Answer and Explanation:
a. The computation of the material price variance is shown below:
= Actual Quantity × (Standard Price - Actual Price)
= $7,260 × (2,200 pounds × $3.10 per pound)
= $440 unfavorable
b. The computation of the material quantity variance is shown below:
= Standard Price × (Standard Quantity - Actual Quantity)
= $3.10 × (2,200 pounds - (190 units × 6 pounds))
= $3,286 unfavorable
c. Total material variance
= Material price variance + material quantity variance
= $440 unfavorable + $3,286 unfavorable
= $3,726 unfavorable
d. The computation of the labor price variance is shown below:
= Actual Hours × (Actual price - Standard Price)
= $7,623 - (770 hours × $10)
= $77 favorable
e. The computation of the labor quantity variance is shown below:
= Standard Rate × (Actual Hours - Standard hours allowed for actual units)
= $10 × (770 hours - (190 units × 4 hours)
= $100 unfavorable
Total labor variance
= Labor rate variance + labor quantity variance
= $77 favorable + 100 unfavorable
= $23 unfavorable
Why do more than half of enterprise application projects exceed budgets, deliver less than expected benefits, or experience overruns?
Answer: The answer is provided below
Explanation:
1. Underfinancing: One main reason that cause budget overrun and less than expected benefits is underfinancing. Allocation of an adequate amount of budget to project at the beginning will lead to a budget overrun or failure.
2. Unfeasible Cost Estimates: Estimation of cost is a vital process in a project and another common reason for budget overrun. When the cost is calculated by inexperienced or unqualified personnel, the project is going to face budget overruns.
3. Underestimating the Project Complexity: Big projects are usually at the risk of overrunning its budget as a result of bigger complications that may arise during its execution.
4. Lack of Resource Planning: When one fails to plan the resources that are available effectively, then this would lead to a budget overrun and less benefits. A common mistakes that cause overrun is failure to estimate the resources which would be utilized during the project.
Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $68,000 and $3,450, respectively. During Year 2, Allegheny wrote off $6,300 of Uncollectible Accounts. Using the percent of receivables method, Allegheny estimates that the ending Allowance for Doubtful Accounts balance should be $5,400. What amount will Allegheny report as Uncollectible Accounts Expense on its Year 2 income statement
Answer:
$8,250
Explanation:
Relevant data provided for compute the Uncollectible Accounts Expense is here below:-
Amount written off = $6,300
Closing balance = $5,400
Opening balance = $3,450
The computation of Uncollectible Accounts Expense is shown below:-
Uncollectible Accounts Expense = Amount written off + Closing balance - Opening balance
= $6,300 + $5,400 - $3,450
= $11,700 - $3,450
= $8,250
Therefore for computing the Uncollectible Accounts Expense we simply applied the above formula.
Exercise 4-20 (Algo) Statement of cash flows; indirect method [LO4-8] Presented below is the 2021 income statement and comparative balance sheet information for Tiger Enterprises. TIGER ENTERPRISES Income Statement For the Year Ended December 31, 2021 ($ in thousands) Sales revenue $ 15,500 Operating expenses: Cost of goods sold $ 5,100 Depreciation expense 410 Insurance expense 950 General and administrative expense 3,500 Total operating expenses 9,960 Income before income taxes 5,540 Income tax expense (2,216 ) Net income $ 3,324 Balance Sheet Information ($ in thousands) Dec. 31,2021 Dec. 31, 2020 Assets: Cash $ 640 $ 370 Accounts receivable 835 1,000 Inventory 825 770 Prepaid insurance 140 40 Equipment 3,300 2,650 Less: Accumulated depreciation (1,180 ) (770 ) Total assets $ 4,560 $ 4,060 Liabilities and Shareholders' Equity: Accounts payable $ 385 $ 530 Accrued liabilities (for general & administrative expense) 385 570 Income taxes payable 365 320 Notes payable (due 12/31/2022) 1,100 800 Common stock 1,120 970 Retained earnings 1,205 870 Total liabilities and shareholders' equity $ 4,560 $ 4,060 Required: Prepare Tiger’s statement of cash flows, using the indirect method to present cash flows from operating activities. (Hint: You will have to calculate dividend payments). (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.)
