Answer:
The tasks A and B will be performed together, then C, D and E will be performed one by one and then F and G will be performed to enable the final task H which will be performed last.
Total task time is 49 mins
= 4 + 7 + 6 + 5 + 6 + 7 + 8 + 6
=49 mins.
Cycle time is 10 min per chair
Production time available per day divided by units required per day
480 minutes / 50 chairs
= 10 mins per chair.
Minimum number of workstation
49 mins / 10 mins = 5 workstations
Explanation:
The tasks A and B will be performed together, then C, D and E will be performed one by one and then F and G will be performed to enable the final task H which will be performed last.
Total task time is 49 mins
= 4 + 7 + 6 + 5 + 6 + 7 + 8 + 6
=49 mins.
Cycle time is 10 min per chair
Production time available per day divided by units required per day
480 minutes / 50 chairs
= 10 mins per chair.
Minimum number of workstation
49 mins / 10 mins = 5 workstations
A decline in the domestic real interest rate would cause a ________ in net exports and a ________ in the exchange rate.
Answer: fall; rise
Explanation:
The real interest rate is the rate of interest that is received by an investor, lender or after inflation has been taken into consideration.
The real interest rate is when the inflation rate is deducted from the nominal interest rate. A reduction in the domestic real interest rate would cause a fall in net exports and a rise in the exchange rate.
Strategic management is about formulating strategies that align an organizations internal capabilities with external opportunities while avoiding or minimizing threats. How effective has Mark Parker been as a strategic so far
Answer:
Mark Parker has been very effective as a strategist for the following reasons:
Explanation:
He has been able to keep Nike's brand equity. His policies on HR has generated an effect which translated to increased motivation for his employees to commit to the attainment of the company's objectivesA strategist must be able to make plans and execute them. Nike's strategy is a customer-centric one. Mark was able to, regardless of the economy, ensure that Nike's products were consumer-centric and that the business units in charge of each aspect of Nike's operations were able to deliver their best.
Cheers!
In which of the following organization forms is the owners' legal responsibility for the debt of the business limited to the amount they invested in the business?
a. Cooperative
b. Sole proprietorship
c. Partnership
d. Corporation
Answer:
d. Corporation
Explanation:
The Corporation is the business form of an organization in which it has the separate legal entity from its owners. Also, there is a limited liability towards any debt that invested in the business and whenever the person think for an organization so he thinks for the long term
Here in the given situation, the corporation is the best choice as it it has the limited liability of the amount invested
Hence, the correct answer is d.
Pisa, Inc. leased equipment from Williamsburg Company under a four-year lease requiring equal annual payments of $68,830, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Pisa, Inc.'s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is 8%. Assuming that this lease is properly classified as a capital lease, what is the approximate amount of principal reduction recorded when the second lease payment is made in Year 2?
Answer:
$54,639
Explanation:
the approximate amount of principal reduction when the second lease payment is made in Year 2 can be calculated by making the Lease amortization table as follows
DATA
Annual payments = 68,830
Implicit rate = 8%
Annuty factor for 4 years at 8% = 3.55710
Present value of lease payment =$246,212 (68830*3.57710 )
Year 1 Year 2
Opening balance - $177,382(w)
interest - $14,191(w)
payments $68,830 $68,830
principal payments $68,830 $54,639
closing balance $177,382(w) $122,743
Working
Closing balance = Present value of lease payment - Annual payment
Closing balance = $256,212 - $68,830
Closing balance = $177,382
Interest = closing balance x implicit rate
Interest = $177,382 x 8%
Interest = $14,190.56
fremont which uses the high-low method reported total cost of $10 per unit its lowest production level, 5000 units. when production tripled to its highest level, the total cost per unit dropped to $5 variable cost per unit
Answer:
$2.50
Explanation:
Calculation for the estimation of variable cost per unit
Units Total cost
High method 15,000×$5 per units =$75,000
(5,000*3)=15,000
Low method 5,000*$10 per units=$50,000
Difference 10,000 $25,000
Variable cost per unit =$25,000/10,000
Variable cost per unit=$2.50
Note: Based on the information given we were told that production tripled to its highest level which means the high method units will be 15,000 units (5,000 units*3)
Therefore Fremont would estimate its variable cost per unit as: $2.50
Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company’s products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 3,400 helmets, using 2,346 kilograms of plastic. The plastic cost the company $15,484. According to the standard cost card, each helmet should require 0.64 kilograms of plastic, at a cost of $7.00 per kilogram. Required: 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,400 helmets? 2. What is the standard materials cost allowed (SQ × SP) to make 3,400 helmets? 3. What is the materials spending variance? 4. What is the materials price variance and the materials quantity variance?
