Answer:
C. nonstructured
Explanation:
-Recurring decision refers to a decision that has to be made regularly.
-Ad hoc decision refers to a decision made for a specific situation.
-Nonstructured decision is a decision that can have multiple solutions that are correct and you don't have a form to define which one is the right option.
-Structured decision is when you make a decision using a process that has been established to manage a specific situation.
According to this, the answer is that in a(n) nonstructured decision, there may be several "right" answers, and there is no precise way to get a right answer.
Marston Manufacturing Company has two divisions, L and H. Division L is the company’s low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division H is considering a project with an expected return of 12%. Should Marston Manufacturing Company accept or reject the project? Reject the project Accept the project On what grounds do you base your accept–reject decision? Division H’s project should be accepted, as its return is greater than the risk-based cost of capital for the division. Division H’s project should be rejected since its return is less than the risk-based cost of capital for the division.
Answer:
Should Marston Manufacturing Company accept or reject the project?
Marston C Company should reject the project because its expected return is lower than Division H's cost of capital.
Since the divisions' risk is so different, and probably their projects are also very different, the company should use different costs of capital to accept of reject the projects based on each division's cost of capital.
Imagine another situation where Division L is evaluating a project that yields 10%. If they used the company's WACC, then they should reject the project, but if they used the division's cost of capital, then they should accept the project (in this case I would recommend accepting it).
Explanation:
Division H's risk = 14%
Division L's risk = 8%
WACC = 11%
Many gas stations with convenience stores sell gas at, or close to, cost. In these organizations, profit comes from the convenience store's products and gas is priced to
Answer: build traffic.
Explanation:
The pricing model employed by such gas stations is built in a way to drive traffic. traffic is important and has an impact in many ways 1. low traffic can bog your business down at some level.
2. When you increase your traffic along with the quality of the visitors, the better you will be able to increase your sales.
traffic in this context refers to customers the more you are able to pull customers over the more sales you make.
This is where what I call a deviant comes in. Every team needs a deviant, someone who can help the team by challenging the tendency to want too much homogeneity, which can stifle creativity and learning. Deviants are the ones who stand back and say, ‘Well, wait a minute, why are we even doing this at all? What if we looked at the thing backwards or turned it inside out?’ That’s when people say, ‘Oh, no, no, no, that’s ridiculous,’ and so the discussion about what’s ridiculous comes up. Unlike the CFO I mentioned before, who derailed the team by shutting down discussions, the deviant opens up more ideas, and that gets you a lot more originality. In our research, we’ve looked carefully at both teams that produced something original and those that were merely average, where nothing really sparkled. It turned out that the teams with deviants outperformed teams without them. In many cases, deviant thinking is a source of great innovation."According to Hackman, a deviant may help a group consider _______, but if the deviant has a strong personality and limits the input of others, the problem of ________ , may arise.
Answer:
According to Hackman, a deviant may help a group consider out-of-box thinking, but if the deviant has a strong personality and limits the input of others, the problem of complacency, may arise.
Explanation:
It's from the book "Leading Teams" of J. Richard Hackman, the Edgar Pierce Professor of Social and Organizational Psychology at Harvard University and a leading expert on teams.
Which of these means of assessing candidates generally has the lowest correlation with subsequent performance?
A. Cognitive ability tests.
B. Job knowledge tests.
C. Unstructured interviews.
Answer:
Unstructured interviews
Explanation:
Moe has entered into a contract with Larry. Subsequently, Moe assigns his rights in that contract to Curly. Which of the following would not prevent that assignment? Multiple Choice The assignment would violate public policy matters. The contract contains an anti-assignment clause. Larry protests the assignment and demands that Moe not make the assignment. The assignment would materially alter Larry's duties and cause an increased burden or risk to Larry.
Answer:
Larry protests the assignment and demands that Moe not make the assignment.
Explanation:
An assignment is defined as the transfer of the responsibility of performing a task or contract to another person.
In this instance Moe is trying to assign the contract he has with Larry to Curly.
Curly will now take responsibility for the execution of the contract.
Assignment is allowed if performance of the task is assured, and the other party has no grounds to object if performance will not be affected.
The situation where the assignment will not be prevented is when Larry protests the assignment and demands that Moe not make the assignment.
However the assignment can be prevented if there is an anti-assignment clause, violate public policy, or materially alter Larry's duties and cause an increased burden or risk to Larry.
