LO, Inc., is considering an investment of $444,000 in an asset with an economic life of five years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $283,100 and $88,800, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 2 percent. The company will use the straight-line method to depreciate its asset to zero over five years. The salvage value of the asset is estimated to be $64,000 in nominal terms at that time. The one-time net working capital investment of $19,500 is required immediately and will be recovered at the end of the project. The corporate tax rate is 24 percent.

Required:
What is the projectâs total nominal cash flow from assets for each year?

Answers

Answer 1

Answer:

LO, Inc.

The project's total nominal cash flow from assets for each year:

                     Revenue            Expenses   Net Cash Flow

Year 1           $283,100          $108,300        $174,800

Year 2           288,762              90,576           198,186

Year 3          294,537               92,388          202,149

Year 4          300,428               94,236         206,192

Year 5          389,937                96,121          293,816

Explanation:

a) Data and Calculations:

Cost of investment in an asset = $444,000

Estimated economic life of the asset = 5 years

Nominal annual revenues for the first year = $283,100

Nominal annual expenses for the first year = $88,800

Annual inflation rate = 2%

Salvage value of the asset = $64,000

One-time net working capital investment = $19,500

Corporate tax rate = 24%

Project's total nominal cash flow from asset for each year:

                     Revenue                            Expenses

Year 1           $283,100                            $108,300 ($88,800+$19,500)

Year 2           288,762 ($283,100 * 1.02)   90,576 ($88,800 * 1.02)

Year 3          294,537 ($288,762 * 1.02)   92,388 ($90,576 * 1.02)

Year 4          300,428 ($294,537 * 1.02)  94,236 ($92,388 * 1.02)

Year 5          306,437 ($300,428 * 1.02)   96,121 ($94,236 * 1.02)

Year  5          83,500   ($64,000 + $19,500) (Salvage value and Working capital recovery)


Related Questions

Total Cost Logistics Model takes into consideration ______. A. all of the transportation cost B. all of the handling cost C. all of fixed assets D. all of the inventory carrying cost

Answers

Answer:

Total Cost Logistics Model takes into consideration:

A. all of the transportation cost

B. all of the handling cost

D. all of the inventory carrying cost

Explanation:

The total cost logistics model includes all the logistics factors (transportation costs, inventory carrying costs, and administration costs). Logistics can be divided into procurement logistics, production logistics, sales logistics, recovery logistics, and recycling logistics.

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:
a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances:
Cash 42,000
Accounts receivable 201,600
Inventory 58,050
Buildings and equipment (net) 352,000
Accounts payable 85,725
Common stock 500,000
Retained earnings 67,925
653,650 653,650
b. Actual sales for December and budgeted sales for the next four months are as follows:
December (actual) 252,000
January 387,000
February 584,000
March 298,000
April 195,000
c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales.
d. The company's gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
e. Monthly expenses are budgeted as follows: salaries and wages, $17,000 per month; advertising, $57,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,420 for the quarter.
f. Each month's ending inventory should equal 25% of the following month's cost of goods sold.
g. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid in the following month.
h. During February, the company will purchase a new copy machine for $1,200 cash. During March, other equipment will be purchased for cash at a cost of $71,000.
i. During January, the company will declare and pay $45,000 in cash dividends.
j. Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.
Required
Using the data above, complete the following statements and schedules for the first quarter:
1. Schedule of expeted cash collections:
Hillyard Company Schedule of Expected Cash Collections
January February March Quarter
Cash sales 77,400 77,400
Credit sales 201,600 201,600
Total collections 279,000 279,000
2-a. Merchandise purchases budget:
Hillyard Company Merchandise Purchases Budget
January February March Quarter
Budgeted cost of goods sold 232,200* 350,400
Add desired ending inventory 87,600†
Total needs 319,800 350,400
Less beginning inventory 58,050
Required purchases 261,750
*$387,000 sales x 60% cost ratio = $232,200.
†$350,400 × 25% = $87,600.
2-b. Schedule of expected cash disbursements for merchandise purchases:
Hillyard Company Schedule of Expected Cash Disbursements for Merchandise Purchases
January February March Quarter
December purchases 85,725
January purchases 130,875 130,875
February purchases
March purchases
Total cash disbursements for purchases
3. Cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.)
Hillyard Company Cash Budget
January February March Quarter
Beginning cash balance 42,000
Add cash collections 279,000
Total cash available 321,000
Less cash disbursements:
Purchases of inventory 216,600
Selling and administrative expenses 104,960
Purchases of equipment
Cash dividends 45,000
Total cash disbursements 366,560
Excess (deficiency) of cash (45,560)
Financing:
Borrowings
Repayments
Interest
Total financing
Ending cash balance
4. Prepare an absorption costing income statement for the quarter ending March 31.
Hillyard Company Income Statement For the Quarter Ended March 31
Cost of goods sold
Selling and administrative expenses:
5. Prepare a balance sheet as of March 31.
Hillyard Company Balance Sheet March 31
Assets
Current assets:
Total current assets
Total assets
Liabilities and Stocholders' Equity
Current liabilities
Stockholders' equity
Total liabilities and stockholders' equity