Answer and Explanation:
The preparation of the cash flow statement is presented below:
TIGER ENTERPRISES
Cash flow statement
Cash flow from operating activities
Net income $3,324
Adjustment made
Add: Depreciation expenses $410
Add: Decrease in account receivable $165 ($835 - $1,000)
Less: Increase in inventory -$55($825 - $770)
Less: Increase in prepaid insurance -$100 ($140 - $40)
Less: Decrease in account payable -$145 ($385 - $530)
Less: Decrease in accrued liabilities -$185 ($385 - $570)
Add: Increase in income taxes payable $45 ($365 - $320)
Net cash provided by operating activities $3,459
Cash flow from investing activities
Purchase of equipment -$650 ($3,300 - $2,650)
Net cash used by investing activities -$650
Cash flow from financing activities
Issuance of the note payable $300 ($1,100 - $800)
Issuance of the common stock $150 ($1,120 - $970)
Dividend paid -$2,989 ($870 + $3,324 - $1,205)
Net cash used by financing activities -$2,539
Increase in cash $270
Add: Beginning cash balance $370
Ending cash balance $670
The items which shown in a positive sign reflects the cash inflow and the items which shown in a negative sign reflects the cash outflow ,
Hardware is adding a new product line that will require an investment of $ 1 comma 476 comma 000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $ 300 comma 000 the first year, $ 290 comma 000 the second year, and $ 240 comma 000 each year thereafter for eight years. Assume the project has no residual value. Compute the ARR for the investment. Round to two places
Answer:
42,51%
Explanation:
Accounting Rate of Return (ARR) = Average Profits / Average Investment
Calculation of Average Profits
Average Profit = Sum of Profits / Number of Years
= (300,000+290,000+240,000×8)/10
= $2,510,000 / 8
= $313,750
Calculation of Average Investment
Average Investment = Initial Investment + Scrape Value / 2
= $1,476,000/2
= $738,000
Accounting Rate of Return (ARR) = $313,750/$738,000×100
= 42,51%
Jiminy’s Cricket Farm issued a bond with 25 years to maturity and a semiannual coupon rate of 4 percent 3 years ago. The bond currently sells for 108 percent of its face value. The company’s tax rate is 22 percent. The book value of the debt issue is $30 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 10 years left to maturity; the book value of this issue is $15 million, and the bonds sell for 73 percent of par. a.What is the company’s total book value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)b.What is the company’s total market value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)c.What is your best estimate of the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
Explanation:
a.What is the pre-tax cost of debt?This question is basically asking for the bond’s current yield to maturity, which is the pre-tax cost of long term debt in the capital markets for this company today.Price = 1.08 * 1000 = 1080+/- PV23 * 2 = 46 N.10 * 1000 = 100 / 2 = 50 PMT1000 FVSolve for i/y = 4.5801 is the semi-annual yield to maturity * 2 = 9.1601% annual YTM
b.What is the after-tax cost of debt?9.1601 * (1 - .35) = 5.9541 after tax cost of debt.This is the true cost of debt to the company because the company gets a tax deduction (a tax shield!) for paying interest on its debt.
One of the key functions of human resource management is
Answer: recruiting.
Explanation:
Recruiting is one of the most important aspects of human resource management. Hence, Option B is correct.
What is the meaning of Recruiting?Finding, vetting, recruiting, and eventually onboarding qualified job prospects is the process of recruitment. The process of finding, vetting, shortlisting, and employing potential resources to fill open jobs in a company is known as recruitment.
It serves as a fundamental part of human resource management. The act of selecting the best candidate for a position at the ideal time is known as recruitment.
Simply announcing that you are hiring is all that hiring entails. The deliberate technique of locating and attracting the best individuals for the position is known as recruiting.
Therefore, Option B is correct.
Learn more about Recruiting from here:
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The complete question has been attached in text form:
One of the key functions of human resource management is:
a. departmentalizing.
b. recruiting.
c. budgeting.
d. auditing.
