Loco Pony Adventures rents clowns and ponies for children’s birthday parties. If the annual total cost of furnishing entertainment is given by TC = 0.5 Q 2 + 25 Q + 1,000, the average variable cost of catering to 30 birthday parties is:

Answers

Answer 1

Answer and Explanation:

The computation is shown below:

As we know that the variable cost is the cost that changed with the production

So the variable cost arise from TC should be

VC=0.5Q^2+25Q

= 0.5 × (30)^2+25 × 30

= 1200

And,  

AVC is

= VC ÷ Q

= 1200 ÷ 30

= 40


Related Questions

On the Tokyo Stock Exchange, Honda Motor Company stock closed at ¥2,915 per share on Monday, June 6, 2016. Honda trades as an ADR on the NYSE. One underlying Honda share equals one ADR. On June 6, 2016, the ¥/$ exchange rate was ¥107.65/$1.00. (Round your answer to 2 decimal places.) At this exchange rate, what is the no-arbitrage U.S. dollar price of one ADR?

Answers

Answer:

$27.08

Explanation:

Calculation to determine the no-arbitrage U.S. dollar price of one ADR

Using this formula

No-arbitrage U.S. dollar price of one ADR=Stock closed per share /Exchange rate

Let plug in the formula

No-arbitrage U.S. dollar price of one ADR=¥2,915 / ¥107.65

No-arbitrage U.S. dollar price of one ADR=$27.078

No-arbitrage U.S. dollar price of one ADR=$27.08 (Approximately)

Therefore the no-arbitrage U.S. dollar price of one ADR is $27.08

The cost of capital is:___________

a. the return that a previous project for the firm had earned.
b. the minimum return that a capital budgeting project must earn for it to be accepted.
c. the maximum return a project can earn.
d. none of these.

Answers

Answer:

I think that the correct answer is b.

Answer:

B

Explanation:

i think the correct answer is B

Ray acquired an activity several years ago, and in the current year, it generates a loss of $50,000. Ray has AGI of $140,000 before considering the loss from the activity.
If the activity is a bakery and Ray is not a material participant, what is his AGI?

Answers

Answer:

adjusted gross income should be $140,000

Explanation:

The computation of the adjusted gross income is given below:

Given that

There is the loss of $50,000

And, the adjusted gross income prior considering the loss should be $140,000

So here $50,000 loss should be suspended under the rule of the passive loss as ray should not be the material participant

Therefore adjusted gross income should be $140,000

A project manager is looking over the actual results of projects and comparing them to what was estimated. She notices that the projects that took six months or longer to complete were noticeably more off the estimates. Which of the following factors is she recognizing?

a. Padding estimates
b. Planning horizon
c. Project structure
d. People
e. Organization culture

Answers

The factor that she recognized is the project structure.

The information related to the project structure is as follows:

It is an organizational framework in which the employees could functions on the project on a continuity basis. The team should perform all types of works here.Here the efforts should be considered with regard to the development that could be completed.

So the following factors should not be recognized:

Padding estimates.Planning horizon.People.Culture of an organization.

Therefore we can conclude that the factor that she recognized is the project structure.

Hence, the correct option is c.

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From a macroeconomic point of view, increases in ____________ are an addition to aggregate demand, while increases in ___________ are a subtraction from aggregate demand. rates of return; exchange rates exchange rates; rates of return exports; imports imports; exports

Answers

Answer:

exports; imports.

Explanation:

Macroeconomics can be defined as the study of behaviors, performance and factors that affect the entire economy. Hence, it focuses on aggregate phenomena such as price level, economic growth, Gross Domestic Product (GDP), inflation, unemployment and national income levels with respect to the central bank, demand or supply shocks, government policies, aggregate spending and savings.

Simply stated, macroeconomics studies the overall operation of the national and global economy.

Trade can be defined as a process which typically involves the buying and selling of goods and services between a producer and the customers (consumers) at a specific period of time.

Basically, trade can be categorized into two (2) main groups and these are;

I. Import: this involves bringing in goods from a foreign country to sell in a different (domestic) country.

II. Export: it involves the sales of goods produced in a domestic country to a foreign country.

From a macroeconomic point of view, increases in exports are an addition to aggregate demand, while increases in imports are a subtraction from aggregate demand.

