Answers
Answer:
200,000 units
Explanation:
The computation of the total no of equivalent units for material during may month is given below:
Units added during May is
= 150,000 + 50,000
= 200,000 units.
Hence, the total no of equivalent units for material during may month is 200,000 units
The same should be considered and relevant
Related Questions
Budgeted overhead for Cinnabar Industries at normal capacity of 30,000 direct labor hours is $6 per hour variable and $4 per hour fixed. In May, $310,000 of overhead was incurred in working 31,500 hours when 32,000 standard hours were allowed. The overhead volume variance is Group of answer choices $10,000 favorable. $11,000 favorable. $5,000 favorable. $8,000 favorable.
Answers
Answer:
Manufacturing overhead volume variance= $5,000 favorable
Explanation:
Giving the following information:
Estimated overhead allocation rate= 4 + 6= $10 per direct labor hour
Actual number of hours= 31,500
Standard hours were allowed= 32,000
To calculate the overhead volume variance, we need to use the following formula:
Manufacturing overhead volume variance= (Estimated manufacturing overhead rate*standard allocation base) - (Estimated manufacturing overhead rate* Actual amount of allocation base)
Manufacturing overhead volume variance= (10*32,000) - (10*31,500)
Manufacturing overhead volume variance= $5,000 favorable
o What’s the Difference Between Non-Formal and Informal Learning
Answers
Answer:
I hope this will help you
Assume that a firm had shareholders' equity on the balance sheet at a book value of $1,500 at the end of 2010.During 2011 the firm earns net income of $1,900,pays dividends to shareholders of $200,and issues new stock to raise $500 of capital.The book value of shareholders equity at the end of 2011 is:_______.
A) $2,750
B) $250
C) $1,450
D) $3,700
Answers
Answer:
The book value of shareholders equity at the end of 2011 is:_______.
D) $3,700.
Explanation:
a) Data and Calculations:
Beginning shareholders equity book value = $1,500
Net income during 2011 = 1,900
Dividends paid to shareholders (200)
Issuance of new stock 500
Ending shareholders equity book value = $3,700
b) The book value of equity at the end of 2011 is equal to the book value at the beginning of 2011 plus net income generated during 2011, issuance of new stock, minus dividends paid to shareholders.
Under IFRS, when a lessee recognizes a balance sheet asset and liability for a new lease: the asset and liability are equal. the asset is typically greater than the liability. the liability is typically greater than the asset.
Answers
Answer:
the asset and liability are equal.
Explanation:
IFRS 16 lease and IAS 17 deals in important changes where the lease transactions are reported in the lessee financial statement
In this the assets and liabilities that are occured from the lease should be initially determined on the present value basis
Also the assets and liability are equivalent to each other
Therefore the first option is correct
In 2012, Wingen Inc. sold 325,000 units at $8 each .Sales volume is expected to increase by 15 percent in 2013 while the price of each unit is expected to decrease by 15 percent. the expected sales revenue for 2013 is a. $373,750 b.$2,541,500 c.$1,878,500 d.$2,990,000
Answers
Answer:
$2541500
Explanation:
Given :
2012 :
Units sold = 325,000
Price per unit = $8
2013 :
Projected increase in volume = 15%
Projected decrease in price = 15%
Expected revenue = sales price * volume sold
Volume in 2013:
Projected Unit sold in 2013 = (1 + 0.15) * 325000 = 373750
units
Projected Price in 2013 = (1 - 0.15) * Price in 2012 = (1 - 0.15) * $8 = $6.80
Expected revenue = $6.80 * 373750 = $2541500
Dobles Corporation has provided the following data from its activity-based costing system:
Activity Cost Pool Total Cost Total Activity
Assembly $228,060 18,000 mahcine hours
Processing orders $34,068 1200 orders
Inspection $125560 1720 inspection hours
The company makes 420 units of product D28K a year, requiring a total of 460 machine-hours, 80 orders, and 10 inspection-hours per year. The product's direct materials cost is $48.96 per unit and its direct labor cost is $25.36 per unit.
According to the activity-based costing system, the unit product cost of product D28K is closest to:
a. $95.34 per unit
b. $93.60 per unit
c. $74.32 per unit
d. $89.93 per unit
Answers
Answer:
Hence the correct option is option (a) i.e. $95.34 per unit.
Explanation:
Cost of 420 units of D28K product = 460 machine hour cost + 80 order cost + 10 inspection hour cost + 420 direct materials cost + 420 direct labor cost.
