Answer:
United Airlines
The value of the company would increase by $9.25 million if it accepts the better project (Plane B).
Explanation:
a) Data and Calculations:
Alternative 1 Alternative 2
Plane A Plane B
Initial project cost $100 million $132 million
Annual net cash inflow $30 million $25 million
Expected lifespan 5 years 10 years
Cost of capital = 12%
Present value Annuity factor 3.605 5.650
Present value of cash inflows $108,150,000 $141,250,000
Net present value = $8,150,000 $9,250,000
The better project (plane) is Plane B.
Anyina Corporation has an actual profit of $80,000. The break-even point is $500,000 and the variable expenses are 60% of sales. Given this information, the margin of safety, based on actual sales, is:
Answer:
Margin of safety = $200,000
Explanation:
Given:
Actual profit = $80,000
Break-even point = $500,000
Variable expenses = 60% of sales
Find:
Margin of safety
Computation:
Assume sales = a
So,
Variable expenses = 0.6a
Pv ratio = [(Sales - Variable expenses) / Sales]100
Pv ratio = [(a - 0.6a)/a]100
Pv ratio = 40%
Margin of safety = Profit / Pv ratio
Margin of safety = 80,000 / 40%
Margin of safety = $200,000
Your sister just deposited $5,500 into an investment account. She believes that she will earn an annual return of 8.8 percent for the next 6 years. You believe that you will only be able to earn an annual return of 8 percent over the same period. How much more must you deposit today in order to have the same amount as your sister in 6 years
Answer:
$5749.02
Explanation:
The first step is to determine the future value of my sister's deposit
The formula for calculating future value:
FV = P (1 + r)^n
FV = Future value
P = Present value
R = interest rate
N = number of years
5500 (1.088)^6 = $9122.97
the second step is to determine the present value of $9122.97 using an interest rate of 8%
$9122.97 / (1.08)^6 = $5749.02
In the simple Keynesian model, there are three simplifying assumptions. Among these assumptions is: __________
a. the price level is flexible no foreign sector
b. the price level is constant until
c. the economy reaches its full-employment level
d. the money supply always rises b and c
Answer: B and C
No foreign sector
The price level is constant until the economy reaches its full-employment level
Explanation:
Keynesian economics refers to the theory that relates to total spending in the economy and how it affects output, Inflation and employment in the economy.
Assumptions of the Keynesian Model include:
• No foreign sector as economy is closed.
• Demand creates its own supply.
• The aggregate price level is fixed. ...
• The price level is constant until the economy reaches its full-employment level
• No retained earnings etc.
During the current year, assets increased from $11,000 to $19,000, and liabilities decreased from $9,000 to $7,500. If no additional capital contributions were made during the year, dividends totaled $4,000, and expenses totaled $21,000, determine total revenues for the year
Answer:
$34,500
Explanation:
Calculation to determine total revenues for the year
Using this formula
Total revenues=Increase in Assets+Decreased in liabilities+Dividends+Expenses
Let plug in the formula
Total revenues=($11,000-$19,000)+($9,000-$7,500)+$4,000+$21,000
Total revenues=$8,000+$1,500+$4,000+$21,000
Total revenues=$34,500
Therefore total revenues for the year is $34,500
On October 1, 20Y6, Jay Crowley established Affordable Realty, which completed the following transactions during the month:
Oct. 1 Jay Crowley transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $30,600.
Oct. 2 Paid rent on office and equipment for the month, $2,750.
Oct. 3 Purchased supplies on account, $2,350.
Oct. 4 Paid creditor on account, $890.
Oct. 5 Earned sales commissions, receiving cash, $15,800.
Oct. 6 Paid automobile expenses (including rental charge) for month, $1,600, and miscellaneous expenses, $680.
Oct. 7 Paid office salaries, $2,000.
Oct. 8 Determined that the cost of supplies used was $1,150.
Oct. 9 Paid dividends, $2,800.
Required –
1. Journalize entries for transactions Oct. 1 through 9. Refer to the Chart of Accounts for exact wording of account titles.
2. Post the journal entries to the T accounts, selecting the appropriate date to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete. Accounts containing only a single entry do not need a balance.
3. Construct an unadjusted trial balance as of October 31, 20Y6.
4. Determine the following:
a. Amount of total revenue recorded in the ledger.
b. Amount of total expenses recorded in the ledger.
c. Amount of net income for October.