Answer:
1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,400 helmets?
3,400 helmets x 064 kgs per helmet = 2,176 kgs
2. What is the standard materials cost allowed (SQ × SP) to make 3,400 helmets?
2,176 kgs x $7 per kg = $15,232
3. What is the materials spending variance?
$15,484 - $15,232 = $252 unfavorable (because total expenditures on materials were higher than budgeted)
4. What is the materials price variance and the materials quantity variance?
materials price variance = [($15,484/2,346) - $7] x 2,346 = -$938 favorable (the purchase price per kg was lower than budgeted)
materials quantity variance = (2,346 - 2,176) x $7 = $1,190 unfavorable
If a stock has a preemptive right, it gives current stockholders the right to purchase any new shares issued by the firm, so as to maintain their level of ownership. This right helps protect current stockholders against both dilution of control and dilution of value.
a. True
b. False
Answer: True
Explanation:
When new shares are issued, the preemptive right helps maintain the position of the shareholder. The preemptive right is vital to shareholders as it protects them against the dilution of ownership interests.
Also, it gives current stockholders the right to purchase any new shares issued by the firm, so as to maintain their level of ownership.
In its third year, a project is expected to produce earnings before interest and taxes of $671,551 and depreciation expense of $125,193. If the company’s tax rate is 34%, what is the project’s expected operating cash flow?
Answer:
Operating cash flow= $568,416.66
Explanation:
Giving the following information:
Earnings before interest and taxes= $671,551
Depreciation expense= $125,193.
Tax rate= 34%
To calculate the operating cash flow, we need to use the following structure:
EBIT= 671,551
Tax= (671,551*0.34)= (228,327.34)
Depreciation= 125,193
Operating cash flow= 568,416.66
The current spot exchange rate Singapore dollar against U.S. dollar (SGD/USD) is 0.6000. After considerable study, an investor concluded that the Singapore dollar will appreciate against the U.S. dollar in the coming 90 days, probably to about 0.7000. She has the following options on the Singapore dollar to choose from:
Option Strike price Premium
Put on SGD 0.6500 0.00003
Call on SGD 0.65 0.00046
1. Should the investor buy a put on Singapore dollars or a call on Singapore dollars?
2. What is the investor's break-even price on the option purchased in part a?
3. Using your answer from part a, what is the investor's gross profit and net profit (including premium) if the spot rate at the end of 90 days is indeed 0.7000?
4.Using your answer from part a, what is the investor's gross profit and net profit (including premium) if the spot rate at the end of 90 days is 0.8000?
Answer:
i) Investor should buy a call option as expected spot price on SGD after 90 days is 0.7 which less than the strike price 0.65 under call option.
II) Break-even price on option selected
Strike price under call option 0.65000
Add : Premium 0.00046
Break even price 0.65046
iii) Actual spot rate after 90 days 0.70000
Less: Strike price under call option 0.65000
Gross profit 0.05000
Less: Call option premium 0.00046
Net profit 0.04954
iv) Actual spot rate after 90 days 0.80000
Less: Strike price under call option 0.65000
Gross profit 0.15000
Less: Call option premium 0.00046
Net Profit 0.14954
The net income reported on the income statement for the current year was $121,900. Depreciation recorded on store equipment for the year amounted to $20,100. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $48,030 $44,190 Accounts receivable (net) 34,440 32,660 Merchandise inventory 47,020 49,710 Prepaid expenses 5,280 4,200 Accounts payable (merchandise creditors) 45,000 41,800 Wages payable 24,590 27,310 a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: $ Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities $ b. Cash flows from operating activities differs from net income because it does not use the of accounting. For example revenues are recorded on the income statement when .
