Answer: discloses contribution margin in the body of the statement.
Explanation:
The Cost Volume Profit (CVP) income statement is made to better show the influence of variable costs and fixed costs on income. It as well shows the effects that changing costs and production volume can have on the income.
Although it shows the same income as a traditional income statement, the format is different in that the contribution margin is included in the statement and the costs and revenue per unit are shown as well.
Daniel derives utility from only two goods, cake (QC) and donuts (Qd). The marginal utility that Daniel receives from cake (MUc) and donuts (MUd) are given as follows:
MUc = Qd MUd = Qc
Daniel has an income of $240 and the price of cake (Pc) and donuts (Pd) are both $3.
1) What is Daniel's budget constraint?
A) 240 = 3Pc + 3Pd.
B) 240 = 3Qc + 3Qd.
C) 240 = (Pc)(Qc).
D) 240 = (Qc)(Qd).
2) Holding Daniel's income and constant at $240 and $3 respectively, what is Daniel's demand curve for cake?
A. Qc = 120/Pc.
B. Qc = 240/(3 + Pc).
C. Qc = 240/Pc.
D. Qc = 240 - Pc.
E. None of the above.
Answer:
1) What is Daniel's budget constraint?
B) 240 = 3Qc + 3Qd.Total budget = 240
Each cake or donut costs 3 each
2) Holding Daniel's income and constant at $240 and $3 respectively, what is Daniel's demand curve for cake?
E. None of the above.240 = 3c + 3d
3c = 240 - 3d
c = 80 - d
Pina Colada Corp. does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $Unresolved. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes
Answer:
b. $2,616
Explanation:
Missing word "Total receipts for February amounted to $46216. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes? O $2773 O "$2616 O $2608 O It cannot be determined.
Sales tax = Total receipt * Tax rate
Sales tax = Total receipt * 6/106
Sales tax = $46,216 * 6/106
Sales tax = $2,616
So, the amount that must be remitted to the state for February's sales taxes is $2,616.
Investors require an after-tax rate of return of 10% on their stock investments. Assume that the tax rate on dividends is 30% while capital gains escape taxation. A firm will pay a $2 per share dividend 1 year from now, after which the firm's stock is expected to sell at a price of $30.
Required:
a. Find the current price of the stock.
b. Find the expected before-tax rate of return for a 1-year holding period.
c. Now suppose that the dividend will be $3 per share. If the expected after-tax rate of return is still 10%, and investors still expect the stock to sell at $20 in 1 year, at what price must the stock now sell?
d. What is the before-tax of return? Why is it now higher than in part (b)?
Answer:
a. $28.5
b. 12.28%
c. $29.18
d. 13.09%
Explanation:
a. let current price = p
p*1.10 = 2(1-0.3)+30
= 1.4+30/1.10
= 31.4/1.10
= 28.5
the current price of the stock is approximately 28.5 dollars
b. (30+2 /28.5)-1
= 32/28.5 - 1
= 0.1228
= 12.28%
expected before tax rate is 12.28%
c. 3(1-0.3)+30 / 1.10
= 3*0.7+30/1.10
= $29.18
d. before tax rate of return
= (3$ + 30-29.18)/29.18
= 0.1309
= 13.09%
it is now higher here given that given that a greater dividend causes more tax burden.
Mark Turney owns Creative Corners. He does his banking at United Federal Bank (UFB) in Tucson, Arizona. The amounts in his general ledger for payroll taxes and the employee's withholding of Social Security, Medicare, and federal income tax as of April 15 of the current year show the following: Social Security tax payable (employer and employee), $3,020; Medicare tax payable (employer and employee), $734; FUTA tax payable, $84; SUTA tax payable, $414; and Employees income tax payable, $4,622. Journalize the payment of the Form 941 deposit to UFB and the payment of the SUTA tax to the State of Arizona as of April 15, 20--.
Answer and Explanation:
The journal entries are shown below
On 15-Apr
FICA social Security tax payable Dr. $3,020
FICA medicare tax payable Dr. $734
Federal Income tax payableDr. $4,622
To Cash account $8,376
(Being cash paid)
on 15-Apr
State Unemployment tax payable Dr.$414
to Cash account $414
(being cash paid)
On 15-Apr
Federal Unemployment tax payable Dr. $84
To Cash account $84
(being cash paid is recorded)
You find a zero coupon bond with a par value of $10,000 and 13 years to maturity. If the yield to maturity on this bond is 4.9 percent, what is the dollar price of the bond
Answer:
$18,763.38
Explanation:
Calculation to determine the dollar price of the bond
Using this formula
Value of bond=Par value/(1+YTM/2)^(2*time period)
Let plug in the formula
Value of bond=10,000/(1+0.049/2)^(2*13)
Value of bond=10,000/(1.0245)^26
Value of bond=10,000/1.8763378
Value of bond=$18,763.38(Approx).
