Complete Question:
Which of the following is true regarding the trial balance? Select all that apply.
a) The trial balance includes all of the accounts needed to create the balance sheet and the income statement.
b) The trial balance is much less detailed than the balance sheet and income statement.
c) The accounting principle of materiality says that the information on the trial balance can be combined and simplified into more general reporting items.
d) The accounting principle of money measurement says that the information on the trial balance can be combined and simplified into more general reporting items.
e) The trial balance shows only nominal accounts.
Answer:
a) The trial balance includes all of the accounts needed to create the balance sheet and the income statement.
Explanation:
Company XYZ's trial balance summarizes all the general ledger account balances with the assets and expenses on the debit side and the liabilities, equity, and income on the credit side. It is extracted from the general ledger for all accounts that do not have equal debit and credit sides. It is one of the ways to ensure that proper double entry system of bookkeeping has been followed. That the two sides are in balance does not mean that the trial balance or the general ledger from which it is prepared is error-free. It simply means that the two sides agree in total. XYZ can prepare the trial balance at any time, not necessarily at the end of the period.
Ignatius Corporation had 7 million shares of common stock outstanding during the current calendar year. It issued ten thousand $1,000, convertible bonds on January 1. Each bond is convertible into 50 shares of common stock. The bonds were issued at face amount and pay interest semiannually at an annual rate of 10%. On June 30, Ignatius issued 100,000 shares of $100 par 6% cumulative preferred stock. Dividends are declared and paid quarterly. Ignatius has an effective tax rate of 25%. Ignatius would report the following EPS data (rounded) on its net income of $20 million: Basic EPS Diluted EPS a. $ 2.77 $ 2.67 b. $ 2.81 $ 2.73 c. $ 2.85 $ 2.67 d. $ 2.81 $ 2.68
Answer:
Ignatius Corporation
Basic and Diluted EPS are:
c. $ 2.85 $ 2.67
Explanation:
Data and Calculations:
Common stock outstanding = 7 million shares
Issued 10,000, $1,000 convertible bonds = $10,000,000
Convertible bonds = 10,000 bonds = 500,000 shares (10,000 x 50)
Interest payment = semiannual at 10% per annum
6%, 100,000 Cumulative preferred stock at $100 par = $10,000,000
Preferred dividend = $600,000
Net Income of $20 million
Basic EPS = $20,000,000/7,000,000 = $2.857 per share
Diluted EPS = $20,000,000/7,500,000 = $2.67 per share
To obtain the diluted EPS, the outstanding common stock is increased by the number of potential convertible bonds.
Even if you cannot meet all of the elements of a contract, in special circumstances, courts may still find that there was an enforceable agreement.
a. True
b. False
Answer:
Correct answer:
a. True
Explanation:
A contract which is an agreement between two individual is meant to be kept in any given business situation. In a situation where there is a need not to meet the elements of the contracts, there might be cancellation of the contract if both parties agrees.
When one of the parties refuses, he or she would go to court inorder to enforce the agreement. In most cases, the court would see reasons on why the agreements must be enforced.
A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. If 150,000 tons of ore are mined during the first year, the journal entry to record the depletion is:_______.
a. Debit Depletion Expense $93,750; credit Natural Resources $93,750.
b. Debit Cash $112,500; credit Natural Resources $112,500.
c. Debit Depletion Expense $93,750; credit Accumulated Depletion $93,750.
d. Debit Cash $93,750; credit Accumulated Depletion $93,750.
e. Debit Depletion Expense $112,500; credit Accumulated Depletion $112,500.
Answer:
Option c is the correct answer.
Explanation:
The depletion expense or charge for the period can be calculated using the following formula,
Depletion expense = [(Cost - Salvage Value) / Total units expected to be mined] * Units mined during the period
Depletion expense = [(1500000 - 250000) / 2000000] * 150000
Depletion expense = $93750
The entry to record the expense is,
Depletion expense 93750 Dr
Accumulated depletion 93750 Cr
So, option c is the correct answer.
When a firm focuses on cost reductions through a variety of efforts including economies of scale, with little customization of products, the firm uses which kind of strategy?
Answer:
Global standardization
Explanation:
Global standardization is when a company(multinational) create a marketing strategy that is results driven in order to sell its products internationally. This type of strategy is used by these companies to promote/advertise, sell their products with a view to making profit.
