Answer:
$35,84 per machine hour
Explanation:
Plantwide overhead rate = Budgeted overheads ÷ Budgeted Activity
where,
Budgeted overheads = $3,600,000 + $880,000 = $4,480,000
Budgeted Activity = 125,000 machine hours
therefore,
Plantwide overhead rate = $4,480,000 ÷ 125,000
= $35,84 per machine hour
The yield on a three-month T-bill is 3.29%, and the yield on a 10-year T-bond is 4.67%. the market risk premium is 6.17%. The Allen Company has a beta of 0.92. Using the Capital Asset Pricing Model (CAPM) approach, Allen’s cost of equity is
Answer:
10.35 %
Explanation:
Using the Capital Asset Pricing Model (CAPM) approach, Allen’s cost of equity is
Cost of Equity = 4.67% + 0.92 x 6.17%
= 10.35 %
There is a proverb "anything worth doing is worth doing well." Do you think an economist would agree with this proverb? A. No, because doing something well has no next best alternatives with which to compare. B. Yes, because the marginal of extra effort is typically as effort increases. C. Yes, because doing something to the best of your ability is optimizing behavior. D. No, because the marginal cost of extra effort may be greater than the marginal benefit. E. , because the total net benefit of extra effort is by definition.
Answer:
D. No, because the marginal cost of extra effort may be greater than the marginal benefit.
Explanation:
Marginal cost can be defined as the additional or extra cost that is being incurred by a company as a result of the production of an additional unit of a product or service.
Generally, marginal cost can be calculated by dividing the change in production costs by the change in level of output or quantity.
Utility can be defined as any satisfaction or benefits a customer derives from the use of a product or service.
This ultimately implies that, any satisfaction or benefits a customer derives from the use of a product or service is generally referred to as a utility.
Furthermore, the marginal utility of goods and services is the additional satisfaction that a consumer derives from consuming or buying an additional unit of a good or service.
Hence, an economist wouldn't agree with the proverb (anything worth doing is worth doing well.) because the marginal cost of extra effort may be greater than the marginal benefit.
This ultimately implies that, the satisfaction that an individual such as an entrepreneur would derive from putting in more efforts into a business would be lesser than the cost incurred. As a result, he would not benefit anything or generate profit from his efforts.
Two alternate plans are available for increasing the capacity of existing water transmission lines between an unlimited source and a reservoir. The unlimited source is at a higher elevation then the reservoir. Plan A calls for the construction of a parallel pipeline and flow by gravity. Plan B specifies construction of a booster pumping station. Estimated cost for the two plans are as follows: Hint: Use Present Worth- (do not guess show all your work) i=10%
Plan A : Cost $700,000, Life 40 Years, Annual Operation and Repair $1,000/Year
Plan B: Cost $200,000, Life 40 Years Structure and 20 years equipment, Equipment replacement at the end of 20 years $75,000, Annual Operation and Repairs 52,000/year
a. Plan A $709,779.00
b. Plan A $740,000
c. Plan B $710,165.50
d. Plan B $326,000
Answer:
plan a
Explanation:
present worth of plan A= 700000+1000(p/a,10%,40)
= 700000+1000*9.779
= 700000+9779
= 709779 dollars
present worth of plan b = 200000+75000(p/f,10%,20)+52000/year(p/a,10%,40)
= 200000+75000*0.1486+52000*9.779
= 719653 dollars.
we compare the pw of both a and b, from the solutions above, the present worth of plan a is smaller than that of plan b, so the best option is plan a, $709,779.00
Rita is a successful entrepreneur who owns a small coffee shop and serves her customers regular homemade coffee. She recently experimented with a new flavor and distributed free samples to her regular customers. She then sought their feedback on the new flavor. This is an example of ________.
a. brand positioning.
b. test marketing.
c. brand retailing.
d. commercialization.
Answer:
b. test marketing.
Explanation:
Test marketing is a marketing method that focused for exploring the response of the consumer with respect to the product by making it available on the limited basis prior to release in a bulk. Also the consumer may be or not be aware that is the part of the test group
Since in the given situation, rita experimented the new flavor and distributed it as a free sample
So, it is a test marketing situation
On the basis of the following information taken from the Adjusted Trial Balance columns of the end-of-period spreadsheet for the month ended September 30, journalize the closing entries for Perez Roofing Company.
