Answer:
a customized risky portfolio to each client based on their risk aversion
Explanation:
It is always believed that when it comes to investment analysis or issue, there are higher returns for higher risk portfolios and lower returns for lower risk portfolios.
Therefore, in order to make a better decision, it is pertinent to note that, the level of risk aversion varies according to each or individual investor.
Hence, when constructing a risky portfolio consisting only of risky assets, an investment manager should offer a customized risky portfolio to each client based on their risk aversion.
On July 9, Mifflin Company receives an $8,500, 90-day, 8% note from customer Payton Summers as payment on account. Compute the amount due at maturity for the note and interest. (Use 360 days a year.)
Answer:
$8,670 and $170
Explanation:
The computation of the amount due at the time of maturity and the interest is shown below:
For interest, it is
= Received amount × rate of interest × number of months ÷ total number of months in a year
= $8,500 × 8% × 90 ÷ 360 days
= $170
And, the amount due at the time of maturity of the note is
= Received amount + interest
= $8,500 + $170
= $8,670
balance sheet reports assets of $6900000 and liabilities of $2700000. All of Ivanhoe’s assets’ book values approximate their fair value, except for land, which has a fair value that is $410000 greater than its book value. On 12/31/21, Oriole Corporation paid $7030000 to acquire Ivanhoe. What amount of goodwill should Oriole record as a result of this purchase?
Answer: $2,420,000
Explanation:
Goodwill is the amount over the fair value of a company that it is purchased for.
Goodwill = Acquisition price - Net Assets
Net Assets = Assets - Liabilities
= (6,900,000 + 410,000) - 2,700,000
= $4,610,000
Goodwill = 7,030,000 - 4,610,000
= $2,420,000
The present value of $10,000 to be received in 10 years, discounted at an annual rate of 6.78%, is closest to:
Answer:
PV= $5,189.21
Explanation:
Giving the following information:
The present value of $10,000 to be received in 10 years, discounted at an annual rate of 6.78%.
To calculate the present value, we need to use the following formula:
PV= FV/(1+i)^n
PV= 10,000/(1.0678^10)
PV= $5,189.21
Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a % weight in equity, % in preferred stock, and % in debt. The cost of equity capital is %, the cost of preferred stock is %, and the pretax cost of debt is %. What is the weighted average cost of capital for Ford if its marginal tax rate is %?
Complete Question:
Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 10% weight in equity, 25% in preferred stock, and 65% in debt. The cost of equity capital is 17%, the cost of preferred stock is 11%, and the pretax cost of debt is 9%. What is the weighted average cost of capital for Ford if its marginal tax rate is 40%?
Answer:
7.96%
Explanation:
We can calculate WACC using the formula:
WACC = Cost of equity * Equity %age / 100% +
After Tax Cost of Debt * Debt %age / 100% +
Cost of Preferred Stock * Preferred Stock %age / 100%
Here,
Cost of equity is 17%
Cost of preferred stock is 11%
Post tax cost of debt = Pre-Tax cost * (1 - Tax rate)
This implies,
Post tax cost of debt = 9% * (1 - 40%) = 5.4%
Equity weight is 10% weight in equity
Preferred stock weight is 25%
Debt Weight is 65%
By putting value in the formula given in the attachment, we have:
WACC = 17% * (10% / 100%) + 11% * (25% / 100%) + 5.4% * (65% / 100%)
WACC = 1.7% + 2.75% + 3.51%
WACC = 7.96%
Rogers, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: Professional and Residential. Assume the following divisional information was available for the past year (in thousands of dollars):
Sales Operating Income Total Assets
Residential $850,000 $68,000 $200,000
Professional $1,095,000 $153,300 $365,000
Assume that management has a 25% target rate of return for each division.
Requirements
a. Calculate each division’s ROI.
b. Calculate each division’s sales margin. Interpret your results.
c. Calculate each division’s capital turnover. Interpret your results.
d. Use the expanded ROI formula to confirm your results from Requirement a. What can you conclude?
e. Calculate each division’s residual income (RI). Interpret your results.
