Answer:
9.4%
Explanation:
using the CAPM formula, the cost of equity (Re) is:
Re = Rf + B(Rm - Rf)
Rf = risk free rate = 4%Rm = market risk = 10%B = beta = 0.9Re = 4% x [0.9 x (10% - 4%)] = 4% x (0.9 x 6%) = 4% x 5.4% = 9.4%
The cost of equity (Re) refers to the required rate of return that investors expect to receive from a certain investment, e.g. stocks or any particular project
ROI, Residual Income, and EVA with Different Bases Envision Company has a target return on capital of 12 percent. The following financial information is available for October ($ thousands):
Software Division . Consulting Division Venture Capital Division
(Value Base) (Value Base) (Value Base)
Book Current Book Current Book Current
Sales $100,000 $100,000 $200,000 $200,000 $800,000 $800,000
Income 12,250 11,700 16,400 20,020 56,730 51,920
Assets 70,000 90,000 100,000 110,000 610,000 590,000
Liabilities 10,000 10,000 14,000 14,000 40,000 40,000
Required
a. Compute the return on investment using both book and current values for each division. Round answers to three decimal places.
Book Value Current Value
Software Answer ? Answer ?
Consulting Answer ? Answer ?
Venture Capital Answer ? Answer ?
b. Compute the residual income for both book and current values for each division. Use negative signs with answers, when appropriate.
Book Value Current Value
Software $Answer 3,850 $Answer 900
Consulting Answer 4,400 . Answer 6,820
Venture Capital Answer (16,470) Answer (1,880)
c. Compute the economic value added income for both book and current values for each division if the tax rate is 30 percent and the weighted average cost of capital is 10 percent. Use negative signs with answers, when appropriate. Book Value Current Value
Software $Answer ? $Answer ?
Consulting Answer ? Answer ?
Venture Capital Answer ? Answer ?
Answer:
a. ROI = income / Assets
Book Value Current Value
Software Division 0.175 0.13
Consulting Division 0.164 0.182
Venture Capital Division 0.093 0.088
Workings:
i. Book value
Software Division = 12,250/70,000=0.175
Consulting Division = 16,400/100,000=0.164
Venture Capital Division = 56,730/610,000 =0.093
ii. Current value
Software Division = 11,700/90,000=0.13
Consulting Division = 20,020/110,000=0.182
Venture Capital Division= 51,920/ 590,000=0.088
b. Residual income = Income - {Asset x Return on capital 12% }
Book Value Current Value
Software Division 3850 900
Consulting Division 4400 6820
Venture Capital Division -16470 -18880
Workings:
i. Book value
Software Division = 12,250-(70,000*12%)=3850
Consulting Division = 16,400-(100,000*12%)=4400
Venture Capital Division = 56,730-(610,000*12%) =-16470
ii. Current value
Software Division = 11,700-(90,000*12%)=900
Consulting Division = 20,020-(110,000*12%)=6820
Venture Capital Division= 51,920-(590,000*12%)=-18880
c. Economic Value Added ( EVA ) = Net Income After Tax - ( Amount of Capital x Weighted Average Cost of Capital [WACC] )
C. Software Division
(Value Base)
Book Current
Sales 100,000 100,000
Income 12,250 11,700
Assets 70,000 90,000
Liabilities 10,000 10,000
Capital invested 60,000 80,000
(Asset - Liabilities)
Tax on Income(30%) 3675 3510
Income after Tax 8,575 8,190
(Income - Tax on
income) (A)
Capital invested 6,000 8,000
* WACC - 10% ) (B)
EVA (C)=(A)-(B) 2,575 190
Consulting Division
(Value Base)
Book Current
Sales 200,000 200,000
Income 16,400 20,020
Assets 100,000 110,000
Liabilities 14,000 14,000
Capital invested 86,000 96,000
(Asset - Liabilities)
Tax on Income(30%) 4920 6006
Income after Tax 11,480 14,014
(Income - Tax on
income) (A)
Capital invested 8,600 9,600
* WACC - 10% ) (B)
EVA (C)=(A)-(B) 2,880 4,414
Venture Capital Division
(Value Base)
Book Current
Sales 800,000 800,000
Income 56,730 51,920
Assets 610,000 590,000
Liabilities 40,000 40,000
Capital invested 570,000 550,000
(Asset - Liabilities)
Tax on Income(30%) 17019 15576
Income after Tax 39,711 36,344
(Income - Tax on
income) (A)
Capital invested 57,000 55,000
* WACC - 10% ) (B)
EVA (C)=(A)-(B) -17,289 -18,656
Mr. and Mrs. Haley are purchasing beachfront property in an upscale development. The home comes equipped with all furnishings. The Haleys want to get a mortgage that will cover the purchase price plus all the furnishings. What kind of mortgage are they looking for?
Answer: package mortgage
Explanation:
From the question, we are informed that Mr and Mrs. Haley are purchasing beachfront property in an upscale development and that the home comes equipped with all furnishings.
We are further told that the Haleys want to get a mortgage that will cover the purchase price plus all the furnishings. This shows that they are looking for package mortgage.
A package mortgage is a form of mortgage whereby the personal property and the furniture will have to be included when buying the house.
The Clipper Corporation had net operating income of $380,000 and average operating assets of $2,000,000. The corporation requires a return on investment of 18%.