5. Determine the increase or decrease in retained earnings for October.
Answer:
Affordable Realty
1. Journal Entries:
Oct. 1 Debit Cash $30,600
Credit Common Stock $30,600
To record the capital contribution of Jay Crowley.
Oct. 2 Debit Rent Expense $2,750
Credit Cash $2,750
To record the payment for monthly rent.
Oct. 3 Debit Supplies $2,350
Credit Accounts Payable $2,350
To record the purchase of supplies on account.
Oct. 4 Debit Accounts Payable $890
Credit Cash $890
To record the payment on account.
Oct. 5 Debit Cash $15,800
Credit Service Revenue $15,800
To record the receipt of sales commission for cash.
Oct. 6 Debit Automobile expenses $1,600
Debit Miscellaneous expenses, $680
Credit Cash $2,280
To record the payment of expenses.
Oct. 7 Debit Office salaries expenses $2,000
Credit Cash $2,000
To record the payment of office salaries for the month.
Oct. 8 Debit Supplies Expense $1,150
Credit Supplies $1,150
To record the supplies expenses for the month.
Oct. 9 Debit Cash Dividends, $2,800
Credit Cash $2,800
To record the payment of dividends.
2. T-accounts:
Cash
Date Account Titles Debit Credit
Oct. 1 Common Stock $30,600
Oct. 2 Rent Expense $2,750
Oct. 4 Accounts Payable 890
Oct. 5 Service Revenue 15,800
Oct. 6 Automobile expenses 1,600
Oct. 6 Miscellaneous expenses 680
Oct. 7 Office salaries expense 2,000
Oct. 9 Cash Dividends 2,800
Oct. 31 Balance $35,680
Common Stock
Date Account Titles Debit Credit
Oct. 1 Cash $30,600
Supplies
Date Account Titles Debit Credit
Oct. 3 Accounts Payable $2,350
Oct. 8 Supplies Expense $1,150
Oct. 31 Balance $1,200
Accounts Payable
Date Account Titles Debit Credit
Oct. 3 Supplies $2,350
Oct. 4 Cash $890
Oct. 31 Balance $1,460
Service Revenue
Date Account Titles Debit Credit
Oct. 5 Cash $15,800
Rent Expense
Date Account Titles Debit Credit
Oct. 2 Cash $2,750
Supplies Expense
Date Account Titles Debit Credit
Oct. 8 Supplies $1,150
Automobile Expense
Date Account Titles Debit Credit
Oct. 6 Cash $1,600
Miscellaneous Expense
Date Account Titles Debit Credit
Oct. 6 Cash $680
Office Salaries Expense
Date Account Titles Debit Credit
Oct. 7 Cash $2,000
Cash Dividends
Date Account Titles Debit Credit
Oct. 9 Cash $2,800
3. Unadjusted Trial Balance as of October 31, 20Y6
Account Titles Debit Credit
Cash $35,680
Supplies 1,200
Common stock $30,600
Accounts payable 1,460
Service revenue 15,800
Rent expense 2,750
Supplies expense 1,150
Automobile expense 1,600
Miscellaneous expense 680
Office salaries expense 2,000
Cash dividends 2,800
Total $47,860 $47,860
4. a. Amount of total revenue recorded in the ledger = $15,800
b. Amount of total expenses = $10,980
c. Amount of net income for October = $4,820 ($15,800 - $10,980)
5. Increase in retained earnings for October = $2,020 ($4,820 - $2,800)
Explanation:
a) Data and Analysis:
Oct. 1 Cash $30,600 Common Stock $30,600
Oct. 2 Rent Expense $2,750 Cash $2,750
Oct. 3 Supplies $2,350 Accounts Payable $2,350
Oct. 4 Accounts Payable $890 Cash $890
Oct. 5 Cash $15,800 Service Revenue $15,800
Oct. 6 Automobile expenses $1,600 Miscellaneous expenses, $680 Cash $2,280
Oct. 7 Office salaries expense, $2,000 Cash $2,000
Oct. 8 Supplies Expense $1,150 Supplies $1,150
Oct. 9 Cash Dividends, $2,800 Cash $2,800
Installing an automated production system costing $300,000 is initially expected to save Zia Corporation $52,000 in expenses annually. If the system needs $7,500 in operating and maintenance costs each year and has a salvage value of $30,000 at year 10, what is the IRR of this system
Answer:
8.87%
Explanation:
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
IRR can be calculated with a financial calculator
Cash flow in year 0 = $-300,000
Cash flow each year from year 1 to 9 = $52,000 - $7,500 = $44500
Cash flow in year 10 = $44500 + $30,000 = $74500
IRR = 8.87%
To determine the value of IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
When Dianna does not know the outcome of each alternative until she has actually chosen that alternative, she is facing conditions of uncertainty time pressures confirmation bias emotional intelligence escalation of commitment
Answer:
uncertainty
Explanation:
Uncertainty is the inability of a person to know the outcome of a decision or a line of action.