Answer:
A.Residential 34%
Professional 42%
B.Residential 8%
Professional 14%
C.Residential 4.25%
Professional 3%
D.Residential 34%
Professional 42%
E.Residential $18,000.00
Professional $62,050.00
Explanation:
A.Calculation for each division’s ROI
Using this formula
Return on Investment
=Net Income / Average Invested Assets
Let plug in the formula
Residential $68,000.00/$200,000.00 = 34.00%
Professional $153,300.00/$365,000.00 = 42.00%
B.Calculation for each division’s sales margin. Interpret your results
Using this formula
Sales Margin= Operating income/Sales
Let plug in the formula
Residential $68,000.00/$850,000.00 = 8.00%
Professional $153,300.00/$1,095,000.00 = 14.00%
C.Calculation for each division’s capital turnover
Using this formula
Capital Turnover=Sales/Average operating assets
Let plug in the formula
Residential $850,000.00 /$200,000.00 = 4.25
Professional $1,095,000.00/$365,000.00 = 3.00
D.Using the expanded ROI formula to confirm the results from Requirement a.
Using this formula
Return on Investment=Profit Margin * Investment Turnover
Let plug in the formula
Residential 8.00% * 4.25% 34.0%
Professional 14.00% * 3.00% 42.0%
E.Calculation for each division’s residual income (RI)
Residential Professional
Average investment
$200,000.00 $365,000.00
×Target return 25% 25%
=Target income
$50,000.00 $91,250.00
Hence,
Operating income $68,000.00 $153,300.00
Less:Target income$50,000.00 $91,250.00
Residual income $18,000.00 $62,050.00
Suppose the country of Stan has fixed its exchange rate to the dollar. The official exchange rate is 0.50 U.S. dollars per rupee. Suppose market conditions are such that the actual equilibrium exchange rate is 0.25 U.S dollars per rupee.
1. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price at official exchange rates? ___________ Are products bought from Stan a good deal?
2. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price if you could buy at the equilibrium exchange rate?
3. Will foreigners want to demand Stan’s rupees to buy goods at the official rate? Explain.
4. Will people in Stan want to buy U.S. goods at the official exchange rates? Will they being supplying or demanding their rupees?
5. Will the monetary authorities in Stan have to buy up a surplus of their currency or sell their currency to meet a shortage of their currency to keep the exchange rate at 0.50 dollars per rupee?
Answer and Explanation:
1. At 0fficial exchange rate:
100 * 0.5 = $50
what I want to buy would be purchased at $50
at market exchange rate:
0.25 x 100 = $25
products bought from this place are not a good deal as I am paying more than the market exchange rate.
2. at equilibrium exchange rate:
100 x 0.25% = $25
the price is $25
3. from answers 1 and 2, I will not want demand Stan's rupees. the products are costly to get.
4. Stan's currency is obviously overvalued. the people from this country now has increased purchasing power so they can purchase goods in dollars, therefore they would be supplying their currency.
5. They will have to buy up the surplus of rupees so that they can easily keep up with maintaining the rupee at half a dollar.
The BRS Corporation makes collections on sales according to the following schedule: 40% in month of sale 55% in month following sale 5% in second month following saleThe following sales have been budgeted: Sales April $210,000 May $160,000June $150,000 Budgeted cash collections in June would be:______.a. $150,840.b. $158,000.c. $149,000.d. $150,000.
Answer:
Total cash collection= $158,500
Explanation:
Giving the following information:
Cash collection:
40% in the month of sale
55% in the month following sale
5% in the second month following sale
Sales:
April $210,000
May $160,000
June $150,000
Cash collection June:
Sales in cash from June= 150,000*0.4= 60,000
Sales on account from May= 160,000*0.55= 88,000
Sales on account from April= 210,000*0.05= 10,500
Total cash collection= $158,500
1. Chang Industries has 1,900 defective units of product that have already cost $13.90 each to produce. A salvage company will purchase the defective units as they are for $4.90 each. Chang's production manager reports that the defects can be corrected for $6.10 per unit, enabling them to be sold at their regular market price of $20.80. The incremental income or loss on reworking the units is:_______.
a. $18,620 income.
b. $30,210 income.
c. $27,930 income.
2. Poe Company is considering the purchase of new equipment costing $85,500. The projected net cash flows are $40,500 for the first two years and $35,500 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine.
Periods Present Value of 1 at 10% Present Value of anAnnuity of 1 at 10%
1 0.9091 0.9091
2 0.8264 1.7355
3 0.7513 2.4869
4 0.6830 3.1699
a. $(27,665).
b. $(14,857).
c. $27,665.
d. $35,709.
Answer:
1. $18620
2. $35709
Explanation:
1.we are required to find incremental loss.
