Answer:
An apple, potato, and onion all taste the same if you eat them with your nose plugged
Explanation:
IF COUNTRIES FIND WAYS OF IMPROVING THEIR FACTOR OF PRODUCTIVITY
Answer:
THEIR FACTOR OF PRODUCTIVITY will increase.
Horace Company manufactures a professional-grade vacuum cleaner and began operations in 2020. For 2020, Horace budgeted to produce and sell 25,000 units. The company had no price, spending, or efficiency variances and writes off production-volume variance to cost of goods sold. Actual data for 2020 are as follows:_______.
Data: Units produced 21,000 Units sold 18,500 Selling price $432 Variable cost: Manufacturing cost per unit produced: Direct materials $33 Direct manufacturing labor $23 Manufacturing Overhead $62 Marketing cost per unit sold $46 Fixed cost: Manufacturing costs $1,550,000 Administrative costs $906,000 Marketing costs $1,479,000
Requirements:
1. Prepare a 2020 income statement for Horace Company using variable costing.
2. Prepare a 2020 income statement for Horace Company using absorption costing.
3. Explain the differences in operating incomes obtained in requirements 1 and 2.
4. Horace's management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this bonus plan create for the supervisors? What modifications could Horace management make to improve such aplan? Explain briefly.
Answer:
Horace Company
1. 2020 Income Statement using variable costing
Sales revenue $7,992,000
Variable Cost of goods sold:
Manufacturing costs $2,183,000
Marketing cost per unit sold $851,000
Contribution margin $4,958,000
Fixed Costs:
Manufacturing costs $1,550,000
Administrative costs $906,000
Marketing costs $1,479,000
Total fixed costs = $3,935,000
Net income = $1,023,000
2. 2020 Income Statement using absorption costing:
2. Sales revenue $7,992,000
Cost of goods sold:
Variable Manufacturing costs $2,478,000 ($118 * 21,000)
Fixed Manufacturing costs 1,550,000
Total cost of production $4,028,000
Less Ending Inventory 479,525
Cost of goods sold $3,548,475
Gross profit $4,443,525
Period costs:
Variable marketing costs $851,000
Fixed marketing costs 1,479,000
Administrative costs 906,000
Total period costs $3,236,000
Net income $1,207,525
3. The differences that Horace obtains in the operating incomes under variable costing and absorption costing are due to the fixed manufacturing costs that are included in the ending inventory under absorption costing, making the cost of goods sold to be less and resulting in more profits. Under variable costing, the ending inventory does not include the fixed manufacturing costs. So the cost of goods sold is higher, resulting in reduced profits.
4. A bonus for Horace's supervisors based on gross margin under absorption costing will entice supervisors to produce more and sell less products so that the fixed costs can be carried forward. Many products will be left in inventory at the end of the period, which is then carried forward to the following period, thus, enhancing the period's gross profit for maximum bonus for the supervisors.
Modifications that Horace management could make to improve the bonus plan is ensuring that production units do not exceed the budgeted sales units by a large margin and ensuring that ending inventory does not exceed an established limit. This will entice the supervisors to produce according to market demand.
Explanation:
a) Data and Calculations:
Budgeted production and sales units for 2020 = 25,000
Actual production units for 2020 = 21,000
Actual sales unit for 2020 = 18,500
Ending inventory units for 2020 = 2,500
Selling price per unit = $432
Sales revenue = $7,992,000 ($432 * 18,500)
Variable cost:
Manufacturing cost per unit produced:
Direct materials $33
Direct manufacturing labor $23
Manufacturing Overhead $62 $118
Marketing cost per unit sold $46
Total variable costs per unit $164
Fixed cost:
Manufacturing costs $1,550,000
Administrative costs $906,000
Marketing costs $1,479,000
Total fixed costs = $3,935,000
1. 2020 Income Statement using variable costing
Sales revenue $7,992,000 ($432 * 18,500)
Variable Cost of goods sold:
Manufacturing costs $2,183,000 ($118 * 18,500)
Marketing cost per unit sold $851,000 ($46 * 18,500)
Contribution margin $4,958,000 ($268 * 18,500)
Fixed Costs:
Manufacturing costs $1,550,000
Administrative costs $906,000
Marketing costs $1,479,000
Total fixed costs = $3,935,000
Net income = $1,023,000
2. Sales revenue $7,992,000
Cost of goods sold:
Variable Manufacturing costs $2,478,000 ($118 * 21,000)
Fixed Manufacturing costs 1,550,000
Total cost of production $4,028,000 (per unit = $191.81)
Less Ending Inventory 479,525 ($191.81 * 2,500)
Cost of goods sold $3,548,475
Gross profit $4,443,525
Period costs:
Variable marketing costs $851,000
Fixed marketing costs 1,479,000
Administrative costs 906,000
Total period costs $3,236,000
Net income $1,207,525
Which of the following is not true of liquidity or marketability risk or discount? It is measurable. The magnitude of the discount or risk is inversely related to the size of the investor’s equity ownership in the business. The magnitude of the discount or risk is directly related to the size of the investor’s equity ownership in the business. It is important to adjust the discount rate for liquidity risk. It is believed to have declined in recent years
Answer:
The magnitude of the discount or risk is directly related to the size of the investor’s equity ownership in the business.