Answers

Answer:

1. Schedule of Cash Collection:

Particulars: January February March Quarter

Cash Sales $77,400 $77,400 $118,200 $273,000

Credit Sales $201,600 $201,600 $472,800 $876,000

Total Collections $279,000 $279,000 $591,000 $1,149,000

Explanation:

Cash sales are 20% of total sales where as remaining 80% sales are credit sales. Cash collection schedule prepared will display the actual cash collected from sales. The sales made on credit are collected in the following month.

How is a monopolistically competitive market similar to a perfectly competitive​ market? A. Producers with market power set their own prices. B. Both have differentiated products with close substitutes. C. There are no restrictions on the entry of new firms. D. Both have homogeneous products with no close substitutes. Which of the following common features do monopolistically competitive markets and monopolies​ share? A. Barriers restrict new firms from entering. B. Consumers with market power set prices. C. Firms face​ downward-sloping demand curves. D. Producers with no market power set their own prices.

Answers

Answer:

c

c

Explanation:

A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.  

In the long run, firms earn zero economic profit.  If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.  

A monopolistic competition is when there are many firms selling differentiated products in an industry. A monopolistic competition has characteristics of both a monopoly and a perfect competition. the demand curve is downward sloping. it sets the price for its goods and services.

An example of monopolistic competition are restaurants  

When firms are earning positive economic profit, in the long run, firms enter into the industry. This drives economic profit to zero

If firms are earning negative economic profit, in the long run, firms leave the industry.  This drives economic profit to zero

in the long run, only normal profit is earned

A monopoly is when there is only one firm operating in an industry. there are usually high barriers to entry of firms. the demand curve is downward sloping. it sets the price for its goods and services.

An example of a monopoly is a utility company

Botosan Factory has budgeted factory overhead for the year at $468,602, and budgeted direct labor hours for the year are 280,600. If the actual direct labor hours for the month of May are 255,300, the overhead allocated for May is

Answers

Answer:

$426,351

Explanation:

Calculation to determine what the overhead allocated for May is

Using this formula

Overhead allocated for May=(Estimated overhead/Estimated total DLHs)*Overhead rate per DLHs

Let plug in the formula

Overhead allocated for May=($468,602/ 280,600)*255,300

Overhead allocated for May=$1.67*255,300

Overhead allocated for May=$426,351

Therefore the overhead allocated for May is $426,351

For each of the following scenarios, indicate which of the four basic tax planning variables (entity, character, time period, jurisdiction) impacts after-tax value.

