Answer:
The Net present value of the project after allowance for flotation costs is - GH¢18,686.10 .
The ranch should not invest in the new barn becuase The NPV is negative.
Explanation:
According to the given data Outflows are as follows:
Initial outlay = GH¢600,000
Flotation cost:
Debt after tax flotation cost in % = 2%
Debt flotation cost = GH¢200,000 / (100% - 2%) * 2% = GH¢4,081.633
Equity flotation cost in % = 15%
Equity flotation cost = GH¢200,000 / (100% - 15%) * 15% =GH¢35,294.118
Total flotation costs = GH¢4,081.633 + GH¢35,294.118 = GH¢39,375.751
According to the given data Inflows are as follows:
Expected to generate perpetual after tax annual cash savings = $90,000
WACC = 14.5%
Present Value of inflows = Perpetual after tax annual cash savings / WACC = GH¢90,000 / 14.5% = GH¢620,689.655
Therefore, to calculate the Net present value of the project after allowance for flotation costs we would have to make the following calculation:
Net present value of the project after allowance for flotation costs = GH¢620,689.655 - GH¢600,000 - GH¢39,375.751 = - GH¢18,686.10
The Net present value of the project after allowance for flotation costs is - GH¢18,686.10
The ranch should not invest in the new barn becuase The NPV is negative.
The general fund of the Town of Dean levied property taxes of $3,000,000 for the fiscal year beginning on January 1, 20X8. It was estimated that 1% of the levy would be uncollectible. During the period January 1, 20X8, through December 31, 20X8, $2,960,000 of the property tax levy was collected. At December 31, 20X8, Dean estimated that $10,000 of property taxes levied in 20X8 would be collected during the first 60 days of 20X9. What amount of property tax revenue should be reported by the general fund for the year ended December 31, 20X8?
Answer: $2,970,000
Explanation:
According to US tax laws, property taxes can be recognised for 60 days into the next financial period because it is assumed that within this period, the taxes can still cover expenses related to the period that it is from.
Therefore, if Property taxes are paid within the first 60 days in 20X9 then the Town of Dean should recognise those taxes paid.
Those taxes amount to $10,000 so therefore, the amount to be reported in the fund is,
= 2,960,000 + 10,000
= $2,970,000
$2,970,000 is amount of property tax revenue that should be reported by the general fund for the year ended December 31, 20X8.
In the Assembly Department of Concord Company, budgeted and actual manufacturing overhead costs for the month of April 2020 were as follows. Budget Actual Indirect materials $14,200 $13,700 Indirect labor 19,100 19,900 Utilities 11,400 12,100 Supervision 4,600 4,600 All costs are controllable by the department manager. Prepare a responsibility report for April for the cost center.
Answer and Explanation:
The preparation of responsibility report for April for the cost center is shown below:-
Concord Company,
Assembly Department
Manufacturing Overhead Cost Responsibility Report
For the Month Ended April
Controllable Cost Budget Actual Difference Remark
Indirect materials $14,200 $13,700 $500 Favorable
Indirect Labor $19,100 $19,900 -$800 Unfavorable
Utilities $11,400 $12,100 -$700 Unfavorable
Supervision $4,600 $4,600 0 None
Total $49,300 $50,300 -$1,000 Unfavorable
Which statement is false? Marginal cost and marginal productivity are inversely related. Marginal cost is the change in a firm's total cost due to a one unit change in output. Costs that are small and unimportant with little impact on profits are called marginal costs. A marginal cost curve will always intersect the average total cost curve at the minimum average total cost. Consider the table. Output 0 1 2 3 4 5 6 7 8 9 10 Total cost 100 110 115 125 140 160 190 230 280 340 420 What is the marginal cost of the fifth unit based on the table? $0 −$20 $20 $160
Answer:
Option (c) Marginal cost of fifth unit = $20
Explanation:
According to the scenario, computation of the given data are as follows:
1)
Option (b) : Marginal cost is the change in the total cost of firm due to one unit change in output.
We can calculate the marginal cost by using following formula :
Marginal cost = Total cost ÷ Quantity
2)
Marginal cost of fifth unit = Total cost at unit 5 - total cost at unit 4
= $160 - $140
= $20
Martinez Company received the following selected information from its pension plan trustee concerning the operation of the company’s defined benefit pension plan for the year ended December 31, 2020.
January 1, 2020 December 31, 2020
Projected benefit obligation $1,517,000 $1,545,000
Market-related and fair value of plan assets 803,000 1,132,300
Accumulated benefit obligation 1,580,000 1,698,300
Accumulated OCI (G/L)—Net gain 0 (201,700 )
The service cost component of pension expense for employee services rendered in the current year amounted to $78,000 and the amortization of prior service cost was $118,300. The company’s actual funding (contributions) of the plan in 2020 amounted to $249,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of $1,183,000 on January 1, 2020. Assume no benefits paid in 2020.
Determine the amounts of the components of pension expense that should be recognized by the company in 2020.