= Defect(market price - price per unit - correction per unit)
Defect product = 900
Market price = 20.8
Price for each defect unit = 4.9
Price for defect correction = 6.1
1900(20.8-4.9-6.1)
= $18600
2. Present value of cash flow =
40500*0.9091 = 36818.55
40500*0.8264 = 33469.2
35500*0.7513 = 26671.15
35500*0.683 = 24246.5
Total = 121209
We subtract cost of new equipment from this value
121209-85500
= $35709
Charger Company's most recent balance sheet reports total assets of $28,413,000, total liabilities of $16,113,000 and total equity of $12,300,000. The debt to equity ratio for the period is (rounded to two decimals):
Answer:
Debt to equity ratio is 1.31
Explanation:
Given the above inflation, the formula for debt to equity ratio is
= Total debt / Total equity
= $16,113,000 / $12,300,000
= 1.31
Therefore, debt to equity ratio is 1.31
ABC issued callable bonds on January 1, 2018. ABC's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 1/1/2018 $194,758 6/30/2018 $7,000 $7,790 $790 195,548 12/31/2018 7,000 7,822 822 196,370 6/30/2019 7,000 7,855 855 197,225 12/31/2019 7,000 7,889 889 198,114 6/30/2020 7,000 7,925 925 199,039 12/31/2020 7,000 7,961 961 200,000 ABC buys back the bonds for $196,000 immediately after the interest payment on 12/31/2018 and retires them. What gain or loss, if any, would ABC record on this date (use a minus sign in front of the number if it is a loss)?
Answer:
Gain $370
Explanation:
Calculation for the gain or loss, if ABC record on this date 12/31/2018
Based on the information given on the amortization schedule, on this date 12/31/2018 the Carrying value was $196,370 while we were still told that ABC buys back the bonds for $196,000 on 12/31/2018
Now let calculate for the gain or loss using this formula
Gain/Loss = Carrying value- Stock bond
Let plug in the formula
Gain/Loss =$196,370-$196,000
Gain/Loss=$370
Therefore if ABC record on this date 12/31/2018, ABC will have a gain of $370
The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of the year, the company made the following estimates:
Department A Department B
Direct labour cost $30,000 $40,000
Manufacturing overhead $60,000 $50,000
Direct labour hours 6,000 8,000
Machine hours 2,000 10,000
What predetermined overhead rates would be used in Departments A and B, respectively?
a. 50% and $8.00.
b. 50% and $5.00.
c. 110% and $15.00.
d. 200% and $5.00.
Answer:
The Watts Company
d. 200% and $5.00.
Explanation:
a) Data and Calculations:
Estimates:
Department A Department B
Direct labour cost $30,000 $40,000
Manufacturing overhead $60,000 LH $50,000 MH
Direct labour hours 6,000 8,000
Machine hours 2,000 10,000
Department A:
Manufacturing overhead rate = $60,000/$30,000 x 100 = 200%
Department B:
Manufacturing overhead rate = $50,000/10,000 = $5.00
The Watts Company Department A will absorb manufacturing overhead at a rate of 200% of direct labor cost in order to arrive at an estimate of $60,000 ($30,000 x 200%). The Department B will absorb manufacturing overhead at a rate of $5 per machine hour to arrive at an estimate of $50,000 (10,000 x $5).
A company has a net cash inflow from operating activities of $793,000, a net cash outflow of $58,000 from investing activities and a net cash inflow of $100,800 from financing activities. The company paid $128,000 in interest, $188,500 in income taxes, and $204,000 in cash dividends. Which of the following statements about the statement of cash flows is not correct?a. The statement of cash flows will show a net increase in cash and cash equivalents of $838, 500. b. If the direct method is used, the $125,000 of interest paid and the $187,000 of income taxes paid will be reported in the cash flows from operating activities. c. The cash dividends of $201,000 paid will be reported as a cash outflow in the cash flow from investing activities section. d. Supplemental disclosures required for a company using the indirect method include the amount of interest and the amount of income taxes paid.
Answer:
Incorrect Statement about the Statement of Cash Flows:
c. The cash dividends of $201,000 paid will be reported as a cash outflow in the cash flow from investing activities section.
Explanation:
Cash dividends of $201,000 will be reported as a cash outflow in the financing activities section and not the investing activities section.