Perez Roofing Company
Adjusted Trial Balance
September 30
Account Title Debit Credit
Cash 22,500
Accounts Receivable 3,575
Office Supplies 2,850
Repair Parts 3,785
Machinery 17,750
Accumulated Depreciation 3,250
Accounts Payable 1,150
Notes Payable 6,500
Common Stock 1,500
Retained Earnings 1,000
Dividends 1,750
Service Revenue 47,200
Wages Expense 4,840
Office Supplies Expense 1,275
Repair Parts Expense 925
Depreciation Expense 1,350
60,600 60,600
Answer:
Perez Roofing Company
Closing Journal Entries:
September 30:
Debit Service Revenue $47,200
Credit Income Summary $47,200
To close service revenue to income summary.
Debit Income Summary $8,390
Credit:
Wages Expense $4,840
Office Supplies Expense $1,275
Repair Parts Expense $925
Depreciation Expense $1,350
To close expenses to income summary.
Debit Income summary $38,810
Credit Retained Earnings $38,810
To close income summary to Retained Earnings.
Debit Retained Earnings $1,750
Credit Dividends $1,750
To close dividends to Retained Earnings.
Explanation:
a) Data and Calculations:
Perez Roofing Company
Adjusted Trial Balance
September 30
Account Title Debit Credit
Cash 22,500
Accounts Receivable 3,575
Office Supplies 2,850
Repair Parts 3,785
Machinery 17,750
Accumulated Depreciation 3,250
Accounts Payable 1,150
Notes Payable 6,500
Common Stock 1,500
Retained Earnings 1,000
Dividends 1,750
Service Revenue 47,200
Wages Expense 4,840
Office Supplies Expense 1,275
Repair Parts Expense 925
Depreciation Expense 1,350
60,600 60,600
Closing Entries:
Service Revenue $47,200
Wages Expense $4,840
Office Supplies Expense $1,275
Repair Parts Expense $925
Depreciation Expense $1,350
Dividends $1,750
Green Thumb Nursery has 32,000 shares outstanding at a market price of $62.15 per share. The earnings per share are $3.15. The firm has total assets of $315,000 and total liabilities of $186,000. Today, the firm announced a share repurchase for $75,000 of its stock. What is the earnings per share after the repurchase?
Answer:
$3.27
Explanation:
Earnings = Earnings per share * Number of stock outstanding
Earnings = $3.15 * 32,000 shares
Earnings = $100,800
Number of shares repurchased = $75,000 / $62.15
Number of shares repurchased = 1206.75784393
Number of shares repurchased = 1,207
Number of stock outstanding = 32,000 - 1,207
Number of stock outstanding = 30,793
Earnings per share after the stock repurchase = Earnings / Number of stock outstanding
Earnings per share after the stock repurchase = $100,800 / 30,793
Earnings per share after the stock repurchase = $3.2734712435
Earnings per share after the stock repurchase = $3.27
Freddy offers to supply water bottles to Jerry’s Gym at a cost of $40a case. The signed contract says that Jerry’s Gym will buy one case of water a month for 12 months. Three months into the contract, Freddy calls Jerry And tells Jerry that the price has gone up to $70a month because Freddy’s product is in such high demand. Jerry refuses to pay. Jerry finds a new supplier, Wally, who will provide one case of water for 9 months at a cost of $50a case. Jerry sues Freddy for breach of contract. What type of damages is Jerry’s Gym entitled to and how much money does Freddy have to pay Jerry’s Gym
Answer:
-jerry is entitled to monetary damages compensations due to a contract breach.