Answer:
$1,337,700
Explanation:
The computation of the amounts of the components of pension expense is shown below:
Service cost $78,000
Amortization of Prior Service cost $1,183,000 ($1,698,300 - $1,580,000)
Interest on PBO $157,000 ($1,517,000 ×10%)
Less: Expected return on plant assets $80,300 ($803,000 × 10%)
Pension expense $1,337,700
We simply applied the above formula so that the amount of pension expense could come
How Hard The Day, Inc. makes a product that has the following direct labor standards: Standard direct labor-hours 1.4 hours per unit Standard direct labor rate $ 12.00 per hour The company budgeted for production of 5,400 units in January, but actual production was 5,500 units. The company used 6,800 direct labor-hours to produce this output. The actual total direct labor cost was $82,960. The direct labor efficiency variance for January is:
Answer:
Direct labor time (efficiency) variance= $10,800 favorable
Explanation:
Giving the following information:
Standard direct labor-hours 1.4 hours per unit
Standard direct labor rate $ 12.00 per hour
Actual production was 5,500 units.
The company used 6,800 direct labor-hours to produce this output.
To calculate the direct labor efficiency variance, we need to use the following formula:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Standard quantity= 5,500*1.4= 7,700
Direct labor time (efficiency) variance= (7,700 - 6,800)*12
Direct labor time (efficiency) variance= $10,800 favorable
The student-run newspaper asks students to visit a web page and respond to questions regarding a proposed tuition increase. Only responses to the questions are recorded. Summary statistics based on the survey responses are used in an article published the following week, and no one outside of the newspaper has access to the individual responses. The newspaper's survey is considered to be A) confidential. B) anonymous. C) both anonymous and confidential. D) neither anonymous nor confidential.
Answer:
C) both anonymous and confidential
Explanation:
As the student-run, the new paper and ask other students to visit a link firm the new paper and respond to those questions and the responses for only those questions were recorded. This indicates that the newspaper survey is anonymous and confidential as the ant student can fill the survey and the information that is confidential as none outside the newspaper has access to those responses.One of the key functions of human resource management is
Answer: recruiting.
Explanation:
Recruiting is one of the most important aspects of human resource management. Hence, Option B is correct.
What is the meaning of Recruiting?Finding, vetting, recruiting, and eventually onboarding qualified job prospects is the process of recruitment. The process of finding, vetting, shortlisting, and employing potential resources to fill open jobs in a company is known as recruitment.
It serves as a fundamental part of human resource management. The act of selecting the best candidate for a position at the ideal time is known as recruitment.
Simply announcing that you are hiring is all that hiring entails. The deliberate technique of locating and attracting the best individuals for the position is known as recruiting.
Therefore, Option B is correct.
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The complete question has been attached in text form:
One of the key functions of human resource management is:
a. departmentalizing.
b. recruiting.
c. budgeting.
d. auditing.
Happy Hands Is A Monopolistically Competitive Firm That Faces The Following Demand Schedule For Its Gloves. In the long run, what is the likely outcome for Happy Hands?
A. Happy Hands will no have any excess capacity.
B. Happy Hands will not charge a price that is exactly equal to the marginal cost.
C. Happy Hands firm will not have any markup to its price.
D. Happy Hands will face lower demand and reach a long run equilibrium at a lower price.
Answer:B
Explanation:
Happy Hands will not charge a price that is exactly equal to the marginal cost, which is the likely outcome for Happy Hands. Therefore option B is correct.
What is Monoplantic?Possessing or attempting to have total control over anything, especially over a business area, without allowing others to participate: She didn't think the fine was enough to stop monopolistic behavior by large producers. The business is charged with monopolistic behavior. Look up the monopoly.
Monopolistic competition has the following characteristics:
The existence of numerous businesses
Each business creates things that are comparable but different.
Companies do not accept prices.
Free admission and exit from the sector Businesses compete on the basis of the goods' quality, cost, and marketing strategy
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revorrow Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 7,000 units, but its actual level of activity was 6,960 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June: Data used in budgeting: Fixed element per month Variable element per unit Revenue - $ 28.40 Direct labor $ 0 $ 2.80 Direct materials 0 10.70 Manufacturing overhead 38,000 1.50 Selling and administrative expenses 23,600 0.30 Total expenses $ 61,600 $ 15.30 Actual results for June: Revenue $ 205,320 Direct labor $ 18,974 Direct materials $ 72,252 Manufacturing overhead $ 48,320 Selling and administrative expenses $ 25,768 The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for June would be closest to:
Answer:
$9,906 F
Explanation:
Calculation as follows:
Budget Income Statement
Particular $
Revenue (28.4 x 7,000) 198,800
Direct Labor (2.8 x 7,000) (19,600)
Direct Material (10.7 x 7,000) (74,900)
Manufacturing Overheads
(38,000 + [1.5 x 7,000] ) (48,500)
Selling and administrative Expenses
(23,600 + [0.3 x 7,000] ) (25,700)
Net Operating Income 30,100
Actual Income Statement
Particular $
Revenue 205,320
Direct Labor (18,974)
Direct Material (72,252)
Manufacturing Overheads (48,320)
Selling and administrative Expenses (25,768)
Net Operating Income 40,006
Activity variance for net operating income = Net operating income actual - Net operating income budgeted
Activity variance for net operating income = 40,006 - 30,100
Activity variance for net operating income = $9,906 F
Paradise Cruises has a monopoly in renting luxury yachts for sailing in the Caribbean Sea. In summer its monthly inverse demand is p Subscript Upper Sequals400minus2Upper Q Subscript Upper S. In winter the inverse demand is p Subscript Upper Wequals400minusUpper Q Subscript Upper W. Paradise has a total of 150 yachts available for rental on a monthly basis. Which season is peak season? Why? What are the profit-maximizing prices in both seasons? Assume marginal cost is zero. Peak season is winter because demand is higher . The profit-maximizing peak-load price for the summer is p Subscript Upper Sequals$ nothing and the optimal peak-load price for the winter is p Subscript Upper Wequals$ nothing. (
Answer:
Explanation:
In economics, profit maximization is an optimization problem for producers, who choose the quantity of output to maximize revenue net of total costs. Profit is maximized when the marginal revenue form the last unit produced is equal to the marginal cost.