Answer:
See answers below.
Explanation:
In order to get net cash flow through indirect method, we will have to make adjustment to the net income; hence we get the increase or decrease of different accounts with the data balance.
a) End beginning cash $48,030 $44,190
Increase in cash $3,840
Accounts receivable(net) $34,440 $32,660
Increase in accounts receivable $1,780
Merchandise Inventory $47,020 $49,710
Decreased inventory -$2,690
Prepaid expenses $5,280 $4,200
Increase prepaid expenses $1,080
Accounts payable(Merchandise creditors) $45,000 $41,800
Accounts payable increase $3,200
Wages payable $24,590 $27,310
Decreased wages payable -$2,720
Per below, we have some accounts that are added (+) to the net income while some are also deducted (-).
Net income $121,900
Adjustment to reconcile the net income to cash
+ Depreciation $20,100
+ Increase in cash $3,840
- Increase in accounts receivable ($1,780)
+ Inventory decrease $2,690
- Increase prepaid expenses ($1,080)
+ Accounts payable increase $3,200
- Decreased wages payable ($2,720)
Net cash $146,150
b) Briefly explain why net cash flow from operating activities is different other than net income.
The reason is that while net income refers to the earned profit by a company for a period ; cash flow from operating activities are measurement of daily cash (in and out) expended on business operation. Cash flow give explanation on the use of cash in an organization on a daily basis which includes net income from the income statement, changes in working capital, adjustments to net profits etc. t is to be noted that the starting point of calculating cash flow from operating activities is the net income.
Occupational fraud comes in many shapes and sizes. The fraud at Rite Aid is one such case. On February 10, 2015, the U.S. Attorney's Office for the Middle District of Pennsylvania announced that a former Rite Aid vice president, Jay Findling, pleaded guilty to charges in connection with a $29.1 million dollar surplus inventory sales/kickback scheme. Another former vice president, Timothy P. Foster, pleaded guilty to the same charges and making false statements to the authorities. Both charges are punishable by up to five years' imprisonment and a $250,000 fine.
The charges relate to a nine-year conspiracy to defraud Rite Aid by lying to the company about the sale of surplus inventory to a company owned by Findling when it was sold to third parties for greater amounts. Findling would then kick back a portion of his profits to Foster.
Findling admitted he established a bank account under the name "Rite Aid Salvage Liquidation" and used it to collect the payments from the real buyers of the surplus Rite Aid inventory. After the payments were received, Findling would send lesser amounts dictated by Foster to Rite Aid for the goods, thus inducing Rite Aid to believe the inventory had been purchased by J. Finn Industries, not the real buyers. The government alleged Findling received at least $127.7 million from the real buyers of the surplus inventory but, with Foster's help, only provided $98.6 million of that amount to Rite Aid, leaving Findling approximately $29.1 million in profits from the scheme. The government also alleged that Findling kicked back approximately $5.7 million of the $29.1 million to Foster.
Foster admitted his role during the guilty plea stage of the trial. He voluntarily surrendered $2.9 million in cash he had received from Findling over the life of the conspiracy. Foster had stored the cash in three 5-gallon paint containers in his Phoenix, Arizona, garage.
Assume you are the director of internal auditing at Rite Aid and discover the surplus inventory scheme. You know that Rite Aid has a comprehensive corporate governance system that complies with the requirements of Sarbanes-Oxley and the company has a strong ethics foundation. Moreover, the internal controls are consistent with the COSO framework.
1. To encourage various groups to come forward and report fraud, Dodd-Frank extended whistle-blowing privileges and rewards to which of the following?
A. Internal auditors.
B. External auditors.
C. The CEO.
D. All of these are correct.
2. Whistleblowers who meet the criteria are eligible to receive an award based on what was collected as a result of the monetary sanctions. This can vary from_________.
a. 1 to 10 percent.
b. 10 to 30 percent.
c. 15 to 35 percent.
d. 1 to 50 percent, depending on the magnitude of the fraud.