Explanation:
The following statements should be considered true with respect to the liquidity or marketability risk
a. It can be measurable
b. The discount or risk magnitude should be inversely related
c. It is considered to be important for adjusting the discount rate
d. It can be fall in the current years
So, the remaining statement should be the answer
You sell 25,000 loaf of bread per year. The carrying cost associated the main ingredient wheat flour is estimated to be $8 per unit (amount used for 1 loaf of bread) per year, and the ordering cost is $10 per order. And assume 1 year is 300 days and lead time is 3 days.
Required:
a. What is the EOQ?
b. How much money you will lose if you order 300 units of wheat flour? Calculate the total cost of inventory with EOQ model and with order size is 300. The difference will give you the answer.
c. Calculate the re-order point (assuming no uncertainty)?
Answer:
Annual Demand (D) = 25000
Carrying Cost (H) = 8
Ordering Costs (S) = 10
Number of working days = 300
Lead Time (Lt) = 3 days
a. EOQ = Sqrt (2*D*S/H)
EOQ = Sqrt (2*25000*10/8)
EOQ = Sqrt (62500)
EOQ = 250
b. Total Cost = (D * S) / EOQ + (EOQ * H) / 2
Total Cost = (25000 * 10) / 250 + (250 * 8) / 2
Total Cost = 1000 + 1000
Total Cost = 2000
Now, we calculate total Cost with order size: of 300
Total Cost = (25000 * 10) / 300 + (300 * 8) / 2
Total Costs = 833.3333 + 1200
Total Cost = 2,033.3333
The amount to lost if we order 300 units of wheat flour is as follows
= 2033.33 - 2000
= $33.33
3. ROP = (D / Number of working days) x Lt
ROP = (25000 / 300) * 3
ROP = 83.3333 * 3
ROP = 249.9999
ROP = 250
Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 44,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $521,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris’s actual manufacturing overhead cost for the year was $687,120 and its actual total direct labor was 44,500 hours. Required: Compute the company’s plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)
Answer:
Predetermined manufacturing overhead rate= $13.84 per direct labor hour
Explanation:
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (521,000 / 44,000) + 2
Predetermined manufacturing overhead rate= 11.84 + 2
Predetermined manufacturing overhead rate= $13.84 per direct labor hour
Wieters Industries manufactures several products including a basic case for a popular smartphone. The company is considering adopting an activity-based costing approach for setting its budget. The company's production activities, budgeted activity costs, and cost drivers for the coming year are as follows:
Activity Activity Overhead $ Cost Driver Cost Driver Quantity
Machine setup $200,000 # of setups 800
Inspection 120,000 # of quality tests 400
Materials receiving 252,000 # of purchase orders 1,800
The budgeted data for smartphone case production are as follows.
Direct materials $2.50 per unit
Direct labor $0.54 per unit
Number of setups 92
Number of quality tests 400
Number of purchase orders 50
Production 15,000 units
Required
a. Calculate the activity rate for each cost pool.
b. Calculate the activity-based unit cost of the smartphone case.