Markley Manufacturing calculated its predetermined overhead rate to be 120% of direct labor cost. During June, the company incurred $90,000 of factory labor costs, of which $85,000 is direct labor and $5,000 is indirect labor. Actual overhead incurred was $84,000. Compute the amount of manufacturing overhead applied during the month. Determine the amount of under- or over-applied manufacturing overhead.
Answer:
Applied Manufacturing Overheads are $102,000
Overapplied Manufacturing overheads are $18,000
Explanation:
Under or over applied manufacturing overhead can be determined by comparing the actual and applied manufacturing overheads.
Applied overheads can be calculated by multiplying pre-determined overhead rate and actual level of quantity. Predetermined overhead rate is calculated using estimated overhead and estimated activity on which overheads are applied.
In this question the predetermined overhead rate is 120% of direct labor cost.
Applied overhead = Direct labor cost x 120% = $85,000 x 120% = $102,000
Actual overheads incurred = $84,000
Overapplied Manufacturing overheads = $102,000 - $84,000 = $18,000
On January 1, 2021, the Blackstone Corporation purchased a tract of land (site number 11) with a building for $600,000. Additionally, Blackstone paid a real estate brokerâs commission of $36,000, legal fees of $6,000, and title insurance of $18,000. The closing statement indicated that the land value was $500,000 and the building value was $100,000. Shortly after acquisition, the building was razed at a cost of $75,000.
Blackstone entered into a $3,000,000 fixed-price contract with Barnett Builders, Inc., on March 1, 2021, for the construction of an office building on land site 11. The building was completed and occupied on September 30, 2022. Additional construction costs were incurred as follows:
Plans, specifications, and blueprints .....................$ 12,000
Architectsâ fees for design and supervision ............95,000
To finance the construction cost, Blackstone borrowed $3,000,000 on March 1, 2021. The loan is payable in 10 annual installments of $300,000 plus interest at the rate of 14%. Blackstoneâs average amounts of accumulated building construction expenditures were as follows:
For the period March 1 to December 31, 2021 ...........$ 900,000
For the period January 1 to September 30, 2022 .......2,300,000
Required:
1. Prepare a schedule that discloses the individual costs making up the balance in the land account in respect of land site 11 as of September 30, 2022.
2. Prepare a schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2022.
Answer:
Blackstone Corporation
1. A schedule that discloses the individual costs making up the balance in the land account in respect of land site 11 as of September 30, 2022:
Cost of Land = $600,000
Broker's Commission = $36,000
Legal Fees = $6,000
Title Insurance = $18,000
Razing of old building = $75,000
Total = $735,000
2. A schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2022:
Payment to contractor for building = $3,000,000
Plans, specifications, and blueprints = $12,000
Architect's fees (design & supervision = $95,000
Capitalized Interest ($3m x14%/10 x 2) = $84,000
Total = $3,191,000
Explanation:
a) The cost of land to recognize includes the actual cost for the parcel of land, including the building which was razed. All other expenses incurred ordinarily and necessarily in order to put the land to its intended use are also capitalized. The costs for the broker's commission, legal fees, title insurance, and razing of old building were incurred ordinarily and necessarily for the land and are therefore capitalized in determining the value of the land.
b) The capitalized interest portion for the building is the interests paid to date. The contractor's fee, payments for plans, architect's fee, and interests are included as costs of the building.
Four employees received feedback from their managers. Jose was told what he did wrong and was given a warning. Jolette was told that she has been too shy in team meetings and is not speaking enough. Richard was told that his unique skill of analysis has been very valuable to the team. Gloria was told about some errors she made on the reports the team produced. Who will most likely feel highly engaged and be more productive?
Answer:
Richard
Explanation:
In simple words, Among all the employees in the organisation only Richard got the appreciation for the work he is performing. Such appreciation would work as an incentive for Richard to perform his duty with more effectiveness in the future.
Positive comments from the employer always works as a motivation to the employees and results in positive reinforcement of such employee which further results in better results.
Assume that the economy is in long-run equilibrium. Now, assume that there is an unexpected increase in the price of oil. As a result of higher oil prices, the A. short-run aggregate supply curve will shift left. B. long-run aggregate supply curve will shift left. C. short-run aggregate supply curve will shift right. D. aggregate demand curve will shift left. The new short-run equilibrium will be
Answer:
The correct answer is D)
The aggregate demand curve will shift left.
