Answer:
the proper cash flow amount to use as the initial investment in fixed assets is $15,840,000
Explanation:
The computation of the proper cash flow amount to use as the initial investment in fixed assets is shown below:
= (Net amount + cost of the plant + grading cost)
= ($4.6 million + $10.4 million + $0.84 million )
= $15,840,000
Hence, the proper cash flow amount to use as the initial investment in fixed assets is $15,840,000
According to the video, an interactive website needs to be able to do what things? Check all that apply. invite people to provide information remove unwanted viewers send information, products, and services automatically play videos process payments send viewers to other websites
Answer:
A,C,E
Explanation:
Answer:
A,C,E
Explanation:
The ___ function returns the year portion of the data/time available
Answer:
The Excel YEAR function returns the year component of a date as a 4-digit number.
Explanation:
Assume the following: The standard price per pound is $2.00. The standard quantity of pounds allowed per unit of finished goods is 4 pounds. The actual quantity of materials purchased and used in production is 50,800 pounds. The actual purchase price per pound of materials was $2.20. The company produced 13,000 units of finished goods during the period. What is the materials price variance
Answer:
Direct material price variance =$10,160 unfavorable
Explanation:
Direct material price variance occurs when the actual quantity of materials are purchased at an actual price per unit higher or lower than the standard price.
Direct material price variance $
50,800 pounds should have cost (50,800× $2) = 101,600
but did cost (50,800× $2.20) = 111,760
Direct material price variance 10,160 unfavorable
Direct material price variance =$10,160 unfavorable
The materials price variance is $10,160 Unfavorable.
The difference between the standard cost and actual cost for the purchased actual quantity of material is the direct material price variance
The formulae for the direct Materials price variance is (Standard price – Actual price) * Actual quantity purchasedDirect Materials price variance = ($2.00 per pound – $2.20per pound) * 50800 pounds
Direct Materials price variance = ($0.20 * 50,800 pounds) Unfavorable
Direct Materials price variance = $10,160 Unfavorable
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Prepare summary journal entries to record the following transactions and events a through g for a company in its first month of operations.
a. Raw materials purchased on account, $92,000.
b. Direct materials used in production, $40,000. Indirect materials used in production, $25,000.
c. Paid cash for factory payroll, $65,000. Of this total, $45,000 is for direct labor and $20,000 is for indirect labor.
d. Paid cash for other actual overhead costs, $7,750.
e. Applied overhead at the rate of 120% of direct labor cost.
f. Transferred cost of jobs completed to finished goods, $69,000.
g. Jobs that had a cost of $69,000 were sold.
h. Sold jobs on account for $98,000.
Answer:
Journal Entries:
a. Debit Raw materials $92,000
Credit Accounts payable $92,000
To record the purchase of raw materials on account.
b. Debit Work-in-Process $40,000
Debit Manufacturing overhead $25,000
Credit Raw materials $65,000
To record direct and indirect materials.
c. Debit Payroll Expense $65,000
Credit Cash $65,000
To record the payment of payroll.
Debit Work-in-Process $45,000 (direct labor)
Debit Manufacturing overhead $20,000 (indirect labor)
Credit Payroll Expenses $65,000
To record the payment of direct and indirect labor.
d. Debit Manufacturing overhead $7,750
Credit Cash $7,750
To record the payment for other overhead costs.
e. Debit Work-in-Process $54,000
Credit Manufacturing overhead $54,000
To record overhead applied at the rate of 120% of direct labor cost.
f. Debit Finished goods $69,000
Credit Work-in-Process $69,000
To record the transfer of completed jobs to finished goods inventory.
g. Debit Cost of goods sold $69,000
Credit Finished goods $69,000
To record the cost of goods sold.
h. Debit Accounts receivable $98,000
Credit Sales revenue $98,000
To record the sale of goods on account.
Explanation:
a. Raw materials $92,000 Accounts payable $92,000
b. Work-in-Process $40,000 Manufacturing overhead $25,000 Raw materials $65,000
c. Payroll Expense $65,000 Cash $65,000 Work-in-Process $45,000 (direct labor) Manufacturing overhead $20,000 (indirect labor) Payroll Expenses $65,000
d. Manufacturing overhead $7,750 Cash $7,750
e. Work-in-Process $54,000 Manufacturing overhead $54,000 (at the rate of 120% of direct labor cost)
f. Finished goods $69,000 Work-in-Process $69,000
g. Cost of goods sold $69,000 Finished goods $69,000
h. Accounts receivable $98,000 Sales revenue $98,000
Fraud Investigators Inc. operates a fraud detection service. On March 31, 10 customers were billed for detection services totaling $21,000. On October 31, a customer balance of $1,300 from a prior year was determined to be uncollectible and was written off. On December 15, a customer paid an old balance of $760, which had been written off in a prior year. On December 31, $460 of bad debts were estimated and recorded for the year.
Required:
1. Prepare journal entries for each transaction above. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
a) Record the service revenue of $34,000 billed on account.
Transaction General Journal Debit Credit
a
B) Record the write-off of a certain customer account from a prior year which is not collectible totaling $1,950..
Transaction General Debit Credit
C1.Record the reversal of the write-off of a $810 customer account.
C2. Record the receiptof cash of $810 from the customer.
D. Record the estimate bad debts of $590 for the year.
2. Complete the following table, indicating the amount and effect (+ for increase, − for decrease, and NE for no effect) of each transaction. Ignore income taxes.
Transaction Net Receivable Net Sales Income From Operation
A
B
C
D
Option for A : NE, +/- 34,000, +34,000, -34,000
Option for B : NE, +/- 1950, +1950, -1950
Option for C: NE, +/- 810, +810, -810
Option for D : NE, +/- 590, +590, -590
Answer:
Fraud Investigators Inc.
1. Journal Entries:
March 31: Debit Accounts Receivable $21,000
Credit Service Revenue $21,000
To record the rendering of service on account.
