Answer:
60
Explanation:
price-earnings ratio = price / earnings per share
earnings per share = net income / shares outstanding = $150 / 300 = $0.50
$30 / $0.50 = 60
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement:
Sales $ 1,546,000
Variable expenses 573,480
Contribution margin 972,520
Fixed expenses 1,070,000
Net operating income (loss) $ (97,480)
In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information:
Division
East Central West
Sales $ 416,000 $ 630,000 $ 500,000
Variable expenses as a percentage of sales 48 % 26 % 42 %
Traceable fixed expenses $ 282,000 $ 324,000 $ 206,000
Required:
1. Prepare a contribution format income statement segmented by divisions.
2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $28,000 based on the belief that it would increase that division's sales by 13%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented?
2-b. Would you recommend the increased advertising?
has a target debt−equity ratio of 1.35. Its WACC is 8.3 percent, and the tax rate is 35 percent. If the company’s cost of equity is 14 percent, what is its pretax cost of debt? (Do not round intermediate calculations. Enter yo
Answer:
5.74%
Explanation:
WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate)
weight of debt = D / (D + E) = 1.35/ (1.35 + 1) = 0.574468 = 57.4468%
weight of equity = 100% - 57.4468% = 42.5532%
let x represent pretax cost of debt
8.1% = 0.425532 x 14% +( 0.574468x) x 0.65
8.1% = 0.373404x + 5.957448%
solve for x
x = 5.74%
Willow Corporation had three employees. Two of the employees worked full-time and earned salaries of $25,000 each. The third employee worked only part-time and earned $3,000. The employer timely paid state unemployment tax equal to 5.4 percent of each employee's wages up to $7,000. How much FUTA tax is due from Willow Corporation for 2019, after the credit for state unemployment taxes?
Answer:
$102
Explanation:
FUTA tax due from Willow Corporation for 2019, after the credit for state unemployment taxes, can be calculated by deducting the Paid state unemployment tax by the FUTA tax.
DATA
Paid State Unemployment Tax = (7,000+7,000+3,000) x 5.4%
Paid State Unemployment Tax = $918
FUTA tax rate in 2019 = 6%
Solution
FUTA tax (6% x $17,000) = $1,020
FUTA tax due = $1,020 - $918
FUTA tax due = $102
In an international communication process carried out by a company, the sales force of the company that conveys the encoded message to the intended receiver acts as a(n)
Answer: message channel
Explanation:
In an international communication process carried out by a company, the sales force of the company that conveys the encoded message to the intended receiver acts as a message channel.
The sales force are said to act as a.mesage channel because they are the ones that pass the message across to the intended receiver.
Which of the following is not a situation in which strict liability applies? Multiple Choice Aimee manufactures snack cakes that are sold in small grocery stores. Faye owns a business in which she regularly uses explosives. Amanda owns a pet tiger that she keeps in her home in a suburban neighborhood. T.J. manufactures cheap clothing that falls apart after minimal use.
Answer:
The correct answer is the last option: T.J. manufactures cheap clothing that falls apart after minimal use.
Explanation:
To begin with, the term known as "Strict Liability", in criminal and civil law, refers to the situation in which a person is legally responsible for the consequences flowing from an activity that it also applies even in those cases where there is an absence of fault or criminal intent from the figure of the defendant under court. Therefore that in the situations that are presented the one in where the strict liability does not applies is the case of T.J manufacturing cheap clothes because the person knows what the product is worth.
The following is not a situation in which strict liability applies is :
D) T.J. manufactures cheap clothing that falls apart after minimal use.
Strict Liability AppliesThe following is not a situation in which strict liability applies is that T.J. manufactures cheap clothing that falls apart after minimal use.
The strict liability exists when a litigant is at risk for committing an activity, notwithstanding of what his/her aim or mental state was when committing the activity.
In criminal law, ownership violations and statutory assault are both cases of strict risk offenses.
Therefore, that in the circumstances that are displayed the one in where the strict obligation does not applies is the case of T.J fabricating cheap dress since the individual knows what the item is worth.
Learn more about "Liability":
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A bank that uses a computer system to record deposits and withdrawals from its customers' checking accounts is using a(n):
Answer: transaction processing system
Explanation:
A bank that uses a computer system to record deposits and withdrawals from its customers' checking accounts is using a transaction processing system.