Sager Industries is considering an investment in equipment that will replace direct labor. The equipment has a cost of $1,200,000 with a $300,000 residual value and a 10-year life. The equipment will replace three employees who has an average total wages of $180,000 per year. In addition, the equipment will have operating and energy costs of $7,500 per year.
Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.
Answer:
Average rate of return = 11%
Explanation:
Depreciation = (Cost of equipment - Residual value) / Useful years
Depreciation = (1,200,000-300,000) / 10
Depreciation = 90,000
Increase in net annual income = 180,000 - 90,000 - 7,500
Increase in net annual income = 82,500
Average investment = (1,200,000 + 300,000) / 2 = 750,000
Average rate of return = Increase in net annual income / Average investment
Average rate of return = 82,500/750,000
Average rate of return = 0.11
Average rate of return = 11%
_________ can give every business access to an agile workforce that is not only better suited to solving some of the problems that organizations struggle with today but in many cases will do it for free.
Complete Question:
_________ can give every business access to an agile workforce that is not only better suited to solving some of the problems that organizations struggle with today but in many cases will do it for free.
Group of answer choices
a. Crowdsourcing
b. LinkedIn
c. Social recruiting
d. Brainstorming
Answer:
a. Crowdsourcing.
Explanation:
Crowdsourcing can be defined as a process of gathering information, ideas, micro-tasks, goods and services, finances, and votes into a project or organizational task from a large group of fast growing participants, either paid or unpaid mostly through the internet. These group of participants are saddled with the responsibility of creating value by contributing significantly to an organization typically over the internet.
Crowdsourcing can give every business access to an agile workforce that is not only better suited to solving some of the problems that organizations struggle with today but in many cases will do it for free.
In cash basis accounting, for tax purposes:
a. Income is recognized when it is actually or constructively received and expenses are recognized when they are actually or constructively incurred, regardless of when paid.
b. Income is recognized when it is earned regardless of when received and expenses are recognized when they are actually or constructively incurred.
c. Income is generally recognized when it is actually or constructively received and expenses are generally recognized when they are paid.
d. The cash basis is not allowed for businesses reported on Schedule C.
Answer: Income is generally recognized when it is actually or constructively received and expenses are generally recognized when they are paid.
Explanation:
In cash basis accounting method, it should be noted that revenues are recognized when they are gotten while for the expenses, they are recognized when they are paid out in cash.
The cash basis for of accounting is the opposite of the accrual method of accounting whereby revenue and expenses will be recognized when incurred.
Assume that you are an intern with the Brayton Company, and you have collected the following data: The yield on the company's outstanding bonds is 7.75%; its tax rate is 40%; the next expected dividend is $0.65 a share; the dividend is expected to grow at a constant rate of 6.00% a year; the price of the stock is $15.00 per share; the flotation cost for selling new shares is F = 10%; and the target capital structure is 45% debt and 55% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?
Answer:
8.038%
Explanation:
For the computation of the firm's WACC first we need to find out the cost of equity which is shown below:-
Cost of equity = Expected dividend ÷ (Price of the stock × (1 - Flotation cost)) + Growth rate
= $0.65 ÷ ($15.00 × (1 - 10%)) + 6.00%
= 10.81%
Now
WACC = Weight debt × (Cost of debt) × (1 - Tax rate) + Weight of equity × Cost of equity
= 45% × 7.75% × (1 - 40%) + 55% × 10.81%
= 8.038%
Bailey Hill Co. uses the indirect method to determine its net cash flows from operating activities. During the course of the year, the company's Accounts Receivable increased by $28,000 and its Accounts Payable decreased by $14,000. If these are the only two adjustments required to convert net income to net cash provided by operating activities, the combined effect will be a(n):
Answer:
The answer is Net income will be reduced by $42,000
Explanation:
Indirect method of preparing cash floe starts with net income.
In cash flow provided by operating activities;
Increase is liabilities is a cash inflow while decrease in liabilities in a cash outflow.
In the same vein, increase in asset is a cash outflow while decrease in asset is a cash inflow.
The effect of these adjustments will be:
Increase in accounts receivable - ($28,000)
Decrease in accounts payable----($14,000)
Cash provided by operating activities - ($42,000)
Net income will be reduced by $42,000
Organizational learning works best when there is integrated thinking and acting at all levels of the organization, according to Peter Senge.
a) true
b) false
Answer: True
Explanation:
According to Peter Senge, he described team learning as a team skill which is required to be practiced by the team members that are involved so that they will all be able to develop their learning skills collectively.