Answer and Explanation:
The Winter is the peak season because for the same quantity demanded, consumers are willing to offer a higher price, as indicated by the demand curve.
On January 1, 2021, the Blackstone Corporation purchased a tract of land (site number 11) with a building for $600,000. Additionally, Blackstone paid a real estate brokerâs commission of $36,000, legal fees of $6,000, and title insurance of $18,000. The closing statement indicated that the land value was $500,000 and the building value was $100,000. Shortly after acquisition, the building was razed at a cost of $75,000.
Blackstone entered into a $3,000,000 fixed-price contract with Barnett Builders, Inc., on March 1, 2021, for the construction of an office building on land site 11. The building was completed and occupied on September 30, 2022. Additional construction costs were incurred as follows:
Plans, specifications, and blueprints .....................$ 12,000
Architectsâ fees for design and supervision ............95,000
To finance the construction cost, Blackstone borrowed $3,000,000 on March 1, 2021. The loan is payable in 10 annual installments of $300,000 plus interest at the rate of 14%. Blackstoneâs average amounts of accumulated building construction expenditures were as follows:
For the period March 1 to December 31, 2021 ...........$ 900,000
For the period January 1 to September 30, 2022 .......2,300,000
Required:
1. Prepare a schedule that discloses the individual costs making up the balance in the land account in respect of land site 11 as of September 30, 2022.
2. Prepare a schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2022.
Answer:
Blackstone Corporation
1. A schedule that discloses the individual costs making up the balance in the land account in respect of land site 11 as of September 30, 2022:
Cost of Land = $600,000
Broker's Commission = $36,000
Legal Fees = $6,000
Title Insurance = $18,000
Razing of old building = $75,000
Total = $735,000
2. A schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2022:
Payment to contractor for building = $3,000,000
Plans, specifications, and blueprints = $12,000
Architect's fees (design & supervision = $95,000
Capitalized Interest ($3m x14%/10 x 2) = $84,000
Total = $3,191,000
Explanation:
a) The cost of land to recognize includes the actual cost for the parcel of land, including the building which was razed. All other expenses incurred ordinarily and necessarily in order to put the land to its intended use are also capitalized. The costs for the broker's commission, legal fees, title insurance, and razing of old building were incurred ordinarily and necessarily for the land and are therefore capitalized in determining the value of the land.
b) The capitalized interest portion for the building is the interests paid to date. The contractor's fee, payments for plans, architect's fee, and interests are included as costs of the building.
Steve Company purchased a tractor at a cost of $180,000. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years, or 10,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,100 hours in 2020. On January 1, 2021, the company decided to sell the tractor for $70,000. Steve uses the units-of-production method to account for the depreciation on the tractor. Based on this information, the entry to record the sale of the tractor will show:
Answer:
Loss on sale = $38,000
Explanation:
The computation of sale of tractor is shown below:-
Total depreciation = ($180,000 - $20,000) × (2,400 + 2,100) ÷ 10000
= $72,000
Net book value on January 1, 2021 = Tractor cost - Total depreciation
= $180,000 - $72,000
= $108,000
Loss on sale = Total depreciation - Net book value on January 1, 2021
= $70,000 - $108,000
= $38,000
Therefore for computing the sale of tractor we simply applied the above formula.
The entry to record the sale of the tractor will show the loss of $38,000.
Here, we are going to calculate the loss or gain on the sale of the tractor.