-Freddy has to pay Jerry $90
Explanation:
the damage that the gym is entitled to would be that of a contract breach. Freddy wanted to earn more money so he breached the contract. Now given that Jerry had to go with another supplier of water at a greater cost of 50 dollars for 9 months, just to satisfy his requirements. Freddy has to pay him monetary damages for this breach in contract. he has to pay the difference that exists between the price in the contract they had and what jerry now has to pay due to the breach. The difference is 10 dollars, which is to be paid every month for 9 months
= (50 - 40)*9
= 10 * 9 = $90
Price Corp. is considering selling to a group of new customers and creating new annual sales of $90,000. Five percent will be uncollectible. The collection cost on all accounts is 3% of new sales, the cost of producing and selling is 80% of sales, and the firm is in the 30% tax bracket. What is the profit on new sales
Answer: $7,560
Explanation:
Before tax Profit = Net sales - Cost of production
Net sales = Sales collected - Cost of collection
= (90,000 * (1 - 5%)) - (90,000 * 3%)
= $82,800
Cost of production = 80% * 90,000
= $72,000
Before tax profit = 82,800 - 72,000
= $10,800
After tax profit = 10,800 * ( 1 - 30%)
= $7,560
Two years ago, Global Airlines sold a $250 million bond issue to finance the purchase of new jet airliners. These bonds were issued in at par value with an original maturity of 12 years and a coupon rate of 12%. Determine the value today of one of these bonds to an investor who requires a 14% rate of return on these securities. Is it a discount or premium bond and why
Answer:
$897
Explanation:
Calculation to determine the value today
Using Financial calculator to determine the Present value (PV)
N = (12- 2) = 10 years
I = 14%
PMT =12%*1,000=120
FV = $1000
PV=?
Hence;
PV = $896.68
PV=$897 (Approximately)
Therefore the value today is $897
A jogger found a stray dog in the park. She took the dog home with her and placed an ad in the paper to try to find the dog's owner. Soon thereafter, the owner of the dog contacted the jogger. He came to the jogger's home and identified the dog as his. He offered to pay the jogger a $200 reward at the end of the week. The jogger thanked the dog owner but turned down the reward. At the end of the week, however, the jogger changed her mind, so she called the dog owner and told him that she would like the reward after all. He refused to pay her, and she sues him for breach of contract. What will the jogger recover?
Answer:
The jogger will recover nothing.
Explanation:
The jogger in the context will gain nothing as her [tex]\text{finding the lost dog occurred prior to the owner's promise}[/tex] for the payment of an amount $200.
The enforceable contract is supported by consideration. It consists of bargained for the exchange between the parties. If somethings has already [tex]\text{been given or performed before the promise is made}[/tex], then it will not satisfy the bargain requirement as it will not give in exchange for the promise.
In this case, in the exchange it is not given for the promise, so the jogger was not under any legal obligation for returning the lost dog to its rightful owner.
Thus, the jogger incurred a detriment. The jogger was not been inducted to as to act by the owner of the dog to pay the promised amount of $200.
Pencils sell for 10 cents and pens sell for 50 cents. Suppose Jae, whose preferences satisfy all of the basic assumptions, is currently spending all his income on both goods. The marginal rate of substitution for pens to pencils is 5. In order to achieve optimum, what should he do
Answer:
Jae should do nothing and continue purchasing the same amount of pens and pencils.
Explanation:
The current rate of substitution that maximizes Jae's utility is Px / Py = 0.50 / 0.10 = 5. That means that Jae will purchase 5 pencils for every pen that he buys, and that is exactly what he is doing right now.
Specter Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 810 2 1,110 3 1,370 4 1,500 a. If the discount rate is 11 percent, what is the present value of these cash flows
Answer:
3620.46
Explanation:
Use basic principles to find the present value of a cash flow
PV(1+i)ⁿ=CF
CF*(1+i)⁻ⁿ=PV
so we would have
[tex]810(1+.11)^{-1}+1110*1.11^{-2}+1370*1.11^{-3}+1500*1.11^{-4}=[/tex]3620.459284
which rounds to 3620.46
What would be the return on total assets of a firm if net income is $50,000, total sales are $100,000, and total assets are $175,000
Answer: 28.6%
Explanation:
The return on the total asset of a firm will be calculated as the net income divided by the total asset and this will be:
=Net income / Total assets
=50,000/175,000
=28.6%
Therefore, return on total asset is 28.6%
Perit Industries has $135,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B Cost of equipment required $ 135,000 $ 0 Working capital investment required $ 0 $ 135,000 Annual cash inflows $ 25,000 $ 63,000 Salvage value of equipment in six years $ 9,800 $ 0 Life of the project 6 years 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 17%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.