Global standardization enables a firm to use same marketing strategy from one country to another while considering the culture of the host country. This means that global standardization is a useful tool especially for product like Coca Cola which have same appeal worldwide.
A risk-free, zero-coupon bond has 15 years to maturity. Which of the following is closest to the price per $1,000 of face value at which the bond will trade if the current YTM is 6.1%?
a $411.40
b. $553.15
c $663.78
d. $885.05
e. $774.42
Answer:
The bond will trade at a. $411.40.
Explanation:
Use the following data to find the price, PV of the bond.
n = 15
pmt = $0
p/yr = 1
fv = $1,000
ytm = 6.10 %
pv = ?
Using a financial calculator, the bond price (PV) is $411,4047 or $411,40
Conclusion :
The bond will trade at $411.40 if the current YTM is 6.1%.
In decision making under ________, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome
Answer: risk
Explanation:
In the decision making under risk, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome.
Unlike in uncertainties whereby the decision maker won't know the probability of the occurrence of the outcomes, in risk, one is aware.
Annabelle owns an Italian ice shop. If she decided to expand the size of her shop so that she could sell more Italian ices, how would she know if she is experiencing economies of scale in the long run
Answer:
her long-run average cost of selling each Italian ice decreases.
Explanation:
Economies of scale is when a firm produces more units of goods or services on a much larger scale, with very little input cost(average cost). Invariably, this implies that the production units of a firm increases as it grows while having a decreased input costs.
A firm will experience economies of scale in the long run if it's average total costs(cost per unit required for production which remains the same irrespective of output) decreases as it increases its scale of production.
eally Great Corporation manufactures industrial−sized landscaping trailers and uses budgeted machine−hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: Budgeted output units 51,000 units Budgeted machine−hours 10,200 hours Budgeted variable manufacturing overhead costs for 51,000 units $387,600 Actual output units produced 35,750 units Actual machine−hours used 14,300 hours Actual variable manufacturing overhead costs $328,900 What is the budgeted variable overhead cost rate per output unit?
Answer:
$7.60 per unit of output
Explanation:
Budgeted output units 51,000 units
Budgeted machine−hours 10,200 hours
Budgeted variable manufacturing overhead costs for 51,000 units $387,600
budgeted variable overhead cost per unit of output = $387,600 / 51,000 units = $7.60 per unit of output
In this case, the applied variable overhead rate = 35,750 units x $7.60 = $271,700, which would have been under-applied since the actual variable overhead costs were much higher, $328,900.
________________ allow(s) for more wealth because a larger market allows producers and consumers to benefit from lower costs.
Answer:
Global competition
Explanation:
Global competition is the competition in which the products and the services are provided by the companies that are competed and serve their products and services to international customers. In this the companies should faced a lot of challenges like taste and preferences, a lifestyle that occurs due to the difference in cultures also it generated the benefit from lowering the cost
Therefore according to the given scenario, global competition is the answer
2. Whom would you choose as a referent on this job? What steps would your manager take to make you feel that you were being equitably treated? What would you do if, after a year on the job, you experienced underpayment equity?
Answer is given below
Explanation:
The comparison is an indication to determine if the treatment is the same. Mentioned may be another person or a group of people similar to them. The Reference Canal may be a person with a previous job or anyone has guesses as to what the result/input ratio will be. Employees are treated equally when they feel that their result / input ratio is equal to the output or input ratio mentioned. Equity is related to the fairness of the results relative to the inputs. Managers help treat employees equally by ensuring that those who provide multiple inputs are rewarded with more results than those who provide less input. If a person changes one aspect of his ratio, the manager must ensure that the other side of the ratio also changes. As the input increases, so does the outcomhold. If the input decreases, the results also decrease. Equity is present when an individual's own result / input ratio is less than the forecast. This happens when an employee compares him or her to a reference and does not want to achieve the results he or his investment has achieved. Equity can be restored by trying to increase growth (by inputs, bonuses or allocating time) or by removing inputs (being late or falling short, doing less work) and turning it into a more accurate indication. If these methods fail, a planned company will choose to departFour companies were sued by customers for injuries sustained from faulty products. All four companies settled out of court for $400,000. For which of the following companies is this event the LEAST material?a. A company with assets totaling $36 billion.b. A company with assets totaling $40 billion.c. A company with assets totaling $15 billion. d. A company with assets totaling $50 billion.
Answer:
d. A company with assets totaling $50 billion.