a. Aloha Corporation is considering building a new manufacturing facility in either State U or State P. State U has a 10 percent state income tax rate. State P has a 15 percent state income tax rate, but offers a tax holiday for new business investment that would exempt up to $250,000 of Aloha’s earnings from state income tax for the first five years of operations in State P.
b. Mary wishes to help her nephew, Gill, pay his college tuition. Instead of giving Gill cash, Mary gives him bonds earning $10,000 annual interest income. Mary’s marginal tax rate is 35 percent and Gill’s marginal tax rate is 15 percent.
c. Congress has recently enacted a decrease in corporate tax rates that will take effect at the beginning of next year. Grant Company, a cash basis taxpayer, is planning to pay expenses prior to year-end in order to maximize its tax savings in the current year.
d. Will has $50,000 to invest in the stock market. He is considering two alternatives. Stock A pays annual qualifying dividends of 6 percent. Stock B pays no dividends but is expected to increase in value at a rate of 5 percent per year. Will would hold either investment for a minimum of four years. Will’s marginal tax rate on ordinary income is 35 percent.

Answers

Answer:

Letter D is the answer

Explanation:

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Janine, currently enrolled in a 3-star plan,
discovers there is 5-star plan available where
she lives. She asks her agent, Josh, to enroll
her in the 5-star plan. Josh can advise Janine
of each of the following except:
Josh should tell Janine that she can only change her current plan to a 5-
star plan during the Annual Election Period.
Josh should tell Janine that she can only use the 5-Star SEP once per
calendar year.
Josh should tell Janine that she can change her current plan to a 5-star

Answers

Answer:

Janine and Josh

Josh can advise Janine  of each of the following except:

Josh should tell Janine that she can only change her current plan to a 5-

star plan during the Annual Election Period.

Explanation:

The Special Election Period (SEP) for the 5-star Medicare Plan lasts one week, that is, between Nov. 30 and Dec. 8.  However, there is an Annual Enrollment Period (AEP) that lasts from October 15th to December 7th.  During the annual enrollment period, any plan holder can change her Medicare plan, depending on its availability in her area.

Could I Industries just paid a dividend of $1.15 per share. The dividends are expected to grow at a rate of 18 percent for the next six years and then level off to a growth rate of 7 percent indefinitely. If the required return is 15 percent, what is the value of the stock today

Answers

Answer: $26.56

Explanation:

Present value of stock = Dividend in year 1 / (1 + required rate of return) + Dividend in year 2 / (1 + required rate of return)² + Dividend in year 3 / (1 + required rate of return)³ + Dividend in year 4 / (1 + required rate of return)⁴ + Dividend in year 5 / (1 + required rate of return)⁵ + Dividend in year 6 / (1 + required rate of return)⁶ + Terminal value /  (1 + required rate of return)⁶

Terminal value = ( Dividend in year 6 * (1 + growth rate) / ( required rate of return - growth rate)

= (1.15 * (1 + 18%)⁶ * (1 + 7%) ) / (15% - 7%)

= $41.5225

Present value of stock:

= (1.15 * 1.18) / (1 + 15%) + (1.15 * 1.18²) / (1 + 15%)² + (1.15 * 1.18³) / (1 + 15%)³ + (1.15 * 1.18⁴) / (1 + 15%)⁴ + (1.15 * 1.18⁵) / (1 + 15%)⁵ + (1.15 * 1.18⁶) / (1 + 15%)⁶ + (41.5225) / (1 + 15%)⁶

= $26.55585976

= $26.56

Entries for Discounted Note Payable A business issued a 90-day note for $57,000 to a creditor on account. The note was discounted at 8%. Assume a 360-day year.
a. Journalize the entry to record the issuance of the note. For a compound transaction, if an amount box does not require an entry, leave it blank. If necessary, round to one decimal place. Accounting numeric field
b. Journalize the entry to record the payment of the note at maturity.

