Answer:
15.19%
Explanation:
According to the given situation, the computation of the annual percentage rate is shown below:-
Annual percentage rate = (1 + APR ÷ n^n) -1)
Now we will put the values into the above formula to reach the annual percentage rate
= ((1.1608) × 0.25 - 1) × 4
= 0.1519
or
= 15.19%
Therefore for computing the annual percentage rate we simply applied the above formula.
Suppose the exchange rate is 90 yen per U.S. dollar and the United States wants to keep the exchange rate at a target rate of 90 yen per U.S. dollar. If the demand for U.S. dollars decrease, the Fed ______
A. buys dollars to raise the exchange rate
B. sells dollars to raise the exchange rate
C. sells dollars to lower the exchange rate
D. buys dollars to lower the exchange rate
Answer:
Option A, buys dollars to raise the exchange rate, is the right answer.
Explanation:
Option A is correct because when the Fed will buy the dollars then only the demand for dollars will shift rightwards. Consequently, the dollar price or exchange rate will go up. Therefore, the Fed will buy the dollars to increase the exchange rate. In another case, if the Fed wants to decrease the exchange rate then it will sell the dollars, and selling of dollars will shift the supply rightwards. Thus, the exchange rate will fall.
The value of the currency of a country as contrasted to the other country or the economic region is called an exchange rate.
The correct answer is:
Option A. buys dollars to raise the exchange rate.
This can be explained as:
When Fed will purchase a dollar then, there will be shifts towards the right.The transfer rate or the dollar price will rise.So to enhance the economic measure dollar should be purchased.To reduce the exchange rate dollar should be sold.Therefore, Fed should buy dollars.
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Folsom Advertising, Inc. is considering an investment in a new information system. The new system requires an investment of $1,800,000 and either has
a. Even cash flows of $750,000 per year or
b. The following expected annual cash flows: $450,000, $225,000, $600,000, $600,000, and $150,000.
Required:
Calculate the payback period for each case
Answer:
Payback period=2 years 5 months
Payback period=3 years 8 months
Explanation:
The payback period is the estimated length of time in years it takes .
It is the number of years it takes the cash project to break-even
a) Payback period
Total cash flow for two years = 750× 2 = 1500.000
Balance of cash flow required to make up= 1800000- 1500,000 300,000
Payback period = 2 years + 300,000/750,000× 12 months= 2 years 5 months
Payback period=2 years 5 months
b) Payback period
Total cash flow for 3 years = 450,000 + $225,000 +600,000=1,275 ,000
Balance o cash required to make up 1800,000 = 1,800,000 -1275,000= 525,000
Pay back period = 3 years + 525,000/750,000× 12 months
= 3 years 8 months
Payback period=3 years 8 months
Suppose the country of Stan has fixed its exchange rate to the dollar. The official exchange rate is 0.50 U.S. dollars per rupee. Suppose market conditions are such that the actual equilibrium exchange rate is 0.25 U.S dollars per rupee.
1. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price at official exchange rates? ___________ Are products bought from Stan a good deal?
2. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price if you could buy at the equilibrium exchange rate?
3. Will foreigners want to demand Stan’s rupees to buy goods at the official rate? Explain.
4. Will people in Stan want to buy U.S. goods at the official exchange rates? Will they being supplying or demanding their rupees?
5. Will the monetary authorities in Stan have to buy up a surplus of their currency or sell their currency to meet a shortage of their currency to keep the exchange rate at 0.50 dollars per rupee?
Answer and Explanation:
1. At 0fficial exchange rate:
100 * 0.5 = $50
what I want to buy would be purchased at $50
at market exchange rate:
0.25 x 100 = $25
products bought from this place are not a good deal as I am paying more than the market exchange rate.
2. at equilibrium exchange rate:
100 x 0.25% = $25
the price is $25
3. from answers 1 and 2, I will not want demand Stan's rupees. the products are costly to get.
4. Stan's currency is obviously overvalued. the people from this country now has increased purchasing power so they can purchase goods in dollars, therefore they would be supplying their currency.
5. They will have to buy up the surplus of rupees so that they can easily keep up with maintaining the rupee at half a dollar.
Fitness Bands Corporation gathered the following information for Job #928: Standard Total Cost Actual Total Cost Direct materials Standard: pints at /pint Actual: pints at /pint What is the direct materials quantity variance?