Answer:
Wieters Industries
a. Activity Rates:
Machine setup = $250
Inspection = 300
Materials receiving 140
b. The activity-based unit cost of the smartphone case is:
= $13.04
Explanation:
a) Data and Calculations:
Activity Activity Overhead $ Cost Driver Cost Driver Quantity
Machine setup $200,000 # of setups 800
Inspection 120,000 # of quality tests 400
Materials receiving 252,000 # of purchase orders 1,800
Total overhead costs $572,000
Activity Rates:
Machine setup = $250 ($200,000/800)
Inspection = 300 ($120,000/400)
Materials receiving 140 ($252,000/1,800)
Budgeted data for smartphone case production:
Direct materials $2.50 per unit
Direct labor $0.54 per unit
Number of setups 92
Number of quality tests 400
Number of purchase orders 50
Production 15,000 units
Overhead Applied to Smartphone Case:
Number of setups 92 * $250 = $ 23,000
Number of quality tests 400 * $300 = 120,000
Number of purchase orders 50 * $140 = 7,000
Total overhead applied = $150,000
Overhead per unit = $10 ($150,000/15,000)
Unit Cost of Smartphone Case:
Direct materials per unit $2.50
Direct labor per unit $0.54
Overhead per unit $10.00
Total unit cost = $13.04
You are a certified fraud examiner, and a local community group, the Silver Years Senior Squad, has requested that you give a presentation about consumer fraud. They want to hear about examples of recent scams that have happened to people and how they can avoid being scammed. What advice you would give to the Silver Years Senior Squad to help them avoid becoming a victim of a telemarketing fraudster?
Answer:
The answer is below
Explanation:
To avoid becoming a victim of a telemarketing fraudster, here some of the necessary things you should not and eventually do:
1. Usually telemarketing fraudsters require the victim involvement or participation, always say NO when you suspect a fraud
2. Old people are more vulnerable to telemarketing fraud, hence, the elderly ones need to be more careful and watch over if necessary.
3. To guide against telemarketing fraud effectively it is to carry out fast and direct reporting of any telemarketing calls suspected to be fraudulent to the Federal Trade Commission
4. Be alert and understand that fraudsters are very manipulative and focus on greed, fear, excitement, and gullibility.
5. Give them none of your information, including those you think is not sensitive or vital, you might never know how ell they could use that information
More than 99% of all U.S. firms are classified as small businesses, and they employ about half of private workers. A small business is defined as any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people. Understanding the advantages and disadvantages of small business ownership is crucial for any potential entrepreneur.
Match each statement or scenario with the appropriate advantage or disadvantage of small business
i. ownership.ii. Focusiii. Reputationiv. High stress levelv. Inexperience/Incompetencevi. Flexibilityvii.Inability to cope with growthviii.Costsix. Independencex. High failure rateMatch each of the options above to the items below.1. One of the leading reasons for becoming your own boss. 2. A 20-employee factory does not have a designated accounting or advertising department.3. The pizzas offered on the Patrick’s Pizza menu are often based on the types of produce in season.4. Mike’s trucking business provides specific information and products to commercial truck drivers.5. Brandy’s nursery offers delivery and expert installation of their trees at no extra cost to the customer and will replace any defective one up to 3 years after purchase.6. Sue works more than 60 hours a week at her construction business and cannot find reliable suppliers for lumber inventory.
7. Half of all new employer firms fail within the first five years.8. As a fitness expert, Tyler is having difficulties understanding the accounting requirements for his bank business loan for his workout facility.9. Circumstances such as products not arriving on time due to limited capacity affect the reputation of a company more than any other factor.
Answer:
A
Explanation:
Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with four years to maturity (YTM) has a coupon rate of 6%. The yield to maturity of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:_________.
a.) $841,635.85
b.) $715,390.47
c.) $530,230.59
d.) $1,009,963.02
Answer:
a.) $841,635.85
Explanation:
The value of the Treasury note is the present value of its future cash flows, its semiannual coupon payments and the face value receivable by the investors in the T-note at maturity.
Semiannual coupon=face value*coupon rate*6/12
face value=$1,000,000
coupon rate=6%
semiannual coupon=$1,000,000*6%*6/12
semiannual coupon=$30,000( there would 8 semiannual coupons in 4 years)
The present value of the cash flows can be determined using a financial calculator bearing in mind that the calculator would be set to its default end mode before making the following inputs:
N=8(semiannual coupons)
PMT=30000(amount of each semiannual coupon)
I/Y=5.50%(semiannual yield to maturity=11.00%*6/12)
FV=1000000(the face value of T-note)
CPT
PV=$841,635.85
Photo Framing's cost formula for its supplies cost is $1,000 per month plus $10 per frame. For the month of November, the company planned for activity of 610 frames, but the actual level of activity was 600 frames. The actual supplies cost for the month was $7,600. The spending variance for supplies cost in November would be closest to:
Answer:
$600 U
Explanation:
Calculation to determine what The spending variance for supplies cost in November would be closest to:
Actual results$ 7600
Less Flexible budget $7,000
($1,000 + $10 × 600)
Spending variance $600 U
($7,600-$7,000)
Therefore The spending variance for supplies cost in November would be closest to: $600 U
A total materials variance is analyzed in terms of quantity and quality variances. tight and loose variances. price and quantity variances. buy and sell variances.