One does not have a certainty of how things will turn out in a given situation.
In the given instance where Dianna does not know the outcome of each alternative until she has actually chosen that alternative, she is facing a condition where she is not certain of the outcome of any alternative
Can anyone explain the popularity of the Types of housing in the UK for me?
Explanation:
Save
There are numerous different types of residential properties to be found throughout the United Kingdom. However, not all may be suitable for your unique requirements. Let’s take the guesswork out of the picture by listing all of the most common variants as well as the bespoke aspects of each. You can then make an informed and educated decision at the appropriate time.
It is currently estimated that there are more than 25 million residential properties throughout the United Kingdom. From detached homes and flats to bungalows and cottages, you have a host of amazing options at your disposal. There is still no doubt that finding the most appropriate structure for your needs can be a bit tricky. Let us examine these and other variants in greater detail. What are the advantages of specific properties? What does each have in store? How will price come into play? These important questions deserve a great deal of attention if you hope to obtain the insight and clarity required to make the best choice possible.
Detached Houses
As the name already suggests, detached houses do not share any walls with a separate structure. They also tend to have both front and back gardens. Associated with a greater degree of privacy when compared to other variants, these units are often ideal solutions for those who have children. The median price for a detached house (at the time that this article was written) is £242,286. If you are curious to know the worth of your property, feel free to use our online house valuation tool at your disposal.
Semi-Detached Houses
As the name suggests, the only major difference between a detached house and a semi-detached property is that semi-detached homes share at least one wall with an existing structure that is separately owned. Not only does this save a great deal of space, but these variants are also noticeably cheaper when compared to fully detached houses. This is why the average 2018 value of these structures was £225,674. The only possible concern is that semi-detached houses do not offer the same level of privacy as their detached alternatives.
Terraced Housing
These are actually some of the most well-known and iconic housing types within the United Kingdom. Terraced houses are connected by a single wall on either side; leading to a literal “row” of structures that occupy a street. The main advantage here is that this type of construction saves a great deal of space. This is why they are quite popular within urban districts where land is at a premium. The prices of these properties are also somewhat lower due to the fact that front or back gardens are sometimes absent from their design (although some may contain small front yards). According to government figures compiled in January 2018, the average price for a terraced home is £194,167.
End-of-Terrace Houses
The only main difference between end-of-terrace houses and the terraced counterparts mentioned previously is that these structures are found at the terminal of a row of homes. In other words, only one wall is shared with an adjacent structure. This is why such houses are often found at the end of a road or on a cul-de-sac. This is also the reason why end-of-terrace homes are priced slightly higher. Some studies have found that these structures cost as much as 18 per cent more than normal terraced homes.
Flats
There is no doubt that flats are by far the most well-known types of homes in the UK. Often being offered as a series within a single building, flats are known for their space-saving qualities as well as their convenience. These structures can either be rented on a contractual basis or purchased (the former is quite common). Flats are ideal for single individuals or those with small families due to the fact that they are often much more affordable when compared to detached or semi-detached houses. In fact, the average rental price of a flat (taking into account both urban and rural locations) is approximately £650. Purchase prices will naturally vary and if you would like to get a better idea of what flats have recently sold for in your area, take a look at our sold house price tool.
Converted Flats
The name for these types of residential properties is actually a bit of a misnomer. Converted flats are often houses that have been split into two sections; a top and bottom half. Either of these can be considered a flat while the other portion is normally where the owner resides. Please note that larger structures can be divided into multiple sections (such as individual bedroom-bathroom combinations) which can be rented separately. Depending upon the property in question, converted flats may or may not offer front and back gardens. The price of these locations fluctuates; depending upon issues such as the age of the property, its overall size and the cost of renting a section out to a customer.
