Carrier sells air conditioning units to distributors. Ahead of the upcoming summer, demand probability is 40,000 units (25%), 55,000 units (35%), 70,000 units (25%), and 80,000 units (15%).
Fixed cost of production = $500,000
Variable cost of production per unit = $1,200
unit selling price= $1500
value for unsold products = $900
Answer the following questions:
1. If the manufacturer is considering production quantities of 40,000 units or 80,000 units, assuming 90% of product will be sold and 10% will be salvaged, what is the profit per unit?
Answer:
For 40,000 units
Profit per unit = $287.50
For 80,000 units
Profit per unit = $293.75
Explanation:
Total Profit = (0.9 * Total Unit Produced * Per unit selling price) + (0.1 * Total Unit Produced * Per unit selling price) - ( Fixed cost + (Total unit produce* Variable cost per unit))
Total Profit = (0.9 * 40,000 * 1,500 ) + (0.1 * 40,000 * 1,500) - (500,000 + (40,000 * 1,200))
= 54,000,000 + 6,000,000 - 48,500,000 = $11,500,000
For 40,000 units
Total Profit = $11,500,000
Profit per unit = total profit/no. of units
= 11,500,00 / 40,000 = $287.50
For 80,000 units
Total Profit = (0.9 * 80,000 * 1,500 ) + (0.1 * 80,000 * 1,500) - (500,000 + (80,000 * 1,200))
= 108,000,000 + 12, 000,000 - 96,500,000
= 23,500,000
Total profit = $ 23,500,000
Profit per unit = 23,500,000 / 80,000
= $293.75
Carla Vista Enterprises buys back 600,000 shares of its stock from investors at $6.50 a share. Two years later, it reissues this stock for $6.00 a share. The stock reissue would be recorded with a debit to Cash for:
Answer:
The stock reissue would be recorded with a debit to Cash for $3,600,000, a debit to additional Paid in capital $300,000 and Credit to treasury stock $3,900,000
Explanation:
Description Debit$ Credit$
Cash 3,600,000
(600,000 * $6.00)
Additional Paid in capital 300,000
(600,000 x $0.50)
Treasury stock 3,900,000
(600,000 * 6.50)
Child Play Inc. manufactures electronic toys within a relevant range of 20,000 to 150,000 toys per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Complete the cost schedule. When computing the cost per unit, round to two decimal places.
Toys produced 40,000 80,000 120,000
Total costs:
Total variable costs $720,000 d. $ j. $
Total fixed costs 600,000 e. k.
Total costs $1,320,000 f. $ l. $
Cost per Unit
Variable cost per unit a. $ g. $ m. $
Fixed cost per unit b. h. n.
Total cost per unit c. $ i. $ o. $
Answer:
Toys produced 40,000 80,000 120,000
Total costs:
Total variable costs $720,000 $1,440,000 $2,160,000
Total fixed costs $600,000 $600,000 $600,000
Total costs $1,320,000 $2,040,000 $2,760,000
Cost per Unit
Variable cost $18 $18 $18
Fixed cost $15 $7.50 $5
Total cost $33 $25.50 $23
Fixed costs do not change with total output, they are the same regardless so the number of units produced. Variable costs change proportionally to any change in total output. If total output increases, variable costs will increase.
Consider the case of Purple Panda Pharmaceuticals: Next year, Purple Panda is expected to earn an EBIT of $2,000,000, and to pay a federal-plus-state tax rate of 30%. It also expects to make $500,000 in new capital expenditures to support this level of business activity, as well as $35,000 in additional net operating working capital (NOWC). Given these expectations, it is reasonable to conclude that next year Purple Panda will generate an annual free cash flow (FCF) of (rounded to the nearest whole dollar).
Answer:
Purple Panda Pharmaceuticals
Annual Free Cash Flow (FCF):
FCF = Sales Revenue - (Operating costs + Taxes) - Required investments in operating capital or net operating profit after taxes - net investment in operating capital =
Net Income = $1,400,000
additional NOWC = 35,000
Capital expenditures = 500,000
FCF = $865,000
Explanation:
a) Data and Calculations:
EBIT = $2,000,000
Tax = 30% or $600,000
Net Income = $1,400,000
additional NOWC = 35,000
Capital expenditures = 500,000
FCF = $865,000
Purple Panda Pharmaceuticals' Free Cash Flow shows what is available for distribution to security holders after the payment of taxes. Purple Panda will use the information from its Free Cash Flow to judge if a project will pay off and generate enough cash flow so that shareholders' value will be enhanced.
Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2020, Job 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $21,200, direct labor $12,720, and manufacturing overhead $16,960. As of January 1, Job 49 had been completed at a cost of $95,400 and was part of finished goods inventory. There was a $15,900 balance in the Raw Materials Inventory account.
During the month of January, Lott Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $129,320 and $167,480, respectively. The following additional events occurred during the month.
1. Purchased additional raw materials of $95,400 on account.
2. Incurred factory labor costs of $74,200. Of this amount $16,960 related to employer payroll taxes.
3. Incurred manufacturing overhead costs as follows:
Indirect materials $18,020
Indirect labor $21,200
Depreciation expense on equipment $12,720
Various other manufacturing overhead costs on account $16,960.
4. Assigned direct materials and direct labor to jobs as follows.
Job No. Direct Materials Direct Labor
50 $10,600 $5,300
51 41,340 26,500
52 31,800 21,200
Calculate the predetermined overhead rate for 2020, assuming Lott Company estimates total manufacturing overhead costs of $ 882,000, direct labor costs of $735,000, and direct labor hours of 21,000 for the year.
Answer:
Predetermined manufacturing overhead rate= $1.2 per direct labor dollar
Explanation:
Giving the following information:
Company estimates total manufacturing overhead costs of $882,000 and, direct labor costs of $735,000
To calculate the predetermined overhead rate, we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 882,000/735,000
Predetermined manufacturing overhead rate= $1.2 per direct labor dollar
The stock pays a dividend of $2 per year and its price is $80. If the market return is 7% and the risk-free rate is 1%, what is the stock beta? A. 0.4 B. 0.5 C. 0.25 D. 0.1
Answer:
The beta of the stock is 0.25 and option C is the correct answer.
Explanation:
The current price of a stock which pays a constant dividend can be determined using the zero growth dividend model of DDM. The formula to calculate the price under this model is,
P0 = Dividend / r
Where,
r is the required rate of return on the stockAs we already know the value of P0 and Dividend, we can plug in these values in the formula and calculate the value of r.
80 = 2 / r
80 * r = 2
r = 2 / 80
r = 2.5% or 0.025
The required rate of return can also be calculated using the CAPM equation. The formula for r under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free raterM is the return on marketTo calculate beta, we will input the values for r, rRf and rM in the CAPM equation.
Let beta be x.
0.025 = 0.01 + x * (0.07 - 0.01)
0.025 - 0.01 = x * 0.06
0.015 / 0.06 = x
x = 0.25
Thus, beta is 0.25
Ace Cleaning Service is considering expanding into one or more new market areas. Which costs are relevant to Ace's decision on whether to expand?
Answer:
variable and opportunity costs
Explanation:
In simple words, whenever an organisation is planning to expand into new market they should taken into account only those costs which will increase or decrease due to such operations success or failures, therefore, sunk costs would be irrelevant.
Variable cost refers to the cost that increase or decrease with level of operations while opportunity costs relates to the cost profits foregone due to choosing best alternative over second best alternative.
Key facts and assumptions concerning Kroger Company, at December 12, 2007, appear below. Using this information, answer the questions following.
Facts and Assumptions
Yield to maturity on long-term government bonds 4.54%
Yield to maturity on company long-term bonds 6.32%
Coupon rate on company long-term bonds 7.50%
Market price of risk, or risk premium 6.30%
Estimated company equity beta 1.05
Stock price per share $ 25.97
Number of shares outstanding 681.2 million
Book value of equity $ 4,965 million
Book value of interest-bearing debt $ 6,674 million
Tax rate 35.0%
a. Estimate Kroger's cost of equity capital.
b. Estimate Kroger's weighted-average cost of capital. Prepare a spreadsheet or table showing the relevant variables.
Answer:
a. 11.16 %
b. 7.56 %
Explanation:
Cost of equity capital is the return that is required by Common Stockholders.