Answer:
price and quantity variances.
Explanation:
In Financial accounting, costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.
Manufacturing costs can be defined as the overall costs associated with the acquisition of resources such as materials and the cost of converting these raw materials into finished goods. Manufacturing costs include direct labor costs, direct materials cost and manufacturing overhead costs.
Total direct materials variance gives the difference between the budgeted cost and actual cost of a unit of goods produced.
Generally, a total materials variance is analyzed in terms of price and quantity variances used by a manufacturer in the manufacturing of a particular product.
Which of the following is an example of a positive economic statement? Question 19 options: a) Corrupt politicians ought to be voted out of office. b) An increase in the price of gasoline will cause a reduction in the amount of gasoline purchased. c) Marginal tax rates should be reduced for individuals in the highest tax bracket. d) Workers with families should be paid at least the minimum wage. e) If crime rates were reduced, the world would be a better place to live.
You are now 20 years of age and decide to save $100 at the end of each month until you are 65. If the interest rate is 9.2%, how much money will you have when you are 65?
Answer:
FV= $804,326.91
Explanation:
Giving the following information:
Monthly deposit (A)= $100
Interest rate (i)= 0.092/12= 0.0077
Number of periods= 45*12= 540 months
To calculate the future value, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
FV= {100*[(1.0077^540) - 1]} / 0.0077
FV= $804,326.91
Net Zero Products, a wholesaler of sustainable raw materials. 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 $ 115,200 $ 80,000 $ 18,000 $ 7,200 $ 4,000 $ 6,000 Percent uncollectible 1 % 3 % 5 % 8 % 11 % 1. Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method. 2. Prepare the adjusting entry to record bad debts expense assuming the unadjusted balance in the Allowance for Doubtful Accounts is a $1,000 credit.
Answer:
Net Zero Products
1. The balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method is:
= $2,680.
2. The Adjusting Entry:
Debit Bad Debts Expense $1,680
Credit Allowance for Doubtful Accounts $1,680
To record bad debts expense and to bring the balance of the Allowance for Doubtful Accounts to a credit balance of $2,680.
Explanation:
a) Data and Calculations:
Days Past Due Total Percent Amount
AR Uncollectible Uncollectible
0 $80,000 1 % $800
1 to 30 $18,000 3 % 540
31 to 60 $7,200 5 % 360
61 to 90 $4,000 8 % 320
Over 90 $6,000 11 % 660
Total $ 115,200 $2,680
Allowance for Doubtful Accounts:
Unadjusted balance = $1,000
Adjusted balance 2,680
Bad Debts Expense = $1,680
Hitzu Co. sold a copier costing $4,800 with a two-year parts warranty to a customer on August 16, 2016, for $6,000 cash. Hitzu uses the perpetual inventory system. On November 22, 2017, the copier requires on-site repairs that are completed the same day. The repairs cost $209 for materials taken from the Repair Parts Inventory. These are the only repairs required in 2017 for this copier. Based on experience, Hitzu expects to incur warranty costs equal to 4% of dollar sales. It records warranty expense with an adjusting entry at the end of each year.
1. How much warranty expense does the company report in 2016 for this copier?
2. How much is the estimated warranty liability for this copier as of December 31, 2016?
3. How much warranty expense does the company report in 2017 for this copier?
4. How much is the estimated warranty liability for this copier as of December 31, 2017?
5. Prepare journal entries to record (a) the copier’s sale; (b) the adjustment on December 31, 2016, to recognize the warranty expense; and (c) the repairs that occur in November 2017.