Pharoah Construction Company earned $403,000 during the year ended June 30, 2017. After paying out $225,794 in dividends, the balance went into retained earnings. If the firm's total retained earnings were $847,042 at the end of fiscal year 2017, what were the retained earnings on its balance sheet on July 1, 2016
Answer:
See below
Explanation:
Given the above,
The retained earnings for June 2017
If net profit = retained earnings + dividend
Retained earnings = earnings - dividend payout
$403,000 - $225,794
= $177,206
Therefore, the retained earnings on it's balance sheet on July 1 2013 would be;
= Total retained earnings at the end of the fiscal year 2017 - Retained earnings
= $847,042 - $177,206
= $669,836
On April 1, year 1, Hyde Corp., a newly formed company, had the following stock issued and outstanding: 1) Common stock, no par, $1 stated value, 20,000 shares originally issued for $30 per share. 2) Preferred stock, $10 par value, 6,000 shares originally issued for $50 per share. Hyde's April 1, year 1 statement of stockholders' equity should report
Common stock Preferred stock APIC
a) $20,000 $60,000 $820,000
b) $20,000 $300,000 $580,000
c) $600,000 $300,000 $0
d) $600,000 $60,000 $240,000
Answer:
Common stock Preferred stock APIC
a) $20,000 $60,000 $820,000
Explanation:
Calculation to determine what Hyde's April 1, year 1 statement of stockholders' equity should report
Calculation to determine the COMMON STOCK
Common stock=20,000 shares*$1
Common stock=$20,000
Calculation to determine PREFERRED STOCK
Preferred stock =6,000 shares*$10
Preferred stock =$60,000
Calculation to determine ADDITIONAL PAID-IN CAPITAL (APIC)
APIC=[(6000*$50)-(6000*$10)]+[(20,000*$30)+(20,000*$1)]
APIC=($300,000-$60,000)+($600,000-$20,000)
APIC=$240,000+$580,000
APIC=$820,000
Therefore Hyde's April 1, year 1 statement of stockholders' equity should report:
Common stock Preferred stock APIC
$20,000 $60,000 $820,000
Complete each statement with the term that correctly defines each platform strategy advantage.
Platform businesses tend to frequently ____________ pipeline businesses.
Platforms scale more efficiently than pipelines by eliminating __________
Platform businesses _________ digital technology can grow much faster
Answer:
Note See full and organized question in the attached picture below
1. Platform businesses tend to frequently outperform pipeline businesses.
2. Platforms scale more efficiently than pipelines by eliminating gatekeepers.
3. Platform businesses leveraging digital technology can grow much faster.
4. Platforms unlock new sources of value creation and supply.
5. Feedback loops from consumers to the producers allow platforms to fine-tune their offerings and to benefit from big data analytics.
On April 30, 2009, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. Refer to the information above. Assume that in its financial statements, Tilton Products uses the 200%-declining-balance method and the half-year convention. Depreciation expense in 2009 and 2010 will be: Group of answer choices
Answer:
2009 $11,000
2010 $19,250
Explanation:
Calculation to determine what Depreciation expense in 2009 and 2010 will be:
2009 depreciation expense=$88,000 × 2/8
2009 depreciation expense = $22,000/2
2009 depreciation expense = $11,000
2010 depreciation expense= $77,000 × 2/8 2010 depreciation expense=$19,250
Therefore the Depreciation expense in 2009 and 2010 will be:
2009 $11,000
2010 $19,250
During fiscal year 2018, BHD Inc. had Cash from Operations of $600 million, and Cash Used for Investing of $1,000 million. During the year the Cash account on the balance sheet decreased by $700 million. This implies that the Financing cash flow was an
Answer:
the Financing cash flow is -$300
Explanation:
The computation of the Financing cash flow is given below:
Cash from operations $600
Less: Cash used for investing -$1,000
Cash flow for financing -$300
Decrease in cash -$700
Hence, the Financing cash flow is -$300
The same should be considered and relevant for determining the Financing cash flow
Peter temporarily takes over Thomas job in his absence,what does this move represent? (10 marks)
Answer:
A job substitution
Explanation:
A substitute is a person who takes over a job or position from another for a shorter period of time in his absence. The term is known from substitute teachers in the school, but also from substitute priests and substitute doctors who may be subordinate officials who temporarily take over for the superior.
