Debt financing has one important advantage that the early Modigliani and Miller (MM) propositions ignored: the interest on business debt is tax deductible. This benefit means that the amount of taxes that a business is required to
pay will be reduced by a phenomenon called an interest tax shield, which is a function of the amount of debt in the firm's capital structure and its tax rate. In contrast, the dividends that a corporation pays on its common and
preferred shares are not tax deductible.

Consider the case of Green Llama Foodstuffs, Inc.:

At the beginning of the year, Blue Chipmunk Foodstuffs, Inc. had an unlevered value of $8,500,000. It pays federal and state taxes at the marginal rate of 40%, and currently has $2,500,000 in debt capital in its capital structure.

According to MM Proposition I with taxes, Green Llama Foodstuffs is allowed to recognize a tax shield of ___________, and the levered value of the firm is:

a. $7,100,000
b. $12,500,000
c. $9,900,000
d. $4,500,000

Answers

Answer 1

Answer:

c. $9,500,000

Explanation:

Un-levered value = $8,500,000

Tax= 40% = 0.4

Debt capital= $2,500,000

Tax shield = Debt capital * Tax

Tax shield = $2,500,000 * 0.4

Tax shield = $1,000,000

Levered value = Unlevered value + Tax shield

Levered value = $8,500,000 + $1,000,000

Levered value = $9,500,000


Related Questions

Tennessee Corporation is analyzing a capital expenditure that will involve a cash outlay of $109,332. Estimated cash flows are expected to be $36,000 annually for 4 years. The present value factors for an annuity of $1 for 4 years at interest of 10%, 12%, 14%, and 15% are 3.170, 3.037, 2.914, and 2.855, respectively. The internal rate of return for this investment is a.9% b.3% c.10% d.12%

Answers

Answer:

D

Explanation:

Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested

IRR can be calculated with a financial calculator  

Cash flow in year 0 = $-109,332

Cash flow each year from year 1 to 4 = $36,000

IRR = 12%

To find the IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.  

On January 15, the end of the first pay period of the year, North Company’s employees earned $40,000 of sales salaries. Withholdings from the employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $3,100 of federal income taxes, $593 of medical insurance deductions, and $230 of union dues. No employee earned more than $7,000 in this first period. Prepare the journal entry to record North Company’s January 15 salaries expense and related liabilities.

Answers

Answer:

Dr Salaries expense 40,000

Cr FICA - Social security taxes payable 2,480

Cr FICA - medicare taxes payable 580

Cr Employee medical insurance deduction 593

Cr Union dues 230

Cr Salaries payable 33,017

Cr Federal income taxes payable 3,100

Explanation:

Preparation of the journal entry to record North Company’s January 15 salaries expense and related liabilities

Jan 15

Dr Salaries expense 40,000

Cr FICA - Social security taxes payable 2,480 (6.2%*40,000)

Cr FICA - medicare taxes payable 580

(1.45%*40,000)

Cr Employee medical insurance deduction 593

Cr Union dues 230

Cr Salaries payable 33,017

Cr Federal income taxes payable 3,100

Salaries payable is calculated as:

Salaries expense 40,000

Less: FICA - Social security taxes payable (2,480)

FICA - medicare taxes payable (580)

Employee medical insurance deduction (593)

Union dues (230)

Federal income taxes payable (3,100)

=$33,017

Here, we are to prepare the journal entry to record North Company’s January 15 salaries expense and related liabilities.

Salaries payable = Salaries expense - FICA - Social security taxes payable - FICA - medicare taxes payable - Employee medical insurance deduction - Union dues - Federal income taxes payable

Salaries payable = $40,000  - $2,480 - $580 - $593 - $230 - $3,100

Salaries payable = $33,017

Date     Account titles and Explanation                 Debit      Credit

Jan 15   Salaries expense                                       $40,000

                FICA - Social security taxes payable                       $2,480

                (6.2%*40,000)

                FICA - medicare taxes payable                                $580

                (1.45%*40,000)

                Employee medical insurance deduction                 $593

                Union dues                                                                 $230

                Salaries payable                                                         $33,017

                Federal income taxes payable                                  $3,100

             (To record salaries expense and related liabilities)

See similar solution here

brainly.com/question/16928960

A catering company prepared and served 375 meals at an anniversary celebration last week using 3 workers. The week before, 2 workers prepared and served 225 meals at a wedding reception
a1. Calculate the labor productivity for each event. (Round your answers to 1 decimal place.) Anniversary Wedding meals/worker meals/worker
a2. For which event was the labor productivity higher?
Anniversary
Wedding

Answers

Answer:

for anniversary = 125

for wedding = 112.5

anniversary

Explanation:

Labour productivity = number of meals / total number of workers

for anniversary = 375 / 3 = 125

for wedding = 225 / 2 = 112.5

labour productivity is higher for the anniversary because one unit of labour produces more meals when compared to the wedding.