Aggregate demand (AD) can be defined as the total quantity of output (final goods and services) that is demanded by consumers at all possible price levels in an economy at a particular time.

Stephani Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of May. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $53,000 and the total of the credits to the account was $69,000. Which of the following statements is true?

a. Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $75,000.
b. Actual manufacturing overhead incurred during the month was $56,000.
c. Manufacturing overhead applied to Work in Process for the month was $75,000.
d. Manufacturing overhead for the month was underapplied by $19,000.

Answers

Answer:

the manufacturing overhead for the month should be overapplied by $16,000

Explanation:

Given that

The debit to the manufacturing overhead is $53,000

And, the credit balance is $69,000

So, it should be overapplied by the

= $53,000 - $69,000

= $16,000

Therefore the manufacturing overhead for the month should be overapplied by $16,000

This is the answer but the same is not provided in the given options

You are docking your boat. The current is pushing you toward the dock . What is the best way to dock

Answers

The best and the most secure way to dock a boat in a dockyard is by :

moving the boat parallelly along the dock, and approaching towards the dock slowly.

A dockyard is a place where ships and boats are sheltered and it provides a secure place to dock or station your boat and a secure place to access the boat.

Now when the current is pushing your boat towards the dock, the best way to dock your boat is :

Allow the current of the water to carry the boat towards the dock.We have approach slowly and parallelly towards the dock.We can also shift the gears whenever we need to adjust the position of the boat.We have to secure the bow lines as well as the stern lines.

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Find the price a purchaser should be willing to pay for the given bond. Assume that the coupon interest is paid twice a year. $30,000 bond with coupon rate 4.4% that matures in 7 years; current interest rate is 6.8%.

Answers

Answer:

Bond Price​= $26,042.12

Explanation:

Giving the following information:

Coupon= (0.044/2)*30,000= $660

YTM= 0.068/2= 0.034

Time to maturity= 7*2= 14 semesters

Face value= $30,000

To calculate the price of the bond, we need to use the following formula:

Bond Price​= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]

Bond Price​= 660*{[1 - (1.034^-14)] / 0.034} + [30,000 /(1.034^14)]

Bond Price​= 7,256.14 + 18,785.98

Bond Price​= $26,042.12

Bramble Corp. has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. Expected sales for Bramble are 60000 Standard and 40000 Supreme. Fixed expenses are $2400000. How many Standards would Bramble sell at the break-even point

Answers

Answer:

160,000 units

Explanation:

Step 1 : Determine the Sales Mix

Bramble : Standard

60000 : 40000

3 : 2

Step 2 : Determine the Overall Break even Point

Break even Point = Fixed Cost ÷ Contribution per unit

                             = $2400000 ÷ $30

                             = 80,000

Step 3 : Determine break-even point for Standards

Standards Break even point = 80,000 x 2

                                               = 160,000 units

Thus,

Bramble Corp would sell 160,000 units of Standards at the break-even point

Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales:

Quarter 1 $4,600,000
Quarter 2 5,100,000
Quarter 3 5,000,000
Quarter 4 7,600,000

In Shalimar's experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are $4,900,000 and for the fourth quarter of the current year are $6,850,000.

Required:
Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year.

Answers

Answer:

Shalimar Company

Cash Sales and Credit Sales:

a) Last two quarters of the current year:

Current Year       Quarter 3       Quarter 4

Budgeted Sales $4,900,000   $6,850,000

Cash (10%)              490,000        685,000

Credit (90%)        4,410,000      6,165,000

b) Each quarter of the next year:

                       Quarter 1    Quarter 2     Quarter 3     Quarter 4

Budgeted

Sales           $4,600,000 $5,100,000  $5,000,000  $7,600,000

Cash (10%)       460,000      510,000       500,000        760,000

Credit

Sales (90%)  4,140,000  4,590,000    4,500,000    6,840,000

Explanation:

a) Data and Calculations:

                       Quarter 1    Quarter 2     Quarter 3     Quarter 4

Budgeted

Sales           $4,600,000 $5,100,000  $5,000,000  $7,600,000

Cash (10%)        460,000      510,000        500,000       760,000

Credit

Sales (90%)   4,140,000  4,590,000     4,500,000    6,840,000

Current Year       Quarter 3       Quarter 4

Budgeted Sales $4,900,000   $6,850,000

Cash (10%)              490,000         685,000

Credit (90%)         4,410,000       6,165,000

A 2-year Treasury security currently earns 1.94 percent. Over the next two years, the real risk-free rate is expected to be 1.00 percent per year and the inflation premium is expected to be 0.55 percent per year. Calculate the maturity risk premium on the 2-year Treasury security.

