Answer:
C. Site B
Explanation:
A benefit-cost (B/C) method is a decision making techi=niques that uses benefit-cost ratio (BCR) to give a summary of overall relationship between the relative benefits and costs and a project being proposed.
To calculated the present values (PV) of Maintenance and Operations (M&O) Cost, Benefits and Disbenefits, we use cumulative discounting factor (CDF) for calculating the present value (PV) of an ordinary annuity as follows:
CDF = [{1 - [1 / (1 + r)]^n} / r] …………………………………. (1)
Where;
r = interest rate = 12%, or 0.12
n = number of years = 5
Substitute the values into equation (1), we have:
CDF = [{1 - [1 / (1 + 0.12)]^5} / 0.12] = 3.60
We can now calculate the B?C of each Site as follows as follows:
a. Calculation of B/C ratio of Site A
Initial cost = $55
PV of M&O Cost = M&O Cost per year * CDF = $3 * 3.60 = $10.80
PV of Benefits = Benefits per year * CDF =$20 * 3.60 = $72.00
PV of Disbenefits = Disbenefits per year * CDF = $0.5 * 3.60 = $1.80
PV of Total Cost = Initial cost + PV of M&O cost + PV of Disbenefits = $55 + $10.80 + $1.80 = $67.60
B/C ratio of Site A = PV of Benefits / PV of tota cost = $72.00 / $67.60 = 1.07
b. Calculation of B/C ratio of Site B
Initial cost = $70
PV of M&O Cost = M&O Cost per year * CDF = $4 * 3.60 = $14.40
PV of Benefits = Benefits per year * CDF =$29 * 3.60 = $104.40
PV of Disbenefits = Disbenefits per year * CDF = $2 * 3.60 = $7.20
PV of Total Cost = Initial cost + PV of M&O cost + PV of Disbenefits = $70 + $14.40 + $7.20 = $91.60
B/C ratio of Site A = PV of Benefits / PV of tota cost = $104.40 / $91.60 = 1.14
b. Calculation of B/C ratio of Site B
Initial cost = $200
PV of M&O Cost = M&O Cost per year * CDF = $6 * 3.60 = $21.60
PV of Benefits = Benefits per year * CDF =$55 * 3.60 = $198.00
PV of Disbenefits = Disbenefits per year * CDF = $2.1 * 3.60 = $7.56
PV of Total Cost = Initial cost + PV of M&O cost + PV of Disbenefits = $200 + $21.60 + $7.56 = $229.16
B/C ratio of Site A = PV of Benefits / PV of tota cost = $198.00 / $229.16 = 0.86
Conclusion
1. Since the B/C ratio of only Site A and Site B are greater than 1, both are acceptable.
2. But since Site B's B/C ratio of 1.14 is greater Site A's B/C ratio of 1.07, Site B is the most acceptable. Therefore, the correct option is C. Site B.
Budgeted variable overhead for the year is $150,000. Expected activity is 30,000 standard direct labor hours. The actual hours worked were 15,000 and the standard hours allowed for actual production were 18,000. The variable overhead efficiency variance is:
Answer:
-$15,000 favorable variance
Explanation:
variable overhead efficiency variance = standard overhead rate x (actual hours - standard hours)
standard variable overhead rate = $150,000 / 30,000 = $5actual hours 15,000standard hours 18,000variable overhead efficiency variance = $5 x (15,000 - 18,000) = $5 x (-3,000) = -$15,000 favorable variance
In cash basis accounting, for tax purposes:
a. Income is recognized when it is actually or constructively received and expenses are recognized when they are actually or constructively incurred, regardless of when paid.
b. Income is recognized when it is earned regardless of when received and expenses are recognized when they are actually or constructively incurred.
c. Income is generally recognized when it is actually or constructively received and expenses are generally recognized when they are paid.
d. The cash basis is not allowed for businesses reported on Schedule C.
Answer: Income is generally recognized when it is actually or constructively received and expenses are generally recognized when they are paid.
Explanation:
In cash basis accounting method, it should be noted that revenues are recognized when they are gotten while for the expenses, they are recognized when they are paid out in cash.