Required ( support your answers with explanations):
a.Calculate the company's return on investment (ROI) and residual income (RI).
b.Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950. If the division planning to make the investment currently has a return on investment of 20% and its manager is evaluated based on the division's ROI, will the division manager be inclined to request funds to make this investment?(Note: the decision model for the division manager is self-interested i.e. centers on the decision's effect on his evaluation criteria)
c.Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950. If the division planning to make the investment currently has a residual income of $50,000 and its manager is evaluated based on the division's residual income, will the division manager be inclined to request funds to make this investment?(Note: the decision model for the division manager is self-interested i.e. centers on the effect on his evaluation criteria)
Answer:
The Clipper Corporation
a. The company's return on investment (ROI) and residual income (RI):
ROI = $380,000/$2,000,000 x 100
= 19%
RI = $380,000 - (18% of $2,000,000)
= 380,000 - $360,000
= $20,000
b. Investment = $70,000
Annual operating income = $12,950
Department's current return on investment = 20%
Actual return on investment for this project = $12,950/$70,000 x 100
= 18.5%
The manager of the division will not be inclined to request funds to make this investment that will yield an ROI of 18.5% when the department is already making 20%. This new investment will dilute his current ROI and adversely affect his performance evaluation.
c. Investment = $70,000
Annual operating income = $12,950
Current divisional residual income = $50,000
Actual residual income from this project,
= $12,950 - (18% of $70,000)
= $12,950 - $12,600
= $350
The division manager will be inclined to request funds for this investment that will increase her Residual Income marginally from $50,000 to $50,350, because her evaluation depends on an absolute figure and not a relative one (ROI).
Explanation:
1. The Clipper Corporation's Residual Income is equal to its operating income minus (minimum required return x operating assets).
2. The Clipper Corporation's Return on Investment is a derivative obtained from dividing the returns of its investment by the cost of the investment.
Here, we are preparing the cpmpany's return on investment (ROI), residual income (RI) etc
a. Computation of the Return on investment (ROI):
Return on investment = (Operating income/Average operating assets) * 100
Return on investment = ($380,000/$2,000,000) * 100
Return on investment = 0.19
Return on investment = 19%
Computation of the residual income (RI)
Residual income = [(Operating income - (Return on investment *Average operating assets)]
Residual income = $380,000 - (18% * $2,000,000)
Residual income = 380,000 - $360,000
Residual income = $20,000
b. Given Information
Investment = $70,000
Annual operating income = $12,950
Department's current return on investment = 20%
The actual return on investment for this project will equals:
= (Annual operating income / Investment) * 100
= ($12,950/$70,000) * 100
= 0.185
= 18.5%
Therefore, the manager of the division will not be inclined to request funds to make this investment that will yield an ROI of 18.5% because the department is already making 20%.
c. Given Information
Investment = $70,000
Annual operating income = $12,950
Current divisional residual income = $50,000
The actual residual income from this project will be:
= Annual operating income - (Return on investment * Investment)
= $12,950 - (18% * $70,000)
= $12,950 - $12,600
= $350
Therefore, the division manager will be inclined to request funds for this investment that will increase the residual Income marginally from $50,000 to $50,350 because her evaluation depends on an absolute figure and not a relative one (Return on investment).
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If a company would still have a cash flow item even if they rejected potential new Project A, should this particular cash flow item be included in Project A's cash flow analysis?
Answer: No
Explanation:
When computing a project analysis for a project, only relevant cash flow should be included in the Project's cash flow analysis. Relevant cash-flow are those that will only occur if the project was embarked on.
If the cash flow in question is still going to occur even if the project wasn't initiated as is the case with Project A, it is not a relevant cash-flow and should not be included in the cash-flow analysis.
Comparing payback period and discounted payback period. Nielsen, Inc. is switching from the payback period to the discounted payback period for small-dollar projects. The cutoff period will remain at three years. Given the following four projects' cash flows, LOADING..., and using a discount rate of %, determine which projects it would have accepted under the payback period and which it will now reject under the discounted payback period. Which projects that would have been accepted under payback period method will now be rejected under the discounted payback period method?
Question Completion:
Given the following four projects' cash flows, and using a discount rate of 10%, ...
project 1 project 2 project 3 project 4
Cost $10,000 $15,000 $8,000 $18,000
Cash Flow Year 1 4,000 7,000 3,000 10,000
Cash Flow Year 2 4,000 5,500 3,500 11,000
Cash Flow Year 3 4,000 4,000 4,000 0
Answer:
Nielsen, Inc.Determination of Projects Acceptance under Payback Period and NPV:
Payback Period NPV
Project 1 Accepted Rejected
Project 2 Accepted Rejected
Project 3 Accepted Accepted
Project 4 Accepted Accepted
Explanation:
1. Data and Calculations:
project 1 project 2 project 3 project 4
Cost $10,000 $15,000 $8,000 $18,000
Cash Flow Year 1 4,000 7,000 3,000 10,000
Cash Flow Year 2 4,000 5,500 3,500 11,000
Cash Flow Year 3 4,000 4,000 4,000 0
Total inflows $12,000 $16,500 $10,500 $21,000
Discount rate = 10%
Payback period Year 3 Year 3 Year 3 Year 2
2. Discount factors: Year 1 = 0.909; Year 2 = 0.826; and Year 3 = 0.751
3. PV of Cash Flows:
project 1 project 2 project 3 project 4
Cost $10,000 $15,000 $8,000 $18,000
Cash Flow Year 1 3,636 6,363 2,727 9,090
Cash Flow Year 2 3,304 4,543 2,891 9,086
Cash Flow Year 3 3,004 3,004 3,004 0
Total PV inflow $9,944 $13,910 $8,622 $18,176
4. NPV ($56) ($1,090) $622 $176
5. Nielsen, Inc.'s payback period is the number of years (or length of time) it takes an investment to reach its break-even point (the point where there is no gain or loss). Nielsen's NPV is the difference between total cash inflows and cash outflows over some periods. A positive NPV for Nielsen shows that the projects should be accepted, while a negative NPV points to some underlying problems with the projects, especially with respect to cash inflows and outflows.
Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?
a. FIFO
b. average
c. LIFO
d. specific identification
Answer: Specific identification
Hope it is correct
Annual demand for a product is 13,000 units; weekly demand is 250 units with a standard deviation of 40 units. The cost of placing an order is $100, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $0.65 per unit.a. To provide a 98 percent service probability, what must the reorder point be?b. Suppose the production manager is told to reduce the safety stock of this item by 100 units. If this is done, what will the new service probability be?
Answer:
a. Reorder point is 1,164 units to provide a 98 percent service probability.
b. the new service probability will be 79% if production manager reduces the safety stock by 100 units.
Explanation:
a. To provide a 98 percent service probability, what must the reorder point be?
This can be calculated as follows:
Step 1: Calculation of optimal order quantity
The optimal order quantity also known as economic order quantity (EOQ) using the following formula:
[tex]EOQ = \sqrt{\frac{2 *D*O}{C} }[/tex] ........................................... (1)
Where,
EOQ = Optimal order quantity = ?
D = Annual demands = 13,000
O = Ordering cost = $100
C = Carrying cost of annual inventory = $0.65 per unit
Substituting the values into equation (1), we have:
[tex]EOQ = \sqrt{\frac{2*13,000*100}{0.65} }[/tex]
[tex]EOQ = \sqrt{\frac{2,600,000}{0.65} }[/tex]
[tex]EOQ = \sqrt{4,000,000}[/tex]
EOQ = 2,000 units
Step 2: Calculation of standard deviation during the lead time
This can be calculated using the following formula:
[tex]SL = \sqrt{L*(S)^{2} }[/tex] ................................................. (2)
Where;
SL = Standard deviation during the lead time = ?
L = Lead time = 4
S = Standard deviation = 40
Substituting the values into equation (2), we have:
[tex]SL = \sqrt{4 *(40)^{2} }[/tex]
[tex]SL = \sqrt{4*1,600}[/tex]
[tex]SL =\sqrt{6.400}[/tex]
SL = 80
Also, z = 2.05 from the standard normal distribution
Step 3: Calculation of reorder point
Total calculate reorder point, we use the following formula:
R = (d * L) + (z * SL) ............................................ (3)
Where;
R = Reorder point = ?
d = Weekly demand = 250
L = Lead time = 4
z = 2.05
SL = Standard deviation during the lead time = 80
Substituting the values into equation (3), we have:
R = (250 * 4) + (2.05 * 80)
R = 1,000 + 164
R = 1,164 units
Therefore, reorder point is 1,164 units to provide a 98 percent service probability.
b. Suppose the production manager is told to reduce the safety stock of this item by 100 units. If this is done, what will the new service probability be?
ISS = Initial safety stock = z * SL = 2.05 * 80 = 164
If the safety stock is reduced by 100 units, we have:
NSS = New safety stock = ISS - 100 = 164 - 100 = 64
The new z (nz) can be obtained as follows:
NSS = nz * SL ................................................. (4)
Where;
NSS = 64
nz = new z = ?
SL = Standard deviation during the lead time = 80
Substituting the values into equation (4) and solve for nz, we have:
64 = nz * 80
nz = 64 / 80
nz = 0.80
For the new z, nz = 0.80, from Standard Normal distribution, the new service probability is 79%.
Therefore, the new service probability will be 79% if production manager reduces the safety stock by 100 units.
On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and fair values of the subsidiary’s assets and liabilities were:
Cash CHF 814,000
Inventory 1,314,000
Property, plant & equipment 4,014,000
Notes payable 2,128,000
Stephanie prepares consolidated financial statements on December 31, 2017. By that date, the Swiss franc has appreciated to $1.10 = CHF 1. Because of the year-end holidays, no transactions took place prior to consolidation.
Required:
a. Determine the translation adjustment to be reported on Stephanie’s December 31, 2017, consolidated balance sheet, assuming that the Swiss franc is the Swiss subsidiary’s functional currency. What is the economic relevance of this translation adjustment?
b. Determine the remeasurement gain or loss to be reported in Stephanie’s 2017 consolidated net income, assuming that the U.S. dollar is the functional currency. What is the economic relevance of this remeasurement gain or loss?
Answer:
a. Translation adjustment = $401,400
b. Remeasurement loss = –$131,400
Explanation:
a. Determine the translation adjustment to be reported on Stephanie’s December 31, 2017, consolidated balance sheet, assuming that the Swiss franc is the Swiss subsidiary’s functional currency. What is the economic relevance of this translation adjustment?
This can determined as follows:
Step 1: Calculation of beginning net asset in
Particular Amount (CHF)
Cash CHF 814,000
Inventory 1,314,000
Property, plant & equipment 4,014,000
Notes payable (2,128,000)
Beginning net asset 4,014,000
Beginning net asset in USD = Beginning net asset in Swiss francs (CHF) * Beginning exchange rate = CHF4.014,000 * $1 = $4,014,000
Step 2: Calculation of ending net asset
Ending net asset in USD = Beginning net asset in Swiss francs (CHF) * Ending exchange rate = CHF4.014,000 * $1.10 = $4,415,400
Step 3: Calculation translation adjustment
Translation adjustment = Ending net asset in USD - Beginning net asset in USD = $4,415,400 - $4,014,000 = $401,400
Economic relevance of this translation adjustment
The positive translation adjustment implies that the equity of stockholders has increased by $401,000.
We obtained a positive value because the net position of the subsidiary in Switzerland is CHF4,014,000 and there was a Swiss franc appreciation of $0.10 (i.e. $1.10 - $1.00 = $0.10).