Answers

Answer:

A. Dr Accounts payable 55,830

Dr Interest expense 1170

Cr Notes payable 57,000

B. Dr Notes payable 57,000

Cr Cash 57,000

Explanation:

A. Preparation of the journal entry to record the issuance of the note.

Dr Accounts payable 55,830

(57,000-1170)

Dr Interest expense (57,000*8%*90/360) 1170

Cr Notes payable 57,000

(To record the issuance of the note)

B. Preparation of the journal entry to record the payment of the note at maturity.

Dr Notes payable 57,000

Cr Cash 57,000

(to record the payment of the note at maturity)

. produces 1000 packages of fruit sushi per month. The sales price is $5 per pack. Variable cost is $1.50 per unit, and fixed costs are $1800 per month. Management is considering adding a chocolate coating to improve the value of the product by making it a dessert item. The variable cost will increase from $1.50 to $1.90 per unit, and fixed costs will increase by 10%. The CEO wants to price the new product at a level that will bring operating income up to $4000 per month. What sales price should be charged

Answers

Answer:

$7.88

Explanation:

The computation is given below:

Sales price is

= ( Total sales revenue ÷ packages sold)

And,

Total sales revenue is

= ( Total Cost + Operting income )

And,  

Total Cost = ( Variable Cost + Fixed cost)

Now

Variable cost = 1,000 packages × $1.90 per unit

= $1,900

And,

Fixed cost = $1,800 × 110%

= $1,980

so

Total cost = $1,900 + $1,980

= $3,880

Now  

Total sales revenue is

= $3,880 + $4,000

= $7,880

 Now  

Sales price = $7,880 ÷ 1,000 packages

= $7.88

4. Problems and Applications Q4 Many observers believe that the levels of pollution in our society are too high. True or False: If society wishes to reduce overall pollution by a certain amount, it is efficient to have firms with lower costs reduce greater amounts of pollution than those with higher costs.

Answers

Answer: True

Explanation:

Firms with lower costs would also incur a lower cost when they try to reduce pollution so they should reduce more pollution because of this reduced cost that they will incur.

Firms with higher costs would then reduce less pollution because this would ensure that they do not spend too much on pollution reduction and incur even more costs.

and​ Associates, a law​ firm, paid $30000 for 12​ months' rent in advance on October 1 of the current year. The​ company's fiscal​ year-end is December 31. Prepare the journal entries for the rent payment on October 1 and the necessary adjusting journal entry on December 31. Omit explanations

Answers

Answer and Explanation:

The journal entries are shown below:

On Oct 1

Rent expense Dr $30,000

      to cash $30,000

(being cash paid)

Here rent expense is debited as it increased the expense and credited the cash as it decreased the assets

On Dec 31

Rent expense Dr ($30,000 × 9 ÷ 12) $22,500

     To prepaid rent $22,500

(being rent expense is recorded)

Here ent expense is debited as it increased the expense and credited the prepaid rent as it decreased the assets

Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $249,400. The equipment was expected to have a useful life of four years, or 8,800 operating hours, and a residual value of $20,600. The equipment was used for 3,080 hours during Year 1, 1,848 hours in Year 2, 2,464 hours in Year 3, and 1,408 hours in Year 4. Required: 1. Determine the amount of depreciation expense for the four years ending December 31 by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. Round the answer for each year to the nearest whole dollar. Depreciation Expense Year Straight-Line Method Units-of-Activity Method Double-Declining- Balance Method Year 1 $fill in the blank 1 $fill in the blank 2 $fill in the blank 3 Year 2 $fill in the blank 4 $fill in the blank 5 $fill in the blank 6 Year 3 $fill in the blank 7 $fill in the blank 8 $fill in the blank 9 Year 4 $fill in the blank 10 $fill in the blank 11 $fill in the blank 12 Total $fill in the blank 13 $fill in the blank 14 $fill in the blank 15 2. What method yields the highest depreciation expense for Year 1

Answers

Answer:

Straight line :

Depreciation expense each of the four years is $57,200

total depreciation = $228,800

Double declining :

Year 1 = $124,700

Year 2  = $62350

Year 3 = $31,175

Year 4 =  $15,588

Total depreciation expense = $233,813

Activity based depreciation

year 1 =  $80,080

year 2 =  $48,048

year 3 =  $64,064

year 4 = $36,608

Total depreciation expense = $288,800

the deprecation method that yields the highest depreciation expense in year 1 is the double declining method