Answer:
1. $240
2. $240
3. $0
4. $31
5. August 16, 2016
Dr Cash $6,000
Cr Sales $6,000
Aug. 16, 2016
Dr Cost of goods sold $4,800
Cr Merchandise inventory $4,800
Dec 31,2016
Dr Warranty expense $240
Cr Estimated warranty liability $240
Nov. 22, 2017
Dr Estimated warranty liability $209
Cr Repair parts inventory $209
Explanation:
1. Calculation to determine How much warranty expense does the company report in 2016 for this copier
Warranty expense = 4% × $6,000
Warranty expense= $240
Therefore the amount of warranty expense that the company report in 2016 for this copier is $240
2. Calculation to determine How much is the estimated warranty liability for this copier as of December 31, 2016
Estimated warranty liability= 6% × $6,000
Estimated warranty liability= $240
Therefore estimated warranty liability for this copier as of December 31, 2016 is $240
3. The 2017 warranty expense that the company report in 2017 for this copier will be $0 because NO ADDITIONAL WARRANTY EXPENSE in the year 2017 should be reported for this copier
4. Calculation to determine how much is the estimated warranty liability for this copier as of December 31, 2017
2017 ESTIMATED WARRANTY LIABILITY
Beginning 2017 balance $240
(4%*$6,000)
Less Parts cost ($209)
Ending 2017 balance $31
Thereforea m the estimated warranty liability for this copier as of December 31, 2017 is $31
5. Preparation of the journal entries
August 16, 2016
Dr Cash $6,000
Cr Sales $6,000
Aug. 16, 2016
Dr Cost of goods sold $4,800
Cr Merchandise inventory $4,800
Dec 31,2016
Dr Warranty expense $240
Cr Estimated warranty liability $240
Nov. 22, 2017
Dr Estimated warranty liability $209
Cr Repair parts inventory $209
A primary function of the promotional mix is to Multiple Choice explain how to use a product. persuade consumers to try a product. inform customers of complementary offerings. inform customers of pricing changes. point out flaws in competitors' products.
Answer: persuade consumers to try a product.
Explanation:
The Promotional Mix has to do with the promotional tools which are used by a company in order to create, and increase the demand for the goods and services offered by the company.
The Promotional Mix integrates promotional tools like direct marketing, personal selling, Advertising, Sales Promotion, etc
The promotional mix is useful in informing the prospective buyers about the importance of a good or service and also convince them to try it and the benefits attached to the product.
Miracle Clean's variable costs are $3.00 per bottle and Fixed Expenses are $350,000 per year. The company currently sells 150,000 bottles for $6.50 which results in profit of $175,000. The company is considering raising the selling price to $7.00 per bottle which is expected to decrease sales by 20%. If the price is raised, the number of units that must be sold to keep the profits unchanged is
Answer:
131,250= number of units
Explanation:
Giving the following information:
We need to calculate the number of units to be sold to maintain a profit of $175,000.
Unitary variable cost= $3
Fixed expenses= $350,000
Selling price= $7
Net income= total contribution margin - fixed cost
175,000= number of units*(7 - 3) - 350,000
525,000 = number of units*4
525,000 / 4= number of units
131,250= number of units
Cape Corp. will pay a dividend of $3.60 next year. The company has stated that it will maintain a constant growth rate of 5 percent a year forever. a. If you want a return of 17 percent, how much will you pay for the stock
Answer:
$30
Explanation:
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
$3.6 / (0.17 - 0.05)
$3.60 / 0.12 = $30
Lucy has decided to save for a vacation in 18 months. She will save the money into a short-term investment account returning 4% annually. How much will she have to put away at the beginning of each month if the vacation cost is $15,000
Answer:
Monthly deposit= $810.20
Explanation:
Giving the following information:
Number of periods (n)= 18 months
Interest rate (i)= 0.04/12= 0.0033
Future value (FV)= $15,000
To calculate the monthly deposit, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (15,000*0.0033) / [(1.0033^18) - 1]
A= $810.20
If a company is overly optimistic about debt collection, the company will understate bad debt expense and:
Answer:
overstate net income but days to collect will increase.
Explanation:
A bad debt expense is defined when any receivable is no more collectible as the customer is not able to fulfil or satisfy the obligation in order to pay the obligation of paying an outstanding debt because of some financial problems or due to bankruptcy.
Thus when any organization is more optimistic about the debt collection, it will understate the bad debt expenses and will also overstate the net income. But in this case the number of days to collect the payment increases.
In the liquidation of a partnership, any gain or loss on the realization of noncash assets should be allocated Group of answer choices first to creditors and the remainder to partners. to the partners on the basis of their capital balances. to the partners on the basis of their income-sharing ratio. only after all creditors have been paid.