Aggregate supply is stimulated only by labour, capital, and technology.
Equilibrium refers to the price point where demand or supply intersect.
Cheers!
Blossom Companyhad the following transactions during 2022: 1. Issued $182500 of par value common stock for cash. 2. Recorded and paid wages expense of $87600. 3. Acquired land by issuing common stock of par value $73000. 4. Declared and paid a cash dividend of $14600. 5. Sold a long-term investment (cost $4380) for cash of $4380. 6. Recorded cash sales of $584000. 7. Bought inventory for cash of $233600. 8. Acquired an investment in Zynga stock for cash of $30660. 9. Converted bonds payable to common stock in the amount of $730000. 10. Repaid a 6-year note payable in the amount of $321200. What is the net cash provided by investing activities
Answer:
($26,280)
This represents net cash used up by investing activities
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow while an increase in liabilities is an inflow and vice versa.
Hence net cash provided by investing activities
= $4380 - $30660
= ($26,280)
Other activities are operating and financing activities.
Grape Inc. uses the percentage of credit sales method of estimating doubtful accounts. The Allowance for Doubtful Accounts has an unadjusted credit balance of $3,500 and the company had $180,000 of net credit sales during the period. Grape has experienced bad debt losses of 4% of credit sales in prior periods. After making the adjusting entry for estimated bad debts, what is the ending balance in the Allowance for Doubtful Accounts accou
Answer:
$9,700
Explanation:
The calculation of ending balance in the Allowance for Doubtful Accounts account is shown below:-
Ending balance in the Allowance for Doubtful Accounts account = Net credit sales × Credit sales percentage + Credit balance
= $180,000 × 4% + $2,500
= $7,200 + $2,500
= $9,700
So, for computing the ending balance in the Allowance for Doubtful Accounts account we simply applied the above formula.
Which law is referred to as the credit cardholders Bill Of Rights ?
Answer: credit CARD act
Hope this helps!!!
A) Fair and Accurate Credit Transaction Act
Suppose that the standard deviation of monthly changes in the price of commodity A is $2. The standard deviation of monthly changes in a futures price for a contract on commodity B (which is similar to commodity A) is $3. The correlation between the futures price and the commodity price is 0.9. What hedge ratio should be used when hedging a one month exposure to the price of commodity A
Answer:
0.6
Explanation:
Correlation r = 0.9,
Standard deviation of monthly change in price of commodity A, σA = 2,
Standard deviation of monthly change in price of commodity B, σB = 3
The hedge ratio will be calculated using the formula
Hedge ratio=r×σA÷σB
Hedge ratio=0.9×2÷3
Hedge ratio = 0.6
Therefore, the hedge ratio used when hedging a one month exposure to the price of commodity A is 0.6.
For the year ended December 31, 2016, Norstar Industries reported net income of $655,000. At January 1, 2016, the company had 900,000 common shares outstanding. The following changes in the number of shares occurred during 2016: Apr. 30 Sold 60,000 shares in a public offering. May 24 Declared and distributed a 5% stock dividend. June 1 Issued 72,000 shares as part of the consideration for the purchase of assets from a subsidiary. Required: Compute Norstar's earnings per share for the year ended December 31, 2016.
Answer:
1.272 per share
Explanation:
The computation of earnings per share is shown below:-
Weighted Average number of Common shares outstanding = outstanding common shares ÷ Net income
= 900,000 ÷ $707,810
= 1.272 per share
Where,
Net Income = Preferred Dividends ÷ Weighted Average number of Common shares outstanding
= $655,000 ÷ (1 + 0.05) + ( 60,000 × 8 months ÷ 12 months) × 1.05 + (72,000 × 7 months ÷ 12 months)
= $623,810 + 40,000 × 1.05 + 42,000
= $623,810 + 42,000 + 42,000
= 707,810
How long do foodbourne illnesses last
Answer:
5-7 days
Explanation:
Immune-comprised individuals may experience a more serious illness. Severe diarrhea (often bloody diarrhea), abdominal cramps, and vomiting. Usually little or no fever. Can begin 2 to 8 days, but usually 3-4 days after consumption of contaminated food or water and last about 5 to 7 days depending on severity.