18000 machine hours = 228060
so 460 machine hours = 228060 x 460 /18000 = 5828.2
1200 orders = 34068
80 orders = 80 x 34068 / 1200 = 2271.2
1720 inspection hours = 125560
10 inspection hours = 10 x 125560/1720 = 730
So cost of 420 units of D28 products = 5828.2 + 2271.2 + 730 + 420 x 48.96 + 420 x 25.36
=40043.8
So cost of 1 D28K product = 40043.8 / 420 = 95.34
A project has an expected risky cash flow of $500 in year 3. The risk-free rate is 4%, the expected market rate of return is 14%, and the project's beta is 1.20. Calculate the certainty equivalent cash flow for year 3, CEQ3. (Assume CAPM holds.)
Answers
The certainty equivalent cash flow for year 3, CEQ3 is $360.33
The computation of the certainty equivalent cash flow for year 3 is as follows:
But before that, the cost of equity should be determined via using the Capital Asset Pricing Model (CAPM).
Cost of equity = Risk-free rate + beta × (expected market rate of return - risk-free rate)
= 4% + 1.20 × (14% - 4%)
= 16%
Now the certainty equivalent cash flow for year 3 is
= $500 ÷ (1+ 0.16)^3
= $360.33
Therefore we can conclude that the certainty equivalent cash flow for year 3, CEQ3 is $360.33
Learn more about the CAPM here: brainly.com/question/14531617
Which of the following approaches for calculating the market value of a property involves estimating the dollar value associated with replacing the property new, as well as determining the loss in value due to physical, functional, and external obsolescence?
a. income approach
b. sales comparison approach
c. cost approach
d. Investment approach
Answers
Answer:
c. cost approach
Explanation:
The cost approach is a real estate valuation method in which the price estimated regarding the buyer that have to pay for the property and the same is equivalnet to the cost for creating a buidling.
Here the property value should be equivalent to the land cost also add the construction cost and minus the depreciation expense
So as per the given situation, it is the cost approach that determined the market value of the property
At the end of 2010 Jarrett Corp. developed the following forecasts of net income:
Year Forecasted Net Income
2011 $20,856
2012 $22,733
2013 $24,552
2014 $27,252
2015 $29,978
Management believes that after 2015 Jarrett will grow at a rate of 7% each year. Total common shareholders' equity was $112,768 on December 31, 2010. Jarrett has not established a dividend and does not plan to paying dividends during 2011 to 2015. Its cost of equity capital is 12%.
Required:
Compute the value of Jarrett Corp. on January 1, 2011, using the residual income valuation model.
Answers
Answer:
$83,057.11
Explanation:
The value of the company is the present value of its residual income where the residual income is the net income in each year minus the implicit cost of capital
residual income=net income-(cost of equity capital*beginning shareholders' equity)
2011:
residual income=$20,856-( $112,768*12%)
residual income=$7323.84
stockholders' equity at the end of 2011=$112,768+$20,856=$133,624
2012
residual income=$22733-( $133624 *12%)
residual income=$6,698.12
stockholders' equity at the end of 2012=$133,624+$22733=$156,357
2013:
residual income=$24552-(12%*$156357)
residual income=$5,789.16
stockholders' equity at the end of 2013=$156,357+$24552=$180,909
2014;
residual income= $27252-(12%*$180909)
residual income=$5,542.92
stockholders' equity at the end of 2014=$180,909+$27252=$208,161
2015:
residual income=$29,978-(12%*$208161)
residual income=$4,998.68
Terminal value of residual income=2015 residual income*(1+terminal growth rate)/(cost of equity-terminal growth rate)
Terminal value of residual income=$4,998.68*(1+7%)/(12%-7%)=$106,971.75
value of the company=$7323.84/(1+12%)^1+$6,698.12/(1+12%)^2+$5,789.16 /(1+12%)^3+$5,542.92/(1+12%)^4+$4,998.68/(1+12%)^5+$106,971.75/(1+12%)^5
value of the company=$83,057.11
The following information relates to last year's operations at the Legumes Division of Gervani Corporation: Minimum required rate of return 12% Return on investment (ROI) 15% Sales $ 900,000 Turnover (on operating assets) 3 times What was the Legume Division's net operating income last year
Answers
Answer: $45000
Explanation:
Firstly, the operating asset will be calculated which will be:
Operating asset = Sales / Turnover
= 900,000/3
Operating assets = $300,000
Then, the net operating income will be: Return on investment × Operating assets
Net operating income = 300,000 × 15%
= 300,000*0.15
= $45,000
Therefore, Legume Division's net operating income last year is $45000
Nichols Company uses the percentage of receivables method for recording bad debts expense. The month-end accounts receivable balance is $250,000 and credit sales during the month were $1,000,000. Management estimates that 4% of accounts receivable will be uncollectible. The Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment. The adjusting entry that Nichols must make includes: a. a credit to the allowance for $7,500. b. a credit to the allowance for $30,000. c. a debit to bad debt expense for $10,000. d. a debit to bad debt expense for $40,000.