Answer:
1. Net present value of Project A = -41,449.96
2. Net present value of Project B = $143,746.85
3. I would recommend that company accept Project B.
Explanation:
Note: This question is not complete as the requirement are omitted. The requirements are therefore provided to complete the question before answering it as follows:
Perit Industries has $135,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:
Project A Project B
Cost of equipment required $ 135,000 $ 0
Working capital investment required $ 0 $ 135,000
Annual cash inflows $ 25,000 $ 63,000
Salvage value of equipment in six years $ 9,800 $ 0
Life of the project 6 years 6 years
The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 17%.
Required:
1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)
2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)
3. Which investment alternative (if either) would you recommend that the company accept?
The explanation of the answers is now provided as follows:
1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)
Cost of equipment required = $135,000
Using the formula for calculating the present value of an ordinary annuity, the present value (PV) of the annual cash inflows can be calculated as follows:
PV of annual cash inflow = Annual cash inflow * (1 - (1 / (1 + discount rate))^Project life) / discount rate) = $25,000 * ((1 - (1 / (1 + 0.17))^6) / 0.17) = $89,729.62
The present value (PV) of the salvage value can be calculated as follows:
PV of salvage value = Salvage value / (1 + + discount rate)^Project life = $9,800 / (1 + 0.17)^6 = $3,820.42
Net present value of Project A = PV of annual cash inflow + PV of salvage value - Cost of equipment required = $89,729.62 + $3,820.42 - $135,000 = -41,449.96
2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)
Working capital investment required = $135,000
Using the formula for calculating the present value of an ordinary annuity, the present value (PV) of the annual cash inflows can be calculated as follows:
PV of annual cash inflow = Annual cash inflow * (1 - (1 / (1 + discount rate))^Project life) / discount rate) = $63,000 * ((1 - (1 / (1 + 0.17))^6) / 0.17) = $226,118.64
The present value (PV) of the Working capital investment required can be calculated as follows:
PV of Working capital investment required = Working capital investment required / (1 + + discount rate)^Project life = $135,000 / (1 + 0.17)^6 = $52,628.21
Net present value of Project B = PV of annual cash inflow + PV of Working capital investment required - Working capital investment required = = $226,118.64 + $52,628.21 - $135,000 = $143,746.85
3. Which investment alternative (if either) would you recommend that the company accept?
From parts 1 and 2 above, we have:
Net present value of Project A = -41,449.96
Net present value of Project B = $143,746.85
Since the Net present value of Project A is negative, it should be rejected.
Since the Net present value of Project B is positive, it should be accepted.
Therefore, I would recommend that company accept Project B.
Tim is a single father with 1 child. He can work as a bagger at the local grocery store for $6 per hour up to 1,200 hours per year. He is eligible for welfare, and if he does not earn any income, he will receive $15,000 a year. If Tim works, the government policy is to deduct 60 cents from his welfare stipend for every $1 that he earns in income. This government policy provides a monetary incentive to work, because
Answer:
The more he works, the higher Tim's salary level. A further explanation is provided below.
Explanation:
Throughout this instance, we must look at Tim's degree of labor as well as his revenue.
Tim would then earn $15,000 if he doesn’t really perform, then he can make,
= [tex]6\times 1200[/tex]
= [tex]7200 \ per \ year[/tex]
60 per cent of its revenue as well from his assistance fund would be deducted by the administration.
= [tex]15000-0.60\times 7200[/tex]
= [tex]10680[/tex]
Now,
His total income will be:
= [tex]10680+7200[/tex]
= [tex]17880[/tex]
Thus the above is the correct answer.
Stocks have a 12% expected return and 22% risk. Bonds have a 7% expected return and 10% risk. The expected return of a portfolio comprised of 70% stocks and 30% bonds is: Group of answer choices
Answer:
10.5%
Explanation:
Calculation to determine Expected return of portfolio
Using this formula
Expected return of portfolio = Ws*E(rs) + Wb*E(rb)
Where,
Expected return stock E(rs) = 12%
Expected return bond E(rb) = 7%
Weight of stock Ws = 0.70
Weight of bond Wb = 0.30
Let plug in the formula
Expected return of portfolio= 0.7*12 + 0.3*7
Expected return of portfolio = 10.5%
Therefore Expected return of portfolio is 10.5%
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $1,400,000 of 4-year, 7% bonds at a market (effective) interest rate of 6%, receiving cash of $1,449,138. Interest is payable semiannually on April 1 and October 1.