Oct. 31: Debit Allowance for Uncollectible Accounts $1,300
Credit Accounts Receivable $1,300
To write-off uncollectible accounts.
Dec. 15: Debit Accounts Receivable $760
Credit Allowance for Uncollectible Accounts $760
To reverse a previously written-off account.
Dec. 15: Debit Cash $760
Credit Accounts Receivable $760
To record the cash collected from the customer.
Dec. 31: Debit Bad Debts Expense $460
Credit Allowance for Uncollectible Accounts $460
To record bad debts expense for the year.
A) Debit Accounts Receivable $34,000
Credit Service Revenue $34,000
To record the rendering of service on account.
B) Debit Allowance for Uncollectible Accounts $1,950
Credit Accounts Receivable $1,950
To write off uncollectible accounts.
C1) Debit Accounts Receivable $810
Credit Allowance for Uncollectible Accounts $810
To reverse a previously written-off debt.
C2) Debit Cash $810
Credit Accounts Receivable $810
To record the receipt of cash from the customer.
D) Debit Bad Debts Expense $590
Credit Allowance for Uncollectible Accounts $590
To record bad debts expense for the year.
2. Transaction Net Receivable Net Sales Income From Operation
A +34,000 +34,000 +34,000
B -1,950 NE -1950
C +/- 810 NE +810
D NE NE -590
Explanation:
a) Data and Analysis:
March 31: Accounts Receivable $21,000 Service Revenue $21,000
Oct. 31: Allowance for Uncollectible Accounts $1,300 Accounts Receivable $1,300
Dec. 15: Accounts Receivable $760 Allowance for Uncollectible Accounts $760
Dec. 15: Cash $760 Accounts Receivable $760
Dec. 31: Bad Debts Expense $460 Allowance for Uncollectible Accounts $460
A) Accounts Receivable $34,000 Service Revenue $34,000
B) Allowance for Uncollectible Accounts $1,950 Accounts Receivable $1,950
C1) Accounts Receivable $810 Allowance for Uncollectible Accounts $810
C2) Cash $810 Accounts Receivable $810
D) Bad Debts Expense $590 Allowance for Uncollectible Accounts $590
You have been given the following information about the production of Usher Co., and are asked to provide the plant manager with information for a meeting with the vice president of operations.
Standard Cost Card
Direct materials (5 pounds at $5 per pound) $25.00
Direct labor (0.90 hours at $10) 9.00
Variable overhead (0.90 hours at $4 per hour) 3.60
Fixed overhead (0.90 hours at $9 per hour) 8.10
$45.70
The following is a variance report for the most recent period of operations.
Variances
Costs Total Standard Cost Price Quantity
Direct materials $405,000 $8,298 F $9,900 U
Direct labor 145,800 4,590 U 7,200 U
(a) How many units were produced during the period? (Round answers to 0 decimal places, e.g. 125.)
Number of units
You have been given the following information abou
(b) How many pounds of raw material were purchased and used during the period? (Round answers to 0 decimal places, e.g. 125.)
Raw material
You have been given the following information abou
pounds
(c) What was the actual cost per pound of raw materials? (Round to 2 decimal places, e.g. 1.25.)
Answer:
Usher Co.
a. The units produced during the period is:
= 16,200 units
b. The pounds of raw materials purchased and used during the period is:
= 82,980 pounds
c. The actual cost per pound of raw materials is:
= $4.90
Explanation:
a) Data and Calculations:
Standard Cost Card
Direct materials (5 pounds at $5 per pound) $25.00
Direct labor (0.90 hours at $10) 9.00
Variable overhead (0.90 hours at $4 per hour) 3.60
Fixed overhead (0.90 hours at $9 per hour) 8.10
$45.70
Variances
Costs Total Standard Cost Price Quantity
Direct materials $405,000 $8,298 F $9,900 U
Direct labor 145,800 4,590 U 7,200 U
Units produced = Total standard cost/direct materials standard cost per unit
= $405,000/$25
= 16,200 units
Pounds of raw materials purchased and used = (Total standard cost + Unfavorable Quantity Variance)/direct materials standard cost per pound
= ($405,000 + $9,900)/$5
= 82,980 pounds
Actual costs:
Direct materials = $406,602 ($405,000 - $8,298 + $9,900)
Actual price per pound = $4.90 ($406,602/82,980)
Direct labor = $157,590 ($145,800 + 4,590 + 7,200)
Actual price per pound = ((Actual Quantity * Standard Price) - Favorable Price Variance)/Actual Quantity
= ((82,980 * $5) - $8,298)/82,980
= ($414,900 - $8,298)/82,980
= $406,602/82,980
= $4.90
A. The units produced during the period are 16200 (rounded off to nearest zero).
B. 82980 pounds of raw material was being required during the period.
C. The actual cost of raw materials come out of $4.90/pound
We know that formula to find units produced is,[tex]\rm units\ produced=\dfrac{\rm{total standard cost}}{\rm{direct materials}}\\\\units \ produced = \dfrac{405000}{25}\\\\\rm units\ produced = 16200[/tex]
So, 16200 units were produced.
Raw material purchased and used can be obtained by the following formula,[tex]\rm raw\ material\ used = \dfrac{\rm{total\ standard\ cost+\ unfavourable \ quantity\ variance}}{\rm{direct\ material \ standard\ cost\ per \pound}} \\\\ =\dfrac{4149000}{5}\\\\=829800[/tex]
So, 829800 pounds of raw material was consumed during the period.
The actual cost of raw material per pound can be calculated by simply dividing direct materials with pounds purchased and used which comes out to $4.90.Hence, the answers are calculated as
Actual cost per pound = $4.90
Raw material consumed and purchased = 829800 pounds
Units produced = 16200 units
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Let T1 be the time between a car accident and reporting a claim to the insurance company. Let T2 be the time between the report of the claim and payment of the claim. The joint density function of T1 and T2, f(t1, t2), is constant over the region 0 < t1 < 6, 0 < t2 < 6, t1 t2 < 10, and zero otherwise. Determine E[T1 T2], the expected time between a car accident and payment of the claim.