Transaction processing system is when the system is used in the processing of transactions and data is being sent and recorded in the system.
Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in dollar sales for the East region. 3. Compute the break-even point in dollar sales for the West region. 4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. Use the same format as shown above. What is Crossfire’s net operating income (loss) in your new segmented income statement? 5. Do you think that Crossfire should allocate its common fixed expenses to the East and West regions when computing the break-even points for each region?
Complete Question:
Crossfire Company segments its business into two regions - East and West. The company prepared a contribution format segmented income statement as shown below:
Total Company East West
Sales $900,000 $600,000 $300,000
Variable Expenses 675,000 480,000 195,000
Contribution margin 225,000 120,000 105,000
Traceable Fixed Expenses 141,000 50,000 91,000
Segment Margin $84,000 $70,000 $14,000
Common Fixed Expenses 59,000
Net Operating Income $25,000
Instructions: (As given).
Answer:
Crossfire Company1. Computation of the companywide break-even point in dollar sales:
Break-even point in dollar sales
= Sales = Total costs
Sales = $816,000
Total costs = Variable costs + Traceable fixed costs
= $675,000 + $141,000
= $816,000
2. Computation of the break-even point in dollar sales for the East region:
Break-even point in dollar sales
= Sales = Total costs
= $530,000
Total costs = $530,000 ($480,000 + 50,000)
3. Computation of the break-even point in dollar sales for the West region:
Break-even point in dollar sales
= Sales = Total costs
= $286,000
Total costs = $286,000 ($195,000 + 91,000)
4. A new segmented income statement based on the break-even dollar sales that are computed in requirements 2 and 3:
Total Company East West
Sales $816,000 $530,000 $286,000
Variable Expenses 675,000 480,000 195,000
Contribution margin 141,000 50,000 105,000
Traceable Fixed Expenses 141,000 50,000 91,000
Segment Margin $0 $0 $0
Common Fixed Expenses 59,000
Net Operating Income/(loss) ($59,000)
Crossfire's net operating income (loss) in the new segmented income statement is: $59,000
5. I think that Crossfire should allocate the common fixed expenses to the East and West regions when computing the break-even points for each region.
This ensures that Crossfire does not run into net operating loss, company-wide. The segmented sales revenues for the regions can be used to allocate the common fixed expenses. Other suitable bases are traceable fixed expense, number of sales and administrative staff, or activity cost pools, using activity-based costing technique.
Explanation:
a) Break-even point in sales dollars is the sales point at which Crossfire's sales revenue will be equal to the total costs. At this point, Crossfire will not make any profit or incur any loss.
For an oil and gas limited partnership (LP), allowances in the form of deductions are allowed by the IRS to be taken to compensate for a depleting resource. The allowance can be taken based on
Answer:
The allowance can be taken based on:
a reduction (production) of the oil and gas reserves.
Explanation:
A limited partnership's allowance for depletion is a special form of depreciation used to account for the gradual reduction in the value of natural resources based on their usage or consumption. There are two methods for recognizing depletion of natural resources. They are the cost depletion method, which is based on usage, and the percentage depletion method, which is a percentage of gross earnings. Then, depletion is different from depreciation, in that depreciation is for tangible assets, while depletion is for natural assets.