The cash basis for of accounting is the opposite of the accrual method of accounting whereby revenue and expenses will be recognized when incurred.
This is where what I call a deviant comes in. Every team needs a deviant, someone who can help the team by challenging the tendency to want too much homogeneity, which can stifle creativity and learning. Deviants are the ones who stand back and say, ‘Well, wait a minute, why are we even doing this at all? What if we looked at the thing backwards or turned it inside out?’ That’s when people say, ‘Oh, no, no, no, that’s ridiculous,’ and so the discussion about what’s ridiculous comes up. Unlike the CFO I mentioned before, who derailed the team by shutting down discussions, the deviant opens up more ideas, and that gets you a lot more originality. In our research, we’ve looked carefully at both teams that produced something original and those that were merely average, where nothing really sparkled. It turned out that the teams with deviants outperformed teams without them. In many cases, deviant thinking is a source of great innovation."According to Hackman, a deviant may help a group consider _______, but if the deviant has a strong personality and limits the input of others, the problem of ________ , may arise.
Answer:
According to Hackman, a deviant may help a group consider out-of-box thinking, but if the deviant has a strong personality and limits the input of others, the problem of complacency, may arise.
Explanation:
It's from the book "Leading Teams" of J. Richard Hackman, the Edgar Pierce Professor of Social and Organizational Psychology at Harvard University and a leading expert on teams.
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2018 with an allowance for sales returns of $400,000. During 2018, Halifax sold merchandise on account for $12,500,000. This merchandise cost Halifax $8,750,000 (70% of selling prices). Also during the year, customers returned $613,000 in sales for credit. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. Prepare an entry to record actual merchandise returns as they occur (not adjusting the allowance for sales returns), and then record a year-end entry to adjust the allowance for sales returns to its appropriate balance. 2. What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?
Answer:
Please refer to the below explanations.
Explanation:
A.
Sales return and allowance a/c Dr $613,000
To accounts receivable A/c Cr $613,000
(Being retuned goods that is recorded)
Merchandise inventory A/c Dr $429,100
($613,000 × 70%)
To cost of goods sold A/c Cr $429,100
(Being cost of goods sold that was recorded)
Estimated return is therefore;
= Sale value of merchandise × return percentage - actual return
= $12,500,000 × 5% - $613,000
= $625,000 - $613,000
= $12,000
B.
Sales return and allowance A/c Dr $12,000
To accounts receivable A/c Cr $12,000
(Being returned goods that were recorded)
Merchandise inventory A/c Dr $8,400
($12,000 × 70%)
To cost of goods sold A/c Cr $8,400
(Being cost of goods sold that were recorded)
Therefore, the computation for the year end allowance for sales return is same as $8,400.
Historically the stock market goes up when there is bad news on unemployment. The latest statistics show the unemployment rate is skyrocketing so this could be a good time to buy stocks.
The arguments target is:
A. Bad news on unemployment
B. The stock market in the past when there is bad news on unemployment
C. The stock market now
Answer: C. The stock market now
Explanation:
The Argument target refers to the subject of the discussion in question. The speaker in question is attempting to explain why it would be a good time to buy stocks in the present which concerns the stock market today making it the subject.
The speaker does this by calling into evidence, the correlations between variables in the past and showing that with one variable ( high unemployment) currently in effect, the other variable (increasing stock prices) which it correlates with therefore has a chance of happening in the present.
ABC Industries is a division of a major corporation. Data concerning the most recent year appears below: Sales $ 17,910,000 Net operating income $ 1,199,970 Average operating assets $ 4,250,000 The division's return on investment (ROI) is closest to:
Answer:
28.23%
Explanation:
ABC corporation has a sales of $17,910,000
The net operating income is $1,199,970
The average operating assets is $4,250,000
Therefore, the ROI can be calculated as follows
ROI= Net operating income/Average operating assets
= $1,199,970/$4,250,000
= 0.2823×100
= 28.23%
Hence the division's return on investment is closest to 28.23%
The total factory overhead for Bardot Marine Company is budgeted for the year at $367,500. Bardot Marine manufactures two types of boats: speed boats and bass boats. The speedboat and bass boat each require three direct labor hours for manufacture. Each product is budgeted for 5,000 units of production for the year.