Answer:
to the partners on the basis of their capital balances.
Explanation:
When the partnership is liquidated so any gain or loss that should be realized on non-cash asset should be distributed to the partners based on their capital balances. As at the time of gain or loss the sale of the non-cash assets should be distributed to the partners at their profit sharing ratio
therefore as per the given situation, the above represent the answer
After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only individual voting for you. a. If the company has 470,000 shares outstanding and the stock currently sells for $41, how much will it cost you to buy a seat if the company uses straight voting
Answer: $9,635,041
Explanation:
With 470,000 shares, you will need to hold a majority to vote yourself into the board.
To gain a majority, you need more than 50% of the shares:
= 470,000 / 2 + 1 share to give you majority
= 235,001 shares
The cost of 235,001 shares is:
= 235,001 * 41
= $9,635,041
1. Prepare the December 31 adjusting entries for the following transactions. Omit explanations. 1. Fees accrued but not billed, $6,300. 2. The supplies account balance on December 31, $4,750; supplies on hand, $960. 3. Wages accrued but not paid, $2,700. 4. Depreciation of office equipment, $1,650. 5. Rent expired during year, $10,800.
Answer:
1. Debit Accounts Receivable $6300
Credit Fees Revenue $6300
2. Debit Supplies Expense $3790
Credit Supplies $3790
3. Debit Wages Expense $2700
Credit Wages Payable $2700
4. Debit Depreciation Expense $1650
Credit Accumulated Depreciation-office equip. $1650
5. Debit Rent Expense $10800
Credit Prepaid Rent $10800
Explanation:
Preparation of the December 31 adjusting entries
1. Debit Accounts Receivable $6300
Credit Fees Revenue $6300
2. Debit Supplies Expense $3790
Credit Supplies $3790
(4750-960)
3. Debit Wages Expense $2700
Credit Wages Payable $2700
4. Debit Depreciation Expense $1650
Credit Accumulated Depreciation-office equip. $1650
5. Debit Rent Expense $10800
Credit Prepaid Rent $10800
Ramble On Co. wishes to maintain a growth rate of 13.6 percent per year, a debt-equity ratio of 1.8, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at .98. What profit margin must the firm achieve
Answer: 5.99%
Explanation:
Based on the question,
Dividend payout ratio = 30%
Therefore, the retention ratio will be:
= 1 - 30%
= 70%
Growth rate = 13.6%
We'll the use the sustainable growth rate formula which will be:
0.136 = (ROE x 0.7)/ (1-(ROE x 0.7))
0.136(1 - (0.7ROE)) = 0.7ROE
ROE = 0.136/0.7952
ROE = 0.171026
Then, the Profit margin will be:
ROE = Profit Margin x Asset Turnover x Equity multiplier
0.171026 = PM x (1/0.98) x (1 + 1.8)
0.171026 = PM x (1/0.98) x 2.8
PM = 0.171026 x 0.98/2.8
PM = 0.0598591
Profit margin = 5.99%
Why is nominal value important ?
Answer: A preferred stock's nominal (par) value is important in that it is used to calculate its dividend while the nominal value of common stock is an arbitrary value assigned for balance sheet purposes. In economics, nominal value refers to the current monetary value and does not adjust for the effects of inflation.
Explanation:
Hope it helps
Flagstaff Company has budgeted production units of 9,000 for July and 9,200 for August. The direct labor requirement per unit is 0.50 hours. Labor is paid at the rate of $22 per hour. The total cost of direct labor budgeted for the month of August is:
Answer:
the total cost of direct labor budgeted for the month of August is $101,200
Explanation:
The computation of the total cost of direct labor budgeted is shown below:
Direct labor cost is
= 9,200 × .50 hours × $22 per hour
= $101,200
Hence, the total cost of direct labor budgeted for the month of August is $101,200
The same should be relevant
An example of a push strategy is ________. organizing couponing campaigns utilizing newspaper advertising using television advertising employing direct marketing paying a shelf fee
Answer: Using television advertising
Explanation:
Push marketing strategy, refers to the strategy whereby take its products to the consumers in order to increase the exposure of the product.
Push marketing simply means pushing the brand through the use of promotions and paid advertisiment. On the other hand, pull strategy draws customers towards the product.
