
g = 0.1606 or 16.06%
Explanation:
The sustainable growth rate is the growth rate in earning or dividends of a stock that will remain constant in the long run. Such a rate is calculate for an indefinite period of time. The formula to calculate the sustainable growth rate is,
g = RR * ROE
Where,
RR is the retention ratio or (1 - dividend payout ratio)ROE is the return on equityThe dividend per share as a percentage of earnings per share will give us the dividend payout ratio.
Dividend payout ratio = 0.35 / 2.98 = 0.1174 or 11.74%
g = (1 - 11.74%) * 18.2%
g = 0.1606 or 16.06%
One of the necessary conditions for a contestable market is that new firms entering the market have a cost advantage over the existing firms.
A. True
B. False
Answer: False
Explanation:
A contestable market is a market whereby there is entry and exit for the companies and such companies usually have low sunk costs. Such companies have access to same technology and skills.
Therefore, the conditions for a contestable market that new firms entering the market have a cost advantage over the existing firms is not true.
A project has an initial cost of $60,000, expected net cash inflows of $14,000 per year for 7 years, and a cost of capital of 13%. What is the project's discounted payback period
Answer:
Discounted payback period = 6.68 years
Explanation:
Year Cash inflow$ Discounted cash Cumulative discounted
inflow$ cash inflow$
1 14,000 12,389 12,389
2 14,000 10,964 23,353
3 14,000 9,703 33,056
4 14,000 8,586 41,643
5 14,000 7,599 49,241
6 14,000 6,724 55,966
7 14,000 5,951 61,917
Discounted cash inflow is calculated by discounting cash inflow at 13%. For example, discounted cash-flow in year 1 = 14,000 / (1+13%)^1 = 12,389.
Similarly, discounted cash-flow in year 2 = 14,000 / (1+13%)^2 = 10,964. And so on.
Cumulative cash-flows are sum of all cashflows till that year. For example, year 2 cumulative cashflow = 12,389 + 10,964 = 23,353.
Similarly, year 3 cumulative cash-flow = 23,353 + 9,703 = 33,056.
This cumulative cash-flow crosses 60,000 in year 7, so discounted payback period = 6 + (60,000-55,966) / 5,951
Discounted payback period = 6.68 years
12.The competitive strategy of a firm pursuing a "think global, act local" approach to strategy-making A. entails little or no strategy coordination across countries. B. usually involves cross-subsidizing the prices in those markets where there are significant country-to-country differences in the product attributes that customers are most interested in. C. involves selling a mostly standardized product worldwide, but varying a company's use of distribution channels and marketing approaches to accommodate local market conditions. D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions. E. involves having strongly differentiated product versionsfor different countries and selling them under distinctly different brand names (one for each country or group of neighboring countries) so that there will be no doubt in customers' minds that the product is more local than global.
Answer:
D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.
Explanation:
A think global act local is a strategic business approach or concept which is aimed at achieving a low cost, effective cost, efficiency and focused strategy theme in all the locations where the firm has its operations but nonetheless avails local managers the opportunity and ability to adjust product
specifications, distribution and marketing channels to better satisfy local consumers, as well as effectively and efficiently match local market conditions.
Hence, the competitive strategy of a firm pursuing a "think global, act local" approach to strategy-making is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.
The Fama-French 3 factor model contains... Group of answer choices market, momentum, and liquidity risk factors none of the answers market, size, and momentum risk factors market, size, and volatility risk factors
Complete Question:
The Fama-French 3 factor model contains
Group of answer choices
A. Market, Momentum and Liquidity Risk Factors
B. None of the answers
C. Market, Size and Momentum risk factors
D. Market, Size and Volatility Risk Factors
Answer:
Hence option is none of these.
Explanation:
The Fama French 3 Model contains following three factors:
Size of FirmsBook-to-Market Values which is Value RiskExcess Return on the Market which is Market RiskIt doesn't include Liquidity risk and Momentum risk factors.
Hence none of the option is correct so we will choose "None of the answers".
Tom Company reports the following data.