When required, round all per unit answers to the nearest cent.
A. Determine the total number of budgeted direct labor hours for the year in each department.
Fabrication direct labor hours
Assembly direct labor hours
B. Determine the departmental factory overhead rates for both departments.
Fabrication $ per dlh
Assembly $ per dlh
C. Determine the factory overhead allocated per unit for each product using the department factory overhead allocation rates.
Speedboat: $ per unit
Bass boat: $ per unit
Question Completion:
The speed boat requires 2 hours in fabrication and 1 hour in assembly. The bass boat requires 1 hour in fabrication and 2 hours in assembly.
Answer:
Bardot Marine CompanyA. Determination of the total number of budgeted direct labor hours in each department:
Speed boats Bass boats Total hours
Direct labor hours:
Fabrication 10,000 5,000 15,000
Assembly 5,000 10,000 15,000
Total 15,000 15,000 30,000
B. Determination of the departmental factory overhead rates for both departments:
Overhead rate = $367,500/30,000 = $12.25
Fabrication $ per dlh = $12.25
Assembly $ per dlh = $12.25
C. Determination of the factory overhead allocated per unit for each product using the department factory overhead allocation rates:
Speedboat: $ per unit = $36.75 ($12.25 x 3)
Bass boat: $ per unit = $36.75 ($12.25 x 3)
Explanation:
a) Data and Calculations:
Total factory overhead = $367,500
Speed Boats Bass Boats
Budgeted units 5,000 5,000
Hours per unit 3 3
Total direct labor hour 15,000 15,000
Fabrication 2 hrs 1 hr
Assembly 1 hr 2 hrs
Total direct labour hours:
Fabrication 10,000 5,000
Assembly 5,000 10,000
Best Foods, Inc. has an unlevered cost of capital of 10 percent. The company generates EBIT of $4,250 per year and has a tax rate of 35 percent. If the firm adds $10,000 of debt to its capital structure, what is the value of the levered firm?
Answer:
The value of the levered firm $31,125
Explanation:
Value of Firm is the value of present value of expected future earning. It is calculated by dividing the earning after tax by the cost of capital while considering that the business will operate for the foreseeable future time.
EBIT $4,250.00
Less
Interest $0.00
EBT $4,250.00
Tax 35% x 4250 $1,487.50
EAT $2,762.50
Cost of Capial 10%
Value of firm = EAT / Cost of Capital = $2,762.5 / 10% = $27,625
Debt after tax = $10,000 x ( 1 - 0.35 ) = $6,500
Value of Equity = Value of firm - Debt after tax = $27,625 - $6,500 = $21,125
Value of debt = $10,000
Value of levered Firm = $21,125 + $10,000 = $31,125
Welcome Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. Welcome Inc. is most likely doing this to:
Answer:
reduce its cultural distance from the other countries
Explanation:
In this scenario, Welcome Inc. is most likely doing this to reduce its cultural distance from the other countries. Cultural distance refers to the differences in cultural values amongst countries, organizations, and stakeholders. In this case, Welcome Inc is trying to reduce this by making sure that they adjust their products and services to best accommodate these specific cultural differences in each country. In doing so they gain more loyal customers and increase their profits in each country which they do business in.
Identify effective decision making techniques?
Answer:
Step 1: Identify the decision. You realize that you need to make a decision. ...
Step 2: Gather relevant information. ...
Step 3: Identify the alternatives. ...
7 STEPS TO EFFECTIVE.
Step 4: Weigh the evidence. ...
Step 5: Choose among alternatives. ...
Step 6: Take action. ...
Step 7: Review your decision & its consequences.
Suppose that fixed investment is $480 billion and (total) investment is $630 billion. What does inventory investment equal?