Explanation:
In order to calculate the material impact of the lawsuit on each company, we must divide the settlement by total assets. In this case, we do not need to do the math, we simply have to select which company has the most assets. The more assets a company has, the lesser the material impact of any unfavorable settlement.
You are given an annuity-immediate paying 10 for 10 years, then decreasing by one per year for nine years and paying one per year thereafter, forever. The annual effective rate of interest is 4%. Calculate the present value of this annuity.
Answer:
124.17
Explanation:
since the first payment is immediate, then this is an annuity due:
we must divide this annuity into 3 separate parts:
1) today plus 9 years = PV = 10 x 8.43533 (PV annuity due, 4%, 10 periods) = 84.3533
2) the second group of years where annuity decreases by $1
PV year 10 = 9/1.04¹⁰ = 6.08
PV year 11 = 8/1.04¹¹ = 5.20
PV year 12 = 7/1.04¹² = 4.37
PV year 13 = 6/1.04¹³ = 3.60
PV year 14 = 5/1.04¹⁴ = 2.89
PV year 15 = 4/1.04¹⁵ = 2.22
PV year 16 = 3/1.04¹⁶ = 1.60
PV year 17 = 2/1.04¹⁷ = 1.03
sum of PVs = 26.99
3) terminal value at year 17 = 1/0.04 = 25
PV of terminal value = 25/1.04¹⁷ = 12.83
now we add the three parts = 84.3533 + 26.99 + 12.83 = 124.17
A monopoly's cost function is
C = 1.5q^2 + 40 Q
and its the demand for its product is
p = 320-0.5Q
where Q is output, p is price, and C is the total cost of production. Determine the profit-maximizing price and output for a monopoly. The profit maximizing output level is units. (Enter a numeric response using an integer)
Answer:
70 units
Explanation:
The computation of profit maximizing output level is shown below:-
Monopolist perform Marginal Revenue which equivalent to the Marginal Cost as
MR = Marginal Revenue and MC = Marginal Cost
[tex]MR = \frac{\partial TR}{\partial Q} = \frac{\partial PQ}{\partial Q} = \frac{\partial (320-0.5Q)Q}{\partial Q}[/tex]
[tex]MR = \frac{\partial (320Q -0.5Q^2)}{\partial Q}[/tex]
MR = 320 - Q
Now we will find the MC which is
[tex]MC = \frac{\partial TC}{\partial Q} =\frac{\partial (1.5Q^2 + 40Q)}{\partial Q} = 3Q + 40[/tex]
now we will put the value of which is into MR = MC
320 - Q = 3Q + 40
280 = 4Q
70 = Q
So, the profit maximizing output level is 70 units.
You have been hired by the CFO of Lugones Industries to help estimate its cost of common equity. You have obtained the following data: (1) r d = yield on the firm's bonds = 7.00% and the risk premium over its own debt cost = 4.00%. (2) r RF = 5.00%, RP M = 6.00%, and b = 1.25. (3) D 1 = $1.20, P 0 = $35.00, and g = 8.00% (constant). You were asked to estimate the cost of common based on the three most commonly used methods and then to indicate the difference between the highest and lowest of these estimates. What is that difference?
Answer:
Under CAPM:
Re = Rf + Beta(Rm - Rf)
Rf = 5%
Rm - Rf = 6%
Beta = 1.25
Re = 5% + (1.25 x 6%) = 12.5%
Under dividend discount model:
Re = (Div₁ / P₀) + g
Div₁ = $1.20
P₀ = $35
g = 8%
Re = ($1.20 / $35) + 8% = 11.43%
Under bond yield plus risk premium approach:
Re = Pre-tax cost of debt + risk premium over its own debt
Pre-tax cost of debt = 7%
risk premium over its own debt = 4%
Re = 7% + 4% = 11%
The highest cost of equity results from the CAPM model and it is 12.5% while the lowest results from using the bond yield plus risk approach (11%), the difference is 1.5% between them.
Here I Sit Sofas has 5,800 shares of common stock outstanding at a price of $81 per share. There are 630 bonds that mature in 17 years with a coupon rate of 5.5 percent paid semiannually. The bonds have a par value of $1,000 each and sell at 93 percent of par. The company also has 4,700 shares of preferred stock outstanding at a price of $34 per share. What is the capital structure weight of the debt?