Sales $385,187
Variable costs 200,887
Fixed costs 87,300
Required:
Determine Tom Company's operating leverage. Round your answer to one decimal place.
Answer: 1.9
Explanation:
The Operating Leverage is calculated by;
Operating leverage = Contribution margin / Operating income
Contribution Margin
= Sales - Variable Costs
= 385,187 - 200,887
= $184,300
Operating Income
= Contribution Margin - Fixed Costs
= 184,300 - 87,300
= $97,000
Operating Leverage = 184,300/ 97,000
= 1.9
How your organization starts its risk mitigation process depends entirely on the type of organization you are working in.
Answer: False
Explanation:
Risk mitigation simply has to do with the strike that are taken by an economic agent such as an individual, firm or the government in order to prevent risk and reduce it to its minimal level.
It should be noted that risk mitigation is identical for every organization as the same process is being followed. Therefore, the question is false.
Smiley Corporation sold equipment costing with of accumulated depreciation for cash. Which of the following journal entries should be prepared?
a. debit Cash for $10, 000, credit Equipment for $6000 and credit Gain on Sale of Equipment for $4000
b. debit Cash for $10, 000, debit Accumulated Depreciation - Equipment for $66, 000, credit Equipment for $72000 and credit Gain on Sale of Equipment for $4000
c. debit Cash for $10, 000 and credit Gain on Sale of Equipment for $10, 000
d. debit Accumulated Depreciation - Equipment for $66, 000 and credit Equipment for $66, 000
The question is incomplete as the figures are missing. The complete question is,
Smiley Corporation sold equipment costing $72, 000 with $66, 000 of accumulated depreciation for $10, 000 cash. Which of the following journal entries should be prepared?
A. debit Cash for $10, 000, credit Equipment for $6000 and credit Gain on Sale of Equipment for $4000
B. debit Cash for $10, 000, debit Accumulated Depreciation - Equipment for $66, 000, credit Equipment for $72000 and credit Gain on Sale of Equipment for $4000
C. debit Cash for $10, 000 and credit Gain on Sale of Equipment for $10, 000
D. debit Accumulated Depreciation - Equipment for $66, 000 and credit Equipment for $66, 000
Answer:
Option B is the correct answer.
Explanation:
To calculate the gain or loss on disposal of the equipment, we first need to determine the book value of the equipment on the date of sale.
Net Book Value = Cost - Accumulated depreciation
Net Book value = 72000 - 66000 = $6000
The gain/(loss) on disposal = Sales Proceeds - Net Book value
The gain/(loss) on disposal = 10000 - 6000 = $4000 Gain
The entry to record this transaction will be,
Cash $10000 Dr
Accumulated depreciation - Equipment $66000 Dr
Equipment $72000 Cr
Gain on sale-Equipment $4000 Cr
What is the expected yield on the market portfolio at a time when Treasury bills are yielding 6%, and a stock with a beta of 1.5 is expected to yield 18%
Answer:
8%
Explanation:
According to CAPM :
expected stock yield =risk free rate + (beta x market yield)
6% + 1.5 x market yield = 18%
18% - 6% = 1.5market yield
solving for market yield gives
market yield = 8%
Determine which of the following situations describe games and which describe decisions. In each case, indicate what specific features of the situation caused you to classify it as you did. (a) A group of grocery shoppers in the dairy section, with each shopper choosing a flavor of yogurt to purchase (b) A pair of teenage girls choosing dresses for their prom (c) A college student considering what type of postgraduate education to pursue (d) The New York Times and the Wall Street Journal choosing the prices for their online subscriptions this year (e) A presidential candidate picking a running mate
Answer:
Situation which describes:
1. Game:
(a) A group of grocery shoppers in the dairy section, with each shopper choosing a flavor of yogurt to purchase
(Because of the attribute of each shopper choosing a flavor of yogurt.)