Explanation:

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

($249,400 - $20,600) / 4 = $57,200

Depreciation expense each of the four years is $57,200

total depreciation = $57,200 x 4 = $228,800

Depreciation expense using the double declining method = Depreciation factor x cost of the asset

Depreciation factor = 2 x (1/useful life) = 2/4

Year 1 = 2/4 x $249,400 = 124,700

book value =  $249,400 - 124,700 = 124,700

Year 2 = 2/4 x 124,700 = 62350

Book value = 124,700 - 62350 =  62350

Year 3 = 2/4 x 62350 = 31,175

book value = 62350 -  31,175 =  31,175

Year 4 = 2/4 x  31,175 = 15,587.50

Addition of the depreciation expenses = $233,812.50

Activity method based on hours worked = (hours worked that year / total hours of the machine) x  (Cost of asset - Salvage value)

($249,400 - $20,600) / 8,800 = 26

year 1 = 26 x 3,080 = $80,080

year 2 = 26 x 1,848 = $48,048

year 3 = 26 x 2,464 = $64,064

year 4 = 26 x 1,408 = $36,608

Addition of the depreciation expenses = $288,800

Glen Inc. and Armstrong Co. have an exchange with no commercial substance. The asset given up by Glen Inc. has a book value of $72,000 and a fair value of $96,000. The asset given up by Armstrong Co. has a book value of $120,000 and a fair value of $114,000. Boot of $24,000 is received by Armstrong Co.What amount should Armstrong Co. record for the asset received

Answers

Answer:

the amount that should be recorded as the asset is $96,000

Explanation:

The computation of the amount that should be recorded as the asset is given below:

Book value of assets given up = $72,000

Add : cash paid in exchange. $24,000

Amount recorded as an asset should be $96,000

We simply added the book value and the cash paid amount for an exchange

Therefore the amount that should be recorded as the asset is $96,000

Beagle Corporation has 26,000 shares of $10 par common stock outstanding and 16,000 shares of $100 par, 5.50% cumulative, nonparticipating preferred stock outstanding. Dividends have not been paid for the past two years. This year, a $420,000 dividend will be paid. What are the dividends per share payable to preferred and common, respectively

Answers

Answer:

$16.5 per share; $6 per share

Explanation:

Calculation to determine the dividends per share payable to preferred and common, respectively

DIVIDENDS PER SHARE PAYABLE TO PREFERRED

First step

Total dividend paid to Preferred Stockholders

= Outstanding preferred stock × Par value of preferred stock × 5.50% × Number of years

Total dividend paid to Preferred Stockholders= 16000 × 100 × 5.50% × 3

Total dividend paid to Preferred Stockholders= $264,000

Second step

Total dividend per share paid to Preferred Stockholders= Total dividend paid to preferred ÷ No. of outstanding shares

Total dividend per share paid to Preferred Stockholders= $264,000 ÷ 16,000 shares

Total dividend per share paid to Preferred Stockholders= $16.5 per share

DIVIDENDS PER SHARE PAYABLE TO COMMON STOCKHOLDERS

First step

Total dividend paid to Preferred Stockholders

= Outstanding preferred stock × Par value of preferred stock × 5.50% × Number of years

Total dividend paid to Preferred Stockholders= 16000 × 100 × 5.50% × 3

Total dividend paid to Preferred Stockholders= $264,000

Second step

Total dividend per share paid to common Stockholders= (Dividend paid in the current year - Total dividend paid to preferred) ÷ Common stock outstanding shares

Total dividend per share paid to common Stockholders= ($420,000 - $264,000) ÷ 26,000

Total dividend per share paid to common Stockholders= $156,000 ÷ 26,000 shares

Total dividend per share paid to common Stockholders= 6 per share

Therefore the dividends per share payable to preferred and common, respectively is:

$16.5 per share; $6 per share

Complete the following statements with one of the terms listed here. You may use a term more than once. Some terms may not be used at all. Capital turnover Direct fixed expenses Flexible budget variance Key performance indictors (KPIs) Profit center Sales margin Common fixed expenses Favorable variance Goal congruence Management by exception Return on investment (ROI) Unfavorable variance Cost center Flexible budget Investment center Master budget variance Revenue center Volume variance

Answers

Solution :

a). Flexible budget

A flexible budget is a budget that is prepared for the different volume level which was originally anticipated.

b). Flexible budget variance

It is the different between the flexible budget and the actual results.

c). Return on Investment

It is used to evaluate the performance of the investment centers. It is calculated by dividing operating income by the investment.

d). Favorable variance

The company has the favorable variance when the actual values are more than the budgeted values.

A manufacturing company has the following budgeted overhead costs: Indirect materials: $0.50 per unit; Utilities: $0.25 per unit; Supervisory salaries: $60,000; Building rent: $80,000. If the company expects to produce 200,000 units using 100,000 hours of direct labor, the standard overhead rate will be $

Answers

Answer:

Predetermined manufacturing overhead rate= $1.45 per unit

Explanation:

First, we will calculate the variable overhead per unit:

Unitary variable overhead= Indirect materials + Utilities

Unitary variable overhead= 0.5 + 0.25

Unitary variable overhead= $0.75 per unit

Now, the total fixed overhead, and fixed overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Total fixed overhead= Supervisory salaries + Building rent

Total fixed overhead= 60,000 + 80,000

Total fixed overhead= $140,000

Predetermined manufacturing overhead rate= 140,000 / 200,000

Predetermined manufacturing overhead rate= $0.7 per unit

Finally, the total predetermined overhead rate:

Predetermined manufacturing overhead rate= 0.75 + 0.7

Predetermined manufacturing overhead rate= $1.45 per unit

PlZ Help 70 points

Look at the circular flow diagram. Choose and define an environmental issue. Using the diagram as a guide, explain how the environmental issue you chose affects the relationship between the business and factor market. (4 points)

Answers

Answer:

Family and government are related to each other in terms of financial unit. Family pay charges to government and after that government utilize that cash for the individuals. Family gain the money by working in firms or by running their possess commerce. Natural issues such as discuss contamination can influence the relationship between family and government. Popleuses their possess transport to go to firms and the number of vehicles are expanding day by day which causes discuss contamination. The government can shape arrangements against personal transport and persuade individuals to utilize open transport which can be advantageous for government as government will straightforwardly get cash from family.

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Professional service organizations include __________.

Answers

Answer:

Accenture, Ernst and Young, KPMG, Deloitte.

Rosina purchased one 15-year bond at par value when it was initially issued. This bond has a coupon rate of 7 percent and matures 13 years from now. If the current market rate for this type and quality of bond is 7.5 percent, then Rosina should expect: the bond issuer to increase the amount of all future interest payments. the yield to maturity to remain constant due to the fixed coupon rate. to realize a capital loss if she sold the bond at today's market price. today's market price to exceed the face value of the bond. the current yield today to be less than 7 percent.

Answers

Answer:

to realize a capital loss if she sold the bond at today's market price.

Explanation:

Given that

NPER is 13

RATE is 7.5%

PMT is 7% of $1,000

Future value be $1,000

We need to find out the present value

So,

The current price of the bond is:

=PV(7.5%,13,7%*1000,1000)

=$959.37

Now if she wants to sell the bond now, so the value should be less than the face value due to which there should be the capital loss  

MC Qu. 120 Levelor Company's flexible budget shows... Levelor Company's flexible budget shows $10,640 of overhead at 75% of capacity, which was the operating level achieved during May. However, the company applied overhead to production during May at a rate of $2.20 per direct labor hour based on a budgeted operating level of 6,050 direct labor hours (90% of capacity). If overhead actually incurred was $11,106 during May, the controllable variance for the month was:

Answers

Answer: $466 Unfavorable

Explanation:

The Controllable variance is found by the formula:

= Flexible budget overhead - Actual Overhead incurred

= 10,640 - 11,106

= -$466

As this is a negative, it is an Unfavorable variance because it shows that actual overhead was higher than planned.