The translation adjustment of $401,000 does not however implies that it was made as a dollar cash flow. The only condition that can make to turn to a profit is if this operation is sold at CHF4,014,000 on December 31 and the amount realized as a proceed is changed to dollars at ruling exchange rate of $1.10 to a Swiss franc on December 31, 2017.
b. Determine the remeasurement gain or loss to be reported in Stephanie’s 2017 consolidated net income, assuming that the U.S. dollar is the functional currency. What is the economic relevance of this remeasurement gain or loss?
This can be determined as follows:
Beginning net liabilities in Swiss franc = Cash - Note payable = CHF814,000 - CHF2,128,000 = –CHF1,314,000
Beginning net liabilities in USD = Beginning net liabilities in Swiss franc * Beginning exchange rate = –CHF1,314,000 * $1.00 = –$1,314,000
Ending net liabilities in USD = Beginning net liabilities in Swiss franc * Ending exchange rate = –CHF1,314,000 * $1.10 = –$1,445,400
Remeasurement loss = Ending net liabilities in USD – Beginning net liabilities in USD = [–$1,445,400] – [–$1,314,000] = –$131,400
Economic relevance of this remeasurement gain or loss
There is a negative remeasurement or remeasurement lost because the net monetary liability position of the Swiss subsidiary is CHF 1,314,000. The appreciation of the Swiss franc by $0.10 results in a loss of $131,400] that not is unrealized.
The readjustment loss of $131,400 does not however implies that it was a dollar cash outflow. The only condition that can make it to turn to a loss is if this operation is sold on December 31. This will lead to the realization of a transaction gain of $81,400 [i.e. CHF814,000 x ($1.10 - $1.00)].
Also, the Swiss franc note payable will be paid off by using the US dollar. This will bring about the realization of a truncation loss of $212,800 [i.e. CHF2,128,000 x ($1.10 - $1.00)].
If D = 8,200 per month, S = $44 per order, and H = $2.00 per unit per month, a) What is the economic order quantity? The EOQ is 601601 units (round your response to the nearest whole number). b) How does your answer change if the holding cost doubles? The EOQ is 425425 units (round your response to the nearest whole number). c) What if the holding cost drops in half? The EOQ is nothing units (round your response to the nearest whole number).
Answer: A) The Economic Order Quantity is 601 units.
B)The Economic Order Quantity is 425 units.
C )The Economic Order Quantity is 849 units
Explanation:
EOQ, economic order quantity = [tex]\sqrt{ 2 x Dx S/ H}[/tex]
where D= demand
S = Order cost
H= holding cost.
a)when D = 8,200 per month, S = $44 per order, and H = $2.00
EOQ, economic order quantity = [tex]\sqrt{2x D x S /H}[/tex]
= [tex]\sqrt{2 x 8,200 x 44 /2 }[/tex] = [tex]\sqrt{360,800}[/tex] = 600.666= 601 units
b) if the holding cost doubles, holding cost = HX 2 = 2 X 2 = 4
EOQ, economic order quantity =[tex]\sqrt{ 2 x D xS /H }[/tex]
= [tex]\sqrt{2 X 8,200 X 44 / 2 X $2}[/tex] = [tex]\sqrt{180,400}[/tex] = 424.73 = 425units
C) if the holding cost drops in half, holding cost = H/2 = 2 X 1/2 = 1
EOQ, economic order quantity =[tex]\sqrt{ 2 x D xS /H }[/tex]
= [tex]\sqrt{2 X 8200 x 44/1}[/tex] = [tex]\sqrt{721,600}[/tex] = 849.47 = 849units
Company XYZ, has the following capital structure:Debt $50MCommon $30MPreferred of $20MPrice of 5-year, par value 6% annual coupon Bonds that sell today for $1,050.Preferred dividend in year 1 of $5 and a preferred stock price of $90.Common stock has a required return of 12%Tax rate is 40%Solve for the Company WACC?
Answer:
The Company WACC is 6.1%
Explanation:
WACC is the averge cost of capital that a company bears based on the weights of each financing option available to the company.
First we need to calculate the Market values
Debt = $50 M x $1,050 / $1,000 = $52.5 M
Common Equity = $30 M
Preferred equity = $20 M x $90 / $100 = $18 M
Total Capital = $52.5 M + $30 M + $18 M = $100.5
Now we need to calculte the Cost of each financing option
Cost of Debt
Price of Bond = C x ( 1 - ( 1 + YTM )^-n / r + Face value / ( 1 + YTM )^n
$1,050 = $60 x ( 1 - ( 1 + YTM )^-5 / YTM + $1,000 / ( 1 + YTM )^5
YTM = 4.85%
Cost of Common Equity = 12%
Cost of Preseferred Stock = $5 / $90 = 0.05556 = 5.56%
Now use following fomula to calculte the WACC
WACC = ( Common Equity weight x Cost of Common equity ) + ( Weight of Debt x Cost of Debt x ( 1 - Tax rate ) + ( Weight of Preferred Shares x Cost of Preferred Shares )
Now Place all the valus in the formula
WACC = ( $30 / $100.5 x 12% ) + ( $52.5 / $100.5 x ( 1 - 40% ) x 4.85% ) + ( $18 / $100.5 x 5.56% )
WACC = 3.58% + 1.52% + 1.00% = 6.1%
In a simple random sample of 800 people age 20 and over in a certain country, the proportion with a certain disease was found to be 0.165 (or 16.5%). Complete parts (a) through (c) below. a. What is the standard error of the estimate of the proportion of all people in the country age 20 and over with the disease? (Round to four decimal places as needed.) b. Find the margin of error, using a 95% confidence level, for estimating this proportion. m=______(round to three decimal places as? needed.)c. Report the 95% confidence interval for the proportion of all Americans age 20 and over with diabetes.