Answer:
5.7255
Explanation:
From the given information:
[tex]T_1 \to \text{time between car accident \& reporting claim} \\ \\ T_2 \to \text{time between reporting claim and payment of claim}[/tex]
The joint density function of [tex]T_1[/tex] and [tex]T_2[/tex] is:
[tex]f(t_1,t_2) = \left \{ {{c \ \ \ 0<t_1<6, \ \ \ 0<t_2<6, \ \ \ t_1+t_2<10} \atop {0} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ otherwise} \right.[/tex]
Area(A): [tex]= 6\times 6 - \dfrac{1}{2}*2*2[/tex]
= 34
The limits are:
[tex]\text{limits of } \ t_1 \ from \ 0 \ is \ 10 \to t_2 \\ \\ \text{limits of } \ t_2 \ from \ 0 \ is \ 4 \to 6[/tex]
Also;
[tex]\text{limits of } \ t_1 \ is \ 0 \to 6 \\ \\ \text{limits of } \ t_2 \ is \ 0 \to 4[/tex]
∴
[tex]\iint f(t_1,t_2) dt_1dt_2 =1 \\ \\ c \iint 1dt_1dt_2 = 1 \\ \\ cA = 1 \\ \\ \implies c = \dfrac{1}{34}[/tex]
To find;
[tex]E(T_1+T_2) = \iint (t_1+t_2)c \ \ dt_1dt_2 \\ \\ \implies \dfrac{1}{34} \Big[\int \limits^4_0 \int \limits^6_0(t_1+t_2) dt_1 \ dt_2 + \int \limits^6_4 \int \limits^{10-t_2}_0(t_1+t_2) dt_1 dt_2 \Big] \\ \\ \implies \dfrac{1}{34} (120 + \dfrac{224}{3}) \\ \\ = \mathbf{5.7255}[/tex]
A wedding party hired a sole proprietorship to cater their wedding, and the sole proprietorship had an employee handle the entire job. If the entire wedding party gets food poisoning, the principal is liable. The employee of the sole proprietorship is also liable because he handled the entire job.
Explanation:
well I will say yes meaning true because he or she was put in charge of the entire job
The following information describes production activities of Mercer Manufacturing for the year.
Actual direct materials used 31,000 1bs. at $5.80 per lb
Actual direct labor used 10,600 hours for a total of $217,300
Actual units produced . 63,000
Budgeted standards for each unit produced are 0.50 pounds of direct material at $5.75 per pound and 10 minutes $21.50 per hour.
AQ = Actual Quantity
SQ=Standard Quantity
AP =Actual Price
SP =Standard Price
AH =Actual Hours
SH= Standard Hours
AR= Actual Rate
SR= Standard Rate
(1) Compute the direct materials price and quantity variances
(2) Compute the direct labor rate and efficiency varian rect labor rate and efficiency variances.
Answer:
Results are below.
Explanation:
To calculate the direct material price and quantity variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (5.75 - 5.8)*31,000
Direct material price variance= $1,550 unfavorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (63,000*0.5 - 31,000)*5.75
Direct material quantity variance= $2,875 favorable
To calculate the direct labor rate and efficiency variance, we need to use the following formulas:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (10,500 - 10,600)*21.5
Direct labor time (efficiency) variance= $2,150 unfavorable
Standard quantity= (10/60)*63,000= 10,500 hours
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (21.5 - 20.5)*10,600
Direct labor rate variance= $10,600 favorable
Actual rate= 217,300 / 10,600= $20.5
Russell Retail Group begins the year with inventory of $65,000 and ends the year with inventory of $55,000. During the year, the company has four purchases for the following amounts. Purchase on February 17 $ 220,000 Purchase on May 6 140,000 Purchase on September 8 170,000 Purchase on December 4 420,000 Required: Calculate cost of goods sold for the year.
Answer:
COGS= $960,000
Explanation:
Giving the following information:
Beginning inventroy= $65,000
Ending inventory= $55,000
Total Purchase= 220,000 + 140,000 + 170,000+ 420,000= $950,000
To calculate the cost of goods sold, we need to use the following formula:
COGS= beginning inventory + cost of goods purchased - ending inventory
COGS= 65,000 + 950,000 - 55,000
COGS= $960,000
Sheila and Jim live in an island where they are the only two workers. Sheila can either catch 10 fish or gather 40 pounds of berries each day, and Jim can either catch 8 fish or gather 24 pounds of berries each day. Both of them work 200 days per year. At current world prices 1 fish trades for 3.5 pounds of berries. Who has the comparative advantage in producing berries
Answer:
SHEILA
Explanation:
A person has comparative advantage in production if it produces at a lower opportunity cost when compared to other people.
Sheila's opportunity cost in producing berries = 10/40 = 0.25
Jim's opportunity cost in producing berries = 8/24 = 0.33
Sheila has a lower opportunity cost in the production of berries and thus has a comparative advantage in the production of berries
Assume that last year, Cliff Consulting, a firm in Berkeley, CA, had the following contribution income statement:
CLIFF CONSULTING
Contribution Income Statement
For the Year Ended September 30
Sales revenue $ 1,200,000
Variable costs
Cost of services $ 480,000
Selling and administrative 60,000 540,000
Contribution margin 660,000
Fixed Costs -selling and administrative 440,000
Before-tax profit 220,000
Income taxes (21%) 46,200
After-tax profit $ 173,800
(a) Determine the annual break-even point in sales revenue.
(b) Determine the annual margin of safety in sales revenue.
(c) What is the break-even point in sales revenue if management makes a decision that increases fixed costs by $80,000?
(d) With the current cost structure, including fixed costs of $440,000, what dollar sales revenue is required to provide an after-tax net income of $250,000?
(e) Prepare an abbreviated contribution income statement to verify that the solution to requirement (d) will provide the desired after-tax income.