2. Decisions:
(b) A pair of teenage girls choosing dresses for their prom. (The prom which date and time has been fixed already)
(c) A college student considering what type of postgraduate education to pursue. (Because of decision to be educated)
(d) The New York Times and the Wall Street Journal choosing the prices for their online subscriptions this year. (Due to the various financial ability of its reader)
(e) A presidential candidate picking a running mate ( Due to the election that is upcoming)
Explanation:
Entries for Investments in Bonds, Interest, and Sale of Bonds Kalyagin Investments acquired $220,000 of Jerris Corp., 7% bonds at their face amount on October 1, 20Y2. The bonds pay interest on October 1 and April 1. On April 1, 20Y3, Kalyagin sold $80,000 of Jerris bonds at 103.
Journalize the entries to record the following:
a. The initial acquisition of the Jerris Corp. bonds on October 1, 20Y2.
b. The adjusting entry for three months of accrued interest earned on the Jems Corp. bonds- or December 11, 20Y2.
c. The receipt of semiannual interest on April 1. 20Y3.
d. The sale of 580,000 of Jerris Corp. bonds on April, 20Y3, at 103.
Answer:
a. Investments in Jerris Corp. bonds (Dr.) $220,000
Cash (Cr.) $220,000
b. Interest Receivable (Dr.) $3,850
Interest received (Cr.) $3,850
c. Cash (Dr.) $7700
Interest Received (Cr.) $3,850
Interest Receivable (Cr.) $3,850
d. Cash (Dr.) $80,000
Investment in Jerris Corp. bonds (Cr.) $80,000
Explanation:
Interest received is the amount interest that is accrued on the bond over the period of time.
Interest accrued = Amount of investment * Coupon rate * time proportion
Interest accrued = 220,000 * 7% * 3/12
Interest accrued = $3,850.
Stellar Corporation has a cumulative temporary difference related to depreciation of $542,000 at December 31, 2017. This difference will reverse as follows: 2018, $37,000; 2019, $225,000; and 2020, $280,000. Enacted tax rates are 35% for 2018 and 2019, and 40% for 2020. Compute the amount Stellar should report as a deferred tax liability at December 31, 2017. Deferred tax liability at December 31, 2017
Answer:
$203,700
Explanation:
2018 2019 2020
Temporary difference $37,000 $225,000 $280,000
Tax rate 35% 35% 40%
Deferred tax liability $12,950 $78,750 $112,000
Deferred tax liability to be reported at December 31, 2017 = $12,950 + $78,750 + $112,000 = $203,700
If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is a
Answer:
quantity variance
Explanation:
Quantity variance is a variance that compares standard quantity of materials that should have been used to the actual materials used. This type of variance is used by firms to know the difference between actual usage of materials and it's expected usage.
Where the actual usage is more than the expected usage, it is adverse ; while it is favorable if the expected usage is more than the actual usage.
A company purchased 400 units at $75 per unit. The company sold 385 units. what is the cost of goods sold and ending inventory
Answer:
Cost of goods sold $28,875
Ending inventory $1,125
Explanation:
Calculation for cost of goods sold and ending inventory
Cost of goods sold is calculated using this formula
Cost of goods sold=Sales units *Purchased per units
Let plug in the formula
Cost of goods sold=385 units *$75 per unit
Cost of goods sold=$28,875
Calculation for the ending inventory using this formula
Ending inventory=(Purchased units * purchased per unit) -Cost of goods sold
Let plug in the formula
Ending inventory=(400 units× 75 per unit) -$28,875
Ending inventory=$30,000-$28,875
Ending inventory=$1,125
Therefore the Cost of goods sold will be $28,875 while the Ending inventory will be $1,125
Grasshopper Lawn Service provides general lawn maintenance to customers. The company’s fiscal year-end is December 31. Information necessary to prepare the year-end adjusting entries appears below.
On October 1, 2021, Grasshopper lent $110,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2022.
On November 1, 2021, the company paid its landlord $22,500 representing rent for the months of November through January. Prepaid Rent was debited for the entire amount.
On August 1, 2021, Grasshopper collected $27,000 in advance rent from another company that is renting a portion of Grasshopper’s building. The $27,000 represents one year’s rent, and the entire amount was credited to Deferred Revenue.
Depreciation for the year is $23,000.