Answer and Explanation:
Please find attachment
I'm calculating standard error we used the formula standard deviation/√number of samples. Standard deviation is not known and so it was first calculated
Margin of error and confidence intervals were also calculated using their formulas
Describe the main differences for revenue spending between ""for profit"" companies and ""not for profit"" companies. Describe how the main financial documents of Goodwill are similar to those companies that are ""for profit"". Describe how the main financial documents of Goodwill are difference to those companies that are ""for profit"".
Answer with Explanation:
Requirement 1:1. Profit Organization
The aim of profit organization is to maximize the wealth of shareholders by increasing its profits. The owners of the company get dividends and appreciation in the value as a return from the company.
2. Nonprofit Organization
The primary mission of Non-profit organization is to benefit the community by helping them and the earnings generation is not the primary goal of the company. ACCA is an entity that delivers quality education to its students and also earns profit on it but the profit margin kept is as low as possible to keep its operation running. Other examples are Rolex, NGO's, National Health Institutes, etc.
In other words, these institutes are for charitable purpose and their primary objective is not making profits.
Key Difference Between Profit Organization and Non-profit Organization
A profit organization's primary objective is to maximize profits whereas the Non profit organizations work for delivering services and products that helps in uplifting the society from their donations.A profit organization is registered as a sole proprietorship or partnership or a corporation. Whereas Non profit organization is registered as a charity club, association of person, trust, corporations, etc.Usually major source of income of Non profit organization comes from donations, government and corporation grants, subscriptions, etc. Whereas the major source of profit organization is income generated from the sale of goods and services. Non profit organization - the major incomes are donation, grant, legacies, subscription, etc.Requirement 2:
Profit making organization have to publish all financial statements which includes income statement, balance sheet, cash flow statement, statement of changes in equity, etc whereas the non profit organization only publishes balance sheet and cash flow statement. If the Non profit organization is involved in selling of products and services then the organization will also have to prepare income statement.
The non profit organization doesn't pays andy dividends as it is a charity firm and all it does is, it spends it money for the welfare of the community. Whereas the profit organization have to retain a share of earned profits and then distributes the remainder to shareholders.
The profit making organization publishes changes in equity statement whereas the charitable firm is not required to publish such things because its primary objective is to spend on the welfare of the community.
SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon with new potatoes and mixed vegetables. During the most recent week, the company prepared 4,800 of these meals using 2,350 direct labor-hours. The company paid its direct labor workers a total of $23,500 for this work, or $10.00 per hour. According to the standard cost card for this meal, it should require 0.50 direct labor-hours at a cost of $9.40 per hour. Required: 1. What is the standard labor-hours allowed (SH) to prepare 4,800 meals? 2. What is the standard labor cost allowed (SH × SR) to prepare 4,800 meals? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance?
Answer:Please find answers in the explanation column
Explanation:
a)standard labor-hours allowed (SH) to prepare 4,800 meals
standard labor-hours =Actual output X standard direct labor hours
4,800 X 0.50 = 2,400hours
B) standard labor cost allowed
direct labor-hours per houR = $9.40
standard labor-hours = 2,400
standard labor cost =direct labor-hours per houR xstandard labor hours
= $9.40 x 2,400= $22,560
c) labor spending variance= Actual cost incurred - Standard Labor cost
= 23,500 - 22,560= 940 -- Which is unfavorable because the actual is cost is greater than the standard labor cost
D)the labor rate variance and the labor efficiency variance?
labor rate variance= (Actual rate - standard rate ) X Actual hours
($10.00 -$9.40) X 2,350= $1,410
Labor efficiency variance=(Actual hrs - standard hrs allowed) x standard rate
2,350- 2,400) X $9.40= $470 --- Favourable as the actual hours used is less than the standard hours .
If the economy is normal, Charleston Freight stock is expected to return 16.5 percent. If the economy falls into a recession, the stock's return is projected at a negative 11.6 percent. The probability of a normal economy is 70 percent while the probability of a recession is 30 percent. What is the variance of the returns on this stock
Answer:
Variance of the returns of this stock is 0.01658177
Explanation:
Mean return = 0.7 * 16.5% + 0.3*-11.6%
Mean return = 0.1155 - 0.0348
Mean return = 0.0807
Mean return = 8.07%
Variance of the return = 0.7 * (16.5%-8.07%)^2 + 0.3 * (-11.6%-8.07%)^2
Variance of the return = 0.7 * (8.43%)^2 + 0.3 * (-19.67%)^2
Variance of the return = 0.7 * (0.0843)^2 + 0.3 * (-0.1967)^2
Variance of the return = 0.0049745 + 0.011607267
Variance of the return = 0.01658177
________ are a means for consumers to share text, images, audio and video information with each other and with companies, and vice versa. Group of answer choices Social media Microsites Interstitials Pay-per-click ads Mobile ads
Answer:
Social Media.
Explanation:
Social media are increasingly being used by people and companies around the world. Through it it is possible to share information, photos, videos, social interactions, etc.
For companies, these platforms are more than just an interaction tool, they can act as a marketing channel that will strengthen the relationship with the consumer, in addition to attracting new customers, strengthening the brand image, engaging consumers, creating shopping desires, providing data on consumer trends, etc.
Social Media are a means for consumers to share text, images, audio and video information with each other.
The following information should be considered:
Social media are increasingly being used by people and companies around the world. Through it is possible to share information, photos, videos, social interactions, etc.Learn more: brainly.com/question/17429689
Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations:
Selling price $90
Units in beginning inventory 0
Units produced 3,400
Units sold 3,000
Units in ending inventory 400
Variable costs per unit:
Direct materials $21
Direct labor $38
Variable manufacturing overhead $6
Variable selling and administrative expense $4
Fixed costs:
Fixed manufacturing overhead $54,400
Fixed selling and administrative expense $3,000
What is the unit product cost for the month under variable costing?