A firm is using experience curve pricing when it prices high worldwide in an attempt to position itself as a market leader.
A. True
B. False

Answers

the answer is this true

A firm is using experience curve pricing when it prices high worldwide in an attempt to position itself as a market leader is a false statement.

What is experience curve pricing?

Pricing for Experience Curve is Depending on the company's level of expertise in creating the goods, the price is set. Every time a corporation doubles its expertise in creating a product, the cost of selling that product or service drops by 10% to 30%.

A business can use less time and resources or produce products more effectively as it gains experience. As a result, it may provide a lower price since costs are reduced.

The pricing of a product at a lower than average-cost level on the theory that costs will reduce as manufacturing expertise improves allows the product to become cheaper as it continues through the product life cycle.

To learn more about experience curve

https://brainly.com/question/29736815

#SPJ2

Jiminy’s Cricket Farm issued a bond with 30 years to maturity and a semiannual coupon rate of 4 percent 2 years ago. The bond currently sells for 107 percent of its face value. The company’s tax rate is 21 percent. The book value of the debt issue is $60 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 $35 million, and the bonds sell for 76 percent of par.

Required:
a. What is the company’s total book value of debt?
b. What is the company’s total market value of debt?
c. What is your best estimate of the aftertax cost of debt?

Answers

Answer:

a. What is the company’s total book value of debt?

total book value of debt = $60,000,000 + $35,000,000 = $95,000,000

 

b. What is the company’s total market value of debt?

total market value of debt = ($60,000,000 x 1.07) + ($35,000,000 x 0.76) = $64,200,000 + $26,600,000 = $90,800,000

c. What is your best estimate of the after tax cost of debt?

weight of debt (using market value):

$64,200,000 / $90,800,000 = 70.7%

$26,600,000 / $90,800,000 = 29.3%

YTM bond I = {1,200,000 + [(60,000,000 - 64,200,000)/56]} / [(60,000,000 + 64,200,000)/2] = 1,125,000 / 62,100,000 = 1.8115 x 2 = 3.62%

YTM bond II = (35 / 26.6)¹/¹⁰ - 1 = 2.78%

after tax cost of debt = (0.707 x 3.62% x 0.79) + (0.293 x 2.78% x 0.79) = 2.02% + 0.64% = 2.66%

Muy Bueno Bakery sells three different products. Currently they are not able to meet all of their customers' demand. Using the following information, determine the price of the cake needed to meet the same contribution margin as the cookies. Cake Pie Cookies Contribution margin $18 $11 $3 Production hours 2 1.5 .25 Variable cost $12 $7 $1 Contribution margin/hr. $9 $7.33 $12 Current selling price $30 $18 $5 a.$45 b.$30 c.$42 d.$36

Answers

Answer:

d. $36

Explanation:

The Contribution margin is the net of selling price and variable cost of a product. It is calculated by deducting the variable cost from the selling price of a product.

                                          Cake   Pie    Cookies

Current selling price          $30    $18    $5

Variable cost                      $12     $7      $1

Contribution margin           $18     $11     $3

Production hours                2        1.5     0.25

Contribution margin/hr.     $9     $7.33  $12

Required Contribution margin per hour of cake = $12

Required Contribution margin = $12 x 2 = $24

Required Selling Price = Contribution margin + variable cost = $24 + $12 = $36

Note there is a mistake in the calculation of Contribution margin of Cookies as it is given $3 but after deducting the variable cost from selling price is should be $4 ( $5 - $1 ), I used the given contribution margin for the calculation.

One of the primary reasons for the failure of quality circles is because management refuses to listen to the quality improvement ideas of subordinates.
A. True
B. False

Answers

The failure of quality circles is not because management refuses to listen to the quality improvement ideas of subordinates.

What do you mean by quality circles?

Quality circles refer to a method that helps in encouraging group involvement.

The major reason for the failure of quality circles is because of the rejection of the concept by top management, labor turnover, lack of cooperation from middle and first-line managers, etc.

Therefore, the above statement is false.

Learn more about Quality circles here:

https://brainly.com/question/24092637

A product's ________ identifies the product or brand, describes several things about the product, and promotes the brand.

Answers

Answer: label

Explanation:

Product labels are the piece of material

that are being attached to a product in order for easy identification by consumers in order to know the brand and also to know the contents.

A product's label identifies the product or brand, describes several things about the product, and promotes the brand.