Answer:
1. To encourage various groups to come forward and report fraud, Dodd-Frank extended whistle-blowing privileges and rewards to which of the following?
D. All of these are correct.
2. Whistleblowers who meet the criteria are eligible to receive an award based on what was collected as a result of the monetary sanctions. This can vary from_________.
a. 1 to 10 percent.
Explanation:
In whistleblowing against a fraud in a company or an organization, the maximum amount which the whistleblower can receive is 10% of the money recovered (or involved) while the least amount would be 1% of the said recovered money
Suppose you invest $20,000 by purchasing 200 shares of Abbott Labs (ABT) at $50 per share, 200 shares of Lowes (LOW) at $30 per share, and 100 shares of Ball Corporation (BLL) at $40 per share. Suppose over the next year Ball has a return of %, Lowes has a return of %, and Abbott Labs has a return of . The return on your portfolio over the year is:
Answer:
3.8%
Explanation:
There are some important parts missing:
Suppose over the next year Ball has a return of 12.5%, Lowes has a return of 21%, and Abbott Labs has a return of -10%.
We must first determine the weight of each stock in the portfolio:
ABT = ($50 x 200) / $20,000 = 50%LOW = ($30 x 200) / $20,000 = 30%BLL = ($40 x 100) / $20,000 = 20%the expected return of the portfolio = (ABT x return) + (LOW x return) + (BLL x return) = (50% x -0.1) + (30% x 0.21) + (20% x .125) = -5% + 6.3% + 2.5% = 3.8%
Julie is working on formulating a marketing plan to increase the market share of Little Debbie Snack Cakes. According to the discussion in class, which one of the following strategies would Julie find most effective as a way to increase Little Debbie's long-term market share?
a. Increase product quality
b. Increase product innovation
c. Increase advertising
d. Increase sales promotion
Answer:
Correct answer:
d. Increase sales promotion
Explanation:
For Julie who owns the Little Debbie Snacks Cakes, in order for her to increase the market share of his company, there will be need for her to increase her sales promotion. This would be through series of campaign which she could run like "Buy 2 get 1 FREE" or "A dozen order free delivery + gift" etc.
The total purchase of the products and services of the firm and the percentage that goes to the company's capital is the term definition of market share.
If the consumers buy for instance 50 chocolates, out of which the 25 are from one company, and in that case, that company holds 25% market share.
The correct option is d. Increase sales promotion
Option d. Increase sales promotion is correct because for Julie who owns the Little Debbie Snacks Cakes, in order for her to increase the market share of his company, there will be a need for her to increase her sales promotion. This would be through a series of campaigns.
Options a, b, and c are wrong because they do not the effective way to increase the sale of the products and services. The options are focusing on the other promotional and advertising activities and the efficiency and effectiveness of the product section.
To know more about the long term market share, refer to the link below:
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"A retired customer that has a portfolio of blue chip stocks is looking to supplement his retirement income. An appropriate recommendation would be to:"
Answer: sell covered calls
Explanation:
A retired customer that has a portfolio of blue chip stocks is looking to supplement his retirement income. An appropriate recommendation would be to sell covered calls.
It should be noted that a covered call is a financial transaction that takes place when a call option is sold by an investor even though the investor still owns part of the security based on what's sold.
Which contingency of power are unions mainly applying by going on strike at a critical time in the company's business cycle
Answer:
Centrality
Explanation:
By going on strike at a critical time in business cycle the contingency of power is centrality. Centrality is the degree and nature of power of interdependence that exists between between the the person holding power and others. Centrality determines the number of people who are affected by the decisions made by the person holding power.
Garrod Smith is a master woodcarver and sole owner of "Smith Custom Doors, LLC." Which of the following advantages applies to his business form?
A. The business is not a taxable entity.B. The business is a separate legal entity from Garrod Smith.C. The business is not taxed as a corporation or sole proprietorship.D. The business makes Garrod liable for only half of the business' debt.
Answer: The business is not taxed as a corporation or sole proprietorship.
Explanation:
From the question, we are informed that Garrod Smith is a master woodcarver and sole owner of "Smith Custom Doors, LLC." The advantage that applies to his business form is that the business is not taxed as a corporation or a sole proprietorship.