Answer:
$65 per unit
Explanation:
Calculation for the unit product cost for the month under variable costing for Aaron Corporation.
Variable costs per unit:
Direct materials $21
Direct labor $38
Variable manufacturing overhead $6
Variable costing unit product cost $ 65
Therefore the unit product cost for the month under variable costing will be $65 per unit.
Find the operating cash flow for the year for Harper Brothers, Inc. if it had sales revenue of , cost of goods sold of , sales and administrative costs of , depreciation expense of , and a tax rate of .
Answer:
$101,960,000
Explanation:
For the computation of operating cash flow first we need to follow some steps which are shown below:-
Step 1
EBIT = Sales - Cost of goods sold - Sales and administrative costs - Depreciation
= $302,100,000 - $135,900,000 - $39,600,000 - $65,000,000
= $61,600,000
Step 2
Net income = EBIT - Tax
= $61,600,000 - ($61,600,000 × 40%)
= $61,600,000 - $24,640,000
= $36,960,000
and finally
Operating cash flow = EBIT - Taxes + Depreciation
= $61,600,000 - $24,640,000 + $65,000,000
= $101,960,000
Emira wants to buy a classic drawing from an art centre in Kuala Lumpur. She managed to secure a painting by a renowned Malaysian artist that costs her RM99,800. Currently, she only has RM12,650 in her savings account and she intends to use 70% of her saving to fund the purchase. If she borrows the remaining amount from Bank Atlantis that levies 4.77% of interest rates, determine the total interest payment that she will pay if the agreement takes 10 years of settlement.
Answer:
RM23,617.80
Explanation:
cost of the painting RM99,800
she has RM12,650 on her bank account and she will use 70% = RM8,855 as down payment. She will borrow the rest = RM99,800 - RM8,855 = RM90,945
interest charged on the loan 4.77% / 12 = 0.3975%
120 monthly periods (10 years)
using the present value formula to determine the monthly payment:
PV = monthly payment x annuity factor
monthly payment = PV / annuity factor
PV = 90,945
annuity factor (120 periods, 0.3975%) = 95.26168
monthly payment = 90,945 / 95.26168 = 954.69
total payments = 120 x 954.69 = RM114,562.80
interests paid = RM114,562.80 - RM90,945 = RM23,617.80
24. Emotional labor is higher in jobs requiring: 1 point A. limited hours of routine work. B. working in irregular shifts. C. working in isolation. D. frequent interaction with clients. E. skilled knowledge such as accounting.
Answer:
The correct answer is:
frequent interaction with clients. (D.)
Explanation:
Emotional labour refers to the suppression or the management of one's emotions that are felt but not expressed while at a job. Essentially, emotional labour requires workers to:
Hide emotions they do feel
show emotions they do not feel
create an appropriate emotion for the situation.
These can be achieved through surface acting and deep acting.
Customer service and retail jobs require a lot of emotional labour. For instance, if the customer service agent is angry, it is not ethical in his/her job description to show such anger to the clients, hence he/she has to force a smile just to give a satisfactory service to the client. some determinants of emotional labour include:
1. societal, organizational or occupational norms
2. emotional expressiveness
3. supervisory regulation of display rules
During 2021, Deluxe Leather Goods issued 707,000 coupons which entitles the customer to a $5.00 cash refund when the coupon is submitted at the time of any future purchase. Deluxe estimates that 71% of the coupons will be redeemed. 261,000 coupons had been processed during 2021. Deluxe recognizes coupon expense in the period coupons are issued. At December 31, 2021, Deluxe should report a liability for unredeemed coupons of:
Answer:
Deluxe should report a liability for unredeemed coupons of $1,204,850
Explanation:
Estimated coupons to be redeemed $501,970
(707,000 * 71%)
Less: Coupons redeemed $261,000
Coupons unredeemed $240,970
X Cost per Coupon 5.00
Liability for unredeemed Coupons $1,204,850
Debra and Merina sell electronic equipment and supplies through their partnership. They wish to expand their computer lines and decide to admit Wayne to the partnership. Debra's capital is $200,000, Merina's capital is $160,000, and they share income in a ratio of 3:2, respectively.Required:Record Wayne's admission for each of the following independent situations:a. Wayne directly purchases half of Merina's investment in the partnership for $97,000.b. Wayne invests the amount needed to give him a one-third interest in the partnership's capital if no goodwill or bonus is recorded.
Answer:
a. Merina's captal is $160,000. Half would be $80,000.
Entry;
DR Merina, Capital ..................................................................$80,000
CR Wayne, Capital ....................................................................................$80,000
(To record purchase of half of Merina Capital)
b.
DR Cash......................................................................$180,000
CR Wayne, Capital.........................................................................$180,000
(To record Wayne investment)
Working
The current Capital amount is;
= 200,000 +160,000
= $360,000
If Wayne joins and adds to this such that he owns 1/3 then;
2/3x = 360,000
x = 360,000/2/3
x = $540,000
Wayne's share would be;
= 1/3 * 540,000
= $180,000
The journal entries that would take place will take effect as A- A debit in Merina's capital amount and Cash account as $17000 and a credit effect in Wayne's capital account. The amount of debit and credit will be $97000.
And for B- There will be Debit in Cash account effecting a credit in The Wayne's capital account. The amount effecting the debit and credit side will be $180,000.