Organizational learning works best when there is integrated thinking and acting at all levels of the organization.
When convertible preferred stock is converted into common stock:______.
a. cash is debited.
b. a gain or loss can be recognized.
Answer:
b. a gain or loss can be recognized.
Explanation:
Convertible preferred stock is an option for shareholders with preferred shares where they have the choice of converting their preferred shares to common shares. The conversion is best done at a time when the common stock is above the conversion price. At this time, the stockholder can make a profit or gain. But if the common share is below the conversion price, the shareholder would most likely record a loss if he converts.
One disadvantage of this conversion process is that, once the preferred stock is converted to the common stock, the preferred shareholder gives up his rights as a preferred shareholder which includes no fixed dividends and higher claims on assets.
Classify the following as a population or sample:
a. Two chimpanzees chosen to carry out genetic research.
b. Statistics 201 is a course taught at a university. Professor Rauch has taught nearly 1,500 students in the course over the past 5 years. You would like to know the average grade for the course.
c. Weather reports for each day of a month in a city for a study on that city's weather during that particular month.
d. To find how many books are published in one week by a famous publishing company.
e. To test a new drug produced by a biotech company.
f. To find the number of men and women working in an IT company with 600 people.
g. To estimate the average salary of doctors in California.
Answer:
Classification as Population or Sample
a. Sample
b. Population
c. Population
d. Population
e. Sample
f. Population
g. Population
Explanation:
The population defines the whole group, while the sample is a part of the population. This means that the sample is less than the population. In statistical research, it is not always possible to study the whole population, unless it is not large. Most times, only the sample is studied and conclusions are then drawn about the population size based on the characteristics discovered about the sample size.
A location decision for a traditional department store (e.g., Macy's) would tend to have what type of focus? revenue focus environmental focus labor focus education focus cost focus
Answer: revenue focus
Explanation:
A location decision for a traditional department store (e.g., Macy's) would tend to have revenue focus. For every organization or company, revenue plays a vital role in the organization.
A traditional department store will shift its focus to a location whereby it can meet the needs of the people daily and generate as much revenue as possible.
The Talbot Company uses electrical assemblies to produce an array of small appliances. One of its high cost / high volume assemblies, the XO-01, has an estimated annual demand of 8,000 units. Talbot estimates the cost to place an order is $50, and the holding cost for each assembly is $20 per year. The company operates 250 days per year. What is the economic order quantity for the XO-01
Answer:
EOQ = 200 units
Explanation:
We can easily calculate the Economic order quantity by putting values EOQ formula. All you need is the data for calculation.
DATA
Annual demand = 8,000
Ordering cost = $50
Holding cost = $20
EOQ =?
Formula
EOQ = [tex]\sqrt{\frac{2CoD}{Ch} }[/tex]
Where
Co = Ordering cost
D = Demand
Ch = Holding cost
Solution
EOQ = [tex]\sqrt{\frac{{2(50)(8000)} }{20}}[/tex]
EOQ = [tex]\sqrt{\frac{800000}{20} }[/tex]
EOQ = 200 units
A consumer plays the role of:
A)a wage earner.
B)a saver.
C)a borrower.
D)All of these choices are correct.
Answer:
c) borrower
Explanation:
A consumer plays the role of a borrower. The consumer is the important role in the economy. Thus, option (c) is correct.
What is consumer?The term “consumer” means purchasing a product or service for the purpose of personal use. The consumer are consumed the product and services. The consumer are buying the product and services with exchange of money.
According to the role of the consumer are the played in the significant role of the economy. The business are the sale of the goods and the services are the borrower are the paid the money to the business. The economy cycle was the continue run.
As a result, the consumer plays the role of a borrower. The consumer is the significant role in the economy. Therefore, option (c) is correct.
Learn more about on consumer, here:
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Pedra, Inc. incurred direct labor costs of $54,000 for 6,000 hours. The standard labor cost was $55,200. During the month, Pedra assigned 6,000 direct labor hours costing $54,000 to production. The standard hours were 6,200. Journalize the transactions for Pedra, Inc. to account for this activity.