Answers

Answer:

cacagada

Explanation:

A financial analyst learns that the Bank of England has just issued a new bond that promises to pay £1,000 in one year’s time when it matures. If the market interest is 5% per year,
(a) Calculate the no-arbitrage price of the bond.
(b) If the bond is trading for £952.20 at the moment, what trading strategy should
the financial analyst follow?
(c) What do you think will happen to the bond’s price?

Please explain any formulas or theories used, thanks a lot!

Answers

Answer:

the price will go lower and I know how much it would be

Blossom Company accumulates the following data concerning a mixed cost, using miles as the activity level.

Miles Driven Total Cost Miles Driven Total Cost
January 6,400 $11,320 March 6,800 $12,000
February 6,000 10,800 April 6,560 11,592

Required:

Compute the variable cost per mile using the high-low method.

Answers

Answer:

just add and subtract the last three numbers and theres your answer love <3

Explanation:

Tangerine, Inc. provides the following data: Surround, Inc. Comparative Balance Sheet Dec. 31, 20X9 Assets Current Assets: Cash and Cash Equivalents $29,000 Account Receivable, Net 31,000 Merchandise Inventory 53,000 Total Current Assets $113,000 Property, Plant, and Equipment, Net 120,000 Total Assets $233,000 Liabilities Current Liabilities: Accounts Payable $4000 Notes Payable 3000 Total Current Liabilities $7000 Long-term Liabilities 84,000 Total Liabilities $91,000 Stockholders' Equity Common Stock $30,000 Retained Earnings 112,000 Total Stockholders' Equity $142,000 Total Liabilities and Stockholders' Equity $233,000 Calculate the debt to equity ratio.

Answers

Answer:

The debt to equity ratio is 0.64.

Explanation:

The debt to equity ratio can be calculated using the following formula:

Debt to equity ratio = Total Liabilities / Stockholders' Equity ……………………. (1)

Where:

Total Liabilities = $91,000

Stockholders' Equity = $142,000

Substitute the relevant data into equation (1), we have:

Debt to equity ratio = $91,000 / $142,000 = 0.64

Therefore, the debt to equity ratio is 0.64.


Kindly help me here

Answers

Answer:

pic quality is too low so I didn't understand

please take another picture its hard to read this

Waterway Industries was organized on January 1, 2021. During its first year, the corporation issued 2,400 shares of $50 par value preferred stock and 150,000 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2021, $5,800; 2022, $13,100; and 2023, $28,800.

Required:
Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 5% and noncumulative.

Answers

Answer:

Preferred dividend is noncumulative which means that it will not accrue if company was unable to pay in any period.

Dividends in 2021

Preferred dividends:

= Number of preferred shares * par value * dividend percentage

= 2,400 * 50 * 5%

= $6,000

Dividends of $5,800 were declared which is not enough to cover even preferred shares so preferred shares will take all the dividends.

Preferred share dividends = $5,800

Common share dividends = $0

Dividends in 2022:

Preferred dividends = $6,000

Common dividends:

= Declared dividends - Preferred dividends

= 13,100 - 6,000

= $7,100

Dividends in 2023:

Preferred dividends = $6,000

Common dividends:

= Declared dividends - Preferred dividends

= 28,800 - 6,000

= $22,800

1-What will be the effect of the following on the accounting equation: a-Amer started business with cash 1,80,000$ b-Purchased goods for cash 50,000$ and on credit 20,000$ c-Sold goods for cash 40,000$ costing 24,000$ d-Rent paid 10,000$, rent outstanding 2000$The answer will be : a-Assets 2,06,000 , liabilities 22,000 , capital 184,000 b-assets 204,000 , Liabilities 20,000 , capital 184,000 c-assets 186,000 , Liabilities 22,000 , capital 164,000​

Answers

Answer:

Purchased goods for cash, 20,000. 4. Purchased goods on credit, 36,000. 5. Paid for rent, 700. 6. Goods costing ₹ 40,000 sold at a profit of 20% for cash ...