Answer:
0.4820
Explanation:
The computation of the weight of debt is shown below:
= Debt value ÷ Total capital structure
where,
Debt value is
= 630 bonds × $1,000 × 0.93
= $585,900
And, the total capital structure is
= Debt value + common stock + preferred stock
= $585,900 + 5,800 shares × $81 + 4,700 shares × $34
= $1,215,500
So, the weight of debt is
= $585,900 ÷ $1,215,500
= 0.4820
A customer wishes to purchase $100,000 face amount of municipal bonds that the broker-dealer does not have in inventory. Under MSRB rules, the firm should:
Answer:
contact enough dealers so that a reasonable market quote is obtained . when a municipal dealer acts in an agency capacity, the price charged must be representative of the market for that type of security. There is no requirement to obtain a pre-set number of quotes (as a contrast, FINRA requires that a minimum of 3 quotes be obtained for non-NASDAQ OTC issues, meaning OTCBB or Pink Sheet issues), nor is there a requirement to direct the customer to a dealer that physically has those bonds. The dealer would not sell short the bonds to the customer, since short covering is very difficult in the thinly traded municipal market.
The Extra Surplus Company's Balance Sheet for December 31, 2017 and the Income Statement for 2018 are shown below.
Extra Surplus Company
Balance Sheet
December 31, 2017
Assets
Cash $14,000
Accounts Receivable 7,000
Inventory 16,800
Property and Equipment, Net 28,000
$65,800
Liabilities and Stockholders' Equity
Accounts Payable $14,000
Notes Payable, Long-Term 7,000
Common Stock 28,000
Retained Earnings 16,800
$65,800
Extra Surplus Company
Income Statement
For the Year Ended December 31, 2018
Sales $23,400
Cost of Goods Sold 5,400
Salaries and Wage Expense 5,400
Interest Expense 1,800
Other Expenses 900
Net Income $9,900
Additional data:
A- Sales were $23,400; $14,400 in cash was received from customers.
B- Bought new land for cash, $18,000.
C- Sold other land for its book value of $9,000.
D- Paid $1,800 principal on the long-term note payable and $1,800 in interest.
E- Issued new shares of stock for $18,000 cash.
F- Cash dividends of $3,800 were declared and paid to stockholders.
G- Paid $10,300 on accounts payable.
H- No inventory purchases were made: other expenses were incurred on account.
I- All wages were paid in cash.
J- Other expenses were on account.
Required:
a. Prepare a balance sheet as of December 31, 2020.
b. Prepare the statement of cash flows using the direct method.
Answer:
The Extra Surplus Company
Balance Sheet
December 31, 2020
Assets
Cash $14,300
Accounts Receivable 16,000
Inventory 11,400
Property and Equipment, Net 37,000
$78,700
Liabilities and Stockholders' Equity
Accounts Payable $3,700
Other Expenses Payable 900
Notes Payable, Long-Term 5,200
Common Stock 46,000
Retained Earnings 22,900
$78,700
b. The Extra Surplus Company
Statement of Cash Flows, using the direct method:
December 31, 2020
Operating activities:
Cash from customers $14,400
Payment to suppliers (10,300)
Payment to labor (5,400)
Net cash from operating (1,300)
Investing activities:
Land sales 9,000
Land (18,000)
Net cash from investing (9,000)
Financing activities:
Issue of shares 18,000
Note Payable Repayment (1,800)
Interest paid (1,800)
Dividends (3,800)
Net cash from financing 10,600 10,600
Net Cash Inflow $300
Explanation:
a) Data and Calculations:
Extra Surplus Company
Balance Sheet
December 31, 2017
Assets Adjustment Balance
Cash $14,000 300 $14,300
Accounts Receivable 7,000 + 23,400 - 14,400 16,000
Inventory 16,800 - 5,400 11,000
Property and Equipment, Net 28,000 - 9,000 + 18,000 37,000
$65,800
Liabilities and Stockholders' Equity
Accounts Payable $14,000 -10,300 3,700
Notes Payable, Long-Term 7,000 -1,800 5,200
Common Stock 28,000 + 18,000 46,000
Retained Earnings 16,800 22,900
$65,800
ii) Extra Surplus Company
Income Statement
For the Year Ended December 31, 2018
Sales $23,400
Cost of Goods Sold 5,400
Salaries and Wage Expense 5,400
Interest Expense 1,800
Other Expenses 900
Net Income $9,900
Cash balance (beginning) $14,000
iii) Cash Receipts:
Cash from customers $14,400
Land sales 9,000
Issue of shares 18,000
Total receipts $41,400
iv) Cash Payments:
Land $18,000
Note Payable Repayment 1,800
Interest paid 1,800
Dividends 3,800
Accounts Payable 10,300
Salaries & Wages 5,400
Total payments $41,100
Cash Balance (Ending) $14,300
v) Retained Earnings:
Net Income $9,900
Beginning Retained Earnings 16,800
Dividends 3,800
Ending Retained Earnings $22,900
v) The Extra Surplus Company's Statement of Cash Flows can also be prepared using the indirect method. This method starts with the net income and adjusts working capital changes after adding back non-cash flow expenses in order to arrive at the net cash from operating activities. Other steps are similar to the direct method, which considers only the actual cash inflows and outflows.