Answer:
about a week
Explanation:
Can begin 2 to 8 days, but usually 3-4 days after consumption of contaminated food or water and last about 5 to 7 days depending on severity.
Matrix Corporation's balance sheet and income statement appear below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 23 $ 22 Accounts receivable 39 40 Inventory 43 44 Property, plant, and equipment 587 500 Less accumulated depreciation 359 347 Total assets $ 333 $ 259 Liabilities and stockholders' equity: Accounts payable $ 30 $ 26 Accrued liabilities 15 18 Income taxes payable 39 40 Bonds payable 109 120 Common stock 51 50 Retained earnings 89 5 Total liabilities and stockholders' equity $ 333 $ 259 Income Statement Sales $ 972 Cost of goods sold 620 Gross margin 352 Selling and administrative expense 200 Net operating income 152 Gain on sale of equipment 14 Income before taxes 166 Income taxes 50 Net income $ 116 The company sold equipment for $20 that was originally purchased for $7 and that had accumulated depreciation of $1. It paid a cash dividend during the year and did not issue any bonds payable or repurchase any of its own common stock. Required: Determine the net cash provided by (used in) operating activities for the year using the indirect method.
Answer:
Check the explanation
Explanation:
Cash flow from operating activities:
Net income $116
Adjustment to reconcile net income to cash basis:
Depreciation expense ($359+1-347) $13
Gain on sale of equipment (14)
Decrease in account receivable (40-39) $1
Decrease in inventory (44-43) $1
Increase in account payable (30-26) $4
Decrease in accrued liabilities (18-15) (3)
Decrease in income tax payable (40-39) (1)
Net cash flow from operating activities $117
If a firm has retained earnings of $2.7 million, a common shares account of $4.7 million, and additional paid-in capital of $9.4 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity.
Answer:
Change in retained earnings = $1.02 million (Decrease)
Change in common shares account = $5.17 million (Increase)
Change in additional paid-in capital = $10.61 million (Increase)
Explanation:
Given:
Retained earnings = $2.7 million
Common shares account = $4.7 million
Additional paid-in capital = $9.4 million
Stock dividend = 10%
Find:
Changes in account.
Computation:
1. Change in retained earnings
Change in retained earnings = Retained earnings - (Retained earnings - Common shares account - Additional paid-in capital)Stock dividend
Change in retained earnings = $2.7 million - ($2.7 million - $4.7 million - $9.4 million)10%
Change in retained earnings = $2.7 million - 1.68 million
Change in retained earnings = $1.02 million (Decrease)
2. Change in common shares account
Change in common shares account = Common shares account (1+Stock dividend)
Change in common shares account = $4.7 million (1+10%)
Change in common shares account = $5.17 million (Increase)
3. Change in additional paid-in capital
Change in additional paid-in capital = Additional paid-in capital + (Additional paid-in capital + Retained earnings)Stock dividend
Change in additional paid-in capital = $9.4 million + ($9.4 million + $2.7 million)10%
Change in additional paid-in capital = $9.4 million + 1.21 million
Change in additional paid-in capital = $10.61 million (Increase)
In the Assembly Department of Concord Company, budgeted and actual manufacturing overhead costs for the month of April 2020 were as follows. Budget Actual Indirect materials $14,200 $13,700 Indirect labor 19,100 19,900 Utilities 11,400 12,100 Supervision 4,600 4,600 All costs are controllable by the department manager. Prepare a responsibility report for April for the cost center.