In the context of situational analysis, the ________ includes the attitudes and reactions of the general public, social and business critics, and other organizations, such as the Better Business Bureau.A) political environmentB) social environmentC) competitive environmentD) legal environment
Answer:
political environment
Explanation:
Situational analysis involves using various methods to check a business organization both internally and externally. Such an analysis would be used to know the strength, environment and customers of this organization.
The political environment in situational analysis includes the reaction and attitude of the general public, as well as critics (both business and social) and other organizations.
Georgia is the primary shareholder in Acme, Inc., a small corporation. After its corporate certificate was issued by the state, there were no other formalities or documentation. In fact, Georgia does not keep separate books for the corporation, and sometimes combines her personal assets with those of the corporation. If she is sued individually by a corporate creditor, what would be the likely outcome
Answer:
The likely outcome would be the judgement debt being settled from her personal assets.
Explanation:
Georgia being a primary shareholder in the small corporation, it was expected that she should keep accounts that differentiate the corporation from her personal expenses. Unfortunately such didn't happen.
Since she was sued individually by a corporate creditor, it was expected that the judgement debt should be settled from her individual account which is quite different form the corporate account.
Answer: Georgia would likely be liable
Explanation:
Based on the scenario that have been provided in the question, Georgia would likely be liable because the creditors can end up piercing the corporate veil.
This means that Georgia would be held responsible for the activities of the organization.
Prepare the journal entry to record Jevonte Company’s issuance of 35,000 shares of its common stock assuming the shares have a: $3 par value and sell for $22 cash per share. $3 stated value and sell for $22 cash per share.
Answer: Please see answer in explanation column
Explanation:
a)journal entry to record Jevonte Company’s issuance at $3 par value and $22 cash per share
Account Debit Credit
Cash(35,000 x $22) $770,000
Common stock, $3 par value(35,000 x 3) $105, 000
Paid-in captial in excess of par value, common stock
($770,000 - $105, 000 ) $665,000
b)journal entry to record Jevonte Company’s issuance at $3 stated value and $22 cash per share
Account Debit Credit
Cash (35,000 x $22) $770,000
Common stock, $3 stated value (35,000 x 3) $105, 000
Paid-in captial in excess of stated value, common stock
($770,000 - $105, 000 ) $665,000
The ________ is the pipeline through which products, their ownership, communication, financing and payment, and risk flow to the consumer.
Answer: Marketing channel
Explanation: The marketing channel is simply the pipeline through which products, their ownership, communication, financing and payment, and risk flow to the consumer. It is defined as a set of interdependent organizations that help ease the transfer of ownership as products move from producer to business user or consumer thereby creating a continuous and seamless supply chain. They help facilitate the physical flow of goods through the supply chain,and in the marketing mix represents "place" or "distribution".
You sold a car and accepted a note with the following cash flow stream as your payment. What was the effective price you received for the car assuming an interest rate of 6.0%?
A. Year 0-$0.
B. Year 1-$1,000.
C. Year 2-$2,000.
D. Year 3-$2,000 and Year 4-$2,000.
Answer:
year two
Explanation:because less time still you'll have 2,000
If income rises from $1,000 to $1,400 and consumption rises from $800 to $1,168, the marginal propensity to consume is __________ percent.
Answer:
The marginal propensity to consume is 92 percent.
Explanation:
Marginal propensity to consume (MPC) refers to the additional expenditure on consumption by consumer as a result of an in national income.
That is, MPC is a measure of the proportion or percentage of the additional income that goes consumption expenditure.
MPC can be calculated using the following formula
MPC = ΔC / ΔY ......................................... (1)
Where;
ΔC = Change in consumption = New consumption - Old consumption = $1,168 - $800 = $368
ΔY = Change in income = New income - Old income = $1,400 - $1,000 = $400
Substituting the values into equation (1), we have:
MPC = $368 / $400 = 0.92, or 92%
Therefore, the marginal propensity to consume is 92 percent.
What describes minerals that are deemed real property, such as gold and silver, until they are removed from the earth and become personal property?