Vacation pay for the year that had been earned by employees but not paid to them or recorded is $13,000. The company records vacation pay as Salaries Expense.
Grasshopper began the year with $27,000 in its Supplies account. During the year $67,000 in supplies were purchased and debited to the Supplies account. At year-end,supplies costing $27,000 remain on hand.
Required:
Prepare the necessary adjusting entries on December 31, 2021.
Answer and Explanation:
The Journal entry is shown below:-
1. Interest receivable $2,200 ($110,000 × 8% × 3 ÷ 12)
To Interest income $2,200
(Being interest income accrued is recorded)
2. Rent expense Dr, $15,000 ($22,500 × 2 ÷ 3)
To Prepaid rent $15,000
(Being expiry of prepaid rent is recorded)
3. Deferred revenue Dr, $11,250 (27000 × 5 ÷ 12)
To Rent income $11,250
(Being rental income earned is recorded)
4. Depreciation expense Dr, $23,000
To Accumulated depreciation $23,000
(Being depreciation expense is recorded)
5. Salaries expense Dr, $13,000
To Salaries payable $13,000
(Being accrued vacation pay is recorded)
6. Supplies expense Dr, $67,000 ($27,000 + $67,000 - $27,000)
To Supplies $67,000
(Being supplies used is recorded)
The preparation of the year-end adjusting entries for Grashopper Lawn Services is as follows:
Adjusting Journal Entries:Debit Interest Receivable $2,200
Credit Interest Revenue $2,200
Debit Rent Expense $15,000
Credit Prepaid Rent $15,000
Debit Deferred Revenue $11,250
Credit Rent Revenue $11,250
Debit Depreciation Expense $23,000
Credit Accumulated Depreciation $23,000
Debit Salaries Expense $13,000
Credit Vacation Payable $13,000
Debit Supplies Expenses $67,000
Credit Supplies $67,000
Data Analysis:Interest Receivable $2,200 Interest Revenue $2,200
($110,000 x 8% x 3/12)
Rent Expense $15,000 Prepaid Rent $15,000
($22,500 x 2/3)
Deferred Revenue $11,250 Rent Revenue $11,250
($27,000 x 5/12)
Depreciation Expense $23,000 Accumulated Depreciation $23,000
Salaries Expense $13,000 Vacation Payable $13,000
Supplies Expenses $67,000 Supplies $67,000
Learn more about preparing adjusting entries at https://brainly.com/question/13933471
Central Systems desires a weighted average cost of capital of 12.7 percent. The firm has an aftertax cost of debt of 4.8 percent and a cost of equity of 15.4 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
a. 0.37
b. 0.44
c. 0.42
d. 0.56
e. 0.34
Answer:
e. 0.34
Explanation:
Let debt be $D
Equity be $E
Total=(D+E)
WACC = Respective cost * Respective weight
12.7 = {(D*4.8)/(D+E)} + {(15.4*E)/(D+E)}
12.7*(D+E)=4.8D+15.4E
12.7D+12.7E=4.8D+15.4E
D=(15.4-12.7)E /(12.7-4.8)
D = 2.7E / 7.9
D = 0.0341772
D = 0.34 E
Hence, debt-equity ratio=debt/equity
=0.34
A company makes cat food. Management is considering whether the hard cardboard box for packing a case of canned cat food should be made internally or purchased from another company. The costs of producing the cardboard boxes include:_________.
Variable cost per box $0.39
Total fixed costs of the factory $59,030 per year
Total boxes needed annually 21,962
Quote from the supplier, per box $0.22
How much will the company save (or lose) IN TOTAL if they accept the supplier's quote? If they lose money, put a negative sign in front of your answer. If they save money, just put in the number without any sign in front of it.
Answer:
Total relevant cost of 21,962 * $0.39 = $8,565.18
making internally
Less: Total relevant 21,962 * 0.22 = $4,831.64
cost of purchasing
Savings in cost $3,733.54
Conclusion: Manufacturing the hard cardboard box internally will save cost of $3,733.54 as compared to cost of purchasing the same quantity of box needed from supplier.