Question:
standard total cost Actual total cost
Direct material
Standard 2000 pints $3.50/pint $7,000
Actual 2,500 pints $5.00/pint $12,000
Answer:
Materials quantity variance= $1,750 unfavorable
Explanation:
Material quantity variance occurs when the actual quantity used to achieved a given level of output is more or less than the standard quantity.
It is determined by the difference between the actual and standard quantity of material for the actual level of output multiplied by the the standard price
pints
Standard quantity allowed 2,000
Actual quantity used 2,500
Quantity variance 500 unfavorable
Standard price $3.50
Materials quantity variance 1,750 unfavorable
Materials quantity variance= $1,750 unfavorable
A 70-year old client wants to invest in U.S. Treasury securities. When performing the suitability determination, the client informs the registered representative that he is looking for after-tax income, liquidity, and to avoid market risk. The registered representative should be LEAST concerned with the:
Answer: client's age
Explanation:
From the question, we are informed that a 70-year old client wants to invest in U.S. Treasury securities and that when performing the suitability determination, the client informs the registered representative that he is looking for after-tax income, liquidity, and to avoid market risk.
The client's age should be the least the registered representative should be concerned about. Rather, the representative should be concerned with the coupon of the recommended treasury securities and the tax bracket of the client for tax purposes.
Which of the following statements would best characterize someone who is not culturally competent in working with others from different cultures?a. The person varies the rate of their speaking.b. The person uses facial expressions when communicating.c. The person pays attention to verbal and non-verbal behavior.d. The person fills "silence" during conversations.
Answer: The person fills "silence" during conversations
Explanation:
Culture is simply regarded as people's way of life. The way if life include their food, the kind of music they listen to, their religion, language, their beliefs, values etc.
Someone who is not culturally competent in working with others from different cultures would usually be silent during conversations. This is because the person doesn't know much about the culture and can't really be involved in the conversation.
Someone offers to buy your car for four, equal annual payments, with the first payment coming 2 years from today. If you think that you could sell your car to another purchaser for an immediate payment of $9,000 and the interest rate is 10%, what is the minimum annual payment that you would accept from this buyer?
Answer:
4i8484884858585848484i
If the government wants to raise tax revenue, which of the following items are good candidates for an excise tax? Why?
a. granola bars.
b. cigarettes.
c. toilet paper.
d. automobile tires.
e. bird feeders.
Answer:
B,C
Explanation:
An excise tax is actually a tax that is levied on a good at purchase.
Cigarettes and tissue paper are good candidates for excise duty. This is because of the fact that both goods are inelastic. There would be no decrease in their consumption if an excise tax is placed on them. People would still purchase them. Tissue paper has no substitute while cigarette would still have buyers regardless of an increase in price.
If bookstore ABC Books determines it is going to sell books at its profit-maximizing price of $15 in a market facing monopolistic competition, calculate total profit for the store
ABC Books Revenue and Cost
Quantity Price Total Revenue Marginal Revenue Total Cost Marginal Cost
0 $26 $0 $325
10 $23 $230 $23 $365 $4
20 $20 $400 $17 $425 $6
30 $18 $540 $14 $505 $8
40 $16 $640 $10 $605 $10
50 $14 $700 $6 $725 $12
60 $12 $720 $2 $865 $14
Answer: $35
Explanation:
Profit will be the Total Revenue less the total costs involved with selling the goods.
Total Revenue at $16 is $640.
Total Cost at $16 is $605.
Profit = 640 - 605
= $35
Note; Your question has $15 as the maximizing price which is not available in the table. It might be a typo so I attached the question.
g Mason Company paid its annual property taxes of $240,000 on February 15, 20X9. Mason also anticipates that its annual repairs expense for 20X9 will be $1,200,000. This amount is usually incurred and paid in July and August when operations are shut down so that machinery and equipment can be repaired. What amount should Mason deduct for property taxes and repairs in each quarter for 20X9?
Answer:
$360,000
Explanation:
The total cost would be estimated as the expense anticipated plus the property taxes paid previously.
Now
Total Cost = $240,000 Property Taxes paid + $1,200,000 Property repairs anticipated
= $1,440,000
Now we will distribute the annual cost over the four quarters which mean we will divide the total annual cost by 4.