Therefore the dollar price of the bond is $18,763.38
SpyingEyes, Inc., a large data intelligence company, has storage technology at multiple sites that store redundant data from its servers at the main office. What risk management strategies has the company primarily implemented?
Answer:
Avoid it risk management strategies
Explanation:
As the name suggests, In Avoid it risk management strategies the organisation takes every feasible step to stop any mismanagement from happening altogether. In other words, this strategy is based on strict monitoring and preparedness in advance.
Thus, from the above we can conclude that the above case illustrates avoid it risk management strategy.
Charles Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit Percent of Sales
Selling Price $190 100%
Variable Expenses 38 20%
Contribution Margin 152 80%
Fixed expenses are $87,000 per month. The company is currently selling 1,000 units per month. Management is considering using a new component that would increase the unit variable cost by $28. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change?
MSI is considering eliminating a product from its ToddleTown Tours collection. This collection is aimed at children one to three years of age and includes "tours" of a hypothetical town. Two products, The Pet Store Parade and The Grocery Getaway, have impressive sales. However, sales for the third CD in the collection, The Post Office Polka, have lagged the others. Several other CDs are planned for this collection, but none is ready for production.
MSI's information related to the Toddle Town Tours collection follows: Segmented Income Statement for MSI's Toddle Town Tours Product Lines Post Office Parade Getaway _Polka Pet Store Grocery Total Sales revenue Variable costs $110,000 $105,000 $31,000 $246,000 43,000 28,000 118,000 $ 63,000 S 62,000 $ 3,000 $128,000 2,800 16,700 $ 55,800 S 55,300 $ 200 $ 111,300 1,550 12,300 47,000 1000 4 Contribution margin Segment margin Net operating income (loss) Less: Direct Fixed costs 7,200 006,700 Less: Common fixed costs .505350 99,000 50,300 $ 50,050S (1.350) S 5,500 0 $ 50,050 $ (1,350) $99,000 5,250 Allocated based on total sales dollars MSI has determined that elimination of the Post Office Polka (POP) program would not impact sales of the other two items. The remaining fixed overhead currently allocated to the POP product would be redistributed to the remaining two products Required 1. Calculate the incremental effect on profit if the POP product is eliminated Effect on Profit 2. Should MSI drop the POP product?
Answer:
MSI
1. Incremental effect on profit if the POP product is eliminated is:
Profit will be reduced by $200 ($99,000 - $98,800).
2. Yes. MSI should drop the POP product. POP product is like a dog in the BCG matrix.
Explanation:
a) Data and Calculations:
Segmented Income Statement
for MSI's Toddle Town Tours Product Lines
Pet Store Grocery Post Office Total
Parade Getaway Polka Firm
Total Sales revenue $110,000 $105,000 $31,000 $246,000
Variable costs 47,000 43,000 28,000 118,000
Contribution margin $ 63,000 $ 62,000 $ 3,000 $128,000
Less: Direct Fixed costs 7,200 6,700 2,800 16,700
Segment margin $ 55,800 $ 55,300 $ 200 $ 111,300
Less: Common fixed costs 5,500 5,250 1,550 12,300
Net operating income (loss) $50,300 $ 50,050 $ (1,350) $99,000
Segmented Income Statement after POP Elimination
for MSI's Toddle Town Tours Product Lines
Pet Store Grocery Total
Parade Getaway Firm
Total Sales revenue $110,000 $105,000 $215,000
Variable costs 47,000 43,000 90,000
Contribution margin $ 63,000 $ 62,000 $125,000
Less: Direct Fixed costs 7,200 6,700 13,900
Segment margin $ 55,800 $ 55,300 $ 111,100
Less: Common fixed costs 6,275 6,025 12,300
Net operating income (loss) $ 49,525 $ 49,275 $98,800
1. Incremental effect on profit if the POP product is eliminated is:
Profit will be reduced by $200 ($99,000 - $98,800), which is the difference between the allocated fixed cost to POP ($1,550) and its operating loss ($1,350).