Mathys Inc. has recently hired a new independent auditor, Karen Ogleby, who says she wants "to get everything straightened out." Consequently, she has proposed the following accounting changes in connection with Mathys Inc.'s 2017 financial statements.1. At December 31, 2016, the client had a receivable of $820,000 from Hendricks Inc. on its balance sheet. Hendricks Inc. has gone bankrupt, and no recovery is expected. The client proposes to write off the receivable as a prior period item.2. The client proposes the following changes in depreciation policies.(a) For office furniture and fixtures, it proposes to change from a 10-year useful life to an 8-year life. If this change had been made in prior years, retained earnings at December 31, 2016, would have been $250,000 less. The effect of the change on 2017 income alone is a reduction of $60,000.(b) For its new equipment in the leasing division, the client proposes to adopt the sum-of-the-years'-digits depreciation method. The client had never used SYD before. The first year the client operated a leasing division was 2017. If straight-line depreciation were used, 2017 income would be $110,000 greater.3.In preparing its 2016 statements, one of the client's bookkeepers overstated ending inventory by $235,000 because of a mathematical error. The client proposes to treat this item as a prior period adjustment.4. In the past, the client has spread preproduction costs in its furniture division over 5 years. Because its latest furniture is of the "fad" type, it appears that the largest volume of sales will occur during the first 2 years after introduction. Consequently, the client proposes to amortize preproduction costs on a per-unit basis, which will result in expensing most of such costs during the first 2 years after the furniture's introduction. If the new accounting method had been used prior to 2017, retained earnings at December 31, 2016, would have been $375,000 less.5. For the nursery division, the client proposes to switch from FIFO to LIFO inventories because it believes that LIFO will provide a better matching of current costs with revenues. The effect of making this change on 2017 earnings will be an increase of $320,000. The client says that the effect of the change on December 31, 2016, retained earnings cannot be determined.6. To achieve an appropriate recognition of revenues and expenses in its building construction division, the client proposes to switch from the completed-contract method of accounting to the percentage-of-completion method. Had the percentage-of-completion method been employed in all prior years, retained earnings at December 31, 2016, would have been $1,075,000 greater.Instructions(a) For each of the changes described above, decide whether:(1) The change involves an accounting principle, accounting estimate, or correction of an error.(2) Restatement of opening retained earnings is required.(b) What would be the proper adjustment to the December 31, 2016, retained earnings?
Answer:
Mathys Inc.
a. (1) Change in accounting principle, accounting estimate, or correction of an error:
1. Write-off of Accounts Receivable = Change in accounting estimate
2. Changes in depreciation policies = Changes in accounting estimate for the office furniture and the introduction of the sum-of-years' digit for the new leasing division's equipment.
3. Overstated Ending Inventory = Correction of an error
4. New accounting method for pre-production costs = Change in accounting estimate
5. Change from FIFO to LIFO = Change in accounting principle
6. Change from completed-contract method of accounting to the percentage-of-completion method = Change in accounting principle
a. (2) If Restatement of opening retained earnings is required:
1. No restatement of opening retained earnings is required.
2. No restatement of opening retained earnings is required.
3. Restatement of opening retained earnings is required.
4. No restatement of opening retained earnings is required.
5. Restatement of opening retained earnings is required.
6. Restatement of opening retained earnings is required.
b) December 31, 2016 Retained Earnings Adjustments:
3. Debit Retained Earnings = ($235,000)
5. Debit Retained Earnings = ($320,000)
6. Credit Retained EArnings = $1,075,000
Net effect on 2016 Retained Earnings = an increase of $520,000
Explanation:
a) Data:
1. December 31, 2016 Write-off of Receivable (Hendricks Inc.) = $820,000
2. Changes in depreciation policies:
a) Office Furniture and Fixtures 10-year to 8-year useful life: Effect on Retained Earnings at December 31, 2016 = $250,000 less. Effect on 2017 Income = $60,000 less.
b) Equipment: sum-of-the-years' digits depreciation method: Effect on 2017 income = $110,000 more.
3. Ending inventory for 2016 overstated by $235,000 Prior period adjustment.
4. Preproduction costs for furniture division: New accounting method. Effect on 2016 Retained earnings = $375,000 less.
5. Inventories for Nursery division, from FIFO to LIFO to match current costs with revenues. Effect on 2017, an increase in Earnings = $320,000.
6. Building Construction Division from completed-contract method of accounting to the percentage-of-completion method. Effect on Retained Earnings 2016 = $1,075,000 greater.
b) Mathys Inc. must correct accounting errors by adjusting previously issued financial statements retrospectively. An example of an accounting error is the overstatement of the ending inventory by $235,000. This implies that the 2016 Retained Earnings were overstated.
c) A good example of a change in accounting estimate is the change Mathys Inc. made of the office furniture's useful life from 10 years to 8. Such changes are not applied retroactively to prior years' financial statements.
d) When Marthys Inc. change the inventory valuation method from LIFO to FIFO, it made a change in an accounting principle. Such principle changes are done retroactively, with the restatement of the financial statements.