Quarterly Expenses = $1,440,000 / 4 = $360,000
Cullumber Corporation had 312,000 shares of common stock outstanding on January 1, 2017. On May 1, Cullumber issued 29,700 shares.
(a) Compute the weighted-average number of shares outstanding if the 29,700 shares were issued for cash.
Weighted-average number of shares outstanding $
(b) Compute the weighted-average number of shares outstanding if the 29,700 shares were issued in a stock dividend.
Weighted-average number of shares outstanding $
Answer:
a. Issued for Cash = ($312,000 * 12/12) + ($29,700 * 8/12)
= $312,000 + $19,800
= $331,800
b. Issued in a stock dividend: Shares issued in the stock dividend are assumed outstanding from the beginning of the year
= ($312,000 * 12/12) + ($29,700 * 12/12)
= $312,000 + $29,700
= $341,700
Beverages manufactures its own . The bottles are made from polyethylene terephthalate (PET), a lightweight yet strong plastic. uses as much PET recycled resin pellets in its bottles as it can, both because using recycled PET helps to meet its sustainability goals and because recycled PET is less expensive than virgin PET.
Riley is continuing to search for ways to reduce its costs and its impact on the environment. PET plastic is melted and blown over soda bottle molds to produce the bottles. One idea Riley's engineers have suggested is to retrofit the soda bottle molds and change the plastic formulation slightly so that 25 % less PET plastic is used for each bottle. The average kilograms of PET per soda bottle before any redesign is 0.004 kg. The cost of retrofitting the soda bottle molds will result in a one-time charge of $22,112, while the plastic reformulation will cause the average cost per kilogram of PET plastic to change from $3.00 to $3.30.
Required:
a. Using the original data (before any redesign of soda bottles ), prepare a direct materials budget to calculate the cost of PET purchases in each quarter for the upcoming year and for the year in total.
b. Assume that the company retrofits the soda bottle molds and changes the plastic formulation slightly so that less PET plastic is used in each bottle. Now prepare a direct materials budget to calculate the cost of PET purchases in each quarter for the upcoming year and for the year in total for this possible scenario.
c. Compare the cost of PET plastic for Requirement 1 (original data) and for Requirement 2 (making change to using less PET.) What is the direct material cost savings from making the change to using less PET?
Answer:
I prepared an excel spreadsheet because there is not enough space here.
C) total savings = previous materials costs - total cost per year after retrofitting - cost of retrofitting the molding machine = $137,105.10 - $102,168.00 - $22,112 = $12,825.10
The difference between total sales revenue and total cost of goods sold is the: A. Trade margin B. Gross marketing contribution C. Net marketing contribution D. All of the above
Answer:
A. Trade margin
Explanation:
The profit obtained from trading operations is known as gross profit or trade margin.This is calculated as sales less costs of goods sold.
The difference between total sales revenue and total cost of goods sold is the gross marketing contribution.
The following information is considered:
When the cost of goods sold is deducted from the sales revenue so the gross marketing contribution should come. Neither it is trade margin, nor net marketing contribution.In other words, the difference is called as gross margin.Therefore we can conclude that the correct option is B.
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You are calculating the performance of your project. If the actual cost is $80,000, the planned value is $70,000 and the earned value is $65,000, what is the cost performance index?
Answer:
Cost performance index is 81.25%
Explanation:
Actual cost = $80,000
Planned value = $70,000
Earned value = $65,000
Cost performance index (CPI) is the ratio of earned value to actual cost and can be used to estimate the projected cost of completing the project.
CPI = EV / AC
= $65,000 / $80,000
= 0.8125
= 0.8125 x 100
= 81.25%
The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with a. 9 units of output. b. 15 units of output. c. 21 units of output. d. 30 units of output.
Answer:
b. 15 units of output.
Explanation:
information regarding sales price and quantity demanded is missing, so I looked it up (see attached file):
units sales revenue total costs profits
9 $216 $36 $180
15 $270 $54 $216
21 $252 $72 $180
30 $90 $99 ($9)
The BRS Corporation makes collections on sales according to the following schedule: 40% in month of sale 55% in month following sale 5% in second month following saleThe following sales have been budgeted: Sales April $210,000 May $160,000June $150,000 Budgeted cash collections in June would be:______.a. $150,840.b. $158,000.c. $149,000.d. $150,000.