2. Yes. MSI should drop the POP product. POP product is like a dog in the BCG matrix.
Bailey Company incurred the following costs in manufacturing desk calculators: Direct materials $18 Indirect materials (variable) 3 Direct labor 9 Indirect labor (variable) 7 Other variable factory overhead 13 Fixed factory overhead 34 Variable selling expenses 26 Fixed selling expenses 12 During the period, the company produced and sold 2,000 units. What is the inventory cost per unit using absorption costing
Answer:
$84
Explanation:
Calculation to determine the inventory cost per unit using absorption costing
Direct materials $18
Indirect materials (variable) $3
Direct labor $9
Indirect labor (variable) $7
Other variable factory overhead $13
Fixed factory overhead $34
Inventory cost per unit $84
($18 + $3 + $9 + $7 + $13 + $34 = $84
Therefore the inventory cost per unit using absorption costing is $84
Imagine that I start a bar in Clemson. Each year I order $200,000 worth of food, beer and drink which is turned around and sold to customers. I also hire part-time staff, where the combined annual wages add up to $100,000. I also pay rent on my building which is $100,000 a year. Assume these are my only expenses. My bar is unusually successful and I generate $1,000,000 in revenue. How much does my bar contribute to GDP? (Hint: Think about using the national spending approach or the factor income approach. One is easier to use than the other)
a) $1,000,000
b) $1,300,000
c) $1,400,000
d) $1,200,000
Answer:
The correct option is a) $1,000,000.
Explanation:
Under factor income approach contribution to gross domestic product (GDP) is calculated by adding up wages, rent, interest, and profit.
Using the factor factor income approach, contribution to GDP can be determined as follows:
Purchases = $200,000
Wages = $100,000
Rent on building = $100,000
Expenses = Wages + Rent on building = $100,000 + $100,000 = $200,000
Revenue = $1,000,000
Profit = Revenue - Purchases - Expenses = $1,000,000 - $200,000 - $200,000 = $600,000
Contribution to GDP = Wages + Rent on building + Profit = $200,000 + $200,000 + $600,000 = $1,000,000
This implies that your bar contributes $1,000,000 to GDP. Therefore, the correct option is a) $1,000,000.
The following Information is avallable for the year ended December 31: Beginning raw materials inventory Raw materials purchases Ending raw materials Inventory Office supplies expense $ 4100 5,600 4,600 2,600 The amount of raw materials used in production for the year is: __________ a) $5.100 b) $8,300 c) $5,700 d) $5,600. e) $9,700
Answer:
a. $5,100
Explanation:
Raw materials used in production = Beginning raw materials inventory + Raw materials purchases - Ending raw materials inventory
Raw materials used in production = $4100 + $5,600 - $4,600
Raw materials used in production = $5,100
So, the amount of raw materials used in production for the year is $5,100.
A farmer sells a bushel of corn to the supermarket for $12. The supermarket then sells the corn to customers for $25. What is the total contribution to GDP?
Answer:
$ 25
Explanation:
As per the description, the exact amount that is being contributed from the corn bushel to the Gross Domestic Product would be $ 25. The price at which the farmer sold it to the supermarket would not be included in the GDP because it would be considered as an intermediary good because the good purchased for the resale purpose is not included in GDP as it leads to double-counting. Thus, only the price of the final good i.e. $ 25 would be included in GDP as it will now be used for final consumption by the customers.
An outside supplier offers to provide Factor with all the units it needs at $44.45 per unit. If Factor buys from the supplier, the company will still incur 70% of its overhead. Factor should choose to:
Answer:
Factor must opt to agree as well as purchase the deal from the provider. A further explanation is provided below.
Explanation:
The given problem seems to be incomplete. Find the attachment of the complete question below.
Given:
Direct material,
= $8.70
Direct labor,
= 24.70
Overhead,
= 43.50
Now,
If the offer is accepted, the cost per unit will be:
= [tex]44.45 + (43.50\times 70 \ percentage)[/tex]
= [tex]44.45 + 30.45[/tex]
= [tex]74.90[/tex] ($)
Thus the above is the correct answer.
Calculate the end of the year cash balance based on the information below:
Beginning of the year cash balance 1,600
Revenue 1,200
Net income 450
Depreciation 100
Negative changes in operating assets and liabilities 60
Acquisitions of PP 300
Dividends paid in the current year 110
Increase in long-term debt 500
Answer: $2,180
Explanation:
Net income is already derived from revenue so adding revenue would be double counting.
Depreciation is a non cash expense so should be added back to cash holdings.