If there were 40000 pounds of raw materials on hand on January 1, 130000 pounds are desired for inventory at January 31, and 310000 pounds are required for January production, how many pounds of raw materials should be purchased in January
Answer:Pound of raw materials needed to be purchased = 400000 pounds
Explanation:
Opening inventory at January 1 =40000 pounds
Closing inventory at January 31- =130000 pounds
Pounds required for production ==310000 Pounds
Pound of raw materials needed to be purchased= Pounds required for production + Closing inventory at January 31 --Opening inventory at January 1 =
=310, 000 pounds+130, 000 pounds -40000 pounds
=400000 pounds
obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as
Answer:
Long term liabilities.
Explanation:
This can be easily or mostly be used in companies and also firms. In most cases they are been tagged a non-current liability.
They are generally defined to be obligations that are not been settled for/paid off in the current year or accounting period. Therefore, debts of this kind are not due within a year. Dept of this kind ranges from notes payable to bonds payable, also mortgages and are also seen as leases in a company settings.
In as much as this is not good for a company's financial health, investors and creditors see how the company is financed through this. Current obligations are seen to be more risky than non-current debts because they will need to be paid sooner.
J. Ross and Sons Inc. has a target capital structure that calls for 40 percent debt, 10 percent preferred stock, and 50 percent common equity. Ross' common stock currently sells for $40 per share. The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10 percent per year. J. Ross's cost of retained earnings is closest to:
Answer:
J. Ross's cost of retained earnings is 18.33%
Explanation:
Cost of retained earnings is also call Cost of Equity
Cost of retained earnings = (Dividend per share for next year / Current market value of stock) + Growth rate of dividend
Cost of retained earnings = 2 / 40(1-40%) + 10%
Cost of retained earnings = 2 / 24 + 10%
Cost of retained earnings = 0.08333 + 0.1
Cost of retained earnings = 0.183333
Cost of retained earnings = 18.3333%
Cost of retained earnings = 18.33%
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 first month of operations ended August 31, Kodiak Fridgeration Company manufactured 60,000 mini refrigerators, of which 54,000 were sold. Operating data for the month are summarized as follows:
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Fixed manufacturing cost 840,000.00 8,940,000.00
Selling and administrative expenses:
Variable $972,000.00 324,000.00
Fixed 1,296,000.00
Required:
1. Prepare an income statement based on the absorption costing concept.
2. Prepare an income statement based on the variable costing concept.
3. Explain the reason for the difference in the amount of operating income reported in (1) and (2). Refer to the list of Labels and Amount Descriptions provided
Labels and Amount Descriptions
Labels
August 31
Cost of goods sold
Fixed costs
For the Month Ended
August 31
Variable cost of goods sold
Amount Descriptions
Contribution margin
Contribution margin ratio
Cost of goods manufactured
Fixed manufacturing costs
Fixed selling and administrative expenses
Gross profit
Operating income
Inventory, August 31
Loss from operations
Manufacturing margin
Planned contribution margin
Sales
Sales mix
Selling and administrative expenses
Total cost of goods sold
Total fixed costs
Total fixed costs
Total variable cost of goods sold
Variable cost of goods manufactured
Variable selling and administrative expenses
Answer:
Kodiak Fridgeration Company
1. Income Statement for the month ended August 31, absorption costing concept:
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Fixed manufacturing cost 840,000.00
Total manufacturing 8,940,000.00
Less Ending Inventory 894,000.00 8,046,000.00
Gross profit $2,214,000.00
Selling and administrative expenses:
Variable $972,000.00
Fixed 324,000.00 1,296,000.00
Net Income $918,000.00
2. Income Statement for the month ended August 31, absorption costing concept:
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Total manufacturing 8,100,000.00
Less Ending Inventory 810,000.00 7,290,000.00
Gross profit $2,970,000.00
Fixed manufacturing cost 840,000.00
Selling and administrative expenses:
Variable 972,000.00
Fixed 324,000.00 2,136,000.00
Net Income $834,000.00
3. The reason for the difference in the amount of operating income reported in (1) and (2) are the cost of products assigned to cost of goods sold and ending inventory are not the same. The following reconciliation buttresses this point:
Net operating income as per absorption costing $918,000.00
less Ending inventory, ($149 - $135) x 6,000 84,000.00
Net operating income as per variable costing $834,000.00
Explanation:
a) Data and Calculations:
Units produced = 60,000
Units sold = 54,000
Ending inventory = 6,000
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Fixed manufacturing cost 840,000.00 8,940,000.00
Selling and administrative expenses:
Variable $972,000.00 324,000.00
Fixed 1,296,000.00
Kodiak's absorption costing concept incorporates all production costs into the cost of products. This means that the cost of production includes all variable and fixed costs associated with production. Costs that are not related to production are treated as period costs. Whereas, with variable costing technique, only the variables costs of production are included in the costs of production. All fixed costs, including factory overheads are treated as period costs.
Mark Sports Inc. sold 500 pairs of skates at $50 each in 2012. The management estimates that 4% of the skates sold will need repair within a year. The repair cost for each pair is $10. Which is the correct journal entry for estimating warranty liability
Answer:
Warranty repair Expense (Dr.) $200
Warranty Payable (Dr.) $200
Explanation:
The warranty expense is the estimate of probable expense that will incur due to fault in the product. The estimated repair is the 4% of skates sold. If 500 pairs of skates are sold then out of them 4% will require repair. The repair for the faulty skates will cost $10. The total cost will be $200,
500 pairs of skates * 4% * $10
Which is the first step toward initiating efficient and effective international business negotiations:
Answer: Selecting an appropriate negotiation team
Explanation:
The first step toward initiating efficient and effective international business negotiations is selecting an appropriate negotiation team.
When an appropriate negotiation team has been selected to negotiate on behalf of a particular company, negotiation becomes easier and are more feasible and both parties can agree on a particular stance.
The Auto Division of Big Department Store had a net operating income of $560,000, a net asset base of $4,000,000, and a required rate of return of 12%. Sales for the period totaled $3,000,000. The residual income for the period is
Answer:
Residua income = $80,000
Explanation:
Residual income is the excess of the controllable profit over the opportunity cost of capital invested.
It is used to evaluate the financial performance of a division or department.
The a positive residual value indicate a good performance, hence the higher the residual value the better
It is computed as follows:
Residual income = Controllable profit - (cost of capital× operating assets)
Controllable profit = 560,000,
Interest on capital = × 12% × 4,000,000 = 480,000
Residual income = 560,000 - 480,000= 80,000
Residua income = $80,000
Unlike direct materials, the sum of all the direct labor variances is always equal to the flexible budget variance.
A. True
B. False
Answer:
A. True
Explanation:
Unlike direct materials, the sum of all the direct labor variances is always equal to the flexible budget variance. Also, a negative direct labor efficiency variance is considered favorable one. And for a direct labor, if the efficiency and rate variances are both negative, then the flexible budget variance will be unfavorable. Therefore, the statement of the question is true.
Calculate the marginal cost of the 70th toy car produced. Round your answer to the nearest hundredth.
Answer:
$1.43
Explanation:
A lot of information is missing, but i found a similar question. Hope it can help.
Labor Q Fixed Variable Total Marginal Average
costs costs cost cost total cost
0 0 50 0 50 0 0
1 10 50 30 80 8 8
2 24 50 60 110 2.5 4.58
3 49 50 90 140 1.20 2.86
4 70 50 120 170 1.43 2.43
5 82 50 150 200 2.50 2.44
marginal cost is calculated by dividing the incremental cost ($30) by the incremental output (21) = $30 / 21 = $1.4286 ≈ $1.43
A firm's total cost function is given by the equation TC=4000+5Q+10Q and marginal cost is given by the equation MC=5+20Q
(A) Write an expression for each of the following cost concepts:
a. Total Fixed Cost
b. Average Fixed Cost
c. Total Variable Cost
d. Average Variable Cost
e. Average Total Cost
(B) Calculate the values of marginal cost and the costs in (a)-(e) above for Q=0,1,2,3.