An entrepreneur purchased an existing bicycle shop that had between 13000

Answers

Answer:

Write the full question a so I can answer?

Sanford Co. sells $500,000 of 10% bonds on March 1, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. Give entries through December 31, 2021.

Required:
Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end.

Answers

Answer:

Sanford Co.

Bond Amortization Schedule  

Period     PV           PMT                Interest                FV

1          $468,951.03         $25,000.00         $28,137.06         $472,088.09

2        $472,088.09         $25,000.00        $28,325.29          $475,413.38

Year #1 end

3        $475,413.38         $25,000.00         $28,524.80          $478,938.18

4        $478,938.18         $25,000.00         $28,736.29         $482,674.47

Year #2 end

5      $482,674.47         $25,000.00         $28,960.47         $486,634.94

6     $486,634.94         $25,000.00          $29,198.10          $490,833.04

Year #3 end

7    $490,833.04          $25,000.00        $29,449.98         $495,283.02

8    $495,283.02         $25,000.00         $29,716.98         $500,000.00

Year #4 end

Explanation:

a) Data and Calculations:

Face value of bonds = $500,000

Proceeds from bonds = $468,951

Bonds Discounts = $31.049

Coupon interest rate = 10%

Effective interest rate = 12%

N (# of periods)  8

I/Y (Interest per year)  12

PMT (Periodic Payment)  25000

FV (Future Value)  500000

Results

PV = $-468,951.03

Sum of all periodic payments $200,000.00

Total Interest $231,048.97

Petrox Oil Co. is considering a project that will have fixed costs of $12,000,000. The product will be sold for $37.50 per unit and will incur a variable cost of $12.80 per unit.

Given Petrox's cost structure, it will have to sell __________ units to break even on this project (Q_BE).

Petrox Oil Co.'s marketing sales director doesn't think that the market for the firm's goods is big enough to sell enough units to make the company's target operating profit of $15,000,000. In fact, she believes that the firm will be able to sell only about 150,000 units. However, she also thinks the demand for Petrox Oil Co.'s product is relatively inelastic, so the firm can increase the sale price. Assuming that the firm can sell 150,000 units, what price must it set to meet the CFO's EBIT goal of $15,000,000?

a. $192.80
b. $221.72
c. $241.00
d. $202.44

Answers

Answer:

Fixed costs = $12,000,000

Selling price = $37.50

Variable cost = $12.80

hope this helps

At the given cost structure, Petrox have to sell 485,830 units to break-even on this project .The selling price to to be set to meet the profit of $15,000,000 is  $192.80. Thus, the correct answer is option A.

What is break-even ?

The break-even point occurs when total cost and total revenue are equal. Though opportunity costs have been paid and capital has received the risk-adjusted, expected return, there is no net loss or gain. In short, all necessary costs are met, and there is no profit or loss.

The break even units is calculated as,

Break-even units = Fixed Cost  / Contribution Margin

                             = Fixed Cost / Sale Price - Variable Cost

                              = $12,000,000/ $37.50-$12.80

                                = 485,830 units

The price that needed to be set is calculated as,

Target units=Fixed Costs+ Target EBIT/selling price-variable cost

Assume selling price is X

150,000= ($12,000,000+$15,000,000) / X-12.80

150,000=27,000,000 / X-12.80

150,000× (X-12.80)=27,000,000

X - 12.80=27,000,000 / 150,000

X-12.80 = 180

X = 180+12.80

X= $192.80

Therefore, the break-even units is 485,830 and the the price to be set is $192.80 to meet the CFO's EBIT goal of $15,000,000.

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Monetary stimulus is only helpful to an economy: __________

a. experiencing significant negative externalities.
b. that's in recession.
c. with few public goods.

Answers

That is in recession. B is the correct answer.