Answer:
Cliff Consulting
a) Annual Break-even point in sales revenue is:
= $800,000
b) Annual margin of safety is:
= $400,000
c) If fixed costs increases by $80,000, the break-even point in sales revenue
= $945,455
d) Dollar Sales Revenue required to provide an after-tax net income of $250,000 is:
= $1,375,375
e) Abbreviated Contribution Income Statement
Sales revenue $1,375,375
Variable costs = 618,919
Contribution = $756,456
Fixed costs 440,000
Before tax income 316,456
Income tax (21%) 66,458
After-tax income $249,998
equivalent to $250,000
Explanation:
a) Data and Calculations:
CLIFF CONSULTING
Contribution Income Statement
For the Year Ended September 30
Sales revenue $ 1,200,000
Variable costs
Cost of services $ 480,000
Selling and administrative 60,000 540,000
Contribution margin 660,000
Fixed Costs -selling and administrative 440,000
Before-tax profit 220,000
Income taxes (21%) 46,200
After-tax profit $ 173,800
Break-even point in sales revenue = Fixed costs/Contribution margin ratio
= $440,000/0.55
= $800,000
Annual margin of safety = normal sales revenue minus break-even sales revenue
= $1,200,000 - $800,000
= $400,000
Contribution margin ratio = contribution margin/sales revenue * 100
= $660,000/$1,200,000 * 100 = 55%
If fixed costs increases by $80,000, the break-even point in sales revenue
= ($440,000 + $80,000)/0.55 = $520,000/0.55 = $945,455
To achieve after-tax net income of $250,000, the required dollar sales revenue:
Net income after-tax = $250,000
Tax rate = 21%
Net income before tax = $250,000/1-21%
= $250,000/0.79 = $316,456
Sales dollars to achieve target profit = (Fixed costs + Target Profit/1 - 0.21)/Contribution margin
= ($440,000 + ($250,000/0.79))/0-55
= ($440,000 + $316,456)/0.55
= $756,456/0.55
= $1,375,375
Abbreviated Contribution Income Statement
Sales revenue $1,375,375
Variable costs = 618,919
Contribution = $756,456
Fixed costs 440,000
Before tax income 316,456
Income tax (21%) 66,458
After-tax income $249,998
After-tax income is equivalent to $250,000
You are given the following information on Parrothead Enterprises:
Debt: 9,300 6.5 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 104.75. These bonds pay interest semiannually and have a par value of $1,000.
Common stock: 240,000 shares of common stock selling for $64.80 per share. The stock has a beta of.93 and will pay a dividend of $3.00 next year. The dividend is expected to grow by 5.3 percent per year indefinitely.
Preferred stock: 8,300 shares of 4.65 percent preferred stock selling at $94.30 per share. The par value is $100 per share.
Market: 11.7 percent expected return, risk-free rate of 3.75 percent, and a 23 percent tax rate.
Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %
Answer:
8.19%
Explanation:
Calculation to determine the company's WACC
First step is to calculate the CAPM rate of equity
Using this formula
CAPM rate of equity = Risk free rate + market risk premium * beta
Let plug in the formula
CAPM rate of equity=3.75%+(11.7%-3.75%)*0.93
CAPM rate of equity=11.14%
Second step is to calculate the DDM rate of equity
Using this formula
DDM rate of equity= Expected dividend next year/Price today + Growth rate
Let plug in the formula
DDM rate of equity=3/64.8+5.3%
DDM rate of equity=9.93%
Third step is to calculate the Cost of equity using this formula
Cost of equity = Average of CAPM and DDM
Let plug in the formula
Cost of equity=(11.14%+9.93%)/2
Cost of equity= 10.54%
Fourth Step is to calculate the Cost of debt (after tax)
Cost of debt (after tax) using financial calculator to compute YTM
PV -1047.5
FV 1000
PMT 1000*6.5%/2 32.5
N 22*2 44
Compute I 3.05%
YTM =3.05%*2 6.10%
Tax rate = 23%
Hence,
Rate of debt (after tax) = 6.1%*(1-23%)
Rate of debt (after tax) = 4.70%
Fifth step is to calculate the Rate of preferred stock using this formula
Rate of preferred stock = Annual dividend/Current price
Let plug in the formula
Rate of preferred stock=4.65/94.3
Rate of preferred stock=4.93
Sixth step is to calculate the Weight
Market value
Source
equity 240000*64.8= 15552000
debt 1047.5*9300= 9741750
preferred stock 8300*94.3=782690
Total 26076440
equity 15552000/26076440= 59.64%
debt 9741750/26076440=37.36%
preferred stock 782690/ 26076440=3.00%
Now let calculate compute WACC
WACC= weight * cost
equity 59.64%*10.54%=6.28%
debt 37.36%* 4.70% =1.76%
preferred stock3.00%*4.93%=0.15%
WACC = 8.19%
(6.28%+1.76%+0.15%)
Therefore the company's WACC is 8.19%
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $5,400 credit. c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $1,900 debit.
Question Completion:
Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.
Days Past Due
Total 0 1 to 30 31 to 60 61 to 90 Over 90
Accounts
receivable $570,000 $396,000 $90,000 $36,000 $18,000 $30,000
Percent uncollectible 1% 2% 5% 7% 10%
a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method.
Answer:
Daley Company
a. The estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method is:
= $11,820.
b. Adjusting Journal Entry:
Debit Bad debts expense $6,420
Credit Allowance for Doubtful Accounts $6,420
To record bad debts expense and bring Allowance balance to $11,820.
c. Adjusting Journal Entry:
Debit Bad debts expense $13,720
Credit Allowance for Doubtful Accounts $13,720
To record bad debts expense and bring Allowance balance to $11,820.