Statement of Cash Flows is broadly divided into three, the operating, investing, and financing activities sections. The operating activities section show the cash flows from the normal business of the enterprise. The investing activities section shows the acquisition and disposal of investments made by the company in cash. While, the financing section shows the inflow and outflow of cash resulting from the funding of the business by stockholders and noncurrent creditors.
In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1 per unit per year will result in an EOQ of:
Answer:
20
Explanation:
The formula for Economic order quantity ( EOQ ) = √2DS/H,
Where,
D annual demand = 40 units
S Ordering cost = $5
H Holding cost = $1
Hence ,
EOQ = √ 2 × 40 units × $5 / 1$
= √ $400 / $1
= 20
On January 1, the listed spot and futures prices of a Treasury bond were 95.4 and 95.6. You sold $100,000 par value Treasury bonds and purchased one Treasury bond futures contract. One month later, the listed spot price and futures prices were 95 and 94.4, respectively. If you were to liquidate your position, your profits would be a Group of answer choices $125 profit. $1,060.50 loss. None of the options are correct. $125 loss. $1,062.50 profit.
Answer:
None of the options are correct.
Explanation:
We start by calculating the net change of the treasury bond position.
= $95,125 - $95,000
= $125
The long treasury bond position gains $125 after a month.
We will also calculate the net change of the treasury bond futures contract.
= $94,125 - $95,187.50
= -$1,062.50
Therefore, Net profits is;
= $125 - $1,062.50
= -$937.50
How can you assist the ProServices team in serving Pro customers in your
department? Select all that apply.
A. Pull orders for Pro customers in advance and have them ready to pick-up
B. Call Pro customers to maintain relationships and proactively seek out business
C. Monitor inventory levels to make sure key Pro items are in-stock
D. Price match other retailers to give Pro the best price
E. Identify pro customers and introduce them to the ProServices team
Answer:
ProServices Team and Pro CustomersAssisting the ProServices Team in serving Pro customers in my department. Here I have assumed that my department manages and coordinates the relationship with Pro customers:
A. Pull orders for Pro customers in advance and have them ready to pick-up
B. Call Pro customers to maintain relationships and proactively seek out business
C. Monitor inventory levels to make sure key Pro items are in-stock
D. Price match other retailers to give Pro the best price
E. Identify pro customers and introduce them to the ProServices team.
Explanation:
“Pro” customers are a group of independent contractors, repair remodelers, specialty tradesmen, property management, and facility maintenance professionals who are afflicted to an organization offering ProServices. They are not the end customers. Between my organization and the customers, they are middlemen and women who are organized by my ProServices organization to offer specialty services to the general public in a professional manner that guarantees customer satisfaction and payment to the professionals for services rendered. In doing this, the ProService organization charges the Pro customers a fixed fee, which is deducted from the payments made by the end-customers.
All reports required to can be found online at sec.gov.
Per Twitter’s amended S-1 filing, what are the maximum estimated capital expenditures in 2013? Please provide your answer in millions without comma separator or decimal.
Answer:
Twitter's amended S-1 filing
Maximum estimated capital expenditures in 2013:
= $98 million
Explanation:
Twitter's capital expenditures in 2013 can be estimated by subtracting the long-term or non-current assets of 2012 from 2013.
The 2013 long-term assets (Property and equipment, net) are worth $284,024,000
The 2012 long-term assets (Property and equipment, net) are worth $185,574,000
The capital expenditure in 2013 = $98,450,000
The implication is that Twitter added to (or increased) its property and equipment by $98,450,000, which represent new capital expenditures in 2013.
Twitter filed SEC Form 1-A (S-1) with the Securities and Exchange Commission (SEC) when it was seeking exemption for registration requirements for its public offerings as an "emerging growth company," as it is "allowed by the federal securities laws to elect to comply with certain reduced public company reporting requirements for future filings."
On January 1, a company issues bonds dated January 1 with a par value of $390,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $405,830. The journal entry to record the issuance of the bond is: Multiple Choice Debit Bonds Payable $390,000; debit Bond Interest Expense $15,830; credit Cash $405,830. Debit Cash $405,830; credit Bonds Payable $405,830. Debit Cash $405,830; credit Premium on Bonds Payable $15,830; credit Bonds Payable $390,000. Debit Cash $405,830; credit Discount on Bonds Payable $15,830; credit Bonds Payable $390,000. Debit Cash $390,000; debit Premium on Bonds Payable $15,830; credit Bonds Payable $405,830.