Depreciation rate per hour = (Cost - Salvage value) / Total estimated hours
Depreciation rate per hour = ($180,000 - $20,000) / 10,000
Depreciation rate per hour = $160,000 / 10,000
Depreciation rate per hour = $16
Depreciation amount = Hours * Depreciation rate per hourDepreciation in 2019 = 2,400 hours * $16 per hour
Depreciation in 2019 = $38,400
Depreciation in 2020 = 2,100 hours * $16 per hour
Depreciation in 2020 = $33,600
Accumulated depreciation = Depreciation in 2019 +
Depreciation in 2020
Accumulated depreciation = $38,400 + $33,600
Accumulated depreciation = $72,000
Carrying value = Cost - Accumulated depreciation
Carrying value = $180,000 - $72,000
Carrying value = $108,000
Gain / (loss) = Sale price - Carrying value
Gain / (loss) = $70,000 - $108,000
Loss = $38,000
Therefore, the entry to record the sale of the tractor will show the loss of $38,000.
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LaserLife Printer Company is a decentralized organization with several autonomous divisions. The division managers are evaluated, in part, on the basis of the change in their return on invested assets. Operating results for the Packer Division for 2019 are budgeted as follows:
Sale $5,000,000
Less variable costs 2,500,000
Contribution margin 2,500,000
Less fixed expenses 1,800,000
Net operating income $ 700,000
Invested capital for the division are currently $3,600,000. For 2019, the division can add a new product line for an investment of $600,000. The new product line will generate sales of $1,600,000 and will incur fixed expenses of $600,000 annually. Variable costs of the new product will average 60% of the selling price.
REQUIRED:
1. What is current ROI? Profit margin (or Return on sales)? Investment (or Capital) turnover?
2. What is the effect on ROI of accepting the new product line?
If the company's required rate of return is 6% and residual income (RI) is used to evaluate managers, would this encourage the division to accept the new product line? Explain and show computations.
Answer:
1. The current ROI is 19.44%. The Profit margin (or Return on sales) is 14%. TheInvestment (or Capital) turnover is 1.39 times.
2. The effect on ROI of accepting the new product line is 17.62%. ROI will be decreased by 1.82%
If the company's required rate of return is 6% and residual income (RI) is used to evaluate managers the residual income amount would be of $4,000 and so Managers should accept the new product line
Explanation:
1. To calculate the profit margin we have to use the following formula:
Profit margin= Net operating income/Sale
Hence, Profit margin = $700,000/$5,000,000 = 14%
ROI= Net operating income/Invested capital
Hence, ROI = $700,000/$3,600,000 = 19.44%
Investment (or Capital) turnover=Sale/Invested capital
Hence, Investment (or Capital) turnover = $5,000,000/$3,600,000 = 1.39 times
2. The Net operating income= ($5,000,000+$1,600,000)-($2,500,000+1,600,000*60%)-$(1,800,000+$600,000) = $740,000
Hence, ROI = $740,000/$4,200,000 = 17.62%
ROI will be decreased by (19.44-17.62) 1.82%.
In order to know if the division would accept the new product line If the company's required rate of return is 6% and residual income (RI) is used to evaluate managers, we would have to calculate the residual income as follows:
Residual income = operating income - invesed capital*required rate of return
= ($740,000-$700,000)-$600,000*6%
= $4,000
Therefore, Managers should accept the new product line.
Jayhawk Foods Inc. is a snack manufacturer that wants to expand globally. Few people abroad are familiar with Jayhawk Foods snacks. The countries into which the company wants to expand require a high degree of local responsiveness when it comes to food, and the citizens of those countries already spend plenty of money on snacks. Which action should the leaders of Jayhawk Foods take? A. Achieve economies of scale by using the global-standardization approach B. Pursue a multidomestic strategy that includes new "local" brands C. Keep costs low with undifferentiated product in the international strategy D. Appease pressures for cost reductions by following the transnational approach
Answer:
the answer is option B) the leaders of Jayhawk Foods should pursue a multidomestic strategy that includes new "local" brands.
Explanation:
Understanding how best to meet your customers needs is a sure way to maximize profits and generate more sales.
Having identified the need for a high degree of local responsiveness when it comes to food, Jayhawk Foods Inc., a snack manufacturer that wants to expand globally should pursue a multi domestic strategy for their branches globally.
Multi Domestic strategy is an international marketing strategy that is responsive to the local market by driving advertising and sales efforts towards the needs that the local consumers are most responsive to.
Alden Trucking Company is replacing part of their fleet of trucks by purchasing them under a note agreement with Kenworthy on January 1, 2009. The note agreement will require $10 million in annual payments starting on December 31, 2009 and continuing for a total of five years (final payment December 31, 2013). Kenworthy will charge Alden Trucking Company the market interest rate of 10% compounded annually.
Required:
1. How much will Alden record as a debit to their equipment account and as acredit to their notes payable account on January 1, 2009?
2. How much ofthe first $10 million payment on December 31, 2009 isinterest?
3. What is theremaining obligation on January 1, 2010 after the first payment hasbeen made?
Answer:
1. $37,907,868
2. $3,790,787
3. $31,698,654
Explanation:
The cost of the trucks according to IAS 16, is the amount of cash or cash equivalent paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition.
Thus=, we need to find the Fair Value or Present Value of the Note as Follows:
Pmt = $10,000,000
P/yr = 1
i = 10%
N = 5
Pv = ?