Explanation:
a) Data and Calculations:
Ageing of Accounts Receivable:
Days Past Due
Total 0 1 to 30 31 to 60 61 to 90 Over 90
Accounts
receivable $570,000 $396,000 $90,000 $36,000 $18,000 $30,000
Percent uncollectible 1% 2% 5% 7% 10%
Allowance $11,820 $3,960 $1,800 $1,800 $1,260 $3,000
Bad Debts Expense:
Allowance for Doubtful Accounts:
b. c.
Unadjusted balance $5,400 credit $1,900 debit
Adjusted balance 11,820 credit 11,820 credit
Bad debts expense $6,420 $13,720
Olympic Sports has two issues of debt outstanding. One is a 6% coupon bond with a face value of $28 million, a maturity of 15 years, and a yield to maturity of 7%. The coupons are paid annually. The other bond issue has a maturity of 20 years, with coupons also paid annually, and a coupon rate of 7%. The face value of the issue is $33 million, and the issue sells for 96% of par value. The firm's tax rate is 40%.
Requied:
a. What is the before-tax cost of debt for Olympic?
b. What is Olympic's after-tax cost of debt?
Answer:
The responses to these question can be defined as follows:
Explanation:
Given:
[tex]Bond \ A \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Bond \ B\\\\[/tex]
[tex]Face \ Value \ \ \ \ \ \ \ \ \ \$1,000 \ \ \ \ \ \ \ \ \ \$ 1,000\\\\ Rate \ of \ Coupon \ \ \ \ \ \ \ \ \ 6\% \ \ \ \ \ \ \ \ \ 7\% \\\\Maturity \ in \ Years \ \ \ \ \ \ \ \ \ 15 \ \ \ \ \ \ \ \ \ 20 \\\\Selling - Price \ \ \ \ \ \ \ \ \ -\$ 908.92 \ \ \ \ \ \ \ \ \ \$960 \\\\ Yield \ To \ Maturity \ \ \ \ \ \ \ \ \ 7\% \ \ \ \ \ \ \ \ \ 7.39\% \\\\Total\ Outstanding \ \ \ \ \ \ \ \ \ \$2,80,00,000 \ \ \ \ \ \ \ \ \ \$ 3,30,00,000\\\\[/tex]
[tex]Rate\ Tax \ \ \ \ \ \ \ \ \ 40\% \\\\selling\ Price \ \ \ \ \ \ \ \ \ PV(7\% , 15 ,60, 1000)\\\\Yield \ To\ Maturity \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ RATE(20, 70, -960,1000)[/tex]
For point a:
Before tax [tex]FACE \ \ VALUE \ \ \ \ \ \ \ \ \ \ MARKET \ \ VALUE \ \ \ \ \ \ \ \ \ \ WEIGHT \ \ \ \ \ \ \ \ \ \ COST \ \ \ \ \ \ \ \ \ \ WACC\\\\[/tex][tex]Dr \ 1 \ \ \ \ \ \ \ \ \ \ \$2,80,00,000 \ \ \ \ \ \ \ \ \ \ 25449760 \ \ \ \ \ \ \ \ \ \ 0.445473 \ \ \ \ \ \ \ \ \ \ 7 \ \ \ \ \ \ \ \ \ \ 3.11831\\\\Dr \ 2 \ \ \ \ \ \ \ \ \ \ \$3,30,00,000 \ \ \ \ \ \ \ \ \ \ 31680000 \ \ \ \ \ \ \ \ \ \ 0.554527 \ \ \ \ \ \ \ \ \ \ 7.39 \ \ \ \ \ \ \ \ \ \ 4.097955\\\\[/tex]
[tex]57129760 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 7.216266\\\\[/tex]
For point b:
After tax
[tex]FACE \ \ VALUE \ \ \ \ \ \ \ \ \ \ MARKET \ \ VALUE \ \ \ \ \ \ \ \ \ \ WEIGHT \ \ \ \ \ \ \ \ \ \ COST \ \ \ \ \ \ \ \ \ \ WACC\\\\Dr \ 1 \ \ \ \ \ \ \ \ \ \ \$2,80,00,000 \ \ \ \ \ \ \ \ \ \ 25449760 \ \ \ \ \ \ \ \ \ \ 0.445473 \ \ \ \ \ \ \ \ \ \ 4.2 \ \ \ \ \ \ \ \ \ \ 1.870986\\\\Dr \ 2 \ \ \ \ \ \ \ \ \ \ \$3,30,00,000 \ \ \ \ \ \ \ \ \ \ 31680000 \ \ \ \ \ \ \ \ \ \ 0.554527 \ \ \ \ \ \ \ \ \ \ 4.434 \ \ \ \ \ \ \ \ \ \ 2.458773\\\\[/tex] [tex]57129760 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 4.329759\\\\[/tex]
So,
In a, answer is [tex]7.22\%[/tex]
In b, answer is [tex]4.33\%[/tex]
Job 412 was one of the many jobs started and completed during the year. The job required $9,500 in direct materials and 35 hours of direct labor time at a total direct labor cost of $10,400. If the job contained four units and the company billed at 70% above the unit product cost on the job cost sheet, what price per unit would have been charged to the customer
Answer:
The appropriate answer is "$8,457,50".
Explanation:
The given values are:
Direct material cost,
= $9,500
Direct labor cost,
= $10,400
Units completed in job 412,
= 4
Now,
The total cost for completion of job 412 will be:
= [tex]Direct \ materials \ cost + Direct \ labor \ costs[/tex]
On substituting the values, we get
= [tex]9,500 + 10,400[/tex]
= [tex]19,900[/tex] ($)
Unit produced cost will be:
= [tex]\frac{19,900}{4}[/tex]
= [tex]4,975[/tex] ($)
70% of unit produced cost will be the profit margin, then
= [tex]70 \ percent\times 4,975[/tex]
= [tex]3,482.50[/tex] ($)
hence,
The price charged to the customer will be:
= [tex]Unit \ product \ cost + Profit \ margin[/tex]
On substituting the values, we get
= [tex]4,975 + 3,482.50[/tex]
= [tex]8,457,50[/tex] ($)
The major benefits to a S.W.O.T Analysis are: a. Simple to use. b. Reduces the costs of strategic planning. c. Flexible. d. Integrates and synthesizes diverse information. e. Fosters collaboration among managers of different functional areas. f. ALL OF THE ABOVE. g. NONE OF THE ABOVE.