You are the manager of a firm that produces goods X and Y. Your rm receives revenues of $40,000 per year from product X and $90,000 per year from product Y. The price elasticity of demand for product X is |-0.75| and the cross price elasticity of demand between product Y and X is -1.7.
Required:
How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 2 percent?
Answer:
price elasticity of demand = % change in quantity / % change in price
-0.75 = % change in quantity / 2%
-1.5 = % change in quantity
lets assume that 1,000 units of X were sold at $40 each, total revenue = $40,000
new total revenue = 985 x $40.80 = $40,188
revenue generated by good X will increase by 0.47%, from $40,000 to $40,188
price elasticity of demand = % change in quantity of Y / % change in price of X
-1.7 = % change quantity of Y / 2%
-3.4% = % change quantity of Y
lets assume that 1,000 units of Y were sold at $90 each, total revenue = $90,000
new total revenue = 966 x $91.80 = $88,678.80
revenue generated by good Y will decrease by -1.47%, from $90,000 to $88,678.80
According to the two-factor theory, ________. A) there exists a hierarchy of needs within every human being, and as each need is satisfied, the next one becomes dominant B) most employees inherently dislike work and must therefore be directed or even coerced into performing it C) employees view work as being as natural as rest or play, and therefore learn to accept, and even seek, responsibility D) the aspects that lead to job satisfaction are separate and distinct from those that lead to job dissatisfaction E) achievement, power, and affiliation are three important needs that help explain motivatio
Answer: D. ) the aspects that lead to job satisfaction are separate and distinct from those that lead to job dissatisfaction
Explanation:
According to the two-factor theory, it is stated that some factors in an organization or company results in job satisfaction while another group of factors results in dissatisfaction of the workers and that both of these factors doesn't depend on one another.
Therefore, the two factor theory the aspects that lead to job satisfaction are separate and distinct from those that lead to job dissatisfaction.
Option d is the right answer.
Careco Company and Audaco Inc are identical in size and capital structure. However, the riskiness of their assets and cash flows are somewhat different, resulting in Careco having a WACC of 10% and Audaco a WACC of 12%. Careco is considering Project X, which has an IRR of 10.5% and is of the same risk as a typical Careco project. Audaco is considering Project Y, which has an IRR of 11.5% and is of the same risk as a typical Audaco project. Now assume that the two companies merge and form a new company, Careco/Audaco Inc. Moreover, the new company's market risk is an average of the pre-merger companies' market risks, and the merger has no impact on either the cash flows or the risks of Projects X and Y. Which of the following statements is correct?
A) if evaluated using the correct post-merger wacc, project x would have a negative npv.
B) after the merger, careco/audaco would have a corporate wacc of 11%. therefore, it should reject project x but accept project y.
C) careco/audaco's wacc, as a result of the merger, would be 10%.
D) after the merger, careco/audaco should select project y but reject project x. if the firm does this, its corporate wacc will fall to 10.5%.
E) if the firm evaluates these projects and all other projects at the new overall corporate wacc, it will probably become riskier over time.
Answer:
E) if the firm evaluates these projects and all other projects at the new overall corporate wacc, it will probably become riskier over time.
Explanation:
Before the merger, Audaco would have rejected any project with an IRR of less than 12% (more risky investments) while Careco only required a 10% IRR (less risky projects). But after the merger the combined WACC will be lower than Audaco's, but higher than Careco's. Therefore, the new merged company will start accepting more risky projects and that tendency will continue over time. Eventually, the company's WACC will have to adjust and increase, and the cycle will continue.
Answer following question with true or false and explain.A firm's profit margin is 5%, its debt/assets ratio is 56%, and its dividend payout ratio is 40%. If the firm is operating at less than full capacity, then sales could increase to some extent without the need for external funds, but if it is operating at full capacity with respect to all assets, including fixed assets, then any positive growth in sales will require some external financing.