A product label identifies the product or brand, describes various things about the product, and promotes the brand. Developing product labeling is therefore a strategic task that can help identify the brand and position it in the market.

An example of how labeling can provide extra benefits for companies is through environmental certifications, which can come as a seal on labels and promote the company's environmental responsibility in a widespread and fast way.

Therefore, the labeling must have the design, layout and information aligned with the company's values so that there is promotion of its products and assist in consumer choice.

Find out more information about labeling here:

https://brainly.com/question/7744386

Given the following data for Vinyard Corporation:
D=1000
V=4000
E=3000
V=4000

Calculate the proportions of debt (D/V) and equity (E/V) for the firm that you would use for
estimating the weighted average cost of capital (WACC):

A. 40% debt and 60% equity
B. 50% debt and 50% equity
C. 25% debt and 75% equity
D. none of the given values

Answers

Answer:

C

Explanation:

D / V = 1000 / 4000

Dividing 1000 by 4000 gives 0.25 = 25%

E / V = 3000 / 4000

Dividing 3000 by 4000 gives 0.75 = 75%

Explain how growth in the demand for​ Australia's natural resources would affect the demand for Australian dollars in the foreign exchange market. Explain how the supply of Australian dollars would change.

Answers

Answer:

The question here is that of the balance of trade and the principles of demand and supply.  

According to the Economics principles of demand and supply, when demand is high, prices follow in the same direction and the currency appreciates in value.

So, on one hand, when the demand for Australia's natural resources increases, because the legal tender recognised within Australia's borders is its own currency, trading partners are forced to convert from their currency into the Australian dollars thus creating an increased demand for the currency.

On the other hand, if the value of a countrys imports is more than the value of its export transactions, the opposite would happen, that is, its currency depreciates or loses value.

Cheers!

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: Name of Company Revenues Cost of Purchased Inputs Citrus Growers Inc. $0.75 0 Florida Jam Company $2.00 $0.75 The Corner Store $2.50 $2.00 What is the value added of Florida Jam Company

Answers

Answer:

$1.75

Explanation:

Value added is calculated by subtracting the difference of revenue and the cost of inputs.

value added of Florida Jam Company = $2.50 - $0.75 = $1.75

Michael and Kathy have one dependent, Dustin, who is in his third year of college. Michael is taking classes in the evening toward an MBA. What credits can Michael and Kathy claim related to tuition they pay for these programs. I. American Opportunity Tax Credit II. Lifetime Learning Credit

Answers

Answer: I and II

I. American Opportunity Tax Credit

II. Lifetime Learning Credit

Explanation:

From the question, we are informed that Michael and Kathy have one dependent, Dustin, who is in his third year of college and that Michael is taking classes in the evening toward an MBA.

The credits that Michael and Kathy can claim related to tuition they pay for these programs are American Opportunity Tax Credit and the Lifetime Learning Credit.

The last dividend paid by Coppard Inc. was $1.25. The dividend growth rate is expected to be constant at 27.5% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its current stock price

Answers

Answer:

36.38

Explanation:

The Current stock price can be calculated by identifying Present value of dividends in all three years adding terminal value of dividends in year 3.

Year Dividend Growth  Dividend   PV factor  Present Values

1  1.25           127.5%   1.59    0.900901         1.43  

 2  1.59           127.5%   2.03           0.811622          1.64  

 3  2.03          127.5%   2.59    0.731191     1.88  

 3                                    42.987(w)  0.731191           31.43  

Total PV                                                                     36.38  

Current Dividend = 2.59    

Rate of return       = 11.00%    

Growth Rate        = 6.00%    

Terminal value = Current Dividend*(1+Growth rate)/(Rate of return-Growth Rate)

Terminal value = 2.59 x (1+0.06) / (0.11-0.06)  

Terminal value =42.987

   

Current stock price = 1.43 +1.64+1.88+31.43

Current stock price = 36.38  

Sue purchased a house for $89,000, spent $56,000 upgrading it, and currently had it appraised at $212,900. The house is being rented to a family for $1,200 a month, the maintenance expenses average $200 a month, and the property taxes are $4,800 a year. If she sells the house she will incur $20,000 in expenses. She is considering converting the house into professional office space. What opportunity cost, if any, should she assign to this property if she has been renting it for the past two years?

Answers

Answer:

Opportunity cost = $192,900

Explanation:

The opportunity cost is the "cost" incurred by not enjoying the benefit associated with the best alternative choice

DATA

Current value = $212,900

Selling expense = $20,000

Opportunity cost = Current value - selling expense

Opportunity cost = $212,900 - $20,000

Opportunity cost = $192,900

Here Sue is Decide to convert the house into professional office space she would lose te opportunity cost of $192,000

Who Done It Mystery Theater sells tickets for dinner and a show for each. The cost of providing dinner is per ticket and the fixed cost of operating the theater is per month. The company can accommodate patrons each month. What is the contribution margin per​ patron?