Favre and Carter Law Office employ 12 full-time attorneys and 5 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $30,000 per paraprofessional. For 20x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
How much should the client be billed in a normal costing system which uses budgeted rate and cost allocations are based on actual data, when 1,000 professional labor-hours were used?
a. $27,000
b. $32,000
c. $34,800
d. $37,400
Answer:
Billed costs= $32,000
Explanation:
Giving the following information:
Total estimated cost attorney= 12*100,000= $1,200,000
Total estimated cost paraprofessional= 5*30,000= $150,000
Estimated Indirect costs= $250,000
Estimated number of hours= 50,000
First, we need to calculate the allocation rate:
Allocation rate= total estimated costs for the period/ total amount of allocation base
Allocation rate= (1,200,000 + 150,000 + 250,000) / 50,000
Allocation rate= 1,600,000/50,000
Allocation rate= $32
Now, for 1,000 hours:
Billed costs= 1,000*32= $32,000
Consider two stocks, A and B. Stock A has an expected return of 10% and a beta of 1.2. Stock B has an expected return of 14% and a beta of 1.8. The expected market rate of return is 9% and the risk-free rate is 5%. Security __________ would be considered the better buy because
Answer:
B; it offers an expected excess return of 1.8%
Explanation:
Here are the options :
A; it offers an expected excess return of .2%A; it offers an expected excess return of 2.2%B; it offers an expected excess return of 1.8%B; it offers an expected return of 2.4%
to determine which stock is the better buy, we have to calculate the expected return of the stocks using CAPM
According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)
Stock A = 5% + 1.2(9% - 5%) = 9.8%
Stock B = 5% + 1.8(9% - 5%) = 12.20%
The next step is to determine the excess return
stated expected return - calculated expected return = excess return
Stock A's excess return = 10% - 9.8% - 0.2%
Stock B's excess return = 14 - 12.20 = 1.8%
Security B would be considered because it has a higher excess return
Suppose that the production function is y= 9k^0.5 N^0.5. With this production function, the marginal product of labor is MPN= 4.5K^0.5 N^-0.5. The capital stock is K= 25. The labor supply curve is NS= 100[(1-t)w]^2, where w is the real wage rate, t is the tax rate on labor income, and hence (1-t)w is the after-tax real wage rate.
Required:
a. Assume that the tax rate on labor income, t, equals zero. Find the equation of the labor demand curve. Calculate the equilibrium levels of the real wage and employ- ment, the level of full-employment output, and the total after-tax wage income of workers.
b. Repeat part (a) under the assumption that the tax rate on labor income, t, equals 0.6.
Answer:
A) i) w/P = MPN , ( NS ) = 100[ (1-t) w]^2
ii) w = 1.5 , N = 225,
iii) y = 675 ,
iv) 337.5
B) i) ( NS ) = 100[(1-0.6)w]^2
ii) w = 2.372 , N = 90
iii) y = 426.91
iv) 85.839
Explanation:
Given data :
Production function ( y ) = 9k^0.5 N^0.5
MPN = 4.5k^0.5N^-0.5
capital stock ( K ) = 25
labor supply curve ( NS ) = 100[ (1-t) w]^2
assume P = 1
a) Determine
i) equation of labor demand curve = w/P = MPN
where; w = 22.5 N^-0.5 , N=506.25/(w^2)
labor supply curve ( NS ) = 100[ (1-t) w]^2
ii) equilibrium levels of real wage and employment
506.25/(w^2) = 100[(1-t)w]^2 ( equilibrium condition )
w ( equilibrium level of real wage ) = 1.5
equilibrium level of employment = 100[(1-t)w]^2 ; where t = 0 , w = 1.5
= 100 ( 1 * 1.5 )^2
N = 225
iii) level of full-employment y = 9k^0.5 N^0.5 ; where N = 225 , k = 25
= 9(25)^0.5 * (225)^0.5
y = 675
iv) Total after-tax wage income of workers
= w*N = ( 225 * 1.5 ) = 337.5
B) assuming t = 0.6
i) equation of labor demand curve
labor supply curve ( NS ) = 100[(1-0.6)w]^2 = 16 w^2
ii) equilibrium levels ; 16w^2 = 506.25/(w^2).
w( equilibrium real wage ) = 2.372
Equilibrium employment ( N )= 16 * ( 2.372 )^2 =90
iii) level of full employment y = 9k^0.5 * 90^0.5
= 9(25)^0.5 * 90^0.5 = 426.91
iv) Total after tax wage/income of workers
= (1-0.6)*2.372*90 = 85.839