Answer:
False
Explanation:
As a company's sales level increases, its current assets will increase, e.g. cash, inventories, accounts receivables increase. generally, also the fixed assets increase, specially if the firm was previous producing at full capacity even before total sales increased. But as sales increase, not only do the company's assets increase, its current liabilities generally increase also, and its profits should increase. In this case, 60% of the company's profits are reinvested in the company, and the liabilities represent more than half of the total assets. Therefore, it is possible that the company needs external financing, but it is also possible that it doesn't. You cannot assume that the company will necessarily need external financing, because retained earnings and the increase in current liabilities might be enough to finance the company's growth in sales.
The following costs result from the production and sale of 4,350 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $285 each. The company has a 40% income tax rate.
Variable production costs
Plastic for casing $ 104,400
Wages of assembly workers 387,150
Drum stands 143,550
Variable selling costs
Sales commissions 95,700
Fixed manufacturing costs
Taxes on factory 13,500
Factory maintenance 27,000
Factory machinery depreciation 87,000
Fixed selling and administrative costs
Lease of equipment for sales staff 27,000
Accounting staff salaries 77,000
Administrative management salaries157,000
Required:
1. Prepare a contribution margin income statement for the company.
2. Compute its contribution margin per unit and its contribution margin ratio.
Prepare a contribution margin income statement for the company.
Answer:
1) $120,450
2a) $117 per unit
b) 41.05
Explanation:
1. Contribution margin income statement
Sales $1,239,750
Less Variable costs
Plastic for casting. ($104,400)
Wages of assembly workers ($387,150)
Drum stands ($143,550)
Sales commission ($95,700)
Contribution margin $508,950
Less fixed costs
Taxes on factory. ($13,500)
Factory maintenance. ($27,000)
Factory machinery depreciation ($87,000)
Lease of equipment for sales staff ($27,000)
Accounting staff salaries ($77,000)
Admin management salaries ($157,000)
Net income $120,450
2a Contribution margin per unit
= Contribution / Unit sales
= $508,950 / 4,350 units
= $117 per unit
b. Contribution margin ratio
= Contribution margin per unit / Sales per unit × 100
= $117 / $285 × 100
= 41.05%
Half of all your potential customers would pay $10 for your product but the other half would only pay $8. You cannot tell them apart. Your marginal costs are $4. If you set the price at $10, the expected profit is:
Answer:
The expected profit is:
$5.
Explanation:
a) Calculations:
Profit from customers paying $10 = $6 ($10 - $4)
Profit from customers paying $8 = $4 ($8 - $4)
Expected profit from customers paying $10, = $6 x 0.5 = $3
Expected profit from customers paying $8, = $4 x 0.5 = $2
Total expected profit = $5.
The expected profit is the profit from customers paying $10 weighted with probability plus the weighted profit from customers paying $8. Adding the expected profit from each class of customers gives the overall expected profit combined.
Answer:
Expected Profit is $4
Explanation:
Price = $8
Marginal Cost = $4
The formula to derive the expected profit is Expected Profit = Price - Marginal Cost------equ(1)
Using equation (1) and given information, expected profit is calculated as
Expected Profit = Price - Marginal Cost
Expected Profit = 8 - 4
Expected Profit = $4
Thus, the Expected Profit is $4
Sherburne Snow Removal's cost formula for its vehicle operating cost is $2,510 per month plus $371 per snow-day. For the month of March, the company planned for activity of 18 snow-days, but the actual level of activity was 17 snow-days. The actual vehicle operating cost for the month was $8,460. The vehicle operating cost in the flexible budget for March would be closest to:
Answer:
Total cost= $8,817
Explanation:
Giving the following information:
Sherburne Snow Removal's cost formula for its vehicle operating cost is $2,510 per month plus $371 per snow-day.
The actual level of activity was 17 snow-days.
The flexible budget will adapt the standard cost to the actual usage.
Flexible budget:
Fixed costs= 2,510
Variable cost= 371*17= 6,307
Total cost= $8,817
As an American investor, you are trying to calculate the present value of a £25 million cash flow that will occur one year in the future. You know that the spot exchange rate is S= $1.9397/ £ and one-year forward rate is F= $1.9581/ £. You also know that the appropriate dollar cost of capital for this cash flow is 6.25% and that the appropriate pound cost of capital for this cash flow is 5.25%. a) What is the present value of the £25 million cash flow from the standpoint of a British investor, and what is the dollar equivalent of this amount? b) What is the present value of the £25 million cash flow from the standpoint of a U.S. investor who first converts the £25 million into dollars and then applies the dollar discount rate?