Answers

Answer:  $19

Explanation:

The Contribution Margin is defined as the Sales the Variable costs.

The Contribution Margin per patron is therefore;

= Ticket Price - Variable Cost which is the cost of dinner

= 40 - 21

= $19

The Discount on Bonds Payable account is: Multiple Choice A contra equity. A contra expense. A liability. A contra liability. An expense.

Answers

Answer:

Is a contra account to bonds payable

Explanation:

XYZ, Inc. has a beta of 0.8. The yield on a 3-month T-bill is 5%, and the yield on a 10-year T-bond is 7%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 20%. What is the estimated cost of common equity using the CAPM? Show your work

Answers

Answer:

the estimated cost of common equity using the CAPM is 11.40 %.

Explanation:

Cost of Equity = Return on the Risk Free Security + Beta × Return on Market Portfolio

                       = 7.00 % +  0.8 × 5.5%

                       = 11.40 %

The estimated cost of common equity using the CAPM is 11.40 %.

Calculation of the cost of common equity;

Since the return on risk-free rate is 7%, beta is 0.8 and, the market risk premium is 5.5%

So here the cost of common equity should be

= Return on the Risk Free + Beta × Market risk premium

= 7.00 % +  0.8 × 5.5%

= 11.40 %

Hence, The estimated cost of common equity using the CAPM is 11.40 %.

Learn more about equity here: https://brainly.com/question/24300830

True or false: At 2019 year-end, a government has $25,000 of outstanding encumbrances. The 2019 Budgetary Comparison Scheduled will include the $25,000 whether or not the encumbrances lapse at year-end.

Answers

Answer:

True.

Explanation:

The 2019 Budgetary Comparison Schedule will include the $25,000 whether or not the encumbrances lapse at the year-end, either as outstanding encumbrances or settled encumbrances.  These $25,000 encumbrances are budget reservations of appropriations so that they can be used to settle specified expenditures in the future.  The purpose of making these reservations is to signal that the expenditures have been earmarked so that their cash allocations are not used for other purposes.

Edna is a leading brain surgeon in the United States. She enters into a contract to perform a complicated brain surgery on Ben. However, since Edna is very busy, she wants to assign this contract to a less experienced surgeon, Charles. This would be Charles's first operation of this type. Ben can object to this assignment and prevent it because the contract between Ben and Edna is a(n):

Answers

Complete Question:

Edna is a leading brain surgeon in the United States. She enters into a contract to perform a complicated brain surgery on Ben. However, since Edna is very busy, she wants to assign this contract to a less experienced surgeon, Charles. This would be Charles's first operation of this type. Ben can object to this assignment and prevent it because the contract between Ben and Edna is a(n):

Group of answer choices.

A. contract for services to be performed in the future.

B. contract involving personal skill.

C. services contract.

D. employment contract.

Answer:

B. contract involving personal skill.

Explanation:

In this scenario, Edna a leading brain surgeon in the United States enters into a contract to perform a complicated brain surgery on Ben. However, Edna is very busy and wants to assign this contract to a less experienced surgeon, Charles which would be his first operation of this type. Hence, Ben can object to this assignment (brain surgery) and prevent it because the contract between Ben and Edna is a contract involving personal skill.

Apparently, it can be deduced that Edna has competent and professional skills which is the reason why she's the leading brain surgeon in USA. Ben having this information at his disposal chose to go into the contract with Edna, who is an experienced brain surgeon. Therefore, the contract between the two (2) parties is solely based on Edna's personal skill.

The production department is proposing the purchase of an automatic insertion machine. They have identified 3 machines and have asked the accountant to analyze them to determine the best average rate of return.
Machine A Machine B Machine C
Estimated Average Income $45,192.56 $64,695.00 $60,929.70
Average Investment $322,804.00 $215,650.00 $406,198.00
Select the correct answer.
a) Machine B or C
b) Machine A
c) Machine C
d) Machine B

Answers

Answer:

Option  D is correct

Machine B is the best investment

Explanation:

The accounting rate of return is the average annual income expressed as a percentage of the average investment.  

The simple rate of return can be calculated using the two formula below:

Accounting rate of return  =

Annual operating income/Average investment × 100

To determine the the machine with the best return,we would compute the average annual return of all of the machines and then choose the machine with the highest return

This is done as follows:

Machine             Working s                                   Average annul rate

A                   45,192.56/322,804.00 ×   100 =      14.0%

B                64,695.00/215,650.00 ×   100=           30.0%

C                  60,929.70/406,198.00×   100 =          15.0%

Machine B is the best investment

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. All of the company's transactions with customers, employees, and suppliers are conducted in cash; there is no credit.