Answer and Explanation:
The Journal entry is shown below:-
1. Factory Labor Dr, $55,200
To Labor Price Variance $1,200
To Factory Wages Payable $54,000
(Being factory labor is recorded)
Here we debited the factory labor as it increased the expenses and we credited the labor price variance and factory wages payable as it the factory wages payable increased the liabilities
2. Work in Process Inventory $57,040 ($55,200 ÷ $6,000 × $6,200)
To Labor Quantity Variance $1,840
To Factory Labor $55,200
(Being is work in progress is recorded)
Here we debited the work in progress inventory as it increased the assets and we credited the labor quantity variance and factory labor as the factory labor decreased the expenses
The capital budgeting method that takes into account both the size of the original investment and the discounted cash flows is the Group of answer choices
Answer:
Option D (profitability index) is the correct choice.
Explanation:
Options aren't mentioned in the issue above. Please find the full query attachment here.
Capital budgeting seems to be the mechanism whereby the creditors assess the value of a future investment project. This corresponds to something like the timeframe by which the planned project can produce adequate income to regain the original investment.
The 3 most prevalent frameworks to contractor choosing are given below:
Payback period.Net present value.Internal rate of return.Some other choices have no relation with the specified scenario. So that the option here is just the appropriate ones.
Suppose your yearly demand for renting DVDs is Q = 20 − 4P. If there is a rental club that charges $2 per rental plus an annual membership fee, what is the most that you would be willing to pay for the annual membership fee?
Answer:
$12
Explanation:
If P = $2 then the Q will be;
Q = 20 - 4 * 2
Q = 20 - 8
Q = 12
The maximum annual membership fee will be equal to the amount of demand. The annual membership fee cannot be greater than the demand function if so there will be decline in the demand.
Rose Corporation, a calendar year corporation, had accumulated earnings and profits of $40,000 as of January 1, 2014. However, for the first six months of 2014 Rose Corporation had an operating loss of $36,000, and finished the year with a total net operating loss for tax year 2014 of $55,000. Rose Corporation distributed $15,000 to its shareholders on July 1, 2014. Which of the following is correct?A. The entire distribution of $15,000 is taxable as a dividend.B. The entire distribution is not taxable.C. The part of the distribution which is taxable as a dividend is $12,500.D. The part of the distribution which is taxable as a dividend is $14,000.
Answer:
C. The part of the distribution which is taxable as a dividend is $12,500.
Explanation:
Rose's total loss for the year = $55,000
we must prorate the loss: $55,000 / 12 months = $4,583.33 per month
loss allocated to the first 6 months = $4,583.33 x 6 = $27,500
retained earnings before the distribution = $40,000 - $27,500 = $12,500
since distributions must come from retained earnings to be considered dividends, then only $12,500 will be considered dividends. The remaining $2,500 will be considered a return of capital
If you were to start a business delivering documents, you might need to purchase cell phones, bicycles, desks, and chairs. a. These purchases are called capital investment. If you raise the funds to purchase them from others you are a saver. b. These purchases are called capital investment. If you raise the funds to purchase them from others you are a borrower. c. These purchases are called consumption. If you raise the funds to purchase them from others you are a saver. d. These purchases are called consumption. If you raise the funds to purchase them from others you are a borrower.
Answer:
The answer is B.
Explanation:
Capital is what is used to start a business. It is what the owner's contribution in the business. In advanced class, it is called stock or equity. Capital is usually from the owner's savings. But if this money is borrowed either from an individual or a bank, the person is a borrower while the other party is the lender.
Option A is incorrect because money raised from someone makes the person borrowing a borrower and not a saver.
Option C and D are incorrect because the items needed for the business are not consumables, they are needed for the smooth running of the business, hence they are not consumption.
Sonic, Inc. is planning to produce 2,500 units of product in 2016. Each unit requires 3 pounds of materials at $6 per pound and a half hour of labor at $16 per hour. The overhead rate is 75% of direct labor.
Required:
a. Compute the budgeted amounts for 2016 for direct materials to be used, direct labor, and applied overhead.
b. Compute the standard cost of one unit of product.
Answer:
Results are below.
Explanation:
Giving the following information:
Production= 2,500
Each unit requires 3 pounds of materials at $6 per pound and 0.5 of labor at $16 per hour. The overhead rate is 75% of direct labor.