Answers
Answer: a. a credit to the allowance for $7,500
Explanation:
Estimated Bad Debt = Balance on Account receivable x bad Debt loss rate = $250,000 x 4% = $10,000
Allowance for doubtful accounts with a credit balance of $2,500
Allowance for Bad debts expense =Estimated Bad Debt - Credit balance Allowance for doubtful accounts = $10,000 - $2,500 = $7,500
Account titles and explanation Debit Credit
Bad Debt Expense $7,500
Allowance for Doubtful Accounts $7,500
CompuGlobal is an American firm producing computers. CompuGlobal imports computer components from Taiwan and assembles them domestically. Suppose that in the United States, a computer sells for $800 and that 60% of the computer’s value comes from the value of the imported components. The United States imposes a 50% tariff on computers and a 10% tariff on the computer’s components. Assume that costs of producing components are the same in the United States and Taiwan and that transit costs are nonexistent. Based on the information provided, the effective rate of protection that CompuGlobal receives from the tariff is
Answers
Answer: 110%
Explanation:
The effective rate of protection is used in measuring the final tariff in a particular sector and it's expressed as:
g = (t -ai,ti) / (1 - ai)
where,
g = effective protection rate
ai = nominal tariff rate = 0.6
t = cost of intermediate input = 0.5
ti = nominal tariff on intermediate input = 0.1
The computer price here is $800 while the input price is 60% of $800 which will be:
= 60% × $800 = $480
nominal tariff rate = 480/800 = 0.6
Nominal tariff on final goods, t = 50% = 0.5
Tariff on imported input, ti = 10% = 0.1
Using the formula:
g = (t -ai,ti) / (1 - ai)
g = [0.5 - (0.6×0.1)] / (1 - 0.6)
g = (0.5 - 0.06) / 0.4
g = 0.44/.0.4
g = 1.10
g = 110%
The effective rate of protection is 110%
Which of the following statements about the monetary aggregates is true?
a. The growth rates of M1 and M2 always track each other closely.
b. M1 is greater than M2.
c. When the growth rate of M2 increases, the growth rate of M1 must also increase.
d. When you transfer funds from your savings account to your checking account, M1 increases and M2 stays the same.
Given that, in billions of U.S. dollars, we have in currency, in demand deposits, in traveler's checks, in savings deposits, and in other checkable deposits. The total M1 amount in this economy is $__________
Answers
Answer: D. When you transfer funds from your savings account to your checking account, M1 increases and M2 stays the same.
Explanation:
1. Since M2 = M1 + Saving deposit + Time deposits + Money Market deposit of individuals, then from the options given, the true statement about the monetary aggregate is that when you transfer funds from your savings account to your checking account, M1 increases and M2 stays the same. Therefore, the fire option is D.
2. Your second question isn't well written but let's assume some figures in order to solve the question.
Let's say,
Currency = $863.2 billion
Demand deposit = $573.5 billion
Traveler's cheque = $3.8 billion
Savings deposit = $5237.8
Other checkable deposit = $319
Therefore, the total M1 amount in this economy will be:
M1 = Currency + Demand deposit + Travelers check + Other checkable deposits
= 863.2 + 573.5 + 3.8 + 319
= $1759.5 billion
The rate at which revenue was generated (in millions of dollars per year) for a certain company for the years 2010 through 2016 can be approximated by f(t)=348e0.22t (10≤t≤16), where t=10 corresponds to the start of the year 2010. Find and interpret ∫1016f(t)dt.