Answer:
The journal entry to record issuance is:
January 1, 202x, bonds are issued at a premium
Dr Cash 405,830
Cr Bonds payable 390,000
Cr Premium on bonds payable 15,830
Explanation:
When a bond's coupon rate is higher than the market rate, the bonds will sell at a premium or a value higher than the bond's face value. On the other hand, if the bond's coupon rate is lower than the market rate, the bonds will sell at a discount or a value lower than the bond's face value.
Exercise 11-4 Stock issuance for noncash assets LO P1 Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.
Answer and Explanation:
The Journal entry is shown below:-
Land $45,000
Building Dr, 85,000
To Common Stock $49,000 (7,000 shares × $7)
To Paid-in capital in excess of par-Common stock $81,000
(Being issuance of the stock in exchange for the land and building is recorded)
Here we debited the land and building as it increases the assets and we credited the common stock and paid in capital in excess of par-common stock as it also increases the liabilities.
You buy a stock for $55 today, and sell the stock one year later for $54, during which time a $2 dividend is paid. What is your return on this stock
Answer:
1.82%
Explanation:
Calculation for the return on the stock
Using this formula
Return=(Sales of stock - Stock bought today+Dividend)/Sales of stock
Let plug in the formula
Return = (54 - 55 + 2)/55
Return =1/55
Return = 0.0182×100
Return=1.82%
Therefore the return on the stock will be 1.82%
In determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.a. True
b. False
Answer:
a. True.
Explanation:
In determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.
In Financial accounting, Horizontal analysis can be defined as an analysis and evaluation of a financial statement which illustrates or gives information about changes in the amount of corresponding financial statement items, benchmarks or financial ratio over a specific period of time. It is one of the most important technique that is used to measure how a business is doing financially. Hence, it is also referred to as the trend analysis.
Under the horizontal analysis of financial statement, we use the financial statements of two or more periods; earliest and latter periods.
Generally, the earliest is chosen as the base period while all other items on the statement for a latter period will be compared with the items on the statement of the base period.
During the current year, Chudrick Corporation expects to produce 10,000 units and has budgeted the following: net income $300,000, variable costs $1,100,000, and fixed costs $100,000. It has invested assets of $1,500,000. The company’s budgeted ROI was 20%. What was its budgeted markup percentage using a full-cost approach?
Answer:
25%
Explanation:
For the computation of budgeted markup percentage using a full-cost approach first we need to find out the profit expected and total cost which is shown below:-
Profit Expected = $1,500,000 × 20%
= $300,000
Total cost = Variable cost + Fixed cost
= $1,100,000 + $100,000
= $12,00,000
Budgeted Markup Percentage = Profit ÷ Total Cost
= $300,000 ÷ $12,00,000
= 25%
Calculate the monthly implicit costs for a business owner who devotes 200 hours per month to his business that could be spent working at $50/hour for someone else.
Answer:
Implicit cost = $10,000
Explanation:
Implicit cost is the opportunity cost of using resources a business already owns.
This business owner passes this income by being in a business for himself
200 hours per month multiplied by $50/hour
200 x 50
= 10000
Implicit cost = $10,000
Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows:
Sales $188,000,000
Cost of goods sold (100,000,000)
Gross profit $88,000,000
Expenses:
Selling expenses $16,000,000
Administrative expenses 12,000,000
Total expenses (28,000,000)
Operating income $60,000,000
The division of costs between variable and fixed is as follows:
Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses 50% 50%
Management is considering a plant expansion program for the following year that will permit an increase of $11,280,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs.
Required:
1. Determine the total variable costs and the total fixed costs for the current year.
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
3. Compute the break-even sales (units) for the current year.
4. Compute the break-even sales (units) under the proposed program for the following year.
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,000,000 of operating income that was earned in the current year.
6. Determine the maximum operating income possible with the expanded plant.
7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year?
8. Based on the data given, would you recommend accepting the proposal?
A. In favor of the proposal because of the reduction in break-even point.
B. In favor of the proposal because of the possibility of increasing income from operations.
C. In favor of the proposal because of the increase in break-even point.
D. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
E. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.