Answer:
$150 billion
Explanation:
Calculation of What does the inventory in
Investment equal
Using this formula
Inventory in Investment =Total investment - Fixed investment
Let plug in the formula
Inventory in Investment=$630 billion-$480 billion
Inventory in Investment=$150 billion
Therefore the inventory investment equal $150 billion .
An investor buys a total of 360 shares-year bond with a $1,000 face value for $800. The bond's coupon rate is 8% and interest payments are made semi-annually. Waht are the bond's yield to maturity and effective annual yield?
Answer:
YTM (Annual( = 10.13%
Effective Annual Yield =10.40%
Explanation:
In order to calculate Yield to maturity, we need to use yield to maturity formula.
Formula: Yield to maturity = [C +(F – P)/n]/(F + P)/2
Where,
C = Coupon amount
F = Face value
n = number of periods
P = Current price
Data
C = 1000 x 8 % = 80
C (6months) = 80 x 6/12 = 40
F = $1000
n = 30 years
P = $800
Solution
YTM = 40 + (1000 – 800/30)/(1000 + 800)/2
YTM = 40 + (200/30)/(1800/2 )
YTM = 40 +( 200/30)/900
YTM = 5.068 semiannual
YTM (Annual( = 10.13%
Effective Annual Yield = [tex](\frac{1+0.1014}{2})^{2-1}[/tex]
Effective Annual Yield =10.40%
A 4 year project has an annual operating cash flow of $55,000. At the beginning of the project, $4,600 in net working capital was required, which will be recovered at the end of the project. The firm also spend $23,100 on equipment to start the project. This equipment will have a book value of $4,940 at the end of the project, but can be sold for $5,880. The tax rate is 35 percent. What is the Year 4 cash flow?
a. $65,809
b. $63,422
c. $21193
d. $55,951
e. $65,151
Answer:Year 4 Cash flow =$65,151.----E
Explanation:
Salvage value of the equipment =$5,880
Book value at end of project before sale = $4,940
Gain on disposal = $940
tax gain non disposal = 35% of $940 =0.35 x 940= $329
Amount after tax salvage value = $5,880 - $329=$5,551
Year 4 Cash flow = Operating cash flow +Net working capital +Amount after tax salvage value = $55,000 + $4,600 +$5551= $65,151.
A location decision for a traditional department store (e.g., Macy's) would tend to have what type of focus? revenue focus environmental focus labor focus education focus cost focus
Answer: revenue focus
Explanation:
A location decision for a traditional department store (e.g., Macy's) would tend to have revenue focus. For every organization or company, revenue plays a vital role in the organization.
A traditional department store will shift its focus to a location whereby it can meet the needs of the people daily and generate as much revenue as possible.
Che MFG Company experiences the following cost behavior patterns each week
Fixed costs: supervisor's salary $1,200; factory rent $2,900
Mixed costs: utilities $1,700+ $5.75 per unit
Variable costs per unit manufacturing labor wages $21.00; supplies used in production $9.00; packaging cost $2.75, warranty cost $4
Required: Compute total costs to be incurred for a week with 2,770 units of activity. (Do not round intermediate calculations.)
Total cost___________
Answer:
Total cost= $123,525
Explanation:
Giving the following information:
Fixed costs: supervisor's salary $1,200; factory rent $2,900
Mixed costs: utilities $1,700+ $5.75 per unit
Variable costs per unit manufacturing labor wages $21.00; supplies used in production $9.00; packaging cost $2.75, warranty cost $4
We need to determine the total cost of 2,770 units:
Total variable cost= 5.75*2,770 + 21*2,770 + 9*2,770 + 2.75*2,770 + 4*2,770
Total variable cost= $117,725
Total fixed costs= 1,200 + 2,900 + 1,700= $5,800
Total cost= 117,725 + 5,800= $123,525
Calgary Industries is preparing a budgeted income statement for 2018 and has accumulated the following information. Predicted sales for the year are $695,000 and cost of goods sold is 40% of sales. The expected selling expenses are $77,500 and the expected general and administrative expenses are $86,500, which includes $19,500 of depreciation. The company's income tax rate is 30%. The budgeted net income for 2018 is:
Answer:
Calgary Industries
Budgeted Net Income for 2018:
Sales Revenue $695,000
Cost of goods sold $278,000
Gross profit $417,000
Selling expenses $77,500
General and Administrative expenses $67,000
Depreciation $19,500
Budgeted Pre-tax Income $253,000
Income tax rate (30%) 75,900
Budgeted Net Income $177,100
Explanation:
a) Data and Calculations:
Estimates:
Sales = $695,000
Cost of goods sold = 40% of sales = $695,000 * 40% = $278,000
Selling expenses = $77,500
General and Administrative expenses = $86,500 - $19,500 = $67,000
Depreciation = $19,500
Income tax rate = 30%
b) Calgary Industries' budgeted net income of $177,100 is the result of deducting the operating expenses and income tax from the gross profit. The gross profit of $417,000 is obtained by deducting the cost of goods sold from the Sales Revenue. These profit points explain the economic returns created by the Calgary Industries. They reflect its financial performance during the budgeted period.