The journal entries are added in the images attached to the answer. The entries would take place in the journal entries on the respective date of their occurrence.( Image attached below).When Wayne is introduced as partner for one third share the calculation of the amount of his capital would be shown as considering the capital as x. The capital by existing partners is $360000. (Image below).,[tex]\dfrac{2}{3}x\ = 360000[/tex]
[tex]x= \dfrac {360000}{\dfrac{2}{3}}[/tex]
Now the value of x will be calculated as
[tex]x= \dfrac{540000}{3}[/tex]
[tex]x=180000[/tex]
Therefore Wayne's capital will be calculated as $180,000, so he will be required to bring in additional $180,000 capital in the firm for getting one third share in the profits and losses of the company.Hence, the correct statements for A will be that Wayne pays $97000 which will be divided in Merina's capital and cash accounts in the proportion of $80000 and $17000 respectively.
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Brodrick Company expects to produce 21,200 units for the year ending December 31. A flexible budget for 21,200 units of production reflects sales of $508,800; variable costs of $63,600; and fixed costs of $142,000. Assume that actual sales for the year are $587,200 (26,300 units), actual variable costs for the year are $113,900, and actual fixed costs for the year are $137,000. Prepare a flexible budget performance report for the year.
Answer:
Flexible budget performance report for the year
Flexible budget Actual Variance Fav/Unf
Sales 631,200 587,200 44,000 UNF
Variable cost (78,900) (113,900) 35,000 F
Contribution 416,000 368,000 48,000 UNF
margin
Fixed cost (142,000) (137,000) 5000 UNF
Net operating 274,000 231,000 43,000 UNF
income
Working:
a. At flexible budget, selling price per unit = $508,800 / 21,200 = $24 per unit . Total sales =26,300 *24 = $631,200
b. Variable cost per unit = $63,600 / 21,200 = $3 per unit . Total cost = 3 * 26,300 = 78,900
A negative supply shock, such as the OPEC oil price increases of the early 1970s, can be illustrated by a shift to the ______________ of the short-run aggregate supply curve and a shift _________________ of the short-run Phillips curve.
Answer: Leftward; upwards.
Explanation: A Supply shock is a term used to describe the sudden and unexpected change in the supply of a given product or commodity usually indicated by the leftward shift if the shock is negative in the aggregate supply curve and an upward change in direction in the Phillips curve both on the short run. Both curves are used to demonstrate graphically the impacts of shifts in supply for a given product or commodity.
Q3) Creative Sports Design (CSD) manufactures a standard-size racket and an oversize racket. The firm’s rackets are extremely light due to the use of a magnesium-graphite alloy that was invented by the firm’s founder. Each standard-size racket uses 0.125 kilograms of the alloy and each oversize racket uses 0.4 kilograms; over the next two-week production period only 80 kilograms of the alloy are available. Each standard-size racket uses 10 minutes of manufacturing time and each oversize racket uses 12 minutes. The profit contributions are $10 for each standard-size racket and $15 for each oversize racket, and 40 hours of manufacturing time are available each week. Management specified that at least 20% of the total production must be the standard-size racket. How many rackets of each type should CSD manufacture over the next two weeks to maximize the total profit contribution? Assume that because of the unique nature of their products, CSD can sell as many rackets as they can produce.
Answer:
165 oversize rackets = 32 machine hours (79.71% of total production)
42 standard size rackets = 7 machine hours (20.29% of total production)
total profit contribution = (165 x $15) + (42 x $10) = $2,895
Explanation:
materials machine hours profit
standard size 0.125 kg 1/6 $10
oversize 0.4 kg 1/5 $15
constraints 80 kilograms of materials
40 hours of manufacturing
profit per machine hour:
standard size $10 x 6 = $60 x 40 hours = $2,400 (total possible production = 240 rackets)
oversize $15 x 5 = $75 x 40 hours = $3,000 (total possible production = 200 rackets)
profit per kilogram of alloy:
standard size $10 / 0.125 = $80 x 80 kgs = $6,400 (total possible production = 480 rackets)
oversize $15 / .4 = $37.50 x 80 hours = $3,000 (total possible production = 200 rackets)
since the most important constraint is the manufacturing hours available, the company should try to produce the products that yield the highest contribution margin per machine hour. In this case, at least 20% of total production must be standard size rackets, so the remaining 80% should be oversize rackets that yield a higher profit.
165 oversize rackets = 32 machine hours (79.71% of total production)
42 standard size rackets = 7 machine hours (20.29% of total production)
total manufacturing time = 40 hours
if we produce 166 oversize rackets and 41 standard size rackets, total manufacturing time will exceed 40 hours (40.03 hours exactly).
Problem 9-18 Comprehensive Variance Analysis [LO9-4, LO9-5, LO9-6]
Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:
Flexible Budget Actual
Sales (3,000 pools) $ 179,000 $ 179,000
Variable expenses:
Variable cost of goods sold* 33,390 44,540
Variable selling expenses
11,000
11,000
Total variable expenses
44,390
55,540
Contribution margin
134,610
123,460
Fixed expenses:
Manufacturing overhead 50,000 50,000
Selling and administrative 75,000 75,000
Total fixed expenses
125,000
125,000
Net operating income (loss) $ 9,610 $
(1,540
)
*Contains direct materials, direct labor, and variable manufacturing overhead.
Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to "get things under control." Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:
Standard Quantity or Hours Standard Price
or Rate Standard Cost
Direct materials 3.6 pounds $
2.00
per pound $ 7.20
Direct labor 0.5 hours $
6.60
per hour 3.30
Variable manufacturing overhead 0.3 hours* $
2.10
per hour
0.63
Total standard cost per unit $ 11.13
*Based on machine-hours.
During June the plant produced 3,000 pools and incurred the following costs:
Purchased 15,800 pounds of materials at a cost of $2.45 per pound.
Used 10,600 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
Worked 2,100 direct labor-hours at a cost of $6.30 per hour.
Incurred variable manufacturing overhead cost totaling $3,000 for the month. A total of 1,200 machine-hours was recorded.
It is the company’s policy to close all variances to cost of goods sold on a monthly basis.