Answer:
f. ALL OF THE ABOVE
Explanation:
SWOT analysis can be regarded as
strategic planning technique that is been utilized to identify opportunities,
strengths as well as weaknesses, and threats associated with business competition as well as project planning of individuals or organization.
The major benefits to a S.W.O.T Analysis includes
✓Reduces the costs of strategic planning.
✓Simple to use.
✓Flexible
✓Fosters collaboration among managers of different functional areas.
✓Integrates and synthesizes diverse information.
TB MC Qu. 8-199 The Puyer Corporation makes and sells ... The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available: Monthly Fixed Cost Variable Cost Per Deb Sold Sales commissions $ 0.90 Shipping $ 1.40 Advertising $ 50,000 $ 0.20 Executive salaries $ 60,000 Depreciation on office equipment $ 20,000 Other $ 40,000 All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the company has budgeted to sell 17,000 Debs in March, then the average budgeted selling and administrative expenses per unit sold for March is closest to: (Round your intermediate calculations to 2 decimal places.)
Answer: $10
Explanation:
First, we need to calculate the total budgeted selling and administrative expenses for March which will be:
Advertising = $50,000
Add: Executive salaries = $60,000
Add: Depreciation on office equipment = $20,000
Add: Other = $40,000
Total = $170,000
Since the company has budgeted to sell 17,000 Debs in March, then the average budgeted selling and administrative expenses per unit sold for March is:
= $170000 / 17000
= $10
The following data pertain to Frontier Enterprises:
Variable manufacturing cost $ 70
Variable selling and administrative cost 20
Applied fixed manufacturing cost 40
Allocated fixed selling and administrative cost 15
What price will the company charge if the firm uses cost-plus pricing based on variable manufacturing cost and a markup percentage of 110%?
A. $84.
B. $147
C. $210.
D. $231
E. Some other amount.
Answer:
D. $231.
Explanation:
With regards to the above, first we need to compute the total manufacturing cost.
Total manufacturing cost = Variable manufacturing cost + Applied fixed manufacturing cost
= $70 + $40
= $110
Then,
= $110 + ($110 × 1.1)
= $110 + $121
= $231
Therefore , the company will charge $231 if cost- plus pricing based is used.
YZ Company is rethinking the way it ships to its 62 customers in another city 220 miles away.
Current Shipping/Delivery Method
They currently hire an LTL (less-than-truckload) carrier to pick up and deliver these shipments. Each customer order shipped via LTL carrier costs $147.
Alternate Shipping/Delivery Method
A 3PL (third-party logistics provider) has approached XYZ Company and suggested that they make full truckload (TL) shipments from their facility to the 3PL's warehouse in the customers' city. The 3PL would then break the bulk shipment (TL or truckload shipment) into individual customer orders to be shipped locally by an LTL carrier. The relative data for this alternate shipping method are as follows:
Full TL shipment cost (220 miles) = $675
Average order weight = 750 lbs.
Warehouse break-bulk fee (per 100 lbs., a.k.a. per "hundred weight") = $13
Local LTL delivery fee = $36
1. What is the total cost of delivering to all customers via LTL carrier (current method
R=_______.
2. How much money would XYZ company save by using the alternate shipping/delivery method?
R=______.
3. At what number of customers would the cost of these two methods be the same?
R=______.
Answer:
1. Total cost of customer order shipped via LTL carrier is $9,114.
2. XYZ company would save $162 by using the alternate shipping/delivery method.
3. The cost of these two methods would be the same when the number of customers is approximately 6.
Explanation:
To ease answering the question, let us first the define as follows:
N = Number of customers = Number of Order
A = Each customer order shipped via LTL carrier costs = $147
B = Average order weight = 750
C = Warehouse break-bulk fee per hundred weight = 13
D = Total cost of weight = ((N * B) / 100) * C
E = Local LTL delivery fee = $36
F = Total Local LTL delivery fee = N * E
G = Full TL shipment cost (220 miles) = 675
H = Total cost of shipping using 3PL = D + F + G
I = Total cost of customer order shipped via LTL carrier = N * A
J = Difference between the cost of the two methods = I - H
1. What is the total cost of delivering to all customers via LTL carrier (current method
This can be calculated using E above as follows:
Total cost of customer order shipped via LTL carrier = E = N * A = 62 * $147 = $9,114
2. How much money would XYZ company save by using the alternate shipping/delivery method?
From the definitions above, we have:
N = Number of orders = 62
D = Total cost of weight = ((N * B) / 100) * C = ((62 * 750) / 100) * 13 = $6,045
F = Total Local LTL delivery fee = N * E = 62 * 36 = $2,232
G = Full TL shipment cost (220 miles) = $675
H = Total cost of shipping using 3PL = D + F + G = $6,045 + $2,232 + $675 = $8,952
I = Total cost of customer order shipped via LTL carrier = $9,114
J = Difference between the cost of the two methods = I - H = $9,114 - $8,952 = $162
Therefore, XYZ company would save $162 by using the alternate shipping/delivery method.
3. At what number of customers would the cost of these two methods be the same?
H = Total cost of shipping using 3PL = D + F + G = (((N * B) / 100) * C) + (N * E) + G ............ (1)
Substituting all the relevant value into equation (1), we have:
H = (((N * 750) / 100) * 13) + (N * 36) + 675
I = N * 147
Equating H and I and solve for N, we have:
(((N * 750) / 100) * 13) + (N * 36) + 675 = N * 147
((N0.01 * 7.50) * 13) + 675 = N147 - N36
(N0.075* 13) + 675 = N111
N0.975 + 675 = N111
675 = N111 - N0.975
N110.025 = 675
N = 675 / 110.025
N = 6.13496932515337.