Answer:
1. Present value in pound=$23,752,969
Dollar equivalent=$46,073,634
2.Dollar equivalent for U.S investors=$48,952,500
Present value in pound=$46,072,918
Explanation:
1a.Calculation for present value of the £25 million cash flow
Using this formula
Present value in pound =cash flow*(1/1+Cash flow cost of capital)^ One year in the future
Let plug in the formula
Present value in pound=$25,000,000*(1/1+0.0525)^1
Present value in pound=$25,000,000*(1/1.0525)^1
Present value in pound=$25,000,000*0.950119
Present value in pound=$23,752,969
1b.Calculation for the dollar equivalent of this amount
Using this formula
Dollar equivalent=Present value in pound*Spot exchange rate
Let plug in the formula
Dollar equivalent=$23,752,969*$1.9397
Dollar equivalent=$46,073,634
2a. Calculation for the Dollar equivalent for U.S investors
Using this formula
Dollar equivalent for U.S investors=Cash flow*one-year forward rate
Let plug in the formula
Dollar equivalent for U.S investors=$25,000,000*$1.9581
Dollar equivalent for U.S investors=$48,952,500
2b. Calculation for the present value of the £25 million cash flow from the standpoint of a U.S. investor .
Using this formula
Present value in pound =Cash flow*(1/1+Cash flow cost of capital)^ One year in the future
Let plug in the formula
Present value in pound=$48,952,500*(1/1.0625)^1
Present value in pound=$48,952,500*0.941176
Present value in pound=$46,072,918
Therefore the Present value in pound for question 1 is $23,752,969 while the Dollar equivalent is $46,073,634.
The Dollar equivalent for U.S investors in question 2 is $48,952,500 while the Present value in pound is $46,072,918
A buyer properly revokes the offer after receiving the property condition disclosure and requests the return of the buyer's earnest money the principal broker is holding in a ____________ trust account. The PREB (1) may require the buyer to sign a release before returning the money; (2) must obtain the seller's permission before returning the money.
Answer:
1. Clients'
2. The principal real estate broker (PREB) may require the buyer to sign a release before returning the money.
Explanation:
In this scenario, a buyer properly revokes the offer after receiving the property condition disclosure and requests the return of the buyer's earnest money the principal broker is holding in a clients' trust account. The principal real estate broker (PREB) may require the buyer to sign a release before returning the money.
Additionally, a principal real estate broker (PREB) can be defined as an individual who is licensed to individually provide a professional real estate service or work with other licensed brokers.
The amount of money being paid to a broker by a buyer as an initial payment to sign a purchase agreement letter is referred to as the earnest money. A principal real estate broker collects the earnest money from a buyer on behalf of the seller of a property such as land, buildings etc.
On June 13, the board of directors of Siewert Inc. declared a 2-for-1 stock split on its 120 million, $1 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $35 on June 13. Prepare a journal entry that summarizes the declaration and distribution of the stock split if it is not to be effected in the form of a stock dividend. What is the par per share after the split
Answer:
Siewert Inc.
Journal Entry:
Memo: This is note that the stock has been split 2-for-1 and the number of common shares increased to 240 (120 x 2) million.
No journal entry is required for a split of 2-for-1 shares. What is required is a memo that indicates that the shares have been split.
The par value is now $0.50 ($1/2)
Explanation:
When the directors of Siewert Inc. declare a stock split, it does not require any journal entry. Instead, a memo is required to describe the declaration and the new number of shares that are now authorized if this has increased, and outstanding. The 2-for-1 split means that stockholders who held 1 share before will now be entitled to 2 shares. This doubling of the number of shares will affect the par value of the shares, causing it to divide by 2. For example, Siewert Inc.'s par value of common shares was $1 before the declaration of the split. After the split, the par value will change to $0.50 or half. This split will also affect the market price of the shares as investors are likely to reduce the current market price to about half of its prevailing price.