Collins Company reported consolidated revenue of $120,000,000 in 20X8. Collins operates in two geographic areas, domestic and Asia. The following information pertains to these two areas:
Sales to External Interarea Sales
Customers Between Affiliates
Domestic $70,000,000 $12,000,000
Asia $50,000,000 $8,000,000
What calculation below is correct to determine if the revenue test is satisfied for the Asian operations?
a. $58,000,000/$120,000,000.
b. $50,000,000/$140,000,000.
c. $58,000,000/$140,000,000.
d. $50,000,000/$120,000,000.
Answer:
d. $50,000,000/$120,000,000
Explanation:
The computation of the correct calculation when the revenue test is satisfied is shown below:
As we can see that the fourth option is correct i.e.
= Asian sales ÷ Total consolidated sales.
= $50,000,000 ÷ $120,000,000
Here the affiliate sales are not relevant so the same is not considered
Hence, the correct option is d.
Bailey Hill Co. uses the indirect method to determine its net cash flows from operating activities. During the course of the year, the company's Accounts Receivable increased by $28,000 and its Accounts Payable decreased by $14,000. If these are the only two adjustments required to convert net income to net cash provided by operating activities, the combined effect will be a(n):
Answer:
The answer is Net income will be reduced by $42,000
Explanation:
Indirect method of preparing cash floe starts with net income.
In cash flow provided by operating activities;
Increase is liabilities is a cash inflow while decrease in liabilities in a cash outflow.
In the same vein, increase in asset is a cash outflow while decrease in asset is a cash inflow.
The effect of these adjustments will be:
Increase in accounts receivable - ($28,000)
Decrease in accounts payable----($14,000)
Cash provided by operating activities - ($42,000)
Net income will be reduced by $42,000
Suppose your yearly demand for renting DVDs is Q = 20 − 4P. If there is a rental club that charges $2 per rental plus an annual membership fee, what is the most that you would be willing to pay for the annual membership fee?
Answer:
$12
Explanation:
If P = $2 then the Q will be;
Q = 20 - 4 * 2
Q = 20 - 8
Q = 12
The maximum annual membership fee will be equal to the amount of demand. The annual membership fee cannot be greater than the demand function if so there will be decline in the demand.
Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,300 tires to the Nixon Car Company for $50 each. The terms of the sale were 3/10, n/30. Harwell uses the gross method of accounting for cash discounts. Required: 1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on July 23, 2018. 2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on August 15, 2018
Answer and Explanation:
The Journal entry is shown below:-
1. a. Accounts Receivable Dr, $65,000 (1,300 × $50)
To Sales revenue $65,000
(Being sales revenue is recorded)
b. Cash Dr, $63,050
Sales discount Dr, $1,950 ($65,000 × 3%)
To Accounts Receivable $65,000
(Being collection is recorded)
2. a. Accounts Receivable Dr, $65,000
To Sales revenue $65,000
(Being sales revenue is recorded)
Cash Dr, $65,000
To Accounts Receivable $65,000
(Being collection is recorded)
In the rational choice decision process model, which of the following immediately follows the step where possible choices have been discovered or developed?
a. Discover possible choices.
b. Select the choice with the highest value.
c. Implement the selected choice
d. Evaluate the selected choice.