By approximating to a whole number since we are talking about human being, we have:
N = 6
At what number of customers would
Therefore, the cost of these two methods would be the same when the number of customers is approximately 6.
Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Jake's paid an annual dividend in the amount of $1.593 per share. The dividend growth rate is 4%. Jake's also has 6,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7% coupon, pay interest annually, and mature in 4.89 years. The bonds are selling at 99% of face value. The company's tax rate is 34%. What is Jake's weighted average cost of capital
Answer:
WACC = 6.92%
Explanation:
total equity = 210,000 x $36 = $7,560,000,weight of equity = 56%
cost of equity:
36 = 1.65672 / (Re - 4%)
Re = 8.602%
total bonds = $5,940,000, weight of bonds = 44%
bond YTM = 7.24%
after tax cost = 7.24% x 66% = 4.78%
WACC = (.56 x 8.602$) + (.44 x 4.78%) = 4.817 + 2.103 = 6.92%
YTM = (70 + 10/4.89) / (1990/2) = 72.04 / 995 = 7.24%
715
Pina Company has the following two temporary differences between its income tax expense and income taxes payable.
2020 2021 2022
Pretax financial income $864,000 $917,000 $909,000
Excess depreciation expense on tax return (30,400) (38,500) (9,800 )
Excess warranty expense in financial income 19,400 10,100 8,300
Taxable income $853,000 $888,600 $907,500
The income tax rate for all years is 20%.
a. Assuming there were no temporary differences prior to 2017, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019.
b. Indicate how deferred taxes will be reported on the 2019 balance sheet. Martinezâs product warranty is for 12 months.
c. Prepare the income tax expense section of the income statement for 2019, beginning with the line "Pretax financial income."
Answer:
multiply ur answer by 0.2 if you want to solve for the income tax rate
Explanation:
Olivia believes that the employees in her company require constant supervision and are not naturally motivated. She believes she should push them to reach their goals. Which theory of leadership can she utilize that would relate to her situation? Olivia can utilize in her company.
Answer:
Transformational Leadership Theory
The Transformational Leadership theory, also known as Relationship theories, focuses on the relationship between the leaders and followers. This theory talks about the kind of leader who is inspirational and charismatic, encouraging their followers to transform and become better at a task.
Transformational leaders typically motivated by their ability to show their followers the significance of the task and the higher good involved in performing it. These leaders are not only focused on the team's performance but also give individual team members the required push to reach his or her potential. This leadership theories will help you to sharp your Skill.
Transactional Theories
Transactional Theories, also referred to as Management theories or exchange theories of leadership, revolve around the role of supervision, organization, and teamwork. These theories consider rewards and punishments as the basis for leadership actions. This is one of the oft-used theories in business, and the proponents of this leadership style use rewards and punishments to motivate employees.
The theory of leadership she utilizes that would relate to her situation is Transformational leadership. This is further explained below.
What is Transformational leadership?Generally, Transformational leadership is simply described as a style of leadership that affects both people and societal systems.
In conclusion, Transformational leadership is the leadership idea that Olivia may use in her position.
Read more about Transformational leadership
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You are comparing two companies in the same industry. You have determined that Gore Corp. depreciates its plant assets over a 40-year life, whereas Ross Corp. depreciates its plant assets over a 20-year life. Discuss the implications this has for comparing the results of the two companies.
Answer:
Gore Corp. is depreciating over a longer term than Ross Corp. This means that on a yearly basis, they will have less depreciation expenses. This would give them a higher net income than Ross Corp but as a result they will then have to pay a higher tax.
Ross Corp on the other hand will be depreciating over a shorter term so this would mean that they are recognizing a higher depreciation expense per year. This would mean that their net income will be lower and by extension their taxes will be lower as well.
Consider the following statements when answering this question I. Increases in the demand for a good, which is produced by a competitive industry, will raise the short-run market price. II. Increases in the demand for a good, which is produced by a competitive industry, will raise the long-run market price. I is true, and II is false. I and II are true. I is false, and II is true. I and II are false.
Answer:
I and II are true
Explanation:
I. Increases in the demand for a good, which is produced by a competitive industry, will raise the short-run market price
In the short run of the competitive industry when the market demand for goods rises then the price of these goods will also increase. This is because the price equals marginal revenue. Therefore, when price rises then marginal revenue will increase and as a result, the marginal cost curve moves up and firms produce more quantity of goods. This statement is therefore true.
II. Increases in the demand for a good, which is produced by a competitive industry, will raise the long-run market price
The effect of the increase in goods demand is the same in the long run of the competitive industry as it is in the short run. Therefore, a rise in demand would raise the price of the goods above ATC (Average Total Cost). Hence, the above statement is also true.
Reuse of large amounts of copyrighted film in a documentary would not constitute a copyright infringement.
a) True
b)False
Answer:
B. False
Explanation:
I majored in Business
Kampus Corporation had the following eight investment transactions or events:
Jan 1 Purchased Argon Co. bonds for $10,000 cash. (Purchase is considered a short-term investment in available-for-sale (AFS) debt securities.)
Jan 3 Purchased 1,200 shares of Elmer, Inc. for $36,000 cash. (Purchase is considered a long-term stock investment with insignificant influence.)
Mar 31 Received cash dividend of $0.25 per share from Elmer, Inc.
Jun 1 Purchased 5,000 shares of Logan, Inc. for $60 per share. These shares represent a 40% ownership in Logan, Inc.
Sep 30 Received cash dividend of $2 per share from Logan, Inc.
Dec 31 Logan, Inc. reported net income of $150,000 for the year.
Dec 31 As of December 31, the Argon Co. bond had a fair (market) value of $12,000.
Dec 31 As of December 31, the Elmer, Inc. stock had a fair (market) value of $25 per share.
Required:
Prepare the journal entries Kampus Corporation should record for these transactions and events.