A. Mineral rights.
B. Nutrients.
C. Synthetics.
D. Solid minerale.
Answer:
The correct answer is D
Explanation:
Solid minerals contained in the land
(Coal, iron, ore, gold or silver)
Hope this helps! （づ￣3￣）づ╭❤～
Minerals known as real property such as gold and silver are known as Solid minerale before they later become personal property.
What is a Solid minerale?These are mineral that is natural occurring in a solid and inorganic state and are representable by a chemical formula.
An example of Solid minerale includes Talc, Gold, Clay, Lithium, Kyanite, Wolframite, Gemstones etc
Therefore, the Option D is correct.
Read more about Solid minerale
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________ means that service quality depends on the quality of buyer-seller interaction during the service encounter.
Answer: interactive marketing
Explanation:
Interactive marketing is also referred to as event-driven marketing or trigger based marketing and it simply has to do with using an effective communication which is two-ways to enable the consumers connect directly with a company.
Interactive marketing means service quality depends on the quality of buyer-seller interaction during the service encounter.
Luther Corporation Consolidated Balance Sheet December 31, 2006 and 2005 (in $ millions) Assets 2006 2005 Liabilities and Stockholders' Equity 2006 2005 Current Assets Current Liabilities Cash 58.5 Accounts payable 73.5 Accounts receivable 39.6 Notes payable / shortterm debt 9.6 Inventories 42.9 Current maturities of longterm debt 36.9 Other current assets 3.0 Other current liabilities 6.0 12.0 Total current assets 144.0 Total current liabilities 132.0 LongTerm Assets LongTerm Liabilities Land 62.1 Longterm debt 168.9 Buildings 91.5 Capital lease obligations Equipment 99.6 Less accumulated depreciation () (52.5) Deferred taxes 22.8 22.2 Net property, plant, and equipment 200.7 Other longterm liabilities Goodwill 60.0 Total longterm liabilities 191.1 Other longterm assets 63.0 42.0 Total liabilities 323.1 Total longterm assets 242.7 Stockholders' Equity 63.6 Total Assets 386.7 Total liabilities and Stockholders' Equity 386.7 Refer to the balance sheet above. Luther's current ratio for 2006 is closest to:
Answer:
Luther Corporation
Current Ratio for 2006 is closest to:
1.1 : 1
Explanation:
a) Data and Calculations:
Total Current Assets = $144 million
Total Current Liabilities = $132 million
Current Ratio = Current Assets/Current Liabilities
= $144/$132
= 1.1 : 1
b) Luther Corporation's current ratio is a liquidity measure that shows Luther's ability to pay off short-term obligations worth $132 million or those due within one year with its current assets of $144 million. The ratio tells investors and analysts of Luther Corporation how Luther can use its current assets to pay off its current debts. Since Luther's current ratio is higher than 1, it is considered good, depending on the industry average. This means that Luther's current ratio of 1.1 : 1 should not be considered in isolation, but in comparison with other firms in the industry and its performance over a number of years.
The term used to describe the degree to which tasks in an organization are subdivided into separate jobs is called ________.
Answer:
work specialization
Explanation:
The term being described is known as work specialization. This term, also known as division of labor, is mainly used by companies in order to divide a large job position into smaller, single tasks that can be completed by one individual. The individual that is given such a task is trained thoroughly in order for them to become a specialist in that task and output more precise workloads.
If a company is experiencing increasing pressures for cost reduction for its products, which of the following courses of action should it consider?
a. sell licenses to produce the products internationally.
b. explore opportunities for exporting or create a wholly-owned subsidiary within a country.
c. establish a joint venture with a foreign company.
d. pursue a franchising model for the company.
Answer: explore opportunities for exporting or create a wholly-owned subsidiary within a country
Explanation:
When a company is experiencing increasing pressures for cost reduction for its product, the course of action should be considered by the company is to explore opportunities for exporting or create a wholly-owned subsidiary within a country.
This is necessary to bring about economies of scale which in turn leads to lesser production cost and cheaper prices for the products.