Negative changes in operating assets and liabilities reduces cash.
Acquisitions of Property and Plants reduces cash
Dividends also reduce cash
Increase in debt increases cash.
Cash balance is therefore:
= Beginning of year cash + Net income + Depreciation + Increase in long-term debt - Negative changes in operating assets and liabilities - Acquisitions of PP - Dividends paid in current year
= 1,600 + 450 + 100 + 500 - 60 - 300 - 110
= $2,180
Net income is derived from revenue so adding revenue give double counting
Depreciation is a non cash expense so should be added back to cash holdings
Negative changes in operating assets and liabilities reduces cash
Acquisitions of Property and Plants reduces cash
Dividends reduce cash
Increase in debt increases cash
Cash balance based on the information is:
= Beginning of year cash + Net income + Depreciation + Increase in long-term debt - Negative changes in operating assets and liabilities - Acquisitions of PP - Dividends paid in current year
= 1,600 + 450 + 100 + 500 - 60 - 300 - 110
= 2,180
What are Operating Assets?Operating assets are those assets acquired for use in the conduct of the ongoing operations of a business. This means assets that are needed to generate revenue.
Examples of operating assets are cash, prepaid expenses, accounts receivable, inventory, and fixed assets. If there are recognized intangible assets, such as technology licenses needed to manufacture goods, these should also be considered operating assets.
Assets not considered to be operating assets are those used for long-term investment purposes, such as marketable securities.
Assets no longer used for operations, such as assets held for sale, are also not considered to be operating assets.
Further, a non-cash asset that is held for investment purposes, such as an investment property, is not considered an operating asset.
What is Liability?A liability is something a person or company owes, usually a sum of money.
Liabilities are settled over time through the transfer of economic benefits including money, goods, or services.
Liability is Recorded on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses.
Liabilities can be contrasted with assets.
Liabilities refer to things that you owe or have borrowed; assets are things that you own or are owed.
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A bailment is different from a gift because:___.
a. a gift requires consideration, but a bailment does not.
b. a gift is always a contract, but a bailment is generally not a contract.
c. a gift requires delivery, but a bailment does not.
d. in a bailment, only possession of the property is transferred to the bailee, whereas with a gift, both possession and ownership must pass to the donee.
Answer: d. in a bailment, only possession of the property is transferred to the bailee, whereas with a gift, both possession and ownership must pass to the donee.
Explanation:
When you give a person a gift, you are giving the person both ownership of that gift and the possession as well. For instance, if you give a person a car as a gift, that person now owns the car and will use it as they please.
With a bailment, there is no transfer of ownership. The bailor is simply giving the bailee possession of the property in question which means that after the bailee is done with the property, they have to return it back to the bailor.
es $ 160,000 Accounts receivable increase $ 10,000 Expenses: Inventory decrease 16,000 Cost of goods sold 100,000 Salaries payable increase 1,000 Salaries expense 24,000 Depreciation expense 12,000 Net income $ 24,000 Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
Statement of Cash Flows
Cash from operating activities
Net Income $24,000
Adjustments to reconcile net income with
net cash flow from operating activities:
Depreciation 12,000
Increase in accounts receivable (10,000)
Decrease in inventory 16,000
Salaries payable increase 1,000 $19,000
Net cash flow : Operating activities $43,000
Dotsero Technology, Inc. has a job-order costing system. The company uses predetermined overhead rates Iin apply manufacturing overhead cost to individual jobs. The predetermined overhead rate in department A is based on machine-hours, and the rate in department B is based on direct material cost. At the beginning of the most recent year, the company's management made the following estimates for the year:Department A Department BMachine-hours............................ 70,000 19,000Direct labor-hours........................ 30,000 60,000Direct materials cost..................... 195,000 282,000Direct labor cost.......................... 260,000 520,000Manufacturing overhead cost............ 420,000 705,000Compute the predeterminded overhead rates for department A and department B.
Answer:
Dept. A Dept. B
Machine hours 70,000
Direct Material Cost 282,000
Manufacturing overhead 420,000 705,000
Predetermined OH rate 420,000 / 70,000 705,000/282,000
= 6.00 per MH = 2.50 per dollar of DM cost
Since its establishment on January 1, 1999, the euro has more than tripled in appreciation against the U.S. dollar, reaffirming the ability of the European Central Bank to manage monetary policy within the euro zone.