If a consumer is always indifferent between an additional one grapefruit or an additional two oranges, then when oranges are on the horizontal axis the indifference curves: Group of answer choices will be straight lines with a slope of 1/2. will be straight lines with a slope of -1. will be right angles whose corners occur on a ray from the origin with a slope of 2. none of these options is correct. will be straight lines with a slope of -1/2.

Answers

Answer: will be straight lines with a slope of -1/2.

Explanation:

An indifference curve simply means the combination of two goods that can give a consumer equal satisfaction, and this makes the consumer indifferent.

It should be noted that along the curve, the consumer will have an equal preference which is for the combinations of the goods that are shown.

If a consumer is always indifferent between an additional one grapefruit or an additional two oranges, then when oranges are on the horizontal axis, then the indifference curves will be straight lines with a slope of -1/2. Here, the fact that the slope is negative

is due to the fact that the curve is downward sloping.

Risk means different things to different people, depending on the context and on how they feel about taking chances.

a. True
b. False

Answers

Answer:

you are true that the risk means different things to different people, depending on the context and on that they feel very happy about taking chances to do anything

Judd, Inc., owns 35% of Cosby Corporation. During the calendar year 2010, Cosby had net earnings of $300,000 and paid dividends of $30,000. Judd mistakenly recorded these transactions using the fair value method rather than the equity method of accounting. What effect would this have on the investment account, net income, and retained earnings, respectively?
a. Understate, overstate, overstate
b. Overstate, understate, understate
c. Overstate, overstate, overstate
d. Understate, understate, understate

Answers

Answer: d. Understate, understate, understate

Explanation:

If using fair value, the effects of net earnings and dividends would not be accounted for. With the equity method however, this would have done leading to the investment account, net income, and retained earnings being understated if using fair value as opposed to equity.

The Equity method would have sent 35% of the net earnings to the investment account which would have increased it. 35% of the Cosby dividends would have been sent to the net income which would have increased it as well and when net income increases, so does retained earnings.

Radison Enterprises sells a product for $114 per unit. The variable cost is $63 per unit, while fixed costs are $741,285. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $120 per unit. a. Break-even point in sales units fill in the blank 1 units b. Break-even point if the selling price were increased to $120 per unit

Answers

Answer:

Results are below.

Explanation:

Giving the following information:

Selling price= $114

Unitary variable cost= $63

Fixed costs= $741,285

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 741,285 / (114 - 63)

Break-even point in units= 14,535

Now, the break-even point if the selling price is $120:

Break-even point in units= 741,285 / (120 - 63)

Break-even point in units= 13,005

Can someone look at my resume for my career class please and thank you!
I also have the rubric and directions y’all can look at too.

Answers

It looks grate to the point and shows you have leader ship and the Spirit to talk to people and be friendly

Assume that the expected return for A is 10% and the expected return for B is 5.5%. Calculate the expected return on a portfolio consisting of 60% A and 40% B. Give your answer in decimal form to 3 decimals places. For example, 8.6% is 0.086.

Answers

Pero she b? Good after noon

Electronic communication:_____.
a. prevents gossip, insults, threats, harassment, and the release of confidential information.
b. enables participants to pick up on subtle, nonverbal, or inflectional clues.
c. always leads to more satisfying negotiations.
d. requires lessening participation in communication to fewer people.
e. can reduce time and expenses devoted to traveling.

Answers

Electronic communication can reduce the time and expenses devoted to traveling. option (E) is correct.

What is communication?

The transfer of information is the standard definition of communication. The phrase may also be used to describe the message sent through such transmissions or the area of research that focuses on them. There are several differences of opinion regarding its exact definition.

Any form of communication that is broadcast, transmitted, stored, or viewed using electronic media, such as computers, phones, email, and video, is referred to as electronic communication. But each has a particular purpose and is more appropriate in certain circumstances. A few types of electronic communication include email, instant messaging, websites, blogs, text messages, voicemail, and video messaging.

Therefore, option (E) is correct.

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The following data relate to the direct materials cost for the production of 2,200 automobile tires:

Actual: 55,500 lbs. at $1.7 per lb.
Standard: 56,600 lbs. at $1.65 per lb.

Required:
Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance.