Answer:
Total cash collection= $158,500
Explanation:
Giving the following information:
Cash collection:
40% in the month of sale
55% in the month following sale
5% in the second month following sale
Sales:
April $210,000
May $160,000
June $150,000
Cash collection June:
Sales in cash from June= 150,000*0.4= 60,000
Sales on account from May= 160,000*0.55= 88,000
Sales on account from April= 210,000*0.05= 10,500
Total cash collection= $158,500
Rogers, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: Professional and Residential. Assume the following divisional information was available for the past year (in thousands of dollars):
Sales Operating Income Total Assets
Residential $850,000 $68,000 $200,000
Professional $1,095,000 $153,300 $365,000
Assume that management has a 25% target rate of return for each division.
Requirements
a. Calculate each division’s ROI.
b. Calculate each division’s sales margin. Interpret your results.
c. Calculate each division’s capital turnover. Interpret your results.
d. Use the expanded ROI formula to confirm your results from Requirement a. What can you conclude?
e. Calculate each division’s residual income (RI). Interpret your results.
Answer:
A.Residential 34%
Professional 42%
B.Residential 8%
Professional 14%
C.Residential 4.25%
Professional 3%
D.Residential 34%
Professional 42%
E.Residential $18,000.00
Professional $62,050.00
Explanation:
A.Calculation for each division’s ROI
Using this formula
Return on Investment
=Net Income / Average Invested Assets
Let plug in the formula
Residential $68,000.00/$200,000.00 = 34.00%
Professional $153,300.00/$365,000.00 = 42.00%
B.Calculation for each division’s sales margin. Interpret your results
Using this formula
Sales Margin= Operating income/Sales
Let plug in the formula
Residential $68,000.00/$850,000.00 = 8.00%
Professional $153,300.00/$1,095,000.00 = 14.00%
C.Calculation for each division’s capital turnover
Using this formula
Capital Turnover=Sales/Average operating assets
Let plug in the formula
Residential $850,000.00 /$200,000.00 = 4.25
Professional $1,095,000.00/$365,000.00 = 3.00
D.Using the expanded ROI formula to confirm the results from Requirement a.
Using this formula
Return on Investment=Profit Margin * Investment Turnover
Let plug in the formula
Residential 8.00% * 4.25% 34.0%
Professional 14.00% * 3.00% 42.0%
E.Calculation for each division’s residual income (RI)
Residential Professional
Average investment
$200,000.00 $365,000.00
×Target return 25% 25%
=Target income
$50,000.00 $91,250.00
Hence,
Operating income $68,000.00 $153,300.00
Less:Target income$50,000.00 $91,250.00
Residual income $18,000.00 $62,050.00
1. Chang Industries has 1,900 defective units of product that have already cost $13.90 each to produce. A salvage company will purchase the defective units as they are for $4.90 each. Chang's production manager reports that the defects can be corrected for $6.10 per unit, enabling them to be sold at their regular market price of $20.80. The incremental income or loss on reworking the units is:_______.
a. $18,620 income.
b. $30,210 income.
c. $27,930 income.
2. Poe Company is considering the purchase of new equipment costing $85,500. The projected net cash flows are $40,500 for the first two years and $35,500 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine.
Periods Present Value of 1 at 10% Present Value of anAnnuity of 1 at 10%
1 0.9091 0.9091
2 0.8264 1.7355
3 0.7513 2.4869
4 0.6830 3.1699
a. $(27,665).
b. $(14,857).
c. $27,665.
d. $35,709.
Answer:
1. $18620
2. $35709
Explanation:
1.we are required to find incremental loss.
= Defect(market price - price per unit - correction per unit)
Defect product = 900
Market price = 20.8
Price for each defect unit = 4.9
Price for defect correction = 6.1
1900(20.8-4.9-6.1)
= $18600
2. Present value of cash flow =
40500*0.9091 = 36818.55
40500*0.8264 = 33469.2
35500*0.7513 = 26671.15
35500*0.683 = 24246.5
Total = 121209
We subtract cost of new equipment from this value
121209-85500
= $35709
In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2017 were as follows.
Budget Actual
Indirect materials $14,200 $13,700
Indirect labor 19,100 19,900
Utilities 11,400 12,100
Supervision 4,600 4,600
All costs are controllable by the department manager.
Prepare a responsibility report for April for the cost center.