A. True
B. False
Answer:
B. False
Explanation:
The exchange rate between the euro and the dollar was 1.1719 dollars per 1 euro. Currently, the exchange rate is 1.18 dollars per euro. The euro has appreciated slightly against the US dollar, but it is a small percentage. It is not even close to multiplying its value by 3.
The Central Division of National Inc. has operating income of $16,000 on sales revenue of $155,000. Divisional operating assets are $84,600, and management of National has determined that a minimum return of 12% should be expected from all investments.
Required:
a. Using the DuPont model, calculate The Central Division’s margin, turnover, and ROI.
b. Calculate The Central Division's residual income.
Answer:
.
Explanation:
Assume that a hypothetical economy with an MPC of 0.75 is experiencing severe recession. Instructions: In part a, round your answers to 2 decimal places. Enter positive numbers. In part b, enter your answers as whole numbers. a. By how much would government spending have to rise to shift the aggregate demand curve rightward by $25 billion? $ billion. How large a tax cut would be needed to achieve the same increase in aggregate demand? $ billion. b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt (because it maintains a balanced budget, G = T).
Answer:
a-1. Amount of rise in government expenditure required = $6.25 billion
a-2. Tax multiplier = -3
b. The combination is as follows:
Increase in spending = $25 billion
increase in taxes = $25 billion
Explanation:
a-1. By how much would government spending have to rise to shift the aggregate demand curve rightward by $25 billion? $ billion.
Spending multiplier = 1 / (1 - MPC) = 1 / (1 - 0.75) = 4
Amount of rise in government expenditure required = Change in aggregate demand / Spending multiplier = $25 / 4 = $6.25 billion
a-2. How large a tax cut would be needed to achieve the same increase in aggregate demand? $ billion.
Tax multiplier = - MPC / (1 - MPC) = - 0.75 / (1 - 0.75) = -3
Amount of tax cut required = Change in aggregate demand / Tax multiplier = $25 / (-3) = $8.33 billion
b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt (because it maintains a balanced budget, G = T).
The amount is the amount of the balanced budget, which has a multiplier of one. This indicates that spending and taxes need be increased by $25 billion each to boost GDP by $125 billion. Therefore, the combination is as follows:
Increase in spending = $25 billion
increase in taxes = $25 billion
Zero-coupon risk-free bonds are available with the following maturities and yield rates (effective, annual):
Maturity(in years) Yield %
1 6
2 6.5
3 7
You need to buy corn for producing ethanol. You want to purchase 10,000 bushels one year from now, 15,000 bushels two years from now, and 20,000 bushels three years from now. The current forward prices, per bushel, are $3.89, $4.11, and $4.16 for one, two, and three years respectively. You want to enter into a commodity swap to lock in these prices. Which of the following sequences of payments at times one, two, and three will NOT be acceptable to you and to the corn supplier?
a. $38,900; $61,650; $83,200
b. $39,083; $61,650; $82,039
c. $40,777; $61,166; $81,554
d. $41,892; $62,340; $78,997
e. $60,184; $60,184; $60,184 73.2
Answer:
e. $60,184; $60,184; $60,184
Explanation:
Corn supplier will have yields of 6 in year 1 and 6.5 in year 2, if it will purchase bushels now he will have to pay $39,083 now or $38,900 2 years later. The corn supplier will not accept the price below this and we will not pay price above this. The Medicare price should be determined and set.
________ would be hurt by unexpected inflation. a. A firm that purchased inputs with a two-year contract b. A worker whose wage increases with inflation c. A worker who signed a two-year wage contract d. A firm who hired a worker on a two-year wage contract
Answer:
a firm who hired a worker
Explanation:
on a two year wage contract
A firm that hired a worker on a two-year wage contract would be hurt by unexpected inflation. Thus, option D is correct.
What is inflation?Inflation, in financial aspects, aggregates expansions in the stockpile of cash, in cash salaries, or in costs. Expansion is by and large considered an exorbitant ascent in the general degree of costs.
While high expansion is by and large thought to be hurtful, a few financial experts accept that a modest quantity of expansion can assist with driving monetary development.
Inter worker was having job security for at least 2 years but due to inflation, he might not have a job. This is the most unexpected thing that the person could experience. As it will be treated as something that has caused hindrances in his planning.
Therefore, option D is correct.