Answers

Answer and Explanation:

The computation is given below:

Direct Material price variance is

= ($1.70 per lb - $1.65 per lb) × 55,500 lbs.

= $2,775 Unfavorable

Direct Material quantity variance is

= (55,500 lbs. - 56,600 lbs.) × $1.65 per lb

= $-1,815 Favorable

Total Direct Materials Cost Varianceis

= Actual Materials Cost  - Standard Materials Cost  

= (55,500 lbs. × $1.70 per lb) - (56,600 lbs. × $1.65 per lb)

= $94,350 - $93,390

= $960 Unfavorable

"Idaho​ Mining, Inc. borrows at prime plus​ 1.5% on its line of credit. The line requires a​ 15% compensating balance. If the prime rate is​ 9% and Idaho Mining plans on borrowing for a period of one​ year, what is the nominal APR of the line of​ credit?"

Answers

Answer:

the  nominal annual percentage rate for the line of credit is 12.4%

Explanation:

The computation of the nominal annual percentage rate is given below:

Nominal Annual percentage rate is

= (Prime rate + line of credit)  ÷  (1 - compensation balance percentage)

= (9% + 1.50%) ÷ (1 - 15%)

= 10.50% ÷ 85%

= 12.4%

Hence, the  nominal annual percentage rate for the line of credit is 12.4%

The same should be considered

Dance Creations manufactures authentic Hawaiian hula skirts that are purchased for traditional Hawaiian celebrations, costume parties, and other functions. During its first year of business, the company incurred the following costs: Variable Cost per Hula Skirt Direct materials $ 9.60 Direct labor 3.40 Variable manufacturing overhead 1.05 Variable selling and administrative expenses 0.40 Fixed Cost per Month Fixed manufacturing overhead $ 16,125 Fixed selling and administrative expenses 4,950 Dance Creations charges $30 for each skirt that it sells. During the first month of operation, it made 1,500 skirts and sold 1,375. Required: 1. Assuming Dance Creations uses variable costing, calculate the variable manufacturing cost per unit for last month. 2. Complete a variable costing income statement for the last month. 3. Assuming Dance Creations uses full absorption costing, calculate the full manufacturing cost per unit for the last month. 4. Complete a full absorption costing income statement. 6. Suppose next month Dance Creations expects to produce 1,500 hula skirts and sell 1,600. Without recreating the new income statements, calculate the difference in profit between variable costing and full absorption costing. Which would be higher

Answers

Answer:

1. $14.05 per unit

2. Contribution Margin $21,381

Net Operating Income $306

3.$24.08 per unit

4.Gross Margin $7,150

Net Operating Income $4,620

6. $1,075

Variable costing would be higher

Explanation:

1. Calculation to determine the variable manufacturing cost per unit for last month

Using this formula

Variable manufacturing cost per unit = Direct material + Direct labor + variable manufacturing overhead

Let plug in the formula

Variable manufacturing cost per unit= $9.60+3.40+1.05

Variable manufacturing cost per unit=$14.05 per unit

Therefore Variable manufacturing cost per unit is $14.05 per unit

2. Calculation to Complete a variable costing income statement for the last month

Variable costing income statement

Sales Revenue $41,250

($30*1,375)

Less: Variable cost per unit $19,869

1,375*($9.60+3.40+1.05 +$0.4)

Contribution Margin $21,381

($41,250-$19,869)

Less: Fixed costs $21,075

($ 16,125+$4,950)

Net Operating Income $306

($21,381-$21,075)

Therefore the complete variable costing income statement for the last month will have Contribution Margn of $21,381 and Net Operating Income of $306

3. Calculation to determine the full manufacturing cost per unit for the last month

Using this formula

Full manufacturing cost per unit = Direct material + Direct labor + variable manufacturing overhead + Fixed manufacturing overhead per unit

Let plug in the formula

Full manufacturing cost per unit= $9.60+3.40+1.05+ $ 16,125/1,500

Full manufacturing cost per unit=$14.05+ $10.75

Full manufacturing cost per unit=$24.08 per unit

Therefore the full manufacturing cost per unit for the last month is $24.08 per unit

4. Calculation to Complete a full absorption costing income statement

Absorption costing Income Statement

Sales Revenue $41,250

($30*1,375)

Less: Cost of Goods sold $34,100

($24.08*1,375)