Answers
The revenue of a company represents the income generated by the company within a time frame. The total revenue generated by the company from the start of 2010 to the start of 2016 is $39.16 billion
Given that:
[tex]f(t) = 348e^{0.22t}[/tex] [tex]10 \le t \le 16[/tex]
First, we calculate the integral
[tex]\int\limits^{16}_{10} {f(t)} \, dt[/tex]
This is calculated as:
[tex]\int\limits^{16}_{10} {f(t)} \, dt = \int\limits^{16}_{10} {348e^{0.22t}} \, dt[/tex]
Remove the constant
[tex]\int\limits^{16}_{10} {f(t)} \, dt = 348\int\limits^{16}_{10} {e^{0.22t}} \, dt[/tex]
Now, integrate
[tex]\int\limits^{16}_{10} {f(t)} \, dt = 348 \times \frac{1}{0.22} (e^{0.22t})|\limits^{16}_{10}[/tex]
[tex]\int\limits^{16}_{10} {f(t)} \, dt = \frac{ 348}{0.22} (e^{0.22t})|\limits^{16}_{10}[/tex]
Expand
[tex]\int\limits^{16}_{10} {f(t)} \, dt = \frac{ 348}{0.22} (e^{0.22\times 16} -e^{0.22\times 10} )[/tex]
[tex]\int\limits^{16}_{10} {f(t)} \, dt = \frac{ 348}{0.22} (e^{3.52} -e^{2.2} )[/tex]
[tex]\int\limits^{16}_{10} {f(t)} \, dt = \frac{ 348}{0.22} \times 24.759[/tex]
[tex]\int\limits^{16}_{10} {f(t)} \, dt = 39164.2[/tex]
From the question
[tex]t = 10[/tex] represents the start of 2010.
This means that
[tex]t = 16[/tex] represents the start of 2016.
So, the interpretation is:
The total revenue from the start of 2010 to the start of 2016 is $39.16 billion
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The seven main functions of marketing summarize what it takes to _____.
Answers
Explanation:
The seven functions of marketing are distribution, market research, setting prices, finance, product management, promotional channels and matching products to consumers
I guess this may help
Answer:
All of the above
Explanation:
just took it
Kluber, Inc. had net income of $911,000 based on variable costing. Beginning and ending inventories were 56,100 units and 54,200 units, respectively. Assume the fixed overhead per unit was $1.80 for both the beginning and ending inventory. What is net income under absorption costing?
a. $811,730
b. $904,160
c. $1,010,270
d. $907,580
e. $911,000
Answers
Answer:
Net operating income (absorption)= $907,580
Explanation:
Giving the following information:
Fixed overhead per unit= $1.80
Net income= $911,000 (variable costing)
Beginning inventory= 56,100 units
Ending inventory= 54,200 units
Under absorption costing, fixed manufacturing overhead is a product cost. We need to incorporate into the cost of goods sold the fixed overhead from beginning inventory and deduct the fixed overhead allocated into ending inventory.
Net operating income= 911,000
Less:
Fixed overhead beginning inventory= (1.8*56,100)
Add:
Fixed overhead ending inventory= (1.8*54,200)
Net operating income (absorption)= $907,580
QS 8-7 Computing revised depreciation LO C2 On January 1, the Matthews Band pays $65,800 for sound equipment. The band estimates it will use this equipment for four years and after four years it can sell the equipment for $2,000. Matthews Band uses straight-line depreciation but realizes at the start of the second year that this equipment will last only a total of three years. The salvage value is not changed. Compute the revised depreciation for both the second and third years.
Answers
Answer:
$23,925 for both the second and third years
Explanation:
Depreciation is the systemic recognition of the cost of an asset in the profit or loss statement. It is an expense.
Depreciation may be computed on a straight line basis as
Depreciation = (cost - salvage value)/estimated useful life
Given that Matthews Band pays $65,800 for sound equipment. The band estimates it will use this equipment for four years and after four years it can sell the equipment for $2,000
Depreciation in the first year of use
= ($65,800 - $2,000)/4
= $15,950
The carrying amount at the start of the second year
= $65,800 - $15,950
= $49,850
Depreciation for the second year and 3rd year after the company realizes that this equipment will last only a total of three years
= ($49,850 - $2,000)/2
= $47,850/2
= $23,925
explain how the looting of shops and malls will affect businesses in terms of the relationship between social responsibility and triple bottom line
Answers
When people loot shops it shows that they are irresponsible and it goes on to destroy the image of the society they live, destroys a business by taking away their means of making profit.
Social responsibility can be described as the civic and ethical duties that citizens of a country owe to the nation they live.
The three bottom principle has the profit, people and the planet. The looting of shops draws a line between consumers relationships and their social responsibility.
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WHAT ARE THE NEW LINKEDIN LIMITS?
Answers
Answer:
100 invites per week.
The new invite limits have been introduced by LinkedIn according to which you can’t send more than 100 invites per week. When you have reached the limit, a notification will pop up saying you’ve reached weekly limits.