Required:
A. Journalize the entries to record the following. Refer to the Chart of Accounts for exact wording of account titles.
1. Issuance of bonds on April 1.
2. First interest payment on October 1 and amortization of bond premium for six months, using the straight-line method. The bond premium amortization is combined with the semiannual interest payment. (Round to the nearest dollar.)
B. Explain why the company was able to issue the bonds for $20,811,010 rather than for the face amount of $20,000,000.
Answer:
A1.Apr.1
Dr Cash $1,449,138
Cr Premium on Bonds Payable $49,138
Cr Bonds Payable $1,400,000
A2. Oct. 1
Dr Interest Expense $24,431
Dr Premium on Bonds Payable $24,569
Cr Cash $49,000
B. The BONDS was paying HIGHER INTEREST RATE of 7% to the MARKET INTEREST RATE of 6%.
Explanation:
A1. Preparation of the journal entry to record Issuance of bonds on April 1Apr.1
Dr Cash $1,449,138
Cr Premium on Bonds Payable $49,138
($1,449,138-$1,400,000)
Cr Bonds Payable $1,400,000
(To record Issuance of bonds)
A2. Preparation of the journal entry to record First interest payment on October 1 and amortization of bond premium for six months, using the straight-line method.
Oct. 1
Dr Interest Expense $24,431
($49,000-$24,569)
Dr Premium on Bonds Payable $24,569
[($1,449,138-$1,400,000)4*2]
Cr Cash $49,000
( $1,400,000 x 7% x 6/12)
(To record First interest payment and amortization of bond premium )
B. Based on the information given the reason
WHY the company was able to issue the bonds for $20,811,010 RATHER THAN for the FACE AMOUNT of $20,000,000 was because the BONDS was paying HIGHER INTEREST RATE of 7% to the MARKET INTEREST RATE of 6%.
A company has the following selected account balances: Sales $ 250,000 Sales Discounts 1,500 Sales Returns and Allowances 2,300 Sales Salaries Expense 56,000 Store Supplies Expense 15,000 Advertising Expense 8,000 Cost of Goods Sold 125,000 What is the gross profit that would appear on a multiple-step income statement:
Answer:
$121,200
Explanation:
The gross profit that would appear on a multiple-step income statement can be determined as :
Gross Profit = Net Sales - Cost of Sales
where,
Net Sales = Sales - Sales Discounts - Sales Returns and Allowances
= $ 250,000 - $1,500 - $2,300
= $246,200
therefore,
Gross Profit = $246,200 - $125,000
= $121,200
Dynamic Futon forecasts the following purchases from suppliers:
Jan. Feb. Mar. Apr. May Jun.
Value of goods ($ millions) 37 33 30 27 25 25
a. Sixty percent of goods are supplied cash-on-delivery. The remainder are paid with an average delay of 1 month. If Dynamic Futon starts the year with payables of $27 million, what is the forecasted level of payables for each month?
b. Suppose that, from the start of the year, the company stretches payables by paying 50% after 1 month and 20% after 2 months. (The remainder continue to be paid cash-on-delivery.) Recalculate payables for each month assuming that there are no cash penalties for late payment. Assume that Dynamic Futon didn't have any payable balance at the start of the year.
Answer:
Please find the complete solution in the attached file.
Explanation:
Direct Labor Variances Advanced Micro Devices develops high-performing computing products. Assume one of its processors, Ryzen 7 Pro, has a standard labor time of 0.25 hours and a standard labor rate of $20 per hour. During February, the following activities pertaining to direct labor for Ryzen 7 Pro were recorded: Direct labor hours used 64,000 Direct labor cost $1,248,000 Units of Ryzen 7 Pro manufactured 250,000
(a) Determine the labor rate variance.
(b) Determine the labor efficiency variance.
(c) Determine the total flexible budget labor cost variance.