Answer:
1. Variable Fixed
Cost of goods sold 70,000,000 30,000,000
Selling Expenses 12,000,000 4,000,000
Administrative Exp. 6,000,000 6,000,000
Total 88,000,000 40,000,000
Note:
Cost of goods sold 70% 30% on 10,000,000 for variable and Fixed respectively
Selling expenses 75% 25% on $16,000,000 for variable and Fixed respectively
Administrative expenses 50% 50% on $12,000,000 for variable and Fixed respectively
2. Unit Variable cost = Total variable cost / Units produced
Total Variable cost 88,000,000
Unit produced 1,000,000
Unit variable cost 88
Unit Contribution margin = Selling Price - Variable cost per unit
Selling Price $188
- Variable cost per unit $88
Unit Contribution margin $100
3. Break even Point (Units) = Fixed cost / Contribution margin per unit
Fixed cost 40,000,000
Contribution margin per Unit 100
Break even Point (Units) 400,000
4. Break even point (units) = Fixed cost / Contribution margin per unit
Fixed cost 40,000,000
Increased Fixed cost 5,000,000
Total New fixed cost 45,000,000
Contribution margin per unit 100
Break even point (units) 450,000
5. Determined sales units = (New fixed cost + Desired Income) / Contribution margin
New Fixed Cost 45,000,000
Desired Income 60,000,000
105,000,000
Contribution margin 100
per unit
Determined sales units 1,050,000
6. Maximum Income from operation = Total New sales - Total New variable cost - Total Fixed cost
Sales 188,000,000
Increased sales 11,280,000
Total New sales 199,289,000
Variable cost 88,000,000
New Variable cost 5,280,000
Total New Variable cost 93,280,000
Total New Fixed cost 45,000,000
Maximum Income from 61,000,000
operation
Number of units = Increase in sales / Price per unit
New variable cost = Number of units * Unit variable cost
Increased sales 11,280,000
Price per unit 188
Number of units 60,000
Unit variable cost x 88.00
New Variable cost 5,280,000
7. Net income = Sales - Variable cost - New fixed cost
Sales 188,000,000
Less: Variable cost 88,000,000
Less: New fixed cost 45,000,000
Net Income 55,000,000
8. Option b. In favour of the proposal because of the possibility of increasing income from operation.
1. The total variable costs are $88,000,000.
Total fixed costs for the current year are $40,000,000.
2.a. The unit variable cost is $88 ($88,000,000/1,000,000)
b. The unit contribution margin is $100 ($188 - $88).
3. The break-even sales (units) for the current year = 400,000 units ($40,000,000/$100).
4. The break-even sales (units) for the proposed program = 450,000 units ($45,000,000/$100).
5. Sales units to realize $60,000,000 of operating income = 1,050,000 units ($45,000,000 + $60,000,000)/$100
6. The maximum operating income with the expanded plant is $61,000,000 ($199,280,000 - $93,280,000 - $45,000,000).
7. Operating income at current sales level = $49,720,000 (188,000,000 - $93,280,000 - $45,000,000).
8. I would recommend the acceptance of the proposal, B. In favor of the proposal because of the possibility of increasing income from operations.
Data and Calculations:
Sales unit at full capacity = 1,000,000 units
Selling price per unit= $188
Sales = $188,000,000
Cost of goods sold = $100,000,000
Variable cost of goods sold = $70,000,000 ($100,000,000 x 70%)
Fixed cost of goods sold = $30,000,000 ($100,000,000 x 30%)
Gross profit = $88,000,000
Expenses:
Selling expenses = $16,000,000
Variable cost of goods sold = $12,000,000 ($16,000,000 x 75%)
Fixed cost of goods sold = $4,000,000 ($16,000,000 x 25%)
Administrative expenses = 12,000,000
Variable cost of goods sold = $6,000,000 ($12,000,000 x 50%)
Fixed cost of goods sold = $6,000,000 ($12,000,000 x 50%)
Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses 50% 50%
Cost of goods sold $70,000,000 $30,000,000
Selling expenses 12,000,000 4,000,000
Administrative expenses 6,000,000 6,000,000
Total costs $88,000,000 $40,000,000
Selling price per unit = $188
Variable cost per unit 88
Contribution margin $100
Contribution ratio = 53.2% ($100/$188 x 100)
Fixed costs = $45,000,000 ($40,000,000 + $5,000,000)
Sales Revenue = $199,280,000 ($188,000,000 + $11,280,000)
Additional sales units = 60,000 ($11,280,000/$188)
Total sales units = 1,060,000 (1,000,000 + 60,000)
Learn more: https://brainly.com/question/18155783
Which of the following items would be a way to manipulate the cash flow from operating activities amount on the statement of cash flows?
a.