Required:
1. Compute the following variances for June:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.
Answer:
1 a. Materials price and quantity variances.
Material price variance = (Actual price - Standard price) * Actual Quantity purchased
= ($2.45 - $2) * 15,800
= $0.45 * 15,800
= $7110 (Unfavorable)
Materials Quantity variance = (Actual Quantity used - Standard Quantity allowed) * Standard price
(10600 - 3000 * 3.6) * $2
= (10,600 - 10,800) * $2
= 200 * $2
= 400 (Favorable)
b. Labor rate and efficiency variances.
Labor rate variance = (Actual rate - standard rate) * Actual hours
= (6.30 - 6.6) * 2,100
= 0.3 * 2,100
= 630 (Favorable)
Labor Efficiency variance = (Actual hours - standard hours allowed) * Standard rate
= (2100 - 3000 * 0.5) * 6.6
= (2,100 - 1,500) * 6.6
= 600 * 6.6
= 3960 (Unfavorable)
c. Variable overhead rate and efficiency variances
Variable overhead rate variance = (Actual rate - Standard rate * Actual machine hours)
= 3000 - (2.10 * 1200)
= 3,000 - 2,520
= 480 Unfavorable
Variable overhead Efficiency variance = (Actual hours - standard hours allowed)* Standard rate
= (1200 - 3000 * 0.3) * 2.10
= (1200 - 900) * 2.10
= 300 * 2.10
= 630 (Unfavorable)
2. Variances Amount
Material price variance 7,110 U
Material quantity variance 400 F
Labor rate variance 630 F
Labor efficiency variance 3,960 U
Variable overhead rate variance 480 U
Variable overhead efficiency variance 630 U
Net variance 11,150 U
The net variance of all the variance of the month is 11,150 (Unfavorable)
Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the most recent operating period: Total Company Southern Division Northern Division Sales $ 418,000 $ 193,000 $ 225,000 Variable expenses $ 130,880 $ 79,130 $ 51,750 Traceable fixed expenses $ 186,000 $ 77,000 $ 109,000 Common fixed expense $ 79,420 $ 36,670 $ 42,750 The common fixed expenses have been allocated to the divisions on the basis of sales. What is the company's overall net operating income if it operates at the break-even points for its two divisions?
Answer:
Neelon Corporation
Total Company Southern Northern
Division Division
Sales $ 418,000 $ 193,000 $ 225,000
Variable expenses $ 130,880 $ 79,130 $ 51,750
Traceable fixed expenses $ 186,000 $ 77,000 $ 109,000
Common fixed expense $ 79,420 $ 36,670 $ 42,750
Net operating income $ 21,700 $200 $21,500
Explanation:
a) Data and Calculations:
Total Company Southern Northern
Division Division
Sales $ 418,000 $ 193,000 $ 225,000
Variable expenses $ 130,880 $ 79,130 $ 51,750
Traceable fixed expenses $ 186,000 $ 77,000 $ 109,000
Common fixed expense $ 79,420 $ 36,670 $ 42,750
Net operating income $ 21,700 $200 $21,500
Neelon Corporation reaches break-even point when it will make no profit or loss. This implies that its break-even point is reached when sales revenue equals both variable and fixed costs. The excess that Neelon Corporation generates from sales revenue over total costs is regarded as operating income.
Gen-Fast Shoes wants to expand internationally and is deciding if its line of tennis shoes can be sold at a high price in Europe. One way for Gen-Fast Shoes to assess this is to determine whether these types of shoes in the foreign market offer customers greater.
a. cost.
b. exports.
c. value.
d. competition.
e. production.
Answer: value
Explanation:
From the question, we are informed that Gen-Fast Shoes wants to expand internationally and is deciding if its line of tennis shoes can be sold at a high price in Europe.
One way for Gen-Fast Shoes to assess this is to determine whether these types of shoes in the foreign market offer customers greater value.
Value simply means the worth of something. When people realize that the tennis shoes are worth it, it'll command a high value.
What is another name for progress monitoring? a. Curriculum-based measurement c. Curriculum-based learning b. Assessment d. None of these
Answer:
Curriculum based measurement
Answer:
a. Curriculum-based measurement
It's correct
Assume you have a margin account with a 50% initial margin. You purchase 100 shares of stock at $80 per share. The price increases to $100 per share. What is the net value of your investment (margin) now
Answer:
Net value of the investment (margin) is $6,000
Explanation:
The initial margin = (100 shares * $80) * 50%
The initial margin = $4,000
Increase in the Margin value = 100 shares* ($100-$80)
Increase in the Margin value = 100 shares * $20
Increase in the Margin value =$2,000
Net value of the investment (margin) = $4,000 + $2,000
Net value of the investment (margin) = $6,000
The following data relate to direct materials costs for February: Materials cost per yard: standard, $1.93; actual, $2.03 Standard yards per unit: standard, 4.68 yards; actual, 4.96 yards Units of production: 9,400 Calculate the direct materials price variance. a.$4,399.20 favorable b.$940.00 unfavorable c.$4,662.40 favorable d.$4,662.40 unfavorable
Answer:
d.$4,662.40 unfavorable
Explanation:
Calculation for direct materials price variance
The first step is to find the Actual quantity variance using the formula
Actual quantity variance =Actual units produced* Actual yard used
Let plug in the formula
Actual quantity variance=9,400*4.96 yards
Actual quantity variance=$46,624
Second step is to calculate for the Direct material price variance using this formula
Direct material price variance= ( Standard price -Actual price)* Actual quantity used
Let plug in the formula
Direct material price variance=($1.93-$2.03)*$46,624
Direct material price variance=(-0.1*46,624)
Direct material price variance=-$4,662.40 Unfavorable
Therefore the Direct material price variance will be $4,662.40 Unfavorable