You can’t do anything about it until the new week starts and the weekly limit resets.
What are the purposes of the Democratic leadership style?
Answers
Answer:
#It brings peace in the society.
#It increases the growth/development of a society.
#It enables civilians of a society to express themselves.
Answer:
Democratic leadership is a type of leadership in which the Group's members play a more participatory role.
Explanation:
This leadership style allows everyone to participate, discuss ideas, hear their views, and encourage debate. However, the group leader still needs guidance and guidance to achieve the goals and goals.
Members of the Group are encouraged to share opinions and ideas, even if the leader retains the last say in decisions.Group members feel more committed to the process.Creativity is promoted and recompensed.As there is group engagement and discussion, more thoughts and ideas lead to better ideas and solutions, the main benefit of a democratic leadership style.
The participants in a group participate more in and engage in projects that increase their investment in the final results. In essence, they care more and increase productivity.
A firm with earnings before interest and taxes of $500,000 needs $1 million of additional funds. If it issues debt, the bonds will mature after 20 years and pay interest of 8 percent. The firm could issue preferred stock with a dividend rate of 8 percent. The firm has 100,000 shares of common stock outstanding and is in the 30 percent income tax bracket. What are the (1) earnings per common share under the two alternatives, (2) the times-interest-earned if the firm uses debt financing, and (3) the times-dividend-earned if the firm uses preferred stock financing
Answers
Answer:
Calculation of Earning Per Share
Particulars Debt Alternative($) Preferred Stock($)
Amount Required 1,000,000 1,000,000
Earning before Interest and Tax 500,000 500,000
Less: Interest Cost(8%) 80,000 ----
Earning After Interest 420,000 500,000
Tax(30%) 126,000 150,000
Earning After Tax 294,000 350,000
Less: Dividend to Pref. Shares 80,000
Earning Avai. for C. Stockholders 294,000 270,000
Outstanding shares 100,000 100,000
Earning Per Common Share 2.94 2.70
2. Times Interest Earned Ratio = EBIT / Interest
Times Interest Earned Ratio = 500,000 / 80,000
Times Interest Earned Ratio = 6.25 Times
3. Times Dividend Earned Ratio = Net Income / Preferred Dividend
Times Dividend Earned Ratio = 350,000 / 80,000
Times Dividend Earned Ratio = 4.375 Times
Which of the following statements is true?
a. Overhead can be applied slowly as a job is worked on.
b. Overhead can be applied when the job is completed.
c. Overhead should be applied to any job not completed at year-end in order to properly value the work in process inventory.
Answers
Answer:
the answer should be
a. Overhead can be applied slowly as a job is worked on.
Answer:
A: overhead can be applied slowly as a job is worked on.
Explanation:
Im pretty sure i already learned that! so trust it!
hope it helps!
if its wrong report my answer!
An individual taxpayer reports the following items for the current year: Ordinary income from Partnership A, operating a movie theater in which the taxpayer materially participates $70,000 Net loss from Partnership B, operating an equipment rental business in which the taxpayer does not materially participate (9,000) Rental income from building rented to a third party 7,000 Short-term capital gain from sale of stock 4,000 What is the taxpayer’s adjusted gross income for the year?
Answers
Answer:
$74,000
Explanation:
Calculation to determine the taxpayer’s adjusted gross income for the year
Taxpayer’s adjusted gross income=Net loss from Partnership B+Capital gain from sale of stock
Let plug in the formula
Taxpayer’s adjusted gross income=$70,000+ $4,000
Taxpayer’s adjusted gross income=$74,000
Therefore the taxpayer’s adjusted gross income for the year is $74,000
Match each example to the appropriate term.
a. Trees used to make paper
1. Human capital
2. Technological knowledge
3. Physical capital
b. A printing press used to make books.
1. Human capital
2. Technological knowledge
3. Physical capital
c. A method of organizing workers to increase production per hour.
1. Human capital
2. Technological knowledge
3. Physical capital
d. The skills workers learn during a training session.
1. Human capital
2. Technological knowledge
3. Physical capital
Answers
Answer:
a equals 3
b equals 3
c equals 1
d equals 2
_____ stock is the number of shares that a corporation's charter allows it to sell. The number of these shares usually exceeds the number of shares issued (and outstanding), often by a large amount.
Answers
An authorized stock is the number of shares that a corporation's charter allows to sell.