Answer and Explanation:
The preparation of responsibility report for April for the cost center is shown below:-
Concord Company,
Assembly Department
Manufacturing Overhead Cost Responsibility Report
For the Month Ended April
Controllable Cost Budget Actual Difference Remark
Indirect materials $14,200 $13,700 $500 Favorable
Indirect Labor $19,100 $19,900 -$800 Unfavorable
Utilities $11,400 $12,100 -$700 Unfavorable
Supervision $4,600 $4,600 0 None
Total $49,300 $50,300 -$1,000 Unfavorable
Which statement is false? Marginal cost and marginal productivity are inversely related. Marginal cost is the change in a firm's total cost due to a one unit change in output. Costs that are small and unimportant with little impact on profits are called marginal costs. A marginal cost curve will always intersect the average total cost curve at the minimum average total cost. Consider the table. Output 0 1 2 3 4 5 6 7 8 9 10 Total cost 100 110 115 125 140 160 190 230 280 340 420 What is the marginal cost of the fifth unit based on the table? $0 −$20 $20 $160
Answer:
Option (c) Marginal cost of fifth unit = $20
Explanation:
According to the scenario, computation of the given data are as follows:
1)
Option (b) : Marginal cost is the change in the total cost of firm due to one unit change in output.
We can calculate the marginal cost by using following formula :
Marginal cost = Total cost ÷ Quantity
2)
Marginal cost of fifth unit = Total cost at unit 5 - total cost at unit 4
= $160 - $140
= $20
Fultz Company has accumulated the following budget data for the year 2020.
1. Sales: 31,410 units, unit selling price $85.
2. Cost of one unit of finished goods: direct materials 1 pound at $6 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $7 per direct labor hour.
3. Inventories (raw materials only): beginning, 10,120 pounds; ending, 15,480 pounds.
4. Selling and administrative expenses: $170,000; interest expense: $30,000.
5. Income taxes: 30% of income before income taxes.
Prepare a schedule showing the computation of cost of goods sold for 2020.
Answer:
COST OF Goods SOLD $ 1,1539,110
Explanation:
Fultz Company
Schedule of Cost of Goods Sold for 2020
As there are no beginning and ending finished goods inventories the total units produced are sold. (Finished Goods required 31410 Units)
Inventories raw materials : beginning, 10,120 pounds
Add Direct Materials Purchases 36770 pounds
Less Inventories ending raw materials , 15,480 pounds
Direct Materials Used 31410 pounds
Materials 1 pound at $6 per pound= $ 6* 31410 Units= $ 188460
Direct labor 3 hours at $12 per hour= $ 36* 31410 Units= $ 1130780
Manufacturing Overhead $7 per direct labor hour= $ 7* 31410 Units=
$ 219870
Total Manufacturing Costs $ 1,1539,110
There are no beginning and ending work in process inventories so the total manufacturing cost gives us the COST OF Goods SOLD.
ImpressMe Products embosses notebooks with school and corporate logos. Last year, the company’s direct labor payroll totaled $352,100 for 50,300 direct labor hours. The standard wage rate is $6.75 per direct labor hour. Calculate ImpressMe’s direct labor rate variance. (Round answer to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)
Answer:
Direct labor rate variance= $12,575 unfavorable
Explanation:
Giving the following information:
Last year, the company’s direct labor payroll totaled $352,100 for 50,300 direct labor hours. The standard wage rate is $6.75 per direct labor hour.
To calculate the direct labor rate variance, we need to use the following formula:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 352,100/50,300= $7 per hour
Direct labor rate variance= (6.75 - 7)*50,300
Direct labor rate variance= $12,575 unfavorable
A bidding firm, A, is worth $27,000 as a stand-alone entity. A target firm, B, is worth $12,000 as a stand-alone entity, but $18,000 if it is acquired and integrated with Firm A. Several other firms are interested in acquiring Firm B, and Firm B is also worth $18,000 if it is acquired by these other firms. If A acquired B, would this acquisition create value? If yes, how much? How much of this value would the equity holders of A receive? How much would the equity holders of B receive?
Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
Firm A’s worth as a stand-alone entity = $27,000
Firm B’s worth as a stand-alone entity = $12,000
But if Firm A acquired Firm B it’s increase worth of Firm B at $18000.
Firm A is acquired Firm B, this acquisition create value of
= $18,000 - $12000
= $6000.
With this acquisition equity holders of Firms received $18,000 which is $6,000 more than Firm B stand alone.