Today, most temporary workers are used in industry and building/construction, where they give companies the opportunity for a faster adaptation to market conditions and thus help to strengthen the competitiveness of the business community.
you need a 20-year, fixed-rate mortgage to buy a new home for $210,000. Your mortgage bank will lend you the money at a 7.1 percent APR for this 240 month loan. However, you can afford monthly payments of $1,000, so you offer to pay off any remaining balance at the end of the loan in the form of a single balloon payment. HOw large will this balloon payment have ot be for you to keep your monthly payments at $1000
Answer: $337,869.73
Explanation:
Find out the future value of $1,000 given an interest rate of 7.1%. If this amount is less than the future value of $210,000, the difference is added to the final payment to come up with the balloon payment.
The APR needs to be made periodic:
= 7.1% / 12
The $1,000 payment is an annuity so this can be calculated as:
= Annuity * ( ( 1 + rate) ^ number of periods - 1) / rate
= 1,000 * ( ( 1 + 7.1/ 12%) ²⁴⁰ - 1) / 7.1/12%
= $527,297.83
Future value of $210,000
= 210,000 * ( 1 + 7.1/ 12%) ²⁴⁰
= $865,167.56
Balloon payment will be:
= 865,167.56 - 527,297.83
= $337,869.73
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $117,000 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee. Compute BMX€™s amounts for each of these four taxes as applied to the employee€™s gross earnings for September under each of three separate situations (a), (b), and (c).
Gross pay through August Gross pay for September
a. 6400 800
b. 18,200 2100
c. 11700 8000
Answer:
Scenario Accumulated September FICA taxes FUTA / SUTA
gross pay gross pay 7.65% 3.5%
a. $6,400 $800 $61.20 $21
b. $18,200 $2,100 $160.65 $0
b. $11,700 $8,000 $611.20 $0
You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis.
Owner's beginning stock basis $36,800
Increase in AAA 32,000
Increase in OAA 6,300
Payroll tax penalty 2,140
Tax-exempt interest income 4,800
Life insurance premiums paid (nondeductible) 2,700
Owner's purchases of additional stock 22,000
Answer:
$74,120
Explanation:
Preparation of her ending stock basis
ENDING STOCK BASIS:
Beginning stock basis $36,800
Add:Increase in AAA $12,800
(.40 * $32,000)
Add:Increase in OAA $2,520
(.40 * $6,300)
Add:Stock purchase $22,000
Total Ending stock basis $74,120
Therefore her ending stock basis is $74,120
Rolling Coast Inc. issued BBB bonds two years ago. These bonds provided a yield to maturity (YTM) of 11.5 percent. Long-term risk-free government bonds were yielding 8.7 percent at the time. The current risk premium on BBB bonds versus government bonds is half of what it was two years ago. If the risk-free long-term government bonds are currently yielding 7.8 percent, then at what interest rate should Rolling Coast expect to issue new bonds
Answer: 9.2%
Explanation:
The interest rate that Rolling Coast should expect to issue new bonds will be calculated thus:
Firstly, we will calculate the previous risk premium on BBB bonds which will be:
= 11.5% - 8.7% = 2.8%
Then, the new risk premium on BBB bonds will be:
= Previous risk premium / 2
= 2.8% / 2
= 1.4%
Then, the interest rate that Rolling Coast should expect to issue new bonds will be:
= 7.8% + 1.4%
= 9.2%
Common stock holders: Group of answer choices have one vote in the election of how the company operates. are last in line to receive income. are guaranteed to get paid when the company fails. receive income before preferred stockholders.
Answer:
are last in line to receive income.
Explanation:
Common stock holders are referred to as the owners of the company. They own shares that gives them the right to vote in a company's general meeting, receive dividends, and they have the right to get newly issued shares in the company before others.
However they are also called unsecured creditors of the company because when the business makes income they are the last in line to receive dividends if any remains.
Also in the case of bankruptcy preference share holders and other creditors are paid first. Common share holders are paid last.