Answer and Explanation:
The computation is shown below:
a. The labor rate variance is
= (standard rate - actual rate) × actual labor hours
= ($20 - $19.50) × 64,000
= $32,000 favorable
b. The labor efficiency variance is
= (standard hours - actual hours) × standard rate
= (62,500 - 64,000) × $20
= -$30,000 unfavorable
c. the total flexible budget variance is
= standard cost - actual cost
= ($1,250,000 - $1,248,000)
= $2,000 favorable
The Cullumber Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $65 a night. Operating costs are as follows:
Salaries $7,500 per month
Utilities $1,000 per month
Depreciation $1,100 per month
Maintenance $2,940 per month
Maid service $24 per room
Other costs $46 per room
Required:
Determine the innâs break-even point in number of rented rooms per month.
Answer:
Results are below.
Explanation:
First, we need to calculate the total fixed cost and the total unitary variable cost:
Total fixed cost= salaries + utilities + depreciation + maintenance
Total fixed cost= 7,500 + 1,000 + 1,100 + 2,940
Total fixed cost= $12,540
Total unitary variable cost= 24 + 46
Total unitary variable cost= $70
As the unitary contribution margin is negative (65 - 70), the company will never break even. I will assume that the selling price is incorrect, and the room costs $85:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 12,450 / (85 - 70)
Break-even point in units= 830
An organizational structure is Multiple Choice the arrangement or relationship of positions within an organization. based on the company's shared beliefs and values. usually not seen in government and nonprofit organizations. only applicable to formal organizations. fixed, even if the company grows in size.
Answer:
the arrangement or relationship of positions within an organization.
Explanation:
The organizational structure corresponds to the arrangement or relationship of positions within an organization, that is, the structure refers to the company's structure by department, position and function, which makes up the organizational hierarchy.
The structure is not fixed, it can be changeable according to the objectives and goals of a company, but to change it it is necessary to share the vision with the stakeholders and analyze the change, since the organizational structure also establishes the culture and the form of relationship within a company.
In the centralized structure, decision-making occurs hierarchically from the highest to the lowest positions, whereas in the decentralized structure, the lower hierarchical levels also participate in the decision-making process, requiring the alignment of the organizational structure with the values and objectives of the company.
9. Bayarmaa owns land with an adjusted basis of $610,000 subject to a mortgage of $350,000. On April 1, Bayarmaa sells her land subject to the mortgage for $650,000 in cash, a note for $600,000, and property with a fair market value of $120,000. What is the amount realized
Answer:
610000-b=a
Explanation:
April 1=610000
Bayarmaa owns land with an adjusted basis of $610,000 subject to a mortgage of $350,000. The amount realized is $1,720,000. The correct option is b.
What are taxes?Taxes are necessary contributions levied by a government entity, whether local, regional, or national, on individuals or corporations. Taxation funds government activities such as public works and services such as roads and schools, as well as programs such as Social Security and Medicare.
The amount realized by Alice is equal to the assumed property tax
Cash = $650,000
Note = $600,000
Property for market value = $120,000
Mortgage debt = $350,000
Prorated property tax = 9000 x 31 + 28 + 31 / 365 days = 2,219
Adding all the money = 1722, 219
Therefore, the correct option is b. $1,720,000.
To learn more about taxes, refer to the link:
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The question is incomplete. Your most probably complete question is given below:
a. $1,370,000
b. $1,720,000
c. $1,820,000
d. $1,250,000
According to the authors, price controls on water, designed to ensure that lower income people can afford water, have resulted in
Answer: a. a reduced supply of usable water
Explanation:
I am unsure as to the text being referred to but this should be the correct answer.
The market allocates resources efficiently based on price. This means that it sets the price such that people who can afford the goods are able to buy them. This ensures that not everybody gets the good and the good can be sustainably used.
If the government imposes price controls on a good as they did here. The market would be unable to efficiently allocate the water so more people than before would be able to access it. This would lead to the supply being used up so there will be a reduced supply of the good which in this case is water.
n investment project has annual cash inflows of $4,000, $4,900, $6,100, and $5,300, for the next four years, respectively. The discount rate is 13 percent. a. What is the discounted payback period for these cash flows if the initial cost is $6,700
Answer:
the answer is 11,000
Explanation:
Which one of the following affects cash during a period?
a. Recording depreciation expense
b. Declaration of a cash dividend
c. Write-off of an uncollectible account receivable
d. Payment of an accounts payable
Answer: d. Payment of an accounts payable
Explanation:
The payment of an accounts payable affects cash because it means that cash was used to pay off the payable in question and therefore the cash that the company holds has now reduced.