Note: Fixed costs is not relevant cost as it is unavoidable.
Jacob Corcoran bought 10,000 shares of Grebe Corporation stock two years ago for $24,000. Last year, Jacob received a nontaxable stock dividend of 2,000 shares in Grebe Corporation. In the current tax year, Jacob sold all of the stock received as a dividend for $18,000.
Required:
a. Complete the letter to Jacob describing the tax consequences of the stock sale.
b. Prepare a memo for the tax research file describing the tax consequences of the stock sale.
c.
Answer:
Jacob purchased 10000 shares form Grebe corporation two years ago for $24000
last year Jacob received a non taxable stock dividend of 2000 shares from Grebe corporation
In the current year tax year Jacob sold all stock received as dividend that's 2000 shares for $18000
The gain of the sale of 2000 shares can be calculated by subtracting the basis in the shares from the cost price. the cost of shares = ( $24000 / 12000 ) = $2 per share
profit made from the sales of 2000 shares is calculated as follows ; selling price ( $18000 ) - cost price of 2000 shares ( $2 * 2000) , the profit is $14000 and it is in the long term because the original shares bought has been held for at least 1 year
Explanation:
Jacob purchased 10000 shares form Grebe corporation two years ago for $24000
last year Jacob received a non taxable stock dividend of 2000 shares from Grebe corporation
In the current year tax year Jacob sold all stock received as dividend that's 2000 shares for $18000
The gain of the sale of 2000 shares can be calculated by subtracting the basis in the shares from the cost price. the cost of shares = ( $24000 / 12000 ) = $2 per share
profit made from the sales of 2000 shares is calculated as follows ; selling price ( $18000 ) - cost price of 2000 shares ( $2 * 2000) , the profit is $14000 and it is in the long term because the original shares bought has been held for at least 1 year
During the year, Bramble Corp. made an entry to write off a $31400 uncollectible account. Before this entry was made, the balance in accounts receivable was $413000 and the balance in the allowance account was $34500. The accounts receivable amount expected to be collected after the write-off entry was
Answer:
The accounts receivable amount expected to be collected after the write-off entry is $378,500
Explanation:
Allowance for bad debt = $34,500
Bad debt written off = $31,400
Credit balance in allowance for bad debts = Allowance for bad debt - Bad debt written off
= $34,500 - $31,400
= $3,100
The balance in receivables account = ($413,000 - $31,400) - ($34,500 - $31,400)
= $381,600 - $3,100
= $378,500
It is March 31, 2014. What is the latest reported number of E-Bay shares beneficially owned by the company’s CEO? Please provide your answer without comma separator or decimal (Ex: 23456326563)
Answer: 2663844
Explanation:
According to page 22 of eBay's March 2014 Definitive Proxy statement on the SEC's website, the President and CEO Mr John J. Donahoe, beneficially owned 2,663,844 shares in the company. This includes, 2,083,628 shares that he can acquire pursuant to some Options and 35,306 in Restricted stock units.
"A customer invests $50,000 in a non-qualified variable annuity. Over the years, it has grown in value to $110,000. The customer’s cost basis in the annuity contract is::"
Answer:
The customer's cost basis in the annuity contract is $50,000.
Explanation:
The customer's cost basis in the annuity contract is the initial payments or premiums made in an annuity amounting to $50,000. This amount is usually taxed at the initial point. This implies that the $110,000 which the annuity has accumulated to will no longer be taxed. The customer will enjoy her lump sum and withdrawals undisturbed by the Internal Revenue Service.
At the beginning of the school year, Priscilla Wescott decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:
Cash balance, September 1 (from a summer job) $8,220
Purchase season football tickets in September 110
Additional entertainment for each month 290
Pay fall semester tuition in September 4,400
Pay rent at the beginning of each month 400
Pay for food each month 220
Pay apartment deposit on September 2 (to be returned December 15) 600
Part-time job earnings each month (net of taxes) 1,020
a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except an overall cash decrease which should be indicated with a minus sign.
b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?
c. Priscilla can see that her present plan will not provide sufficient cash. If Priscilla did not budget but went ahead with the original plan, she would be $ short at the end of December, with no time left to adjust.