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Canton Company sells a motor that carries a 60-day unconditional warranty against product failure. From prior years' experience, Canton estimates that 3% of units sold each period will require repair at an average cost of $160 per unit. During the current period, Canton sold 100,000 units and repaired 2,400 of those units. (a) How much warranty expense must Canton report in its cur
Answer:
$480,000
Explanation:
Calculation to determine much warranty expense must Canton report
Using this formula
Warranty expense=Average cost per unit*Unit sold*Estimated percentage of units sold
Let plug in the formula
Warranty expense= $160*100,000*3%
Warranty expense=$480,000
Therefore warranty expense that Canton must report is $480,000
A firm's total output is 1500 units. The same firm's average variable cost is equal to $5 while its average fixed cost is equal to $15. How much is the firm's total cost of production
Answer:
$30,000
Explanation:
Total cost of production = Total unit cost x units produced
hence,
Total cost of production = ($5 + $15) x 1500 units
= $30,000
The firm's total cost of production is $30,000
A company has annual sales of $32,000 and accounts receivables of $2,200. The gross profit margin is 31.3%. The receivable days estimated from the data above is ______.
Answer: 80.17 days
Explanation:
The Receivable days estimated is calculated by the formula:
= Accounts receivable * 365 / (Annual sales * Gross profit margin)
= 2,200 * 365/ (32,000 * 31.3%)
= 2,200 * 0.03644169329
= 80.17 days
Brinker accepts all major bank credit cards, including First Savings Bank's, which assesses a 5% charge on sales for using its card. On May 26, Brinker had $6,200 in First Savings Bank Card credit sales. What entry should Brinker make on May 26 to record the deposit
Answer:
Date Account titles and explanation Debit Credit
May 20 Cash ($6,200 - $310) $5,890
Credit card expenses ($6,200*5%) $310
Sales $6,200
(To record the deposit)
According to Laurent, managers in Sweden, Denmark, and Great Britain believe that employees should ________. A. adopt a collectivist mindset B. participate in problem solving C. be "fed" all the answers by their superiors D. not be involved in the decision-making process
Answer:
B. participate in problem solving
Explanation:
André Laurent published the Cross Cultural Puzzle of International Human Resource Management.
This citation looks at how managers in different cultures interact with their employees based on the prevalent sociological tendencies of the country.
People from different cultures tend to perceive communication differently when they interact in the workplace.
He found that employees for Sweden, Denmark, and Great Britain like to participate in problem solving.
Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck
Answer: See explanation
Explanation:
The journal entry to record the purchase of the truck will be:
Dr Trucks $54641
Dr Discount on Notes Payable $25359
Cr Notes Payable $80000
Note:
Face value of Note = $80000
× PV factor = 1/1.10⁴ = 0.68301
Present value of Face value of Note = $54641
Stuart Software has 5.7 percent coupon bonds on the market with 11 years to maturity. The bonds make semiannual payments and currently sell for 93 percent of par. What is the current yield on the bonds
Answer:
current yield = 6.13%
Explanation:
Given:
The software has 5.7 percent coupon bonds
maturity=11 years
current sell=93 percent of par
The objective is to find the current yield on the bonds
Formula used:
Current yield = [tex]\frac{Annual Coupon payment}{current selling price}*100[/tex]
Solution:
Current selling price=93% of 1000=930
Annual coupon payment= 5.7% of 1000=57
Then,
On substituting the values in the formula,
Current yield = [tex]\frac{57}{930}[/tex]*100
On Simplifying,
Current yield =6.13%
Therefore,
Current yield =6.13%
Part E14 is used by M Corporation to make one of its products. A total of 19,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials $ 4.10 Direct labor $ 8.70 Variable manufacturing overhead $ 9.20 Supervisor's salary $ 4.60 Depreciation of special equipment $ 3.00 Allocated general overhead $ 8.20 An outside supplier has offered to make the part and sell it to the company for $29.50 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part E14 could be used to make more of one of the company's other products, generating an additional segment margin of $31,000 per year for that product. The annual financial advantage (disadvantage) for the company as a result of buying part E14 from the outside supplier should be:
Answer: ($24100)
Explanation:
The annual financial advantage (disadvantage) for the company goes thus:
The relevant cost to produce will be:
= ($4.10 × 19,000) + ($8.70 × 19,000) + ($9.20 × 19,000) + ($4.60 × 19,000) + $31,000
= $77900 + $165300 + $174800 + $87400 + $31000
= $536,400
The relevant costs to buy will be:
= 19,000 × $29.5
= $560,500
Since the relevant cost to buy is more than the relevant cost to produce, then the financial disadvantage will be:
= $560500 - $536,400
= $24,100
The answer is ($24,100)