Answer:
Correct Answer:
b. Select the choice with the highest value.
Explanation:
In the rational choice decision process model, it is a series of process whereby steps are taking towards making a beneficial decision for a given business setup. In a situation where possible choices has been discovered, the next step would be to select the choice with the highest value which is going to be implemented.
The step that followed where possible choices have been discovered or developed is option b.
The following information should be considered:
In the case of the rational choice decision process, it should be the sequence of the process in which the steps should be taken so that the decision should be carried out i.e. beneficial for the business setup. When the possible choices are discovered so the next step should be that the choice should be selected having the high value.Therefore we can conclude that The step that followed where possible choices have been discovered or developed is option b.
Learn more: brainly.com/question/6201432
On the basis of the following data, the general manager of Hawkeye Shoes Inc. decided to discontinue Children’s Shoes because it reduced operating income by $30,000. Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 20Y8 Children's Shoes Men's Shoes Women's Shoes Total Sales $280,000 $300,000 $500,000 $1,080,000 Costs of goods sold: Variable costs $(135,000) $(150,000) $(220,000) $(505,000) Fixed costs (45,000) (60,000) (120,000) (225,000) Total cost of goods sold $(180,000) $(210,000) $(340,000) $(730,000) Gross profit $100,000 $90,000 $160,000 $350,000 Selling and administrative expenses: Variable selling and admin. expenses $(100,000) $(45,000) $(95,000) $(240,000) Fixed selling and admin. expenses (30,000) (20,000) (25,000) (75,000) Total selling and admin. expenses $(130,000) $(65,000) $(120,000) $(315,000) Operating income (loss) $(30,000) $25,000 $40,000 $35,000 a. Prepare a differential analysis to determine the
Answer:
Hawkeye Shoes Inc.
Differential Analysis:
Alternative 1: Continue with Children Shoes:
Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 20Y8
Children's Men's Women's Total Sales $280,000 $300,000 $500,000 $1,080,000
Costs of goods sold:
Variable costs $(135,000) $(150,000) $(220,000) $(505,000)
Fixed costs (45,000) (60,000) (120,000) (225,000)
Total cost of goods
sold $(180,000) $(210,000) $(340,000) $(730,000)
Gross profit $100,000 $90,000 $160,000 $350,000
Selling and administrative expenses:
Variable selling and
admin. expenses $(100,000) $(45,000) $(95,000) $(240,000) Fixed selling and
admin. expenses (30,000) (20,000) (25,000) (75,000)
Total selling and
admin. expenses $(130,000) $(65,000) $(120,000) $(315,000)
Operating income
(loss) $(30,000) $25,000 $40,000 $35,000
Alternative 2: Discontinue Children Shoes:
Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 20Y8
Men's Women's Total
Sales $300,000 $500,000 $800,000
Costs of goods sold:
Variable costs $(150,000) $(220,000) $(370,000)
Fixed costs (60,000) (120,000) (180,000)
Total cost of goods sold $(210,000) $(340,000) $(550,000)
Gross profit $90,000 $160,000 $250,000
Selling and administrative expenses:
Variable selling and admin. $(45,000) $(95,000) $(140,000)
Fixed selling and admin. (20,000) (25,000) (45,000)
Total selling and admin. $(65,000) $(120,000) $(185,000)
Operating income (loss) $25,000 $40,000 $65,000
Choose Alternative 2, the elimination of Children Shoes, as this increases the total profits from $35,000 to $65,000.