For an automobile company, the total overhead applied was $48,000,000 at the end of the year. Actual overhead was $52,850,000. Closing over/under applied overhead into cost of goods sold would cause net income to:
Answer:
Net income decreased by $4,850,000.
Explanation:
Given total overhead applied = $48000000
The actual overhead = $52850000
Over/under Applied overhead = total overhead applied - Actual overhead at the end of the year.
Over / under Applied overhead = 48000000-52850000
Over / under Applied overhead = -$4850000
From the calculation, it can be seen that the overhead is underapplied therefore when under applied overhead allocated to cost of goods sold then cost of goods sold decreased by $4850000.
On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020.
Sales units: First quarter 5,200; second quarter 6,700; third quarter 7,000.
Ending raw materials inventory: 40% of the next quarter’s production requirements.
Ending finished goods inventory: 25% of the next quarter’s expected sales units.
Third-quarter production: 7,380 units.
The ending raw materials and finished goods inventories at December 31, 2019, follow the same percentage relationships to production and sales that occur in 2020. 3 pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $5 per pound.
a) Prepare a production budget by quarters for the 6-month period ended June 30, 2020.
b) Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2020.
Answer:
Hardin Company
Production budget
For the first semester of 2020
First quarter Second quarter Total
Sales units 5,200 6,700 11,900
Planned ending 1,675 1,750 1,750
inventory
Total production 6,875 8,450 13,650
required
- beginning inv. -1,300 -1,675 -1,300
Units to be 5,575 6,775 12,350
produced
Hardin Company
Raw materials budget
For the first semester of 2020
First quarter Second quarter Total
Units to be 5,575 6,775 12,350
produced
Materials required 3 3 3
per unit
Materials needed 16,725 20,325 37,050
for production
Planned ending 8,130 8,856 8,856
inventory
Total materials 24,855 29,181 45,906
needed
- beginning inv. -6,690 -8,130 -6,690
Materials to be 18,165 21,051 39,216
purchased
Cost per unit $5 $5 $5
Total cost of $90,825 $105,255 $196,080
direct materials
Cash Payback Method Lily Products Company is considering an investment in one of two new product lines. The investment required for either product line is $540,000. The net cash flows associated with each product are as follows:
Year Liquid Soap Body Lotion
1 $170,000 $90,000
2 150,000 90,000
3 120,000 90,000
4 100,000 90,000
5 70,000 90,000
6 40,000 90,000
7 40,000 90,000
8 30,000 90,000
Total $720,000 $720,000
A. Recommend a product offering to Lily Products Company, based on the cash payback period for each product line.
Payback period for liquid soap
Payback period for body lotion
B. The project with the_____net cash flows in the early years of the project life will be favored over the one with the______net cash flows in the initial years.
Answer:
1a. Payback period for LIQUID SOAP =4 years
Payback period for BODY LOTION =6 years
1b. GREATEST; LESS
Explanation:
1a.Calculation for the Payback period for liquid soap
LIQUID SOAP
Year Cash flow Cumulative Cash flow
1 $170,000 $170,000
2 (150,000+170,000) =320,000
3 (120,000+320,000)=440,000
4 (100,000+440,000)=540,000
5 (70,000+540,000)= 610,000
6 (40,000+610,000)= 650,000
7 (40,000+650,000)= 690,000
8 (30,000+690,000)= 720,000
The Payback period for LIQUID SOAP will be 4 years
Calculation for the Payback period of body lotion
BODY LOTIO
Year Cash flow Cumulative Cash flow
1 $90,000 $90,000
2 (90,000+90,000)=180,000
3 (90,000+180,000)=270,000
4 (90,000+270,000)=360,000
5 (90,000+360,000)=450,000
6 (90,000+450,000)=540,000
7 (90,000+540,000)=630,000
8 (90,000+630,000)=720,000
The Payback period for BODY LOTION will be 6 years
Based on the calculation above for both liquid soap and body lotion the product offering i will recommend to Lily Products Company, based on the cash payback period for each product line will be LIQUID SOAP because it has a 4 years payback period.
B. The project with the GREATEST net cash flows in the early years of the project life will be favored over the one with the LESS net cash flows in the initial years.