First, we need to calculate the total cost for direct material, direct labor, and manufacturing overhead:
Direct material= (3*2,500)*6= $45,000
Direct labor= (0.5*2,500)*16= $20,000
Manufacturing overhead= 20,000*0.75= $15,000
Total cost= $80,000
Now, the unitary cost:
unitary cost= 80,000/2,500= $32
ABC issued callable bonds on January 1, 2018. ABC's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 1/1/2018 $194,758 6/30/2018 $7,000 $7,790 $790 195,548 12/31/2018 7,000 7,822 822 196,370 6/30/2019 7,000 7,855 855 197,225 12/31/2019 7,000 7,889 889 198,114 6/30/2020 7,000 7,925 925 199,039 12/31/2020 7,000 7,961 961 200,000 ABC buys back the bonds for $196,000 immediately after the interest payment on 12/31/2018 and retires them. What gain or loss, if any, would ABC record on this date (use a minus sign in front of the number if it is a loss)?
Answer:
Gain $370
Explanation:
Calculation for the gain or loss, if ABC record on this date 12/31/2018
Based on the information given on the amortization schedule, on this date 12/31/2018 the Carrying value was $196,370 while we were still told that ABC buys back the bonds for $196,000 on 12/31/2018
Now let calculate for the gain or loss using this formula
Gain/Loss = Carrying value- Stock bond
Let plug in the formula
Gain/Loss =$196,370-$196,000
Gain/Loss=$370
Therefore if ABC record on this date 12/31/2018, ABC will have a gain of $370
Sales mix, three products. The Ronowski Company has three product lines of belts—A, B, and C— with contribution margins of $3, $2, and $1, respectively. The president foresees sales of 200,000 units in the coming period, consisting of 20,000 units of A, 100,000 units of B, and 80,000 units of C. The company’s fixed costs for the period are $255,000.
What is the company’s breakeven point in units, assuming that the given sales mix is maintained?
If the sales mix is maintained, what is the total contribution margin when 200,000 units are sold? What is the operating income?
What would operating income be if 20,000 units of A, 80,000 units of B, and 100,000 units of C were sold? What is the new breakeven point in units if these relationships persist in the next period?
Answer:
1. 13,236 units
2. $85,000
3. $65,000
4. 15,938 units
Explanation:
First Determine the ratio of the sales mix as follows :
Ratio = 20,000 : 100,000 : 80,000
Reduced to lowest term = 1 : 5 : 4
Then find the Company`s break-even point using the sales mix as follows ;
Break-even point (units) = Fixed Costs ÷ Contribution Margin as per sales mix
= $255,000 ÷ ($3 × 1 + $2 × 5 + $1 × 4)
= $255,000 ÷ $17
= 13,235.29 or 13,236 units
Calculation of Operating Income assuming 200,000 units are sold
Contribution :
A : (1/10 × 200,000 units) × $3 = $60,000
B : (5/10 × 200,000 units) × $2 = $200,000
C : (4/10 × 200,000 units) × $1 = $80,000
Total Contribution $340,000
Less Fixed Cost ($255,000)
Operating Income $85,000
Calculation of Operating Income if 20,000 units of A, 80,000 units of B, and 100,000 units of C were sold.
Contribution :
A : 20,000 units × $3 = $60,000
B : 80,000 units × $2 = $160,000
C : 100,000 units × $1 = $100,000
Total Contribution $320,000
Less Fixed Cost ($255,000)
Operating Income $65,000
Determination of New Sales Mix :
Ratio = 20,000 : 80,000 : 100,000
Reduced to Lowest Term = 1 : 4 : 5
Break-even point (units) = Fixed Costs ÷ Contribution Margin as per sales mix
= $255,000 ÷ ($3 × 1 + $2 × 4 + $1 × 5)
= $255,000 ÷ $16
= 15,937.5 or 15,938 units
Using the periodic FIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.) Multiple Choice $3,405. $3,445. $3,200. $3,540. $3,270.
Answer:
The question is incomplete, below is the completed question:
A company had the following purchases and sales during its first year of operations:
January: Purchases 10 units at $120-sales 6 units
February: Purchases 20 units at $125-sales 5 units
May: Purchases 15 units at $130-sales 9 units
September: Purchases 12 units at $135-sales 8 units
November: Purchases 10 units at $140-sales 13 units
On December 31, there were 26 units remaining in ending inventory. Using the periodic FIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.) Multiple Choice $3,405. $3,445. $3,200. $3,540. $3,270.