This can be determined as follows :
1. Growth Model
Cost of equity = Recent dividend / Market Price of Share + Expected Growth Rate
or
2. Capital Asset Pricing Model (CAPM)
Cost of equity = Return on Risk Free Security + Beta × Return on Market Portfolio Security
= 4.54% + 1.05 × 6.30%
= 11.16 %
WACC = Ke × (E/V) + Kd × (D/V) +Kp × (P/V)
Explanation and value of Variables
Ke = Cost of Equity
= 11.16 %
E/V = Weight of Equity
= $ 4,965 ÷ ( $ 4,965 + $ 6,674)
= 42.66 %
Kd = Cost of Debt :
= Interest × (1 - tax rate)
= 7.50% × ( 1 - 0.35)
= 4.875 or 4.88 %
D/V = Weight of Debt
= $ 6,674 ÷ ( $ 4,965 + $ 6,674)
= 57.34 %
Therefore,
WACC = 11.16 % × 42.66 % + 4.88 % × 57.34 %
= 7.56 %
The Bathtub Division of Kirk Plumbing Corporation has recently approached the Faucet Division with a proposal. The Bathtub Division would like to make a special "ivory" tub with gold-plated fixtures for the company's 50-year anniversary. It would make only 5,000 of these units. It would like the Faucet Division to make the fixtures and provide them to the Bathtub Division at a transfer price of $160. If sold externally, the estimated variable cost per unit would be $140. However, by selling internally, the Faucet Division would save $6 per unit on variable selling expenses. The Faucet Division is currently operating at full capacity. Its standard unit sells for $43 per unit and has variable costs of $25.
Required:
Compute the minimum transfer price that the Faucet Division should be willing to accept, and discuss whether it should accept this offer.
Answer:
Minimum transfer price = $152
Explanation:
The minimum transfer price can be calculated by Adding variable cost and the contribution margin lost
Minimum transfer price = Variable cost + Contribution margin lost
Minimum transfer price = $134 + $18
Minimum transfer price = $152
Working
Variable cost = $140 -$6(saving) = $134
Contribution margin lost = Selling price - variable cost per unit
Contribution margin lost = $43 - $25
Contribution margin lost = $18
Decision: The offer should be accepted because the minimum transfer price of $152 is less than $160
An investment adviser places large block trades for securities positions that are being purchased for its customers' accounts in order to lower its commission costs. The trades are often executed piecemeal, at different prices. The adviser, after being confirmed that the entire block has been filled, allocates the shares to its accounts. As a favor to its most valuable employees, the adviser allocates the shares purchased at the lowest prices to its employees' accounts; and then allocates the remaining shares to its customer accounts pro-rata. The adviser has disclosed its allocation method only to its employees. Which statement is TRUE
Answer: The investment adviser has breached its fiduciary duty because it has not disclosed its method of allocating shares to its customers
Explanation:
The options to the question are:
a. The investment adviser has breached its fiduciary duty to its customers because the block order must be executed at one price, not in pieces at differing prices
b. The investment adviser has breached its fiduciary duty because it has not disclosed its method of allocating shares to its customers
c. The investment adviser has not breached its fiduciary duty because it has disclosed its method of allocating shares to its employees
d. The investment adviser has not breached its fiduciary duty to customers because it has obtained trade executions for customers at lower commission costs.
Based on the scenario in the question, it should be noted that the investment adviser has breached its fiduciary duty because it has not disclosed its method of allocating shares to its customers.
Fiduciary duty is a legal obligation whereby a party has to work in the best interest of the other party and should also be trustworthy but in this situation, this isn't thw case.
A customer buys a variable annuity and elects a payout option of Life Income with a 20 year period certain. This means that payments will continue for:
Answer:
the annuitant's life, but if he dies before 20 years elapse, payments continue to his heir(s)
Explanation:
An annuity life payment is a financial option that continues until the annuitant dies. a lump sum payment is made by this annuitant which he uses in securing a payout option of Life Income with a 20 year period certain . This annuity would continues for as long as the customer or annuitant is alive, but if he dies before that certain period, Someone else, that is a beneficiary or heir would be entitled to the payment until that period of 20 years elapses.
Use information from the Washington Post article "Why We've Been Hugely Underestimating the Overfishing of the Oceans" to determine whether each statement is true or false.
a. According to the Food and Agriculture Organization of the United Nations (FAO), worldwide catches peaked in 2001 at 86 million tons.
b. Using catch reconstruction, researchers estimate that the actual peak catch was 50% larger than the reported peak catch.
c, Catch reconstruction shows that, since the peak, catches have been increasing, not decreasing as