The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $76,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:

Raw materials $10,200
Work in process $4,200
Finished goods $8,200
During the year, the following transactions were completed:

a. Raw materials purchased for cash, $170,000.

b. Raw materials requisitioned for use in production, $141,000 (materials costing $121,000 were charged directly to jobs; the remaining materials were indirect).

c. Costs for employee services were incurred as follows: |Direct labor|$156,000

Indirect labor $185,900
Sales commissions $22,000
Administrative salaries $50,000
d. Rent for the year was $18,800 ($13,600 of this amount related to factory operations, and the remainder related to selling and administrative activities).

e.Utility costs incurred in the factory, $16,000.

f.Advertising costs incurred, $13,000.

g. Depreciation recorded on equipment, $21,000. ($15,000 of this amount was on equipment used in factory operations; the remaining $6,000 was on equipment used in selling and administrative activities.)

h. Manufacturing overhead cost was applied to jobs, $?

i.Goods that had cost $226,000 to manufacture according to their job cost sheets were completed.

j. Sales for the year totaled $514,000. The total cost to manufacture these goods according to their job cost sheets was $220,000.

Required:

(Round your intermediate calculations to 2 decimal places)

1. Prepare journal entries to record the transactions for the year.

2. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

3. Prepare an income statement for the year.

Answers

Answer:

1)

a. Raw materials purchased for cash, $170,000.

Dr Materials inventory 170,000

   Cr Cash 170,000

b. Raw materials requisitioned for use in production, $141,000 (materials costing $121,000 were charged directly to jobs; the remaining materials were indirect).

Dr Work in process: direct materials 121,000

Dr Manufacturing overhead 20,000

    Cr Materials inventory 141,000

c. Costs for employee services were incurred as follows:

Dr Work in process: direct labor 156,000

Dr Manufacturing overhead 185,900

Dr Sales salaries expense 22,000

Dr Administrative salaries expense 50,000

    Cr Cash 413,900

d. Rent for the year was $18,800 ($13,600 of this amount related to factory operations, and the remainder related to selling)

Dr Manufacturing overhead 13,600

Dr Rent expense 5,200

    Cr Cash 18,800

e.Utility costs incurred in the factory, $16,000.

Dr Manufacturing overhead 16,000

    Cr Cash 16,000

f. Advertising costs incurred, $13,000.

Dr Advertising expenses 13,000

    Cr Cash 13,000

g. Depreciation recorded on equipment, $21,000. ($15,000 of this amount was on equipment used in factory operations; the remaining $6,000 was on equipment used in selling and administrative activities.)

Dr Manufacturing overhead 15,000

Dr Depreciation expense 6,000

    Cr Accumulated depreciation: manufacturing equipment 15,000

    Cr Accumulated depreciation: office equipment 6,000

h. Manufacturing overhead cost was applied to jobs, $?

Dr Work in process 265,200

     Cr Manufacturing overhead 265,200 (170% of direct labor)

i. Goods that had cost $226,000 to manufacture according to their job cost sheets were completed.

Dr Finished goods inventory 226,000

    Cr Work in process 226,000

j. Sales for the year totaled $514,000. The total cost to manufacture these goods according to their job cost sheets was $220,000.

Dr Cash 514,000

    Cr Sales revenue 514,000

Dr Cost of goods sold 220,000

    Cr Finished goods inventory 220,000

2)

Dr Manufacturing overhead ($265,200 - $250,500) 14,700

    Cr Cost of goods sold 14,700

3) Gold Nest Company

Income Statement

Sales revenue                                                                        $514,000

- Cost of goods sold                                                             -$205,300

Gross profit                                                                             $308,700

Operating expenses:

Sales salaries expense -$22,000Administrative salaries expense -$50,000Rent expense -$5,200Advertising expenses -$13,000Depreciation expense -$6,000                                      -$96,200

Operating profit                                                                        $212,500