Pv = 37,907,868
Therefore Alden will record $37,907,868 as a debit to their equipment account and as a credit to their notes payable
Interest on First Payment = $37,907,868×10%
= $3,790,787
Remaining Obligation = $37,907,868 - $6,209,213 (Capital Portion) - $3,790,787 (Interest Portion)
= $31,698,654
The Stores and Service Fund of the City of Monroe had the following account balances as of January 1, 2017:
Debits Credits
Cash $28,000
Due from other funds 27,000
Inventory of supplies 27,500
Land 18,000
Buildings 84,000
Accumulated depreciation—buildings $30,000
Equipment 46,000
Accumulated depreciation—equipment 25,000
Accounts payable 19,000
Advance from water utility fund 30,000
Net position 126,500
Totals $ 230,500
Required:
a. Open a general journal for the City of Monroe Stores and Service Fund and record the following transactions.
(1) A budget was prepared for FY 2017. It was estimated that the price charged other departments for supplies should be 1.25% of cost to achieve the desired breakeven for the year.
(2) The amount due from other funds as of January 1, 2017, was collected in full.
(3) During the year, supplies were ordered and received in the amount of $307,000. This amount was posted to accounts payable.
(4) $15,000 of the advance from the Water Utility Fund, originally provided for construction, was repaid. No interest is charged. (5) During the year, supplies costing $250,560 were issued to the General Fund, and supplies costing $46,400 were issued to the Water Utility Fund. These funds were charged based on the previously determined markup ($ 313,200 to General Fund and 58,000 to the Water Utility Fund).
(6) Operating expenses, exclusive of depreciation, were recorded in accounts payable as follows: Purchasing, $15,000; Warehousing, $16,900; Delivery, $17,500; and Administrative, $9,000.
(7) Cash was received from the General Fund in the amount of $310,000 and from the Water Utility Fund in the amount of $50,000.
(8) Accounts payable were paid in the amount of $365,000.
(9) Depreciation in the amount of $10,000 was recorded for buildings and $4,600 for equipment.
Answer and Explanation:
The Journal entry is shown below:-
1. No Journal entry is required
2. Cash Dr, $27,000
To Due from other funds $27,000
(Being the cash collected which is due from others is recorded)
3. Inventory of suppliers Dr, $307,000
To Accounts payable $307,000
(Being purchase of supplies is recorded)
4. Advance from water utility fund Dr, $15,000
To Cash $15,000
(Being repayment of advance of water utility fund is recorded)
5. Operating expenses Dr, $296,960
($250,560 + $46,400)
To Inventory of supplies $296,960
(Being issue of supplied is recorded)
5. Due from other funds Dr, $371,200
($313,200 + $58,000)
To Revenue charged for services and sales $371,200
(Being the charge of supplies is recorded)
6. Operating expenses of sale and services Dr, $49,400
($15,000 + $16,900 + $17,500)
Operating expenses of administrative Dr, $9,000
To Accounts payable $58,400
(Being operating expenses is recorded)
7. Cash Dr, $350,000
($310,000 + $50,000)
To Due from others $350,000
(Being cash received from general fund is recorded)
8. Accounts Dr,$365,000
To Cash $365,000
(Being the payment of accounts payable is recorded)
9. Operating expenses cost of depreciation Dr, $14,600
To Accumulated Dep - Building $10,000
To Accumulated Dep - Equipment $4,600
(Being depreciation expenses is recorded)
Revenue charged for sales and services Dr, $444,200
To operating expenses cost of depreciation $14,600
To operating expenses cost of administrative $9,000
To operating expenses cost of sale and services $49,400
To operating expenses cost of sale $371,200
(Being transfer the operating expenses is recorded)
Assume that the electricity from nuclear power has become a preferred source of electricity because it is cleaner than electricity produced by burning coal. At the same time, new regulations make it more expensive to produce electricity from nuclear power. What are the consequences?
Answer:
The answer to this question can be described as follows:
Explanation:
In the given statement some information is missing that is choices so, the correct choice can be described as follows:
The most important source of electricity is nuclear energy. It will boost demand for the nuclear energy century of electric power. The demand curve also is moving to the right. At the very same time, it increases in power generation rates would also increase the cost of energy generation via nuclear power plant. This will lead to a shift to the left. The nuclear demand curve will change to just the right and the nuclear power source will switch to the left. It will lead to an increase in the balance cost value with an uncertain shift in the balance quantities.Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $235,000, variable expenses of $132,600, and traceable fixed expenses of $63,800. The Alpha Division has sales of $545,000, variable expenses of $309,800, and traceable fixed expenses of $121,500. The total amount of common fixed expenses not traceable to the individual divisions is $120,200. What is the company's net operating income
Answer:
Operating income $32,100
Explanation:
The operating income for the company is the to be determined by aggregating the sales and cost figures of the two divisions . This is done as follows
$
Total sales (235,000 + 545,000) = 780,000
Variable expenses(132600+309800) = (442,400)
Traceable fixed expenses(63800+121500) = (185300)
Common fixed expenses (120200 )
Operating income 32,100
Medallion Cooling Systems, Inc., has total assets of $9,800,000, EBIT of $2,050,000, and preferred dividends of $201,000 and is taxed at a rate of 40%. In an effort to determine the optimal capital structure, the firm has assembled data on the cost of debt, the number of shares of common stock for various levels of indebtedness, and the overall required return on investment:
Capital structure/debt Cost of debt Number of stock shares Rate of return
0% 0% 200,000 12.3%
15 7.8 175,000 13.1
30 9.1 140,000 14.2
45 12.1 111,000 16.3
60 15.2 75,000 20.1
Calculate earnings per share for each level of indebtedness.