Explanation:
a) Data and Calculations:
Hawkeye Shoes Inc. Product-Line Income Statement For the Year Ended November 30, 20Y8
Children's Men's Women's Total Sales $280,000 $300,000 $500,000 $1,080,000
Costs of goods sold:
Variable costs $(135,000) $(150,000) $(220,000) $(505,000)
Fixed costs (45,000) (60,000) (120,000) (225,000)
Total cost of goods
sold $(180,000) $(210,000) $(340,000) $(730,000)
Gross profit $100,000 $90,000 $160,000 $350,000
Selling and administrative expenses:
Variable selling and
admin. expenses $(100,000) $(45,000) $(95,000) $(240,000) Fixed selling and
admin. expenses (30,000) (20,000) (25,000) (75,000)
Total selling and
admin. expenses $(130,000) $(65,000) $(120,000) $(315,000)
Operating income
(loss) $(30,000) $25,000 $40,000 $35,000
Hawkeye Shoes Inc. differential analysis helps it to choose between alternatives 1 and 2 concerning the continuation or discontinuation of Children Shoes production. It is an important tool in managerial accounting to helps management to make research-driven decisions.
Assume that you are an intern with the Brayton Company, and you have collected the following data: The yield on the company's outstanding bonds is 7.75%; its tax rate is 40%; the next expected dividend is $0.65 a share; the dividend is expected to grow at a constant rate of 6.00% a year; the price of the stock is $15.00 per share; the flotation cost for selling new shares is F = 10%; and the target capital structure is 45% debt and 55% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?
Answer:
8.038%
Explanation:
For the computation of the firm's WACC first we need to find out the cost of equity which is shown below:-
Cost of equity = Expected dividend ÷ (Price of the stock × (1 - Flotation cost)) + Growth rate
= $0.65 ÷ ($15.00 × (1 - 10%)) + 6.00%
= 10.81%
Now
WACC = Weight debt × (Cost of debt) × (1 - Tax rate) + Weight of equity × Cost of equity
= 45% × 7.75% × (1 - 40%) + 55% × 10.81%
= 8.038%
Andrea Apple opened Apple Photography, Inc. on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:
1. Andrea, the stockholder, invested $13,800 cash in the business.
2. Andrea contributed $23,000 of photography equipment to the business.
3. The company paid $2,400 cash for an insurance policy covering the next 24 months.
4. The company received $6,000 cash for services provided during January.
5. The company purchased $6,500 of office equipment on credit.
6. The company provided $3,050 of services to customers on account.
7. The company paid cash of $1,800 for monthly rent.
8. The company paid $3,400 on the office equipment purchased in transaction #5 above.
9. Paid $305 cash for January utilities.
Based on this information, the balance in the A. Apple, Capital account reported on the Statement of Owner's Equity at the end of the month would be:
a. $31,400.
b. $39,200.
c. $31,150.
d. $40,175.
e. $30,875.
Answer:
$43,745
Explanation:
Calculation for what the Capital account reported on the Statement of Owner's Equity at the end of the month would be
Using this formula
Ending Capital Balance = Cash (1)+ Photography equipment (2) +Cash for services provided (4)+Services to customers on account (6)- Monthly rent(7)- Utility (9)
Let plug in the formula
Ending Capital Balance = $13,800 + $23,000 + $6,000 + $3,050 - $1,800 - $305
Ending Capital Balance= $43,745
Therefore the balance in the Capital account reported on the Statement of Owner's Equity at the end of the month would be: $43,745
Suppose you work for a company that makes a product line for a large hardware chain. The chain asks you for a price quote for 30,000 units that will require a $1,500,000 investment with marginal costs of $15 per unit. What is the lowest price you are willing to quote
Answer:
$1,950,000
Explanation:
Note the company has a margin per unit cost and investment cost, where
investment cost = $1,500,000
+
margin per unit cost = $450,000 (30,000 x $15)
Thus, total cost = $1,950,000. Since companies do not want to make loses, but may allow for break-even, the lowest price to quote should not be lesser than the total cost of $1,950,000.
The before-trade domestic price of tomatoes in the United States is $500 per ton. The world price of tomatoes is $400 per ton. The U.S. is a price-taker in the tomatoes market.
If trade in tomatoes is allowed, the United States:______
a) will experience increases in both consumer surplus and producer surplus.
b) may become either an importer or an exporter of tomatoes, but this cannot be determined.
c) will become an exporter of tomatoes.
d) will become an importer of tomatoes.