The allowable increase for a constraint is Group of answer choices how much resource to use to get the optimal solution. the amount by which the resource can increase given shadow price. how many more units of resource to purchase to maximize profits. the amount by which the constraint coefficient can increase without changing the final optimal value.
Answer: the amount by which the resource can increase given shadow price.
Explanation:
The allowable increase refers to the amount by which the coefficient of the objective function can be increased without bringing about a change in the optimal basis.
The allowable increase for a constraint is the amount by which the resource can increase given shadow price. Therefore, the correct option is B.
LOL Music Store uses the perpetual inventory system to account for its merchandise. On November 17, it purchased $1,000 of merchandise with terms of 2/5,n/60. If payment is made on November 21. Demonstrate the required journal entry to record the payment.
Answer:
LOL Music Store
Journal Entry to record the payment:
November 21:
Debit Accounts Payable $1,000
Credit Cash $980
Credit Cash Discounts $20
To record the payment on account.
Explanation:
a) Data and Analysis:
November 17: Inventory $1,000 Accounts Payable $1,000
November 21: Accounts Payable $1,000 Cash $980 Cash Discounts $20
b) When LOL Music Store uses the perpetual inventory system to account for its merchandise, it debits the Inventory account instead of the Purchases account on November 17. The credit entry goes to the Accounts Payable account. On November 21, when payment is made, the Accounts Payable is debited while the Cash account and Cash Discounts are correspondingly credited.
Holt Enterprises recently paid a dividend, D0, of $3.50. It expects to have nonconstant growth of 19% for 2 years followed by a constant rate of 10% thereafter. The firm's required return is 13%. How far away is the horizon date? The terminal, or horizon, date is Year 0 since the value of a common stock is the present value of all future expected dividends at time zero. The terminal, or horizon, date is the date when the growth rate becomes nonconstant. This occurs at time zero. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the beginning of Year 2. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of Year 2. The terminal, or horizon, date is infinity since common stocks do not have a maturity date.
Answer:
Holt Enterprises
The terminal, or horizon, date is:
the date when the growth rate becomes constant. This occurs at the end of Year 2.
Explanation:
a) Recent dividend, DO = $3.50
Expected non-constant growth = 19%
Period of non-constant growth = 2 years
Expected constant rate of growth = 10% after 2 years of non-constant growth
The firm's required return rate = 13%
b) The terminal or horizon date is, therefore, from the end of year 2 or beginning of year 3, when constant growth sets in with the Holt stock.
At the horizon date the dividend, D3, must have grown to $5.42 approx.
Then, the horizon value is given by the formula = D3 / required rate - growth rate
= 5.42 / 0.13 - 0.01
= 5.42 / 0.03
= $181
University Car Wash built a deluxe car wash across the street from campus. The new machines cost $234,000 including installation. The company estimates that the equipment will have a residual value of $27,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows:
Year Hours Used
1 2,800
2 1,900
3 2,000
4 2,000
5 1,800
6 1,500
Required:
a. Prepare a depreciation schedule for six years using the straight-line method.
b. Prepare a depreciation schedule for six years using the double-declining-balance method.
c. Prepare a depreciation schedule for six years using the activity-based method.