If an investor has a choice of investing money at 6% compounded daily or 6.025% compounded quarterly which one is best

Answers

General Rule: Daily compounding gives a higher yield

Compounding works like this:

6.025% per quarter

Quarter 1: $100 x 6.025% = $6.025

Quarter 2: $106.025 x 6.025% = $6.388

Quarter 3: $112.413 x 6.025% = $6.7729

Quarter 4: $119.186 x 6.025% = $7.4491

Etc…

6% per day

Day 1: $100 x 6% = $6

Day 2: $106 x 6% = $6.36

...

Day 365: $193.47 x 6% = $11.96

Over the last ten years productivity grew faster in Oceania than in Freedonia and the population and total hours worked remained the same in both countries. It follows that:

a. real GDP per person must be higher in Oceania than in Freedonia.
b. real GDP per person grew faster in Oceania than in Freedonia.
c. the standard of living must be higher in Oceania than in Freedonia.
d. All of the above are correct.

Answers

Answer:

it's d. All are correctamundo

Happy Trails, a bicycle rental company, is considering purchasing three additional bicycles. Each bicycle would cost them $249.66. At the end of the first year the increase to their revenues would be $140 per bicycle. At the end of the second year the increase to their revenues again would be $140 per bicycle. Thereafter, there are no increases to their revenues. At which of the following interest rates is the sum of the present values of the additional revenues closest to the price of a bicycle?
a. 5 percent.
b. 6 percent.
c. 7 percent.
d. 8 percent.

Answers

Answer:

D

Explanation:

We are to determine the IRR of the purchase

The internal rate of return is a capital budgeting method that is used to determine the profitability of a project.

Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested

Cash flow in Y0 = -249.66

Cash flow in Y1 = 140

Cash flow in  Y2 = 140

IRR = 8

To determine IRR 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 IRR button and then press the compute button

At December 31, Hawke Company reports the following results for its calendar year.

Cash sales $1,432,910
Credit sales $3,376,000

In addition, its unadjusted trial balance includes the following items.

Accounts receivable $1,022,928 debit
Allowance for doubtful accounts $11,560 debit

Required:
Prepare the adjusting entry for this company to recognize bad debts

Answers

The adjusting entries for acknowledging the bad debts would be:

a). Bad Debts Expense                  $50 640

Allowance for Doubtful Accounts                     $50 640

b). Bad Debts Expense                 $48089.1

Allowance for Doubtful Accounts                     $48089.1

Bad debts:

Bad debts are described as debts that are unable to be recovered from their respective debtors.

The key reasons for this could be:

The debtor is bankrupt and cannot pay the amount.The debtor flees away and thus, can't be compelled to pay.

The given amounts are obtained as follows:

a). Given that,

Bad debts is 1.5% of credit sales.

Credit Sales = $3,376,000

Bad debts = 1.5% of $3,376,000

∵ Bad debts = 1.5/100 * $3,376,000

= $50 640

b). Given that,

Bad debts = 1 % of total sales.

Total Sales = Credit sale + Cash sale

= $3,376,000 + $1,432,910

= $4808910

Bad debts = 1% of 4808910

∵ Bad debts = 1/100 * $4808910

= $48089.1

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9 Given figures showing: Sales £8,200, Opening inventory £1,300, Closing inventory £900, Purchases £6,400, Carriage inwards £200, the cost of goods sold figure is (A) £6,800 (B) £6,200 (C) £7,000 (D) Another figure

Answers

Explanation:

the correct answer is

B)£6,200

Your grandfather has offered you a choice of one of the three following alternatives: $11,500 now; $5,700 a year for five years; or $71,000 at the end of five years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

Required:
a. Assuming you could earn 9 percent annually, compute the present value of each alternative.
b. Which alternative should you choose?

Answers

Answer:

1. $11,500

2. $22,171.01

3. $46,145.13

option 3. This is because it has the highest present value

Explanation:

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

option 2

Cash flow each year from year 1 to 5 = $5,700

I = 9

PV = 22,171,01

OPTION 3

Cash flow in year 5 = 71,000

I = 9

PV = 46,145.13

To determine PV using a financial calculator take the following steps:

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  

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