1. The preparation of journal entries to record the transactions for Gold Nest Company of Guandong, China, is as as follows:

a. Debit Raw materials $170,000

Credit Cash $170,000

b. Debit Work in Process $121,000

Debit Manufacturing Overhead $20,000

Credit Raw materials $141,000

c. Debit Work in Process $156,000

Debit Manufacturing Overhead $185,900

Credit Payroll Expenses $341,900

Debit Selling and Administrative Expenses $22,000

Credit Sales commissions $22,000

Debit Selling and Administrative Expenses $50,000

Credit Administrative salaries $50,000

d. Debit Manufacturing Overhead $13,600

Debit Selling and Administrative Expenses $5,200

Credit Rent Expenses $18,800

e. Debit Manufacturing Overhead $16,000

Credit Utilities Expense $16,000

f. Debit Selling and Administrative Expenses $13,000

Advertising costs $13,000

g. Debit Manufacturing Overhead $15,000

Debit Selling and Administrative Expenses $6,000

Credit Depreciation Expenses $21,000

h. Debit Work in Process $265,200

Credit Manufacturing Overhead (Applied) $265,200 ($1.70 x $156,000)

i. Debit Finished Goods Inventory $226,000

Credit Work in Process $226,000

j. Debit Cash $514,000

Credit Sales Revenue $514,000

j. Debit Cost of goods sold $220,000

Credit Finished Goods Inventory $220,000

2. The journal entry to close the balance in the Manufacturing Overhead account to the Cost of goods sold is as follows:

Debit Manufacturing Overhead $14,700

Credit Cost of goods sold $14,700

3. Gold Nest Company

Income Statement

for the year ended December 31

Sales Revenue            $514,000

Cost of goods sold      205,300

Gross profit               $308,700

Selling and Administrative Expenses:

Sales commission       $22,000

Administrative salaries 50,000

Rent Expenses                5,200

Advertising Expenses   13,000

Depreciation Expenses 6,000

Total selling/admin.  $96,200

Net income             $212,500

Data Calculations:

Estimated manufacturing overhead = $76,500

Estimated direct labor dollars = $45,000

Predetermined overhead rate = $1.70 ($76,500/$45,000)

Beginning inventory balances:

Raw materials = $10,200

Work in process = $4,200

Finished goods = $8,200

Data Analysis:

a. Raw materials $170,000 Cash $170,000

b. Work in Process $121,000 Manufacturing Overhead $20,000 Raw materials $141,000

c. Work in Process $156,000 Manufacturing Overhead $185,900 Payroll Expenses $341,900

Selling and Administrative Expenses $22,000 Sales commissions $22,000

Selling and Administrative Expenses $50,000 Administrative salaries $50,000

d. Manufacturing Overhead $13,600 Selling and Administrative Expenses $5,200 Rent Expenses $18,800

e. Manufacturing Overhead $16,000 Utilities Expense $16,000

f. Selling and Administrative Expenses $13,000 Advertising costs $13,000

g. Manufacturing Overhead $15,000 Selling and Administrative Expenses $6,000 Depreciation Expenses $21,000

h. Work in Process $265,200 Manufacturing Overhead (Applied) $265,200 ($1.70 x $156,000)

i. Finished Goods Inventory $226,000 Work in Process $226,000

j. Cash $514,000 Sales Revenue $514,000

j. Cost of goods sold $220,000 Finished Goods Inventory $220,000

2. Manufacturing Overhead $14,700 Cost of goods sold $14,700

Manufacturing Overhead

b. Raw materials                   $20,000

c. Payroll Expenses            $185,900

d. Rent Expenses                 $13,600

e. Utilities Expense              $16,000

g. Depreciation Expenses  $15,000

h. Work in Process                                 $265,200

Cost of goods sold (Over-applied

overhead)                          $14,700

Cost of goods sold

Finished goods                                   $220,000

Over-applied manufacturing overhead (14,700)

Adjusted cost of goods sold           $205,300

What is a job-order costing system?

A job-order costing system is a costing system that tracks the costs and revenues according to jobs, with jobs allocated job numbers.  It is unlike process costing, which tracks jobs for each process in order to determine the unit costs instead of per job.

Learn more about accounting costs under job-order costing system at https://brainly.com/question/24516871

A PHLX Jan 80 Swiss Franc Call contract is quoted at 2 when the Swiss Franc closes at 77. The contract is:_______

Answers

Answer:

Out the money.

Explanation:

A PHLX Jan 80 Swiss Franc Call contract is quoted at 2 when the Swiss Franc closes at 77. The contract is out the money.

An out the money ultimately implies that an option only has an extrinsic value but no intrinsic value. The extrinsic value of an option refers to the difference between its intrinsic value and the market value (premium). An extrinsic value is affected by the volatility in the market and its time value. The intrinsic value of an asset refers to the calculated, true or real value of an asset and is solely affected by internal factors.

A call is out the money when the strike price is greater than or above the underlying price of an asset. This simply means that, it's market value (price) has fallen below its strike price.

In this scenario, the market price of the call is 77 while its strike price is 80; thus, the call option is out the money by 3.