(C) Determine the quantity that minimizes average total cost. Demonstrate that the predicted relationship between marginal cost and average cost holds.
Following are the calculation to the given question:
[tex]\to TC = 4,000 + 5Q + 10 \ Q2\\\\\to MC = 5 + 20\ Q\\\\[/tex]
For point A)
[tex](a)\ TFC = 4,000\\\\(b)\ AFC = \frac{TFC}{ Q} = \frac{4,000}{ Q}\\\\(c)\ TVC = 5Q + 10\ Q2\\\\(d)\ AVC = \frac{TVC }{Q} = 50 + 10\ Q\\\\(e)\ ATC = \frac{TC }{ Q} = (\frac{4,000}{ Q}) + 50 + 10Q \ \text{Also, ATC = AVC + AFC}\\\\[/tex]
For point B)
TFC remains unchanged at 4,000, regardless of the price of Q.
i)
[tex]\to Q = 0[/tex]
AFC, AVC, and ATC cannot be calculated (division by zero is not possible).
ii)
[tex]Q = 1\\\\AFC =\frac{4,000}{ 1} = 4,000\\\\TVC = (5 \times 1) + (10 \times 1) =5 + 10 = 15\\\\AVC = \frac{TVC}{ Q} = \frac{15}{1} = 15\\\\ATC = 4,000 + 15 = 4,015\\\\MC = 5 + (20 \times 10 = 5 + 20 = 25[/tex]
iii)
[tex]Q = 2\\\\AFC = \frac{4,000}{ 2} = 2,000\\\\TVC = (5 \times 2) + (10 \times 2 \times 2) = 10 + 40 = 50\\\\AVC = \frac{50}{2} = 25\\\\ATC = 2,000 + 25 = 2,025\\\\MC = 5 + (20 \times 2) = 5 + 40 = 45\\\\[/tex]
iv)
[tex]Q = 3\\\\AFC = \frac{4,000}{ 3} = 1,333.33\\\\TVC = (5 \times 3) + (10 \times 3 \times 3) = 15 + 90 = 105\\\\AVC = \frac{105}{3} = 35\\\\ATC = 1,333.33 + 35 = 1,368.33\\\\MC = 5 + (20 \times 3) = 5 + 60 = 65\\\\[/tex]
For point C)
i)
[tex]ATC[/tex] is minimized when [tex]\frac{dATC}{dQ} = 0[/tex]
[tex](- \frac{4,000}{Q2} ) + 10 = 0\\\\\frac{4,000}{Q2} = 10\\\\Q2 = 400\\\\Q = 20\\[/tex]
ii)
Part (B) shows that as MC increases from Q = 0 to Q = 3, ATC decreases, validating the link.
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Absolute Company has a manufacturing facility in Brooklyn that manufactures robotic equipment for the auto industry. For Year 1, Absolute collected the following information from its main production line:Actual quantity purchased 200 unitsActual quantity used 110 unitsUnits standard quantity 100 unitsActual price paid $8 per unitStandard price $10 per unitAbsolute isolates price variances at the time of purchase. What is the materials price variance for Year 1?a. $400 favorableb. $400 unfavorablec. $220 favorabled. $220 unfavorable
Answer:
Direct material price variance= $400 favorable
Explanation:
Giving the following information:
Actual quantity purchased 200 units
Actual price paid $8 per unit
Standard price $10 per unit
To calculate the direct material price variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (10 - 8)*200
Direct material price variance= $400 favorable
Blossom Street Inc. makes unfinished bookcases that it sells for $57. Production costs are $37 variable and $10 fixed. Because it has unused capacity, Blossom Street is considering finishing the bookcases and selling them for $70. Variable finishing costs are expected to be $6 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Blossom Street should sell unfinished or finished bookcases. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Answer and Explanation:
The Preparation of an analysis on a per unit basis is shown below:-
Particulars Sell unfinished Sell finished Increase/Decrease
bookcases bookcases in income
Sale price per
unit $57 $70 $13
Less: variable cost
per unit $37 $43 $6
($37 + $6)
Les: fixed cost per
unit $10 $10 $0
Total cost per
unit $47 $53 $6
Net income per
unit $10 $17 $7
Therefore, Unfinished bookcases are further processed, as net profit per unit increases further by processing by $7