Answer:
Earnings per share:
0% debt = $5.145 per share
15% debt = $5.487 per share
30% debt = $6.203 per share
45% debt = $6.386 per share
60% debt = $6.570 per share
Explanation:
The earnings per share is the monetary value of how much each share of common stock outstanding has earned. The earnings per share can be calculated by dividing the Net Income attributable to common stockholders by the number of common stock shares outstanding.
Net Income attributable to Common stockholders = Net Income - Preferred stock dividends
Thus, Earnings per share = (Net Income - Preferred stock dividends) / Number of common stock shares outstanding
To calculate Earnings per share at each level of indebtedness, we first need to calculate the net income at each debt level. The net income will change as interest is deducted before calculating net income.
Net Income = EBIT - interest - tax
Total debt = Total assets * weightage of debt in capital structure
Tax = EBT * tax rate
a. 0% debt
Net Income = 2,050,000 - 0 - (2050000 * 0.4) = $1,230,000
Earnings per share = (1230000 - 201000) / 200000 = $5.145 per share
b. 15% debt
Total debt = 9,800,000 * 0.15 = 1470000
EBT = 2,050,000 - (1470000 * 0.078) = $1935340
Net Income = 1935340 - ( 1935340 * 0.4) = $1161204
Earnings per share = (1161204 - 201000) / 175000 = $5.487 per share
c. 30% debt
Total debt = 9,800,000 * 0.30 = 2940000
EBT = 2050000 - (2940000 * 0.091) = $1782460
Net Income = 1782460 - (1782460 * 0.4) = $1069476
Earnings per share = (1069476 - 201000) / 140000 = $6.203 per share
d. 45% debt
Total debt = 9,800,000 * 0.45 = 4410000
EBT = 2050000 - (4410000 * 0.121) = $1516390
Net Income = 1516390 - (1516390 * 0.4) = $909834
Earnings per share = (909834 - 201000) / 111000 = $6.386 per share
e. 60% debt
Total debt = 9,800,000 * 0.60 = 5880000
EBT = 2050000 - (5880000 * 0.152) = $1156240
Net Income = 1156240 - (1156240 * 0.4) = $693744
Earnings per share = (693744 - 201000) / 75000 = $6.570 per share
The XYZ Corporation reported the following balance sheet data for 2018 and 2017: 2018 2017 Cash $60,375 $22,955 Available-for-sale debt securities (not cash equivalents) 15,500 85,000 Accounts receivable 91,000 68,250 Inventory 165,000 145,000 Prepaid insurance 1,500 2,000 Land, buildings, and equipment 1,260,000 1,125,000 Accumulated depreciation (610,000) (572,000) Total assets $983,375 $876,205 Accounts payable $70,340 $148,670 Salaries payable 20,000 24,500 Notes payable (current) 25,000 75,000 Bonds payable 200,000 0 Common stock 300,000 300,000 Retained earnings 368,035 328,035 Total liabilities and shareholders' equity $983,375 $876,205 Additional information for 2018: (1.) Sold available-for-sale debt securities costing $69,500 for $74,000. (2.) Equipment costing $20,000 with a book value of $5,000 was sold for $6,000. (3.) Issued 6% bonds payable at face value, $200,000. (4.) Purchased new equipment for $155,000 cash. (5.) Paid cash dividends of $20,000. (6.) Net income was $60,000. Required: Prepare a statement of cash flows for 2018 in good form using the indirect method for cash flows from operating activities
Answer:
Dividends actually paid is $10000 as per the reconciliationshown in the entry below (attachment)
Answer:
statement of cash flows for 2018 using the indirect method
Cash Flow from Operating Activities
Net income for the year $60,000
Adjustment of Non-Cash Items :
Profit from Sale of Equipment ($1,000)
Depreciation (Workings) $107,500
Adjustments for Working Capital items :
Increase in Accounts receivable ($22,750)
Increase in Inventory ($20,000)
Decrease in Prepaid insurance $500
Decrease in Accounts Payable ($78,330)
Decrease in Salaries payable ($4,500)
Decrease in Notes payable ($50,000)
Cash Flow from Investing Activities
Proceeds from Sale of Equipment $6,000
Purchase of New Equipment ($155,000)
Cash Flow from Financing Activities
Proceeds from Issue of 6% bonds $200,000
Dividends Paid ($20,000)
Proceeds from Available-for-sale debt securities $74,000
Net Cash Inflow / Outflow during the Period $37,420
Cash and Cash Equivalents at Beginning of the Period $22,955
Cash and Cash Equivalents at End of the Period $60,375
Explanation:
Available-for-sale debt securities - T- Account
Debit :
Ending Balance 15,500
Sale 69,500
Totals 85,000
Credit:
Beginning Balance 85,000
Totals 85,000
Equipment T - Account
Debit :
Beginning Balance 1,125,000
Purchase 155,000
Totals 1,280,000
Credit:
Ending Balance 1,260,000
Sold 20,000
Totals 1,280,000
Accumulated Depreciation Equipment T - Account
Debit :
Ending Balance 610,000
Disposal 69,500
Totals 679,500
Credit:
Beginning Balance 572,000
Depreciation 107,500
Totals 679,500
Markley Manufacturing calculated its predetermined overhead rate to be 120% of direct labor cost. During June, the company incurred $90,000 of factory labor costs, of which $85,000 is direct labor and $5,000 is indirect labor. Actual overhead incurred was $84,000. Compute the amount of manufacturing overhead applied during the month. Determine the amount of under- or over-applied manufacturing overhead.