Answer:
a) Priscilla Wescott's
Cash budget
Months
Sept. Oct. Nov. Dec.
beginning balance 8,220 3,220 3,330 3,340
football tickets -110
other entertainment -290 -290 -290 -290
semester tuition -4,400
rent -400 -400 -400 -400
food -220 -220 -220 -220
apartment deposit -600 600
part time jobs earnings 1,020 1,020 1,020 1,020
ending balance 3,220 3,330 3,340 4,150
b) This is a static budget because it is being prepared in advance. A flexible budget adjusts a static budget to the real cash outflows and inflows.
c) The spring semester tuition costs $4,400 and she will only have $4,150, that means she will be $250 short.
Suppose Income Summary received a debit of $75,000 and a credit of $100,000. The net income or net loss for the period must have been:
Answer: Net income of $25000
Explanation:
Suppose Income Summary received a debit of $75,000 and a credit of $100,000, there will be a net income of $25000.
This is because we've a credit of $100,000 and a debit of $75,000 and since the credit is higher than the debit, it shows that there will be a net income.
Gideon Company uses the direct write-off method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is
Answer and Explanation:
The Journal entry is shown below:-
Bad debts expense Dr, $2,000
To Accounts receivable-Hopkins $2,000
(Being write off is recorded)
Here we debited the bad debt expenses as it increased the expenses and we credited the accounts receivable as it reduced the assets so that the proper posting could be done
Firms with high capital intensity ratios have found ways to lower this ratio permitting them to achieve a given level of growth with fewer assets and consequently less external capital. For example, just-in-time inventory systems, multiple shifts for labor, and outsourcing production are all feasible ways for firms to reduce their capital intensity ratios. True or False
Answer: True
Explanation:
The capital intensity ratio of a company
is used to measure the amount of capital that is required per dollar of revenue. The capital intensity ratio is calculated when the total assets that a company has is divided by its sales.
It should be noted that firms that has high capital intensity ratios have found ways to lower this ratio which allows them to achieve a given level of growth with fewer assets and consequently less external capital.
A retired customer has an existing stock portfolio held in a cash account. He has heard that "leveraging" his portfolio can increase his return. The portfolio holds blue chip stocks that pay current dividends. He wants to transfer the positions to a margin account and use them as collateral to buy more stocks of the same blue chip companies. Which statement is TRUE
Answer: C. This is not an appropriate strategy because the customer's income will decline
Explanation:
A. The options for the question are:
This is an appropriate strategy that will increase the customer's income
B. This is not an appropriate strategy because the customer's tax liability will increase if the securities appreciate and are sold
C. This is not an appropriate strategy because the customer's income will decline
D. This is an appropriate strategy because the customer has the potential for larger capital gains
From the information that have been provided in the question, we can see that the customer needs income but based on the information that have been provided in the question, the interest that will be charged will eat up the dividend paid by the the stock.
Therefore, this is not an appropriate strategy because the customer's income will decline.
If Tex's Manufacturing Company purchases the component externally, $20,000 of the fixed costs can be avoided. At what external price for the 100 units is the company indifferent between making or buying
Answer:
$210,000
Explanation:
The computation of the external price is shown below
Making cost = buying cost
$120,000 + $25,000 + $45,000 + $30,000) = external price + Unavoidable fixed cost (30,000-20,000)
$220,000 = External price + $10,000
So,
External price = 210,000
Hence, the same is to be considered
Therefore the external price is $210,000
In a company's annual report, the section called Management Discussion and Analysis provides critical information for interpreting the financial statements and assessing the future of the company.
A. True
B. False
Answer:
A. True
Explanation:
The section called Management Discussion and Analysis in an annual report analyzes the performance of a company, includes comments from the management about the financial statements to allow the readers to understand the information in a better way and includes the future objectives and plans. According to this, the answer is that the statement that indicates that in a company's annual report, the section called Management Discussion and Analysis provides critical information for interpreting the financial statements and assessing the future of the company is true.