Onslow Co. purchases a used machine for $178,000 cash on January 2 and readies it for use the next day at a $2,840 cost. On January 3, it is installed on a required operating platform costing $1,160, and it is further readied for operations. The company predicts the machine will be used for six years and have a $14,000 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.Required:Prepare journal entries to record the machine's disposal under each of the following separate assumptions: a. It is sold for $22,000 cash. b. It is sold for $88,000 cash. c. It is destroyed in a fire and the insurance company pays $32,500 cash to settle the loss claim.

Answers

Answer:

All the requirements are solved below

Explanation:

Purchase = $178,000

Ready to use cost = $2,480

Installation cost = $1,160

Salvage value = $14,000

Depreciation method = Straight line

Useful life = 6 years

Solution

Requirement A If sold for $22,000

Entry                                               DEBIT      CREDIT

Cash                                            $22,000

Accumulated depreciation       $140,000

Profit/loss on disposal               $20,000

Machinery                                                       $182,000

Requirement B If sold for $88,000

Entry                                             DEBIT        CREDIT

Cash                                            $82,000

Accumulated depreciation       $140,000

Profit/loss on disposal                                   $40,000

Machinery                                                       $182,000  

Requirement C If destroyed in fire and insurance company paid $32,500

Entry                                             DEBIT      CREDIT

Cash                                            $30,000

Accumulated depreciation       $140,000

loss from fire                              $12,000

Machinery                                                       $182,000

Workings

Cost =$178,000 + $2,480 + $1,160

Cost = $182,000

Accumulated depreciation = ([tex]\frac{182,000-14,000}{6}x5[/tex]

Accumulated depreciation = 140,000

In what way did Henry Ford’s use of the assembly-line method of production represent an advance in technology in automobile manufacturing?

Answers

Answer: a. It allowed workers to specialize on specific tasks and become more productive.

Explanation:

The Assembly line method of production that Henry Ford initiated at his plant was a technological game changer as it enabled workers to assemble cars faster and this mass produce Ford cars at a cheaper rate for the masses.

The Assembly line worked by putting workers at various stages of the assembly line where they would focus on installing only one or a few parts into the prospective vehicle. This way they were able to focus on that specific task, become more adept at it and thus become more productive.

A customer sells short 1,000 shares of ABC stock at $4 in a margin account. The customer must deposit:________.
A. $2,000
B. $2,500
C. $4,000
D. $5,000

Answers

Answer: $4000

Explanation:

A margin account is typically offered by a brokerage firms so that investors can borrow money in order to purchase securities.

A customer sells short 1,000 shares of ABC stock at $4 in a margin account. The customer must deposit:

= $4 × 1000

= $4000

In its first year, a project is expected to generate earnings before interest and taxes of $237,884 and its depreciation expense is expected to be $87,882. If the company’s tax rate is 35%, what is the project’s expected net operating profit after taxes for the year?

Answers

Answer:

Net operating income= $242,506.6

Explanation:

Giving the following information:

Earnings before interest and taxes= $237,884

Depreciation expense= $87,882.

Tax rate= 35%

To calculate the net operating profit, we need to use the following structure:

EBIT= 237,884

Tax= (237,884*0.35)= (83,259.4)

Depreciation= 87,882

Net operating income= 242,506.6

A manufacturing company is thinking about building a new factory. The new factory, if built, will give a return of $200 million in 4 years, and it would cost $125 million today to build. The company will decide to build the factory if the interest rate is

Answers

Answer:

The company will decide to build the factory if the interest rate is 12.47 %.

Explanation:

The required interest rate r, can be determined as follows ;

PV = - $125 million

n = 4

Pmt = $0

P/yr = 1

FV = $200 million

r = ?

Using a Financial Calculator, the required interest rate r, is 12.4683 or 12.47 % (2 decimal places)

Bailey and Sons has a levered beta of 1.10, its capital structure consists of 40% debt and 60% equity, and its tax rate is 40%. What would Bailey's beta be if it used no debt, i.e., what is its unlevered beta? a. 0.79 b. 0.67 c. 0.71 d. 0.64 e. 0.75

Answers

Answer:

Option A. 0.79

Explanation:

All we have to do is convert the levered beta into unlevered beta (100% equity financed). So we will use the following formula to find unlevered beta:

Unlevered Beta = Levered Beta /  (1   +  (1+T)* D/E)

Here,

Tax rate is 40%

Debt is 40%

Equity is 60%

And Levered Beta is 1.10

Now by putting values, we have:

Unlevered Beta =     1.10   / (1   +  (1 - 0.4)* 40% / 60%)

Unlevered Beta =     1.10  / (1 +   0.6 * .667)

Unlevered Beta =     1.10  / (1 +    0.4)

Unlevered Beta =     1.10  / (1.4)

Unlevered Beta =     0.786 which after rounding off we have 0.79

Mr. Dow bought 100 shares of stock at $17 per share. Three years later, he sold the stock for $23 per share. What is his annual rate of return

Answers

Answer:

10.60%

Explanation:

The compound annual growth rate formula stated below can be used to determine the annual rate of return on the stock investment.