Frederick Company has two service departments (Cafeteria Services & Maintenance). Frederick has two production departments (Assembly Department & Packaging Department.) Frederick uses a step allocation method where Cafeteria Services is allocated to all departments and Maintenance Services is allocated to the production departments. All allocations are based on total employees. Cafeteria Services has costs of $255,000 and Maintenance has costs of $175,000 before any allocations. What amount of Maintenance total cost is allocated to the Packaging Department? (round to closest whole dollar) Employees are: Cafeteria Services 4 Maintenance 5 Assembly Department 10 Packaging Department 10
Answer:
The Total allocation of maintenance cost of packaging department is $87,500
Explanation:
According to the given data we have the following:
The Total Maintenance cost is $175,000 before allocation.
Total employees of in Production Department is= 10 Assembly + 10 Packaging= 20
Hence, Total maintenance cost per employee = $175,000 / 20
Total maintenance cost per employee =$8,750
Therefore, the Total allocation of maintenance cost of packaging department= Total maintenance cost per employee× Employees Packaging Department
Total allocation of maintenance cost of packaging department=$ 8,750 X 10 employees= $87,500
Select a publicly traded firm of your choice that enjoys a large shareholder base. What challenges may this firm have encountered (or is likely to encounter) in terms of (a) incorporating ethics into financial management practices, and (b) maintaining/sustaining ethical practices in the face of internal or external (market) pressures? Frame your response relative to the financial manager's fiduciary duty to maximize shareholder's wealth.
Answer: The answer is provided below
Explanation:
The publicly traded firm of my choice is Amazon.
a. Amazon would in its initial phase have encountered challenges as a result of the inculcating of financial management practises. At the beginning, the founders and the employees may not be willing to disclose all the profits on their books of accounts.
Also, the use of debt might not be taken as a healthy sign at the beginning. The preparation of statement of position might not be taken seriously and the internal control mechanisms will have been challenging to put up and also keep accountability.
b. It would have been really difficult for managers to sustain best practises during pressures. Also, stakeholders due to their personal goals might not allow finance manager to independently work. The pressure to exhibit certain level of sales or profit may also be there.
Furthermore, the lagging or leading of expenses might be done to show
lesser or higher profit. A materially price sensitive information might not be disclosed or reported. Finally, the extent of any loss might also not be reported as a result of internal pressures.
The reported net incomes for the first 2 years of Sandra Gustafson Products, Inc., were as follows: 2014, $147,000; 2015, $185,000. Early in 2016, the following errors were discovered.
1. Depreciation of equipment for 2014 was overstated $17,000.
2. Depreciation of equipment for 2015 was understated $38,500.
3. December 31, 2014, inventory was understated $50,000.
4. December 31, 2015, inventory was overstated $16,200.
Prepare the correcting entry necessary when these errors are discovered. Assume that the books are closed. (Ignore income tax considerations.)
Answer:
Debit 2016 Beginning retained earning for $37,700;
Credit Accumulated depreciation for $21,500, and
Credit Inventory for $16,200.
Explanation:
The entries will affect the 2016 beginning Retained earning except for the December 31, 2014 inventory which was understated by $50,000 which was a self correcting error at the end of 2015.
Accumulated depreciation = Understatement of 2015 depreciation - Overstatement of 2014 depreciation = $38,500 - 17,000 = $21,500
The entries will affect the 2016 beginning retained earning as follows:
Details Dr ($) Cr ($)
Beginning retained earning 37,700
Accumulated depreciation 21,500
Inventory - 2015 Overstatement 16,200
To correct the error discovered in the accounts. .
How Hard The Day, Inc. makes a product that has the following direct labor standards: Standard direct labor-hours 1.4 hours per unit Standard direct labor rate $ 12.00 per hour The company budgeted for production of 5,400 units in January, but actual production was 5,500 units. The company used 6,800 direct labor-hours to produce this output. The actual total direct labor cost was $82,960. The direct labor efficiency variance for January is:
Answer:
Direct labor time (efficiency) variance= $10,800 favorable
Explanation:
Giving the following information:
Standard direct labor-hours 1.4 hours per unit
Standard direct labor rate $ 12.00 per hour
Actual production was 5,500 units.
The company used 6,800 direct labor-hours to produce this output.