Outside the flight experience itself, airlines are generating revenue by charging fees for credit cards, frequent-flyer programs, and access to airport lounges. This serves to
Complete Question:
Outside the flight experience itself, airlines are generating revenue by charging fees for credit cards, frequent-flyer programs, and access to airport lounges. This serves to
Group of answer choices:
A. increase competition.
B. expand the profit pool.
C. provide better customer service.
D. satisfy regulators
Answer:
B. expand the profit pool.
Explanation:
Outside the flight experience itself, airlines are generating revenue by charging fees for credit cards, frequent-flyer programs, and access to airport lounges. This serves to expand the profit pool.
Generally, all business entities are typically set up to generate revenues by engaging or increasing the number of services being offered to potential customers and as a result of this, make more money or profits.
In this scenario, the airline company has diversified its portfolios through the provision of services centered around the transport or logistics business such as use of credit cards as a means of payment by the customers, use of airport lounges as relaxation spot, waiting area and use of frequent-flyer programs as a form of advert in the airport or on board.
Harver company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 58000 units of RX5 follows. Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 58000 units of RX5 for 18.50 per unit. determine the total incremental cost making 58000 units of Rx5. Determine the total incremental cost of buying 58000 units of RX5. Should the company make or buy RX%
Answer:
Decision = Make
Explanation:
The incremental cost to buy and the incremental cost to make can be calculated as follows
DATA
Direct material = $4 (100% variable)
Direct labor = $8 (100% variable)
Overhead = $9 ( 70% fixed)
Total cost per unit = $21
Offered price = $18.5 per unit
Total units = 58,000
Solution
Incremental cost of making
Direct material ( 58,000 x $4) = $232,000
Direct labor (58,000 x $8) = $464,000
Overhead ( 58,000 x $9 x 30%) = $156,600
Total cost = $825,600
Incremental cost of buying
Total cost = No. of units x offered price
Total cost = 58,000 x $18.5
Total cost = $1,073,000
Decision: The company should make the product as the total cost to buy is $247,400 higher than the cost to make.
During September, the capital expenditure budget indicates a $450000 purchase of equipment. The ending September cash balance from operations is budgeted to be $70000. The company wants to maintain a minimum cash balance of $38000. What is the minimum cash loan that must be planned to be borrowed from the bank during September
Answer:
the minimum cash loan that must be planned to be borrowed from the bank during September is $418,000 .
Explanation:
The cash loan that must be planned to be borrowed from the bank is determined by preparing a cash budget
Snippet of the Cash Budget Reconciliation Section
Cash Balance from Operation $70000
Less Purchase of Equipment ($450,000)
Balance ($380,000)
Less Desired Balance ($38000)
Cash loan $418,000
A divorced woman with 2 young children has a small trust fund that gives her $2,500 a year in income. She collects another $2,500 per year in alimony payments. The woman wishes to make a contribution to an Individual Retirement Account this year. Which statement is TRUE
Answer: No contribution can be made
Explanation:
The options to the question are:
a. No contribution can be made
b. A contribution can be made based only on the income received from the trust fund.
c. A contribution can be made based only on the alimony payments received
d. A contribution can be made based on both the income received from the trust fund and the alimony payments received
From the question, we are informed that a divorced woman with 2 young children has a small trust fund that gives her $2,500 a year in income and that she collects another $2,500 per year in alimony payments.
Based on the above analysis, the woman cannot make a contribution to an Individual Retirement Account this year.