Gross Margin $7,150

($41,250-$34,100)

Less: Selling expenses $2,530

($0.4*1,375+4,950)

Net Operating Income $4,620

($7,150-$2,530)

Therefore the Complete a full absorption costing income statement will have Gross Margin of $7,150 and Net Operating Income of $4,620

6. Calculation to determine the difference in profit between variable costing and full absorption costing.

Difference=(1,600-1,500)*($16,125/1,500)

Difference= 100*($16,125/1,500)

Difference=100*$10.75

Difference= $1,075

Therefore Variable costing would be higher $1,075

Trent Inc. needs an additional worker on a multiyear project. It could hire an employee for a $88,000 annual salary. Alternatively, it could engage an independent contractor for a $95,000 annual fee. Trent's income tax rate is 21 percent. Required: Compute the annual after-tax cost of each option and indicate which minimizes the after-tax cost of obtaining the worker

Answers

Answer: The cheaper cost is to hire an additional worker.

Explanation:

Employee:

With an employee, Trent is going to have to pay payroll taxes.

After-tax cost of hiring employee:

= Salary * (1 + Payroll tax)

= 88,000 * ( 1 + 7.5%)

= $94,600

The subtract the income tax from this amount:

= 94,600 * ( 1 - 21%)

= $74,734

Contractor:

With a contractor, only the marginal income tax is accounted for:

= 95,000 * (1 - 21%)

= $75,050

The cheaper cost is to hire an additional worker.

Enviro Company issues 10.50%, 10-year bonds with a par value of $430,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 7.50%, which implies a selling price of 127.875. The straight-line method is used to allocate interest expense. 1. Using the implied selling price of 127.875. what are the issuer’s cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What is the amount of bond interest expense recorded on the first interest payment date?

Answers

Answer:

1.

549,862.5

2.

$331,637.5

3.

$16,581.87

Explanation:

1.

Cash proceeds = Par Value of the bond x Price ratio to par value

Cash proceeds = $430,000 x 127.875%

Cash proceeds = $549,862.5

2.

Bond Interest expense = Total Coupon payment - Premium on bond

Bond Interest expense = ( $430,000 x 10.50% x 10 ) - ( $549,862.5 - $430,000 )

Bond Interest expense = $451,500 - $119,862.5

Bond Interest expense = $331,637.5

3.

Bond Interest expense = Coupon Payment - Premium on Bond amortization

Bond Interest expense = ( $430,000 x 10.5% x 6/12 ) - ( ( $549,862.5 - $430,000 ) / ( 10 x 2 ) )

Bond Interest expense = $22,575 - $5,993.13

Bond Interest expense = $16,581.87

Exercise 19-17 (Algo) EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options [LO19-5, 19-6, 19-7, 19-8] On December 31, 2020, Berclair Inc. had 380 million shares of common stock and 4 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purchased 96 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2021. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2021, was $600 million. Also outstanding at December 31 were 30 million incentive stock options granted to key executives on September 13, 2013. The options were exercisable as of September 13, 2020, for 30 million common shares at an exercise price of $56 per share. During 2021, the market price of the common shares averaged $70 per share. Required: Compute Berclair's basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Do not round intermediate calculations.)

Answers

Answer:

Berclair Inc.

Basic earnings per share = $1.87

Diluted earnings per share = $1.70

Explanation:

a) Data and Calculations:

                                             Common Stock     Cumulative Preferred Stock

Dec. 31, 2012 Outstanding     380,000,000           4,000,000 shares

Dividend rate                                                                              9%

Stock par value                                                                         $100

Total value of stock                                                                $400 million

Annual preferred dividend                                   $36 million ($400 m * 9%)

March 1, 2021 Treasury stock (96,000,000)

July 1, 2021 Stock dividend       14,200,000 (284,000,000 * 5%)

October 1, 2021 Treasury stock 4,000,000

Outstanding shares               302,200,000         4,000,000 shares

Stock options                           30,000,000

Total shares and options      332,200,000

Net income for the year = $600,000,000

Preferred stock dividend       36,000,000

Earnings for available for

common stockholders     $564,000,000

Basic earnings per share = $1.87 ($564,000,000/302,200,000)

Diluted earnings per share = $1.70 ($564,000,000/332,200,000)

Other Questions
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