Answer:
Applied Manufacturing Overheads are $102,000
Overapplied Manufacturing overheads are $18,000
Explanation:
Under or over applied manufacturing overhead can be determined by comparing the actual and applied manufacturing overheads.
Applied overheads can be calculated by multiplying pre-determined overhead rate and actual level of quantity. Predetermined overhead rate is calculated using estimated overhead and estimated activity on which overheads are applied.
In this question the predetermined overhead rate is 120% of direct labor cost.
Applied overhead = Direct labor cost x 120% = $85,000 x 120% = $102,000
Actual overheads incurred = $84,000
Overapplied Manufacturing overheads = $102,000 - $84,000 = $18,000
If the distribution of water is a natural monopoly, then a. a single firm cannot serve the market at the lowest possible average total cost. b. multiple firms would likely each have to pay large fixed costs to develop their own network of pipes. c. allowing for competition among different firms in the water-distribution industry is efficient. d. average cost increases as the quantity of water produced increases.
Answer:
The correct option is C) If the distribution of water is a natural monopoly, average cost increases as the quantity of water produced increases.
Explanation:
Natural monopoly occurs when there is a hig cost of entry into a particular market niche. The high cost is usually caused by expensive equipment and infrastructural set up for manufacturing as well as maintenance costs.
Therefore, If the distribution of water is a natural monopoly, average cost increases as the quantity of water produced increases.
Distribution of water falls into the category of natural monopoly. Due to the prevailing circumstances, Fixed cost is larger comparable to variable cost such that it is cheaper for a single firm to serve the market.
Jiminy’s Cricket Farm issued a bond with 25 years to maturity and a semiannual coupon rate of 4 percent 3 years ago. The bond currently sells for 108 percent of its face value. The company’s tax rate is 22 percent. The book value of the debt issue is $30 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 10 years left to maturity; the book value of this issue is $15 million, and the bonds sell for 73 percent of par. a.What is the company’s total book value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)b.What is the company’s total market value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)c.What is your best estimate of the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
Explanation:
a.What is the pre-tax cost of debt?This question is basically asking for the bond’s current yield to maturity, which is the pre-tax cost of long term debt in the capital markets for this company today.Price = 1.08 * 1000 = 1080+/- PV23 * 2 = 46 N.10 * 1000 = 100 / 2 = 50 PMT1000 FVSolve for i/y = 4.5801 is the semi-annual yield to maturity * 2 = 9.1601% annual YTM
b.What is the after-tax cost of debt?9.1601 * (1 - .35) = 5.9541 after tax cost of debt.This is the true cost of debt to the company because the company gets a tax deduction (a tax shield!) for paying interest on its debt.
Assume that the economy is in long-run equilibrium. Now, assume that there is an unexpected increase in the price of oil. As a result of higher oil prices, the A. short-run aggregate supply curve will shift left. B. long-run aggregate supply curve will shift left. C. short-run aggregate supply curve will shift right. D. aggregate demand curve will shift left. The new short-run equilibrium will be
Answer:
The correct answer is D)
The aggregate demand curve will shift left.
Aggregate supply is stimulated only by labour, capital, and technology.
Equilibrium refers to the price point where demand or supply intersect.
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Matrix Corporation's balance sheet and income statement appear below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 23 $ 22 Accounts receivable 39 40 Inventory 43 44 Property, plant, and equipment 587 500 Less accumulated depreciation 359 347 Total assets $ 333 $ 259 Liabilities and stockholders' equity: Accounts payable $ 30 $ 26 Accrued liabilities 15 18 Income taxes payable 39 40 Bonds payable 109 120 Common stock 51 50 Retained earnings 89 5 Total liabilities and stockholders' equity $ 333 $ 259 Income Statement Sales $ 972 Cost of goods sold 620 Gross margin 352 Selling and administrative expense 200 Net operating income 152 Gain on sale of equipment 14 Income before taxes 166 Income taxes 50 Net income $ 116 The company sold equipment for $20 that was originally purchased for $7 and that had accumulated depreciation of $1. It paid a cash dividend during the year and did not issue any bonds payable or repurchase any of its own common stock. Required: Determine the net cash provided by (used in) operating activities for the year using the indirect method.