22. On January 1, 2021, Princess Corporation leased equipment to King Company. The lease term is eight years. The first payment of $675,000 was made on January 1, 2021. The equipment cost Princess Corporation $3,600,000. The present value of the lease payments is $3,961,183. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 10%, how much interest revenue will Princess record in 2022 on this lease
Answer:
$293,980.13
Explanation:
Calculation of how much of the interest revenue Princess will record in 2022 on the lease
First Step is to find the interest for year 2021
Present Value January 1, 2021 $3,961,183
Less Payment January 1, 2021 (675,000)
=$3,286,183
Hence,
2021 Interest =$3,286,183× 10%
2021 Interest = $328,618.3
Second Step
Second Payment $675,000
Less Interest (328,618.3)
Reduced balance $346,381.7
Third Step is to find the how much interest revenue will Princess record in 2022 on the lease
2021 $3,286,183
Less Reduced balance (346,381.7)
January 1 2022 Liability = $2,939,801.3× 10%
2022 Interest Revenue =$293,980.13
Therefore the amount of interest revenue that Princess will record in 2022 on the lease will be $293,980.13
valdes corporation had a credit balance in the allowance for doubtful accounts of $62,000 at 1/1/19 during 2019, it wrote off $21,400 of accounts and collected $7,800 on accounts previously written off, the amount of bad debt expense recoginzed in 2019 is $11,000. if valdes estimates at the year end that 6% accounts receivable will prove to be uncollectible what is the account receivable balance at 12/21/2019
Answer:
The account receivable balance at 12/31/2019 is $990,000
Explanation:
Ending balance of allowance account = Beginning allowance + Bad debt expense - Doubtful accounts written off + Amount collected on written off doubtful account
Ending balance of allowance account = $62,000 + $11,000 - $21,400 + $7,800
Ending balance of allowance account = $59,400
Accounts receivable balance at 12/31/2019 = $59,400 / 6%
=$990,000
A firm has sales of $1,220, net income of $226, net fixed assets of $544, and current assets of $300. The firm has $101 in inventory. What is the common-size statement value of inventory
Answer:
11.97%
Explanation:
Common size statement value of inventory is where all accounts are expressed as a percentage of total assets.
Total assets = Net fixed assets + Current assets
= $544 + $300
= $844
Common size statement value of inventory = Inventory ÷ Total assets
= $101 ÷ $844
= 0.1197
= 11.97%
The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 5.2 hours Standard variable overhead rate $11.60 per hour The following data pertain to operations for the last month: Actual hours 2,500 hours Actual total variable manufacturing overhead cost $29,590 Actual output 150 units What is the variable overhead efficiency variance for the month?
Answer:
Variable overhead efficiency variance= $19,952 unfavorable
Explanation:
Giving the following information:
Standard hours per unit of output 5.2 hours
Standard variable overhead rate $11.60 per hour
Actual hours 2,500 hours
Actual output of 150 units
To calculate the variable overhead efficiency variance, we need to use the following formula:
Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Standard quantity= 5.2*150= 780
Variable overhead efficiency variance= (780 - 2,500)*11.6
Variable overhead efficiency variance= $19,952 unfavorable
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent’s cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay (reservation value): adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent’s demand is:
Answer:
There is some information missing, and when I looked for it I found similar questions but the demand was already given and the question was about Vincent's total daily income.
Passenger Price Daily demand
Adults $18 70
Children $10 25
Senior citizens $12 55
total 150
total revenue per day = ($18 x 70) + ($10 x 25) + ($12 x 55) = $1,260 + $250 + $660 = $2,170
total operating costs per day = (150 / 50) x $450 = $1,350
operating income per day = $2,170 - $1,350 = $820
A one-year insurance policy was purchased on June 1 for $2,400. The adjusting entry on December 31 would be:
Answer:
Adjusting Journal Entry:
Debit Insurance Expense $1,400
Credit Prepaid Insurance $1,400
To record the insurance expense for the year (7 months).
Explanation:
This adjustment will cause the Prepaid Insurance account to remain $1,000. This balance represents the insurance cost for 5 months having deducted the insurance cost for 7 months from June 1 to December 31. So, in line with the accrual concept and the matching principle of generally accepted accounting principles, only $1,400 Insurance was incurred for the current year. The balance will be charged to the account when the service is consumed.
Firm A has set an MSRP of MXN 25 for its product, and the average discount to distributors is 30%. What is revenue on 40 million units
Answer: 700 million
Explanation:
From the question, we are informed that Firm A has set an MSRP of MXN 25 for its product, and the average discount to distributors is 30%.
The revenue on 40 million units will be calculated as:
= (40,000,000 × 25) × (100% - 30%)
= 1,000,000,000 × 70%
= 1,000,000,000 × 0.7
= 700,000,000
The answer is 700 million.
The revenue on 40 million units is 700,000,000.
The calculation is as follows:
= (40,000,000 × 25) × (100% - 30%)
= 1,000,000,000 × 70%
= 1,000,000,000 × 0.7
= 700,000,000
Therefore we can conclude that The revenue on 40 million units is 700,000,000.
Learn more; brainly.com/question/6201432