In the Statement of Cashflows, this is accounted for under the Operating Activities of the business. A decrease in accounts payable is subtracted from the net income to show that cash has reduced.
Moonbeam Company manufactures toasters. For the first 8-months of 2017, the company reported the following operating results while operating at 75% of plant capacity:
Sales (350,000 units) $4,375,000
Cost of goods sold 2,600,000
Gross profit 1,775,000
Operating expenses 840,000
Net income $935,000
Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed. In September, Moonbeam receives a special order for 21,600 toasters at $8.12 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,100 of shipping costs but no increase in fixed costs.
Required:
a. Prepare an incremental analysis for the special order.
b. Should Moonbeam accept the special order? Why or why not?
Answer:
Moonbeam Company
a. Incremental Analysis:
Sales revenue:
Units of toasters (21,600 at $8.12) $175,392
Variable costs (21,600 * $7.12) 153,792
Shipping costs 3,100
Total incremental costs $156,892
Incremental net income $18,500
b. Moonbeam should accept the special order. It has the required capacity to deliver the additional toasters. It will generate an incremental income of $18,500, which is better than nothing.
Explanation:
a) Data and Calculations:
Sales (350,000 units) $4,375,000
Cost of goods sold 2,600,000
Gross profit 1,775,000
Operating expenses 840,000
Net income $935,000
Operating capacity = 75%
Current sales = 350,000
Plant capacity = 466,667 units (350,000/75%)
Total Per Unit
Sales (350,000 units) $4,375,000 $12.50
Variable cost of goods sold = 1,820,000 ($2,600,000 * 70%)
Variable operating expense = 672,000 ($840,000 * 80%)
Total variable costs = $2,492,000 $7.12
Net income = $1,883,000
Special Order:
Incremental Sales revenue
Units of toasters (21,600 at $8.12) $175,392
Variable costs (21,600 * $7.12) 153,792
Shipping costs 3,100
Total incremental costs $156,892
Incremental net income $18,500
The costs of bringing a corporation into existence, including legal fees and promoter fees, are called:
Answer:
organization expenses.
Explanation:
A corporation can be defined as a corporate organization that has facilities and owns or controls assets used for the production of goods and services in at least one country other than its headquarter (home office) located in its home country.
This ultimately implies that, a corporation is a corporate organization that owns or controls its business in two or more countries.
Some examples of multinational firms are Ap-ple, Volkswagen, G-oogle, Shoprite, Nestlé, Accenture, Shell BP, Chevron etc.
The costs of bringing a corporation into existence, including legal fees and promoter fees, are called organization expenses.
John F. Kennedy, Jr. crashed his airplane as a result of being disoriented while flying in marginal weather conditions at night. In order to reduce the risk of an accident during these conditions, a pilot should
Answer: b. Rely more on flight instruments than normal
Explanation:
Due to the weather conditions, John Kennedy Jr. became disoriented and in the process did not know which way to best fly to plane towards which means that he lost direction and that was why he crashed.
In such a situation, it is advised that a pilot should rely more on their navigation equipment instead of the horizon or other navigation patterns that could have been affected by the weather. The flight equipment on board would be less affected and so would be safer to use.
Travel expenses incurred by the sales department of a manufacturing company would be classified as: a. indirect labor b. manufacturing overhead c. a period cost d. a conversion cost e. a product cost
Answer:
c. a period cost
Explanation:
Option C, period cos is the correct answer because the period cost is not related to the production and manufacturing of the commodity. Rather it is the cost incurred outside the factory such as marketing expenses, travelling expenses, etc. Therefore, the option "period cost" is the correct answer.
Travel expenses incurred by the sales department of a manufacturing company would be classified as: c. a period cost
Period costs are indirect costs incurred in the production of goods and services. These costs are not tied directly to production processes.
Unlike product costs that are assigned to one particular product, Period costs are not assigned to one particular product or the cost of inventory.
Period costs are also not included in the inventory valuation hence are treated as expenses in the period in which they are incurred.
Other examples of Period costs includes: marketing expenses, indirect labor etc.
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