Answer:
The cost of ending inventory = $3,540
Explanation:
FIFO (First-in-first-out) inventory costing method is a costing method where the goods purchased first are sold first before those purchased at a later date.
In order to answer this question, let us first determine the total number of units of goods purchased during the year
Month units
January 10
February 20
May 15
September 12
November 10
Total 67
Therefore a total of 67 units were purchased during the year.
Next, we are told that the ending inventory balance = 26 units
Therefore the number of units sold during the year = Total purchase - ending inventory = 67 - 26 = 41
41 units were sold during the year.
using the FIFO inventory method, the units purchased first are sold out first therefore, out of the 41 units sold:
January = 10 units
February = 15 units
May = 11 units
Total = 41 units
This means that out of the 15 unit purchased in may, 11 units were sold, hence the number of units remaining = 15 - 11 = 4 units.
From this point up to November, forms the ending iniventory therefore, the the total ending inventory is calculated as follows:
Month units price per unit($) Total($)
May 4 130 520
September 12 135 1,620
November 10 140 1,400
Total 26 3,540
Therefore, the cost of ending inventory = $3,540
Bronco Corp. has decided to establish a subsidiary in Taiwan that will produce stereos and sell them locally in the country. It expects that its cost of producing these stereos will be one third the cost of producing them in the United States. Assuming that its production cost estimates are accurate, is Bronco‘s strategy sensible? Explain.
Answer:
No
Explanation:
Based on the description provided it can be said that Bronco's strategy is not sensible. This is because Bronco Corp. has recognized an advantage of producing stereos in Taiwan as opposed to the U.S but this is only an advantage if they sell those same stereos that were produced in the Taiwan subsidiary to the U.S. markets. Otherwise they will be selling the stereos at a much lower price in the Taiwan market, which will ultimately not be an advantage.
An investor buys a total of 360 shares-year bond with a $1,000 face value for $800. The bond's coupon rate is 8% and interest payments are made semi-annually. Waht are the bond's yield to maturity and effective annual yield?
Answer:
YTM (Annual( = 10.13%
Effective Annual Yield =10.40%
Explanation:
In order to calculate Yield to maturity, we need to use yield to maturity formula.
Formula: Yield to maturity = [C +(F – P)/n]/(F + P)/2
Where,
C = Coupon amount
F = Face value
n = number of periods
P = Current price
Data
C = 1000 x 8 % = 80
C (6months) = 80 x 6/12 = 40
F = $1000
n = 30 years
P = $800
Solution
YTM = 40 + (1000 – 800/30)/(1000 + 800)/2
YTM = 40 + (200/30)/(1800/2 )
YTM = 40 +( 200/30)/900
YTM = 5.068 semiannual
YTM (Annual( = 10.13%
Effective Annual Yield = [tex](\frac{1+0.1014}{2})^{2-1}[/tex]
Effective Annual Yield =10.40%
"Frank bought a house for $100,000. He put 20% down and borrowed the rest from the bank. However, the value of the house has now increased to $160,000 and he has paid off $20,000 of the bank loan. What is the equity that Frank has in his home
Answer:
$100,000
Explanation:
The computation of the equity in his home is shown below;
Given that
Increased in the value of the house = $160,000
And, the amount he has to paid is
= Borrowed amount - down payment
= $80,000 - ($100,000 × 20%)
= $80,000 - $20,000
= $60,000
So, the equity is
= $160,000 - $60,000
= $100,000
hence, the equity value is $100,000
Answer:
The equity that Frank has in his home is $100000
Explanation:
The purchase price of house = $100000
The down payment = 20% or $100000 ×20% = $20000
The remaining amount paid by bank = $80000
The increased value of house = $160,000
Payment of loan amount = $20000
The Value of house is $160000 and he pays $20000 to the bank as a part of loan payment so reaming amount that he has to pay the bank is ($80000-20000) = $60000.
Thus, his equity will be $100000.