Answer:
University Car Wash
a. Straight-line Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Balance
1 $234,000 $34,500 $34,500 $199,500
2 $234,000 $34,500 $69,000 $165,000
3 $234,000 $34,500 $103,500 $130,500
4 $234,000 $34,500 $138,000 $96,000
5 $234,000 $34,500 $172,500 $61,500
6 $234,000 $34,500 $207,000 $27,000
b. Double-Declining-Balance Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Balance
1 $234,000 $77,220 $77,200 $156,780
2 $234,000 $51,737 $128,937 $105,043
3 $234,000 $34,664 $163,601 $70,379
4 $234,000 $23,225 $186,826 $47,154
5 $234,000 $15,561 $202,387 $31,583
6 $234,000 $4,593 $206,980 $27,000
c. Activity-Based Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Balance
1 $234,000 $48,300 $48,300 $185,700
2 $234,000 $32,775 $81,075 $152,925
3 $234,000 $34,500 $115,575 $118,425
4 $234,000 $34,500 $150,075 $83,925
5 $234,000 $31,050 $181,125 $52,875
6 $234,000 $25,825 $206,950 $27,050
Explanation:
a) Data and Calculations:
Cost of new machines = $234,000
Residual value of equipment = $27,000
Depreciable amount = $207,000
Estimated useful life = 6 years
Straight-line depreciation expense per annum = $34,500 ($207,000/6)
Double-declining-balance rate = 33% (100%/6 * 2)
Year Depreciation Declining Balance
1 $77,220 $156,780
2 $51,737 $105,043
3 $34,664 $70,379
4 $23,225 $47,154
5 $15,561 $31,583
6 $4,593 $27,000
Estimated useful life in hours = 12,000
Depreciation rate per hour = $17.25 ($207,000/12,000)
Actual usage per year:
Year Hours Used Usage Charge
1 2,800 $48,300 (2,800 * $17.25)
2 1,900 $32,775 (1,900 * $17.25)
3 2,000 $34,500 (2,000 * $17.25)
4 2,000 $34,500 (2,000 * $17.25)
5 1,800 $31,050 (1,800 * $17.25)
6 1,500 $25,825 (1,500 * $17.25)
Assume that an investor purchased a put option on BP with an exercise price of $1.900 for $0.0215 per unit. There are 31,250 units in a GBP options contract. At the time of the option expiration date, the spot price for GBP was $1.885. What was the net profit/loss on this option to the investor?
a. $203.125
b. $671.8750
c. $468.75
d. $1,140.625
Answer:
a. $203.125
Explanation:
Calculation to determine the net profit/loss on this option to the investor
Net profit/loss=((1.900 - 1.885) - 0.0215)(31,250)
Net profit/loss=(0.015-0.0215)*31,250
Net profit/loss=0.0065*31,250
Net profit/loss=$203.125
Therefore the net profit/loss on this option to the investor will be $203.125
The trial balance of Swifty Corporation at the end of its fiscal year, August 31, 2022, includes these accounts: Beginning Inventory $18,650; Purchases $227,110; Sales Revenue $208,200; Freight-In $9,560; Sales Returns and Allowances $3,440; Freight-Out $1,810; and Purchase Returns and Allowances $8,000. The ending inventory is $23,400.
Prepare a cost of goods sold section (periodic system) for the year ending August 31, 2022.
Answer and Explanation:
The preparation of the cost of goods sold section is presented below;
Beginning inventory $18,650
Purchases $227,110
Less: Purchase return & allowances ($,8000)
Add: Freight in $9,560
Cost of goods available for sale $247,320
Less: Ending inventory ($23,400)
Cost of goods sold $223,920
In this way it should be prepared
Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $219,017 and average assets of $1,413,720. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $36,220 more than under FIFO, and its average assets would have been $31,640 less than under FIFO.
Required:
Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO).
Answer:
a) Under the FIFO method:-
ROI = 15.49%.
Under LIFO method:-
ROI = 13.2%
Explanation:
ROI = Net Income * 100 / Avverage assets.
a) Under the FIFO method
[tex]ROI= \frac{219017*100}{1413720} \\ROI = 15.49[/tex]
ROI = 15.49%.
Under LIFO method
[tex]ROI= \frac{182797*100}{1382080} \\ROI=13.2%[/tex]
ROI = 13.2%
Net income Under LIFO= Net income under FIFO-Increased cost of goods sold
= $219017-$36,220= $182797.
Average assets under LIFO= Average assets under FIFO-Average assets that are less under LIFO
= $1413720 - $31,640= $1382080.
You have accepted a job as the president and CEO of a large transportation conglomerate. Over the years, the conglomerate has acquired a number of unrelated divisions. Your first action as CEO is to complete a strategic plan.
Business Projected Growth Rate Current market share
Shipping Low 1%
Cargo inspection High 5%
Railroad loading Low 75%
Freight forwarding High 70%
Which of the following divisions would you take profits from and continue to run?
a. Railroad loading
b. Shipping
c. Freight forwarding
d. Cargo inspection
Answer: a. Railroad loading
Explanation:
This question relates to the BCG matrix which allows a company with multiple divisions to know how to deal with its various divisions based on their growth rate and market share.
The question specifically relates to a matrix called "Cash cows". Cash cows are divisions that have a significant market share but a low growth rate. These divisions are stable and bring more money into the company than they cost to run.
This allows us to take profits from them and invest in other. The Railroad loading controls a significant market share of 75% but has a low growth rate so is a Cash cow.