Adding depreciation back to net income to determine cash flow from operating activities.
b.
Including interest expense and tax expense in the calculation of cash flow from operating activities.
c.
Recording an item that should be recorded as an operating activity as an investing activity.
d.
The cash flow statement cannot be manipulated.
Answer:
C. Recording an item that should be recorded as an operating activity as an investing activity.
Explanation:
Hope it helped
Suppose that a museum of modern art discovers the following: adults are willing to pay $20 per ticket to see a Monet exhibit. Students are willing to pay less; 60% of students have WTP of $15, and 40% are willing to pay up to $10. There are no marginal costs to allowing more viewers into the museum. The museum manager decides to set the regular price at $20, and offer a student discount. What discount should it offer?
Answer:
50%
Explanation:
From the question we have here
If adults would pay 20$
Out of a 100% students:
60% would pay 15
40% would pay 10
If regular price = 20$
We are required to find discount
Discount = (20 - 10)/20 x 100
Discount = 0.5 x 100
Discount = 50%
The museum should offer 50percent discount.
A company issues 9% bonds with a par value of $110,000 at par on January 1. The market rate on the date of issuance was 8%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bond holder(s) is:
Answer: $4950
Explanation:
From the question, we are informed that a company issues 9% bonds with a par value of $110,000 at par on January 1 and that the market rate on the date of issuance was 8% and also that the bonds pay interest semiannually on January 1 and July 1.
There is no discount on the bonds payable because they are issues at par. Therefore, the cash paid on July 1 to the bond holders will be:
= $110,000 x 9% x 6/12
= $110,000 x 9/100 x 6/12
= $110,000 x 0.09 x 0.5
= $4,950
Cullumber Corporation had 312,000 shares of common stock outstanding on January 1, 2017. On May 1, Cullumber issued 29,700 shares.
(a) Compute the weighted-average number of shares outstanding if the 29,700 shares were issued for cash.
Weighted-average number of shares outstanding $
(b) Compute the weighted-average number of shares outstanding if the 29,700 shares were issued in a stock dividend.
Weighted-average number of shares outstanding $
Answer:
a. Issued for Cash = ($312,000 * 12/12) + ($29,700 * 8/12)
= $312,000 + $19,800
= $331,800
b. Issued in a stock dividend: Shares issued in the stock dividend are assumed outstanding from the beginning of the year
= ($312,000 * 12/12) + ($29,700 * 12/12)
= $312,000 + $29,700
= $341,700
A divorced woman with 2 young children has a small trust fund that gives her $2,500 a year in income. She collects another $2,500 per year in alimony payments. The woman wishes to make a contribution to an Individual Retirement Account this year. Which statement is TRUE
Answer: No contribution can be made
Explanation:
The options to the question are:
a. No contribution can be made
b. A contribution can be made based only on the income received from the trust fund.
c. A contribution can be made based only on the alimony payments received
d. A contribution can be made based on both the income received from the trust fund and the alimony payments received
From the question, we are informed that a divorced woman with 2 young children has a small trust fund that gives her $2,500 a year in income and that she collects another $2,500 per year in alimony payments.
Based on the above analysis, the woman cannot make a contribution to an Individual Retirement Account this year.
In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2017 were as follows.
Budget Actual
Indirect materials $14,200 $13,700
Indirect labor 19,100 19,900
Utilities 11,400 12,100
Supervision 4,600 4,600
All costs are controllable by the department manager.
Prepare a responsibility report for April for the cost center.
Answer:
HANNON COMPANY
Assembly Department
Manufacturing Overhead Cost Responsibility Report
For the Month Ended April 30,2017
Controllable Cost Budget$ Actual$ Difference$ Remark
Indirect materials 14,200 13,700 500 Favourable
Indirect Labor 19,100 19,900 -800 Unfavourable
Utilities 11,400 12,100 -700 Unfavourable
Supervision 4,600 4,600 0 None
Total 49,300 50,300 -1,000 Unfavourable
The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with a. 9 units of output. b. 15 units of output. c. 21 units of output. d. 30 units of output.
Answer:
b. 15 units of output.
Explanation:
information regarding sales price and quantity demanded is missing, so I looked it up (see attached file):
units sales revenue total costs profits
9 $216 $36 $180
15 $270 $54 $216
21 $252 $72 $180
30 $90 $99 ($9)