On the basis of the following data, the general manager of Hawkeye Shoes Inc. decided to discontinue Children’s Shoes because it reduced operating income by $30,000. Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 20Y8 Children's Shoes Men's Shoes Women's Shoes Total Sales $280,000 $300,000 $500,000 $1,080,000 Costs of goods sold: Variable costs $(135,000) $(150,000) $(220,000) $(505,000) Fixed costs (45,000) (60,000) (120,000) (225,000) Total cost of goods sold $(180,000) $(210,000) $(340,000) $(730,000) Gross profit $100,000 $90,000 $160,000 $350,000 Selling and administrative expenses: Variable selling and admin. expenses $(100,000) $(45,000) $(95,000) $(240,000) Fixed selling and admin. expenses (30,000) (20,000) (25,000) (75,000) Total selling and admin. expenses $(130,000) $(65,000) $(120,000) $(315,000) Operating income (loss) $(30,000) $25,000 $40,000 $35,000 a. Prepare a differential analysis to determine the
Answer:
Hawkeye Shoes Inc.
Differential Analysis:
Alternative 1: Continue with Children Shoes:
Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 20Y8
Children's Men's Women's Total Sales $280,000 $300,000 $500,000 $1,080,000
Costs of goods sold:
Variable costs $(135,000) $(150,000) $(220,000) $(505,000)
Fixed costs (45,000) (60,000) (120,000) (225,000)
Total cost of goods
sold $(180,000) $(210,000) $(340,000) $(730,000)
Gross profit $100,000 $90,000 $160,000 $350,000
Selling and administrative expenses:
Variable selling and
admin. expenses $(100,000) $(45,000) $(95,000) $(240,000) Fixed selling and
admin. expenses (30,000) (20,000) (25,000) (75,000)
Total selling and
admin. expenses $(130,000) $(65,000) $(120,000) $(315,000)
Operating income
(loss) $(30,000) $25,000 $40,000 $35,000
Alternative 2: Discontinue Children Shoes:
Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 20Y8
Men's Women's Total
Sales $300,000 $500,000 $800,000
Costs of goods sold:
Variable costs $(150,000) $(220,000) $(370,000)
Fixed costs (60,000) (120,000) (180,000)
Total cost of goods sold $(210,000) $(340,000) $(550,000)
Gross profit $90,000 $160,000 $250,000
Selling and administrative expenses:
Variable selling and admin. $(45,000) $(95,000) $(140,000)
Fixed selling and admin. (20,000) (25,000) (45,000)
Total selling and admin. $(65,000) $(120,000) $(185,000)
Operating income (loss) $25,000 $40,000 $65,000
Choose Alternative 2, the elimination of Children Shoes, as this increases the total profits from $35,000 to $65,000.
Explanation:
a) Data and Calculations:
Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 20Y8
Children's Men's Women's Total Sales $280,000 $300,000 $500,000 $1,080,000
Costs of goods sold:
Variable costs $(135,000) $(150,000) $(220,000) $(505,000)
Fixed costs (45,000) (60,000) (120,000) (225,000)
Total cost of goods
sold $(180,000) $(210,000) $(340,000) $(730,000)
Gross profit $100,000 $90,000 $160,000 $350,000
Selling and administrative expenses:
Variable selling and
admin. expenses $(100,000) $(45,000) $(95,000) $(240,000) Fixed selling and
admin. expenses (30,000) (20,000) (25,000) (75,000)
Total selling and
admin. expenses $(130,000) $(65,000) $(120,000) $(315,000)
Operating income
(loss) $(30,000) $25,000 $40,000 $35,000
Hawkeye Shoes Inc. differential analysis helps it to choose between alternatives 1 and 2 concerning the continuation or discontinuation of Children Shoes production. It is an important tool in managerial accounting to helps management to make research-driven decisions.
Pharoah Company had the following two transactions related to its delivery truck. 1. Paid $280 for an oil change. 2. Paid $600 to install a special gear unit, which increases the operating efficiency of the truck.Required:Prepare Pharoah's journal entries to record these two transactions.
Answer:
1.
Oil change expense $280 Dr
Cash $280 Cr
2.
Delivery Truck Account $600 Dr
Cash $600 Cr
Explanation:
1.
The cost incurred to cover the day to day expenses related to an asset which does not increase the asset's useful life or benefit but merely maintains them are recorded as revenue expenditure. Such expenses are charged as expenses to the income statement. The cost incurred for oil change which is for maintenance purpose is a revenue expenditure.
2.
The cost incurred for capital expenditure is added to the cost of the asset and systematically charged to the income statement using the depreciation. Any expense that will increase the life or operating efficiency and benefit form a fixed asset is a capital expenditure and is capitalized by adding it to the cost of the asset. So, installation of a special gear unit giving increased efficiency is a capital expenditure.