Answer:
Check the explanation
Explanation:
Cash flow from operating activities:
Net income $116
Adjustment to reconcile net income to cash basis:
Depreciation expense ($359+1-347) $13
Gain on sale of equipment (14)
Decrease in account receivable (40-39) $1
Decrease in inventory (44-43) $1
Increase in account payable (30-26) $4
Decrease in accrued liabilities (18-15) (3)
Decrease in income tax payable (40-39) (1)
Net cash flow from operating activities $117
George Weston Limited, a Canadian food processing and distribution company, is one of the world's largest producers of breads. Refer to the scenario. The company owns the Wonder bread brand. When Weston introduced whole grain white bread, which gives kids the bread texture and colour they recognize and love and parents the vitamins they want for their children, what was it an example of?
Answer:
c. Mix width
Explanation:
Product mix width can be defined as the total number of product lines that a company has to sell.
As an example, we can mention a cosmetics company that manufactures four different types of products, such as jewelry, perfumes, clothes and makeup.
Companies use the strategy of having different product lines because they add benefits such as attracting more consumers and gaining a larger share of the market.
Weston introduced whole grain white bread, which gives kid the bread texture and color they realize and love and parents the vitamins they want for their children, is the example of Product Mix width.
What is the product mix width?The product mix width is defined as the number of product lines that attach to sales. In short, it means the total amount of product lines that a company has to sell.
Example:
Refer to a cosmetics company that make up or deals with the four different types of products, like adornment or jewelry, toiletries, clothes and makeup.
Companies use the strategy of mix width of having various product lines because they increase goods and their benefits, such as forcing some more consumers and deriving a bigger share of the market.
In the above case, George Weston Limited produces whole grain white bread, means the company uses the mix width production strategy to increase their sales and wealth.
Therefore, the company uses the production mix width method of marketing.
To learn more about the mix width, refer to:
https://brainly.com/question/9644044
Your company is considering purchasing a machine for $270,000. This machine will bring revenues of $100,000 in the second year, of $150,000 in the third year, and of $75,000 in the fourth year. The machine will be worthless after the fourth year, so you will not be able to get any resale value out of it. If the interest rate is 6% per year, should you go ahead with this project?
Answer:
Yes we should go with this project because it has a positive NPV of $4,350
Explanation:
We need to calculate the net present value of the machine to decide whether to invest in the machine or not.
As per Given Data
Costs $270,000
Cash Inflows
Year 2 $100,000
Year 3 $150,000
Year 4 $75,000
Interest Rate = 6%
Net Present Value
As we know Net Present value is calculated by discounting each years cash flows using using the Weighted Average cost of Capital.
Year Cash Inflows Discount factor 13% Present values
Year 0 $(270,000) (1+6%)^-0 $(270,000)
Year 2 $100,000 (1+6%)^-2 $89,000
Year 3 $150,000 (1+6%)^-3 $125,943
Year 4 $75,000 (1+6%)^-4 $59,407
Net present value $4,350
Blossom Companyhad the following transactions during 2022: 1. Issued $182500 of par value common stock for cash. 2. Recorded and paid wages expense of $87600. 3. Acquired land by issuing common stock of par value $73000. 4. Declared and paid a cash dividend of $14600. 5. Sold a long-term investment (cost $4380) for cash of $4380. 6. Recorded cash sales of $584000. 7. Bought inventory for cash of $233600. 8. Acquired an investment in Zynga stock for cash of $30660. 9. Converted bonds payable to common stock in the amount of $730000. 10. Repaid a 6-year note payable in the amount of $321200. What is the net cash provided by investing activities
Answer:
($26,280)
This represents net cash used up by investing activities
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow while an increase in liabilities is an inflow and vice versa.
Hence net cash provided by investing activities
= $4380 - $30660
= ($26,280)
Other activities are operating and financing activities.
gravitational field
Answer:
The region of space surrounding a body in which another body experiences a force of gravitational attraction.
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Adams Industries holds 55,000 shares of FedEx common stock, which is not a large enough ownership interest to allow Adams to exercise significant influence over FedEx. On December 31, 2021, and December 31, 2022, the market value of the stock is $98 and $112 per share, respectively. What is the appropriate reporting category for this investment and at what amount will it be reported in the 2022 balance sheet
Answer:
The explanation is given below:-
$6,160,000
Explanation:
Since owning shares is not a huge enough to exert significant control. So, strategy for reporting would be a fair value process.
According to the scenario the computation of amount reported in the 2022 balance sheet is shown below:-
Fair value through net income = Shares of FedEx common stock × Market value of the stock of 31 Dec 2022
= 55000 × $112
= $6,160,000
So, for computing the amount reported in the 2022 balance sheet we simply multiply the Shares of FedEx common stock with Market value of the stock of 31 Dec 2022.