Authorized stock is the legal number or limit of shares that a company allows or authorizes to be sold or put in the market. This factor of policy is applicable as per the charter that the corporation allows or is legally viable to provide.
In the issue of sharing shares of a company, an organization can allow only a certain limit of shares that can be sold. This limit is the number of shares that a corporation can issue to its shareholders or investors.This stock is different from issued stock which refers to the actual number of stocks that the company has sold.Rather, authorized stock is the amount of shares that can be sold by the company and being provided in the market to be bought by shareholders or investors.Thus, we can conclude that whatever limit a corporation allows or provides to be sold is the authorized stock. And it is only this number of shares that can be issued or given to a shareholder to buy.
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The following production data were taken from the records of the Finishing Department for June: Inventory in process, June 1 (35% completed) 5,000 units Completed units during June 64,500 units Ending inventory (63% complete) 4,400 units What is the number of material equivalent units of production in the June 30, Finishing Department inventory, assuming that the first-in, first-out method is used to cost inventories and materials were added at the beginning of the process?
a. 4,400 units
b. 59,500 units
c. 68,900 units
d. 63,900 units
Answers
Answer:
d. 63,900 units
Explanation:
Particulars Unit
Beginning inventory -
Units started and completed 59,500 [64,500 - 5,000]
Closing WIP for materials 4,400
Equivalent units for materials 63,900
So, the number of material equivalent units of production in the June 30, Finishing Department inventory is 63,900 units
Ajax, Inc., issued callable bonds with a par value of $1,000,000 that require the payment of a call premium of $10,000. The bonds have a carrying value of $990,000. We call these bonds prior to maturity on September 30.
Required:
Write down journal entry.
Answers
Answer: please see explanation column for answers.
Explanation:
The journal entry is as follows:
To record the bonds payable and retirement
Date Account titles and explanation Debit Credit
Sept 30, Bonds payable $1,000,000
Loss on bonds retirement $20,000
To Discount on bond $10,000
To cash $1,010,000
Calculation:
Loss on bonds retirement:Total Cash disbursements - carrying value
= (par value of the bonds+ call premium) -carrying value
= ($1,000,000 + $10,000) - $990,000
= $1,010,000 - $990,000
= $20,000
A company paid $0.85 in cash dividends per share. Its earnings per share is $3.50, and its market price per share is $35.50. Its dividend yield equals:___.
a. 2.0%.
b. 2.4%.
c. 9,9%.
d. 21.4%.
e. 24.2%.
Answers
Answer:
B
Explanation:
A firm is making an economic loss of $100,000. This means that: multiple choice 1 the firm should immediately exit the industry. the firm's revenues are less than its opportunity costs. the firm is not making an accounting profit. the firm could increase economic profit if its resources were used in a different way. If a firm is making an economic profit of zero: multiple choice 2 it will have unhappy stockholders. it is not making an accounting profit. the firm should change to a different line of business. it cannot make a higher economic profit by changing how it is using its resources.
Answers
A firm is making an economic loss of $100,000. This means that:
Choice 1 -
The firm could increase economic profit if its resources were used in a different way.
If a firm is making an economic profit of zero:
Choice 2 -
It cannot make a higher economic profit by changing how it is using its resources.
What Is Economic Profit (or Loss)?An economic profit or loss is the difference between the revenue received from the sale of an output and the costs of all inputs used, as well as any opportunity costs. In calculating economic profit, opportunity costs and explicit costs are deducted from revenues earned.Opportunity costs are a type of implicit cost determined by management and will vary based on different scenarios and perspectives.The calculation for economic profit --Economic profit = revenues - explicit costs - opportunity costsLearn more about Economic Profit (or Loss) on:
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Daphne Inc., a steel manufacturing company, is planning to buy a new plant at $1,090,000. The life of the plant is estimated to be 5 years and has cash flows of $109,000, $218,000, $327,000, $436,000, and $545,000. Calculate the payback period for the new plant.
a. 5 years
b. 2 years
c. 4 years
d. 3 years
Answers
Answer:
The payback period is exactly 4 years.
Explanation:
Giving the following information:
Initial investment= $1,090,000
Cf1= 109,000
Cf2= 218,000
Cf3= 327,000
Cf4= 436,000
Cf5= 545,000
The payback period is the time required to cover the initial investment:
Year 1= 109,000 - 1,090,000= -981,000
Year 2= 218,000 - 981,000= -763,000
Year 3= 327,000 - 763,000= 436,000
Year 4= 436,000 - 436,000= 0
The payback period is exactly 4 years.