CAGR=(future value/present value)^(1/n)-1

future value is the future worth of the stock after three years i.e100*$23=$2300

Present value is the initial cost of the stock which is 100*$17=$1700

n is the number of years the stocks have been owned

CAGR=($2300/$1700)^(1/3)-1=10.60%

Your estimate of the market risk premium is ​%. The​ risk-free rate of return is ​%, and General Motors has a beta of . According to the Capital Asset Pricing Model​ (CAPM), what is its expected​ return?

Answers

Answer:

The correct option is option A) 16.4%.

Explanation:

Note: This question is not complete as all the important data are omitted from it. The complete question is therefore provided before answering the question as follows:

Your estimate of the market risk premium is 9%. The risk-free rate of return is 3.8% and General Motors has a beta of 1.4. According to the Capital Asset Pricing Model (CAPM), what is its expected return?

Options:

A) 16.4%

B) 17.2%

C) 14.8%

D) 15.6%

The question is now answered as followed:

Capital asset pricing model (CAPM) can be described as a model that is employed to compute a theoretical required rate of an asset in order decide whether or not to add assets a portfolio of investment that is well-diversified.

According to the Capital Asset Pricing Model (CAPM), the expected return can be calculated using the following formula:

Expected return = Risk-free rate + (Beta * Market ris premium) .......... (1)

Where;

Risk-free rate of return = 3.8%

Market risk premium = 9%

Beta = 1.4

Substitute the values into equation (1), we have:

Expected return = 3.8% + (1.4 * 9%) = 16.40%

Therefore, the correct option is option A) 16.4%.

Other Questions
All of the following are true statements except _____. |93| = 93 |93| = 93 |93| = 93 |93| = 93 Let the following sample of 8 observations be drawn from a normal population with unknown mean and standard deviation: 21, 14, 13, 24, 17, 22, 25, 12Required:a. Calculate the sample mean and the sample standard deviation.b. Construct the 90% confidence interval for the population mean.c. Construct the 95% confidence interval for the population mean HELP??? ------ In what fundamental way does one musical note differ from another? What is the product of the complex numbers 8i and 5i? (1 point)0404024040iJUST NEED SOME HELP :( I need help please help meee I dont understand Match each function name with its equation. What is the value of w? inscribed angles (Image down below) Question 8 of 30When is a redox reaction spontaneous?A. When a metal electrode is in contact with an electrolyteB. When a power source supplies an electrical currentC. When the cell potential is positiveD. When the cell potential is negative The joint density function for a pair of random variables X and Y is given. f(x, y) = Cx(1 + y) if 0 x 4, 0 y 4 0 otherwise f(x,y) = 0A) Find the value of the constant C. I already have 1/24.B) Find P(X < = 1, Y < = 1)C) Find P(X + Y < = 1). at 89 CC , where [Fe2+]=[Fe2+]= 3.60 MM and [Mg2+]=[Mg2+]= 0.310 MM . Part A What is the value for the reaction quotient, QQQ, for the cell? Suppose a 500 mb chart valid today at 12 Z indicates a large trough over the eastern US and a large ridge over the western US. An aircraft, flying in the vicinity of 18,000 ft altitude from west to east over the US at 12 Z today, will _____ altitude if the altimeter is not corrected. Group of answer choices what is ammonium nitrate why does working out make us feel good Pls answer ASAP TY. TY. TY. the ottoman empire was ruled by the emperor of Four letters are selected at random with replacement from the word MATHCOUNTS. What is the probability that the letters in the order they are selected will form the word MATH? A group of students conducted several trials of an experiment to study Newtons second law of motion. They concluded that tripling the mass required tripling the net force applied. What quantity were the students holding constant? A literaryWork whichextol one's virtues andaccomplishment is calledWhat If an advertisement is affiliated with a website's content, what might that suggest? A. that the information you find is biased B. that the advertisements were free C. that the advertisements financially support the site D. that the information you find will be entirely untrue I'm confused between some answers can someone clarify. Nitric oxide (NO) can be formed from nitrogen, hydrogen and oxygen in two steps. In the first step, nitrogen and hydrogen react to form ammonia: (g) (g) (g) In the second step, ammonia and oxygen react to form nitric oxide and water: (g) (g) (g) (g) Calculate the net change in enthalpy for the formation of one mole of nitric oxide from nitrogen, hydrogen and oxygen from these reactions. Round your answer to the nearest .