To calculate the direct labor efficiency variance, we need to use the following formula:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Standard quantity= 5,500*1.4= 7,700
Direct labor time (efficiency) variance= (7,700 - 6,800)*12
Direct labor time (efficiency) variance= $10,800 favorable
All of the following are correct statements about transfers between divisions located in countries with different tax rates except that
A. differences in tax rates across countries complicate the determination of the appro-priate transfer price
B. a decreasing number of transfers are between divisions located in different countries
C. companies must pay income tax in the country where income is generated
D. many companies prefer to report more income in countries with low tax rates.
All of the following are correct statements about transfers between divisions located in countries with different tax rates except that the companies must pay income tax in the country where income is generated. Thus option (C) is correct.
What is tax?Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local, regional, or national.
Tax revenues finance government activities, including public works and services such as roads and schools, or programs such as Social Security and Medicare.
In economics, taxes fall on whoever pays the burden of the tax, whether this is the entity being taxed, such as a business, or the end consumers of the business’s goods.
From an accounting perspective, there are various taxes to consider, including payroll taxes, federal and state income taxes, and sales taxes.
Learn more about tax here:
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LaserLife Printer Company is a decentralized organization with several autonomous divisions. The division managers are evaluated, in part, on the basis of the change in their return on invested assets. Operating results for the Packer Division for 2019 are budgeted as follows:
Sale $5,000,000
Less variable costs 2,500,000
Contribution margin 2,500,000
Less fixed expenses 1,800,000
Net operating income $ 700,000
Invested capital for the division are currently $3,600,000. For 2019, the division can add a new product line for an investment of $600,000. The new product line will generate sales of $1,600,000 and will incur fixed expenses of $600,000 annually. Variable costs of the new product will average 60% of the selling price.
REQUIRED:
1. What is current ROI? Profit margin (or Return on sales)? Investment (or Capital) turnover?
2. What is the effect on ROI of accepting the new product line?
If the company's required rate of return is 6% and residual income (RI) is used to evaluate managers, would this encourage the division to accept the new product line? Explain and show computations.
Answer:
1. The current ROI is 19.44%. The Profit margin (or Return on sales) is 14%. TheInvestment (or Capital) turnover is 1.39 times.
2. The effect on ROI of accepting the new product line is 17.62%. ROI will be decreased by 1.82%
If the company's required rate of return is 6% and residual income (RI) is used to evaluate managers the residual income amount would be of $4,000 and so Managers should accept the new product line
Explanation:
1. To calculate the profit margin we have to use the following formula:
Profit margin= Net operating income/Sale
Hence, Profit margin = $700,000/$5,000,000 = 14%
ROI= Net operating income/Invested capital
Hence, ROI = $700,000/$3,600,000 = 19.44%
Investment (or Capital) turnover=Sale/Invested capital
Hence, Investment (or Capital) turnover = $5,000,000/$3,600,000 = 1.39 times
2. The Net operating income= ($5,000,000+$1,600,000)-($2,500,000+1,600,000*60%)-$(1,800,000+$600,000) = $740,000
Hence, ROI = $740,000/$4,200,000 = 17.62%
ROI will be decreased by (19.44-17.62) 1.82%.
In order to know if the division would accept the new product line If the company's required rate of return is 6% and residual income (RI) is used to evaluate managers, we would have to calculate the residual income as follows:
Residual income = operating income - invesed capital*required rate of return
= ($740,000-$700,000)-$600,000*6%
= $4,000
Therefore, Managers should accept the new product line.
If the distribution of water is a natural monopoly, then a. a single firm cannot serve the market at the lowest possible average total cost. b. multiple firms would likely each have to pay large fixed costs to develop their own network of pipes. c. allowing for competition among different firms in the water-distribution industry is efficient. d. average cost increases as the quantity of water produced increases.
Answer:
The correct option is C) If the distribution of water is a natural monopoly, average cost increases as the quantity of water produced increases.
Explanation:
Natural monopoly occurs when there is a hig cost of entry into a particular market niche. The high cost is usually caused by expensive equipment and infrastructural set up for manufacturing as well as maintenance costs.
Therefore, If the distribution of water is a natural monopoly, average cost increases as the quantity of water produced increases.
Distribution of water falls into the category of natural monopoly. Due to the prevailing circumstances, Fixed cost is larger comparable to variable cost such that it is cheaper for a single firm to serve the market.