Answer:
Kampus Corporation
Journal Entries:
Jan 1 Debit Bonds Receivable (Argon Co.) $10,000
Credit Cash $10,000
To record a short-term investment in available-for-sale (AFS) debt securities.)
Jan 3 Debit Investments (Long-term) in Elmer, Inc. $36,000
Credit Cash $36,000
To record the long-term investment (1,200 shares of Elmer, Inc. at $30 each.)
Mar 31 Debit Cash $300
Credit Dividend Received $300
To record dividend received from Elmer's investment
($0.25 per share of 1,200 shares).
Jun 1 Debit Investment in Logan, Inc. $300,000
Credit Cash $300,000
To record the investment in 5,000 shares of $60 per share, representing a 40% equity ownership.
Sep 30 Debit Cash $10,000
Credit Investment in Logan, Inc. $10,000
To record dividend received from investment in Logan, Inc. ($2 per share of 5,000 shares).
Dec 31 Debit Investment in Logan, Inc. $60,000
Credit Retained Earnings $60,000
To record 40% share of the Net income of $150,000 in Logan, Inc.
Dec 31 No Journal Required: Argon Co. bond had a fair (market) value of $12,000.
Dec 31 Debit Unrealized Loss from Investment in Elmer, Inc. $6,000
Credit Investment in Elmer, Inc. $6,000
To record $5 lost in the (market) value of $25 per share.
Explanation:
a) Data and Analysis:
Jan 1 Bonds Receivable (Argon Co.) $10,000 Cash $10,000
a short-term investment in available-for-sale (AFS) debt securities.)
Jan 3 Investments (Long-term) in Elmer, Inc. $36,000 Cash $36,000 1,200 shares of Elmer, Inc. at $30 each.
Mar 31 Cash $300 Dividend Received $300
$0.25 per share of 1,200 shares.
Jun 1 Investment in Logan, Inc. $300,000 Cash $300,000
5,000 shares of $60 per share, represent a 40% ownership.
Sep 30 Cash $10,000 Dividend Received $10,000
$2 per share of 5,000 shares.
Dec 31 Investment in Logan, Inc. $60,000 Retained Earnings $60,000
40% share of the Net income of $150,000 in Logan, Inc.
Dec 31 No Journal Required: Argon Co. bond had a fair (market) value of $12,000.
Dec 31 Unrealized Loss from Investment in Elmer, Inc. $6,000 Investment in Elmer, Inc. $6,000 (market) value of $25 per share.
An airline is considering a project of replacement and upgrading of machinery that would improve efficiency. The new machinery costs $400 today and is expected to last for 5 years with no salvage value. Straight line depreciation will be used. Project inflows connected with the new machinery will begin in one year and are expected to be $200 each year for 5 consecutive years and project outflows will also begin in one year and are expected to be $90 each year for 5 consecutive years. The corporate tax rate is 32% and the required rate of return is 9%. Calculate the project's net present value.
$-9.48
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow = (revenue - cost - depreciation) (1 - tax rate) + depreciation
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
(400 - 0) / 5 = 80
(200 - 90- 80) x (1 - 0.32) + 80 = $100.40
Cash flow in year 0 = $-400
Cash flow each year from year 1 to 5 = $100.40
I = 9%
NPV = $-9.48
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
A firm is operating in the United States with only two other competitors in the industry. a. It is likely this industry would be characterized as: multiple choice 1 monopolistically competitive. perfectly competitive. oligopoly. pure monopoly. b. Firms in this industry will likely earn: multiple choice 2 a normal profit. an economic profit. an economic loss. c. If foreign firms begin supplying the product, increasing the number of competitors, it is likely that: multiple choice 3 economic profits will fall.
Answer:
a. oligopoly.
b. an economic profit.
c. economic profits will fall.
Explanation:
An oligopoly can be defined as a market structure comprising of a small number of firms (sellers) offering identical or similar products, wherein none can limit the significant influence of others.
Hence, it is a market structure that is distinguished by several characteristics, one of which is either similar or identical products and dominance by few firms.
The characteristics of an oligopolistic market structure are;
I. Mutual interdependence between the firms.
II. Market control by many small firms.
III. Difficult entry to new firms.
Hence, a firm operating in the United States of America with only two other competitors in the industry is likely to be an industry that would be characterized as oligopoly.
Additionally, business firms operating in this industry (oligopolistic market) will likely earn an economic profit. Also, if foreign business firms begin supplying the product, increasing the number of competitors, it is likely that economic profits will fall because the industry is now being competitive and controlled by other business firms.
In economics, market structure refers to how different industries are distinguished depending on the degree and form of product and services rivalry. It's based on the features that influence the outcomes and behaviors of businesses in a given market.
a) An oligopoly is a business that operates in the United States with only two other competitors in the same industry.
Reason:
An oligopoly is a market structure with a small number of enterprises and high entry barriers. A competitive environment in which there are just a few vendors reveals to be Oligopoly because there are only two competitors available in the business.
b) Oligopolistic businesses will almost certainly make an economic profit.
Reason:
In an oligopoly, all firms would have to work together to raise prices and make a bigger profit. The bulk of oligopolies form in industries where goods are essentially homogeneous and give essentially the same advantage to customers.
c) Economic earnings are expected to diminish or fall if international enterprises begin to supply the product, increasing the number of competitors.
Reason:
As the supply curve changes to the right, the market price begins to fall, and as a result, existing and new enterprises' economic earnings fall. Due to the entry of new enterprises, which pulls down the market price, economic profit is zero in the long term.
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What is true of a good at a market clearing price?
A)
There is no competitive market for the good.
B)
Quantity supplied is greater than quantity demanded.
C)
Producers must lower inventory in order to increase demand.
D)
The quantity of a good demanded is equal to the quantity supplied.
Answer:
D. The quantity of a good demanded is equal to the quantity supplied.
Explanation:
Deman will not change, but supply decrease. Demand will decrease.