Answer:
d) will become an importer of tomatoes.
Explanation:
Consumer surplus would increase because the price at which they buy tomatoes would reduce while producer surplus would reduce because the price of tomatoes would reduce as a result of international trade.
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.Because the price of tomatoes in the US is greater than the price of tomatoes in the world, when the US begins international trade, it would import tomatoes because it is inefficient in the production of tomatoes.
Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product
Moe has entered into a contract with Larry. Subsequently, Moe assigns his rights in that contract to Curly. Which of the following would not prevent that assignment? Multiple Choice The assignment would violate public policy matters. The contract contains an anti-assignment clause. Larry protests the assignment and demands that Moe not make the assignment. The assignment would materially alter Larry's duties and cause an increased burden or risk to Larry.
Answer:
Larry protests the assignment and demands that Moe not make the assignment.
Explanation:
An assignment is defined as the transfer of the responsibility of performing a task or contract to another person.
In this instance Moe is trying to assign the contract he has with Larry to Curly.
Curly will now take responsibility for the execution of the contract.
Assignment is allowed if performance of the task is assured, and the other party has no grounds to object if performance will not be affected.
The situation where the assignment will not be prevented is when Larry protests the assignment and demands that Moe not make the assignment.
However the assignment can be prevented if there is an anti-assignment clause, violate public policy, or materially alter Larry's duties and cause an increased burden or risk to Larry.
Evaluate the Ritz-Carlton business model and associate key quality characteristics in the operations of a hotel set-up process.
Answer:
Ritz Carlton is luxury hotel chain of America. The company has 101 luxury hotel in more than 30 countries of the world. The success of Ritz Carlton is mainly because they keep the comfort of their guests as their highest priority. Their mission statement clearly states that comfort and genuine care of their guests is utmost important to them.
Explanation:
Their business model focuses entirely on their customers. Ritz Carlton has created its leading brand by providing great ambiance to the visitors and its guest. One can dream of staying at such luxury hotel. They are famous for their hospitality of their guests. The hotel management believes on total quality management. It has set highest standard for themselves and strive to meet them by providing better and better service to its guests.
The capital budgeting method that takes into account both the size of the original investment and the discounted cash flows is the Group of answer choices
Answer:
Option D (profitability index) is the correct choice.
Explanation:
Options aren't mentioned in the issue above. Please find the full query attachment here.
Capital budgeting seems to be the mechanism whereby the creditors assess the value of a future investment project. This corresponds to something like the timeframe by which the planned project can produce adequate income to regain the original investment.
The 3 most prevalent frameworks to contractor choosing are given below:
Payback period.Net present value.Internal rate of return.Some other choices have no relation with the specified scenario. So that the option here is just the appropriate ones.
To calculate the after-tax cost of debt, multiply the before-tax cost of debt by ________________
Water and Power Company (WPC) can borrow funds at an interest rate of 10.20% for a period of four years. Its marginal federal-plus-state tax rate is 45%. WPC's after-tax cost of debt is ______________ (rounded to two decimal places).
At the present time, Water and Power Company (WPC) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,329.55 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 45%. If WPC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)?
A. 4.02%
B. 4.47%
C. 3.58%
D. 5.14%
Answer:
To calculate the after-tax cost of debt, multiply the before-tax cost of debt by (1 - tax rate).
Water and Power Company (WPC) can borrow funds at an interest rate of 10.20% for a period of four years. Its marginal federal-plus-state tax rate is 45%. WPC's after-tax cost of debt is = 10.20% x (1 - 45%) = 5.61%.
At the present time, Water and Power Company (WPC) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,329.55 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 45%. If WPC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)?
B. 4.47%
pre-tax cost of debt = bond's yield to maturity
approximate YTM = {120 + [(1,000 - 1,329.55)/15] / [(1,000 + 1,329.55)/2] = 98.03 / 1,164.775 = 0.08416 = 8.416%
approximate after tax cost of debt = 8.4% x (1 - 45%) = 4.62 = 4.62
since I used the approximate yield to maturity, my answer is not exact. That is why I have to look for the closest available option.