ABC Company's production budget for October is based on 500 units. Standard unit cost for raw materials is $130 per unit ($10 per pound x 13 pounds per unit).
ABC's actual production in October= = 525 units.
The actual cost of materials used = $69,300 ($11 per pound x 12 pounds per unit).
Required:
a. Calculate the raw materials price variance for October. Is it favorable or unfavorable?
b. Calculate the raw materials usage variance for October. Is it favorable or unfavorable?
Answer and Explanation:
The computation is shown below;
a. Raw material price variance is
= (standard price - actual price) × actual quantity
= ($10 - $11) × ($69,300 ÷ $11)
= ($10 - $11) × 6,300
= $6,300 unfavorable
b. The raw material usage variance is
= (Standard quantity - actual quantity) × standard price
= (525 × 13 - 6,300) × $10
= $5,250 favorable
In this way it should be calculated
Triptych Food Corp. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 6,350 5,000 Operating costs except depreciation and amortization 1,120 1,040 Depreciation and amortization 318 200 Total Operating Costs 1,438 1,240 Operating Income (or EBIT) 4,912 3,760 Less: Interest 663 489 Earnings before taxes (EBT) 4,249 3,271 Less: Taxes (25%) 1,062 818 Net Income 3,187 2,453 Calculate the profitability ratios of Triptych Food Corp. in the following table. Convert all calculations to a percentage rounded to two decimal places.
Question Completion:
The following shows Triptych Food Corp.'s income statement for the last two years. The company had assets of $10,575 million in the first year and $16,916 million in the second year. Common equity was equal to $5,625 million in the first year, 100% of earnings were paid out as dividends in the first year, and the firm did not issue new shares in the second year.
Answer:
Triptych Food Corp.
The profitability ratios of Triptych Food Corp.
Year 2 Year 1
Net profit margin 50.19% 49.06%
Return on total assets 18.84% 23.20%
Return on common equity 36.17% 43.61%
Basic earning power 29.04% 35.56%
Explanation:
a) Data and Calculations:
Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1
Net Sales $6,350 $5,000
Operating costs except
depreciation and amortization 1,120 1,040
Depreciation and amortization 318 200
Total Operating Costs 1,438 1,240
Operating Income (or EBIT) 4,912 3,760
Less: Interest 663 489
Earnings before taxes (EBT) 4,249 3,271
Less: Taxes (25%) 1,062 818
Net Income $3,187 $2,453
Total assets $16,916 $10,575
Common equity $8,812 $5,625
Profitability ratios and formulas:
Net profit margin = Net Income/Sales * 100
Return on total assets = Net Income/Total assets * 100
Return on common equity = Net Income/Common Equity * 100
Basic earning power = EBIT/Total assets * 100
Year 2 Year 1
Net profit margin 50.19% 49.06%
= ($3,187/$6,350 * 100) ($2,453/$5,000 * 100)
Return on total assets 18.84% 23.20%
= ($3,187/$16,916 * 100) ($2,453/$10,575 * 100)
Return on common equity 36.17% 43.61%
= ($3,187/$8,812 * 100) ($2,453/$5,625 * 100)
Basic earning power 29.04% 35.56%
= ($4,912/$16,916 * 100) ($3,760/$10,575 * 100)
The following statements describe why profits for firms in a perfectly competitive industry tend to vanish in the long run. Select the explanation that most accurately reflects this scenario?
A) Firms try to increase supply to cover their costs if they experience losses, and this leads to zero profits.
B) Firms are unable to generate revenue over time because the demand for products drops.
C) When other perfectly competitive firms see an opportunity to earn profits and enter the market prices drop.
D) When other perfectly competitive firms see an opportunity to earn profits and enter the market, prices rise.
Answer:
The correct answer is the option C: When other perfectly competitive firms see an opportunity to earn profits and enter the market the prices drop.
Explanation:
To begin with, in the microeconomics theory the perfect competitive market is characterized by the fact that there a lot of companies that sell an homogenous product and that are price takers of the market itself. So therefore that the only big difference in the firms are the costs and the prices that they have. Moreover, in the long run the firms are obtaining great profits so that leads to the enter of another more companies to the market and the supply rises the prices will have to go low so that will implicate as well a decrease in the prices of every company that now works in that industry.