Answer:
HANNON COMPANY
Assembly Department
Manufacturing Overhead Cost Responsibility Report
For the Month Ended April 30,2017
Controllable Cost Budget$ Actual$ Difference$ Remark
Indirect materials 14,200 13,700 500 Favourable
Indirect Labor 19,100 19,900 -800 Unfavourable
Utilities 11,400 12,100 -700 Unfavourable
Supervision 4,600 4,600 0 None
Total 49,300 50,300 -1,000 Unfavourable
In determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.a. True
b. False
Answer:
a. True.
Explanation:
In determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.
In Financial accounting, Horizontal analysis can be defined as an analysis and evaluation of a financial statement which illustrates or gives information about changes in the amount of corresponding financial statement items, benchmarks or financial ratio over a specific period of time. It is one of the most important technique that is used to measure how a business is doing financially. Hence, it is also referred to as the trend analysis.
Under the horizontal analysis of financial statement, we use the financial statements of two or more periods; earliest and latter periods.
Generally, the earliest is chosen as the base period while all other items on the statement for a latter period will be compared with the items on the statement of the base period.
Which of the following items would be a way to manipulate the cash flow from operating activities amount on the statement of cash flows?
a.
Adding depreciation back to net income to determine cash flow from operating activities.
b.
Including interest expense and tax expense in the calculation of cash flow from operating activities.
c.
Recording an item that should be recorded as an operating activity as an investing activity.
d.
The cash flow statement cannot be manipulated.
Answer:
C. Recording an item that should be recorded as an operating activity as an investing activity.
Explanation:
Hope it helped
U.S. net capital outflow Group of answer choices is a source of the supply of loanable funds, and the source of the supply of dollars in the foreign exchange market. is a source of the supply of loanable funds, and a source of the demand for dollars in the foreign exchange market. is a part of the demand for loanable funds, and the source of the supply of dollars in the foreign exchange market. is a part of the demand for loanable funds, and a source of the demand for dollars in the foreign exchange market.
Answer:
Option D would be the correct choice.
Explanation:
The net capital outflow has been the discrepancy among purchasing foreign assets from a region, as well as selling domestic currency worldwide. Find a basket of products similar across both the United States or even just Taiwan. Such net capital outflows allude to something like the disparity between households and businesses acquiring overseas investments versus non-residents acquiring domestic currency.The other options in question aren't relevant to the particular context. So choice D is perhaps the right one.
balance sheet reports assets of $6900000 and liabilities of $2700000. All of Ivanhoe’s assets’ book values approximate their fair value, except for land, which has a fair value that is $410000 greater than its book value. On 12/31/21, Oriole Corporation paid $7030000 to acquire Ivanhoe. What amount of goodwill should Oriole record as a result of this purchase?
Answer: $2,420,000
Explanation:
Goodwill is the amount over the fair value of a company that it is purchased for.
Goodwill = Acquisition price - Net Assets
Net Assets = Assets - Liabilities
= (6,900,000 + 410,000) - 2,700,000
= $4,610,000
Goodwill = 7,030,000 - 4,610,000
= $2,420,000
5. Kroger can use __________ gathered from ClickList orders to determine which products they should keep more or less of in stock.
Answer: Data analytics
Explanation:
Data analytics simply has to do withcanalyzing raw data to make conclusions about a particular information. Data analytics is used by organizations in order to optimize their business performance.
Kroger can use data analytics gathered from ClickList orders to determine which products they should keep more or less of in stock.
All reports required to can be found online at sec.gov.
Per Twitter’s amended S-1 filing, what are the maximum estimated capital expenditures in 2013? Please provide your answer in millions without comma separator or decimal.
Answer:
Twitter's amended S-1 filing
Maximum estimated capital expenditures in 2013:
= $98 million
Explanation:
Twitter's capital expenditures in 2013 can be estimated by subtracting the long-term or non-current assets of 2012 from 2013.
The 2013 long-term assets (Property and equipment, net) are worth $284,024,000
The 2012 long-term assets (Property and equipment, net) are worth $185,574,000
The capital expenditure in 2013 = $98,450,000
The implication is that Twitter added to (or increased) its property and equipment by $98,450,000, which represent new capital expenditures in 2013.
Twitter filed SEC Form 1-A (S-1) with the Securities and Exchange Commission (SEC) when it was seeking exemption for registration requirements for its public offerings as an "emerging growth company," as it is "allowed by the federal securities laws to elect to comply with certain reduced public company reporting requirements for future filings."
Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a % weight in equity, % in preferred stock, and % in debt. The cost of equity capital is %, the cost of preferred stock is %, and the pretax cost of debt is %. What is the weighted average cost of capital for Ford if its marginal tax rate is %?
Complete Question:
Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 10% weight in equity, 25% in preferred stock, and 65% in debt. The cost of equity capital is 17%, the cost of preferred stock is 11%, and the pretax cost of debt is 9%. What is the weighted average cost of capital for Ford if its marginal tax rate is 40%?
Answer:
7.96%
Explanation:
We can calculate WACC using the formula:
WACC = Cost of equity * Equity %age / 100% +
After Tax Cost of Debt * Debt %age / 100% +
Cost of Preferred Stock * Preferred Stock %age / 100%
Here,
Cost of equity is 17%
Cost of preferred stock is 11%
Post tax cost of debt = Pre-Tax cost * (1 - Tax rate)
This implies,
Post tax cost of debt = 9% * (1 - 40%) = 5.4%
Equity weight is 10% weight in equity
Preferred stock weight is 25%
Debt Weight is 65%
By putting value in the formula given in the attachment, we have:
WACC = 17% * (10% / 100%) + 11% * (25% / 100%) + 5.4% * (65% / 100%)
WACC = 1.7% + 2.75% + 3.51%
WACC = 7.96%
Following is information on two alternative investments being considered by Jolee Company. The company requires a 6% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1). (Use appropriate factor(s) from the tables provided.) Project A Project B Initial investment $ (174,325 ) $ (152,960 ) Expected net cash flows in year: 1 41,000 44,000 2 60,000 53,000 3 72,295 68,000 4 87,400 81,000 5 59,000 30,000For each alternative project compute the net present value.
Answer and Explanation:
The computation of the net present value is presented in the attachment below:
For project A, the net present value is $91,771.53 and for project B, the net present value is $79,390.69
It is computed after considering the discounting factor that comes from
= 1 ÷ (1 + discount rate)^number of years
for year 1, it is
= 1 ÷ (1 + 0.06)^1
The same applied for the remaining years
On January 1, the listed spot and futures prices of a Treasury bond were 95.4 and 95.6. You sold $100,000 par value Treasury bonds and purchased one Treasury bond futures contract. One month later, the listed spot price and futures prices were 95 and 94.4, respectively. If you were to liquidate your position, your profits would be a Group of answer choices $125 profit. $1,060.50 loss. None of the options are correct. $125 loss. $1,062.50 profit.
Answer:
None of the options are correct.
Explanation:
We start by calculating the net change of the treasury bond position.
= $95,125 - $95,000
= $125
The long treasury bond position gains $125 after a month.
We will also calculate the net change of the treasury bond futures contract.
= $94,125 - $95,187.50
= -$1,062.50
Therefore, Net profits is;
= $125 - $1,062.50
= -$937.50
Calculate the monthly implicit costs for a business owner who devotes 200 hours per month to his business that could be spent working at $50/hour for someone else.
Answer:
Implicit cost = $10,000
Explanation:
Implicit cost is the opportunity cost of using resources a business already owns.
This business owner passes this income by being in a business for himself
200 hours per month multiplied by $50/hour
200 x 50
= 10000
Implicit cost = $10,000
Reed Company is in the process of preparing its financial statements for 2022. During 2022, Reed changed from the double-declining balance method for its building to the straight-line method. The building originally cost $900,000. It had an original useful life of 25 years and a salvage value of $60,000. Purchase date was 1/1/20. The 2022 depreciation expense for the building will be:
Answer:
$30,511.30
Explanation:
The double declining method was used for two years
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Depreciation factor = 2 x (1/useful life) = 2 /25 = 0.08
Depreciation expense in 2020 = 0.08 x $900,000 = $72,000
Book value = $900,000 - $72,000 = $828,000
Depreciation expense in 2021 = 0.08 x $828,000 = $66,240
book value = $828,000 - $66,240 = $761,760
Straight line depreciation expense = (book value - Salvage value) / useful life
useful life = 25 - 2 = 23
book value = $761,760
salvage value = $60,000.
( $761,760 - $60,000. ) / 23 = $30,511.30
The depreciation expense for the remaining useful life of the asset would $30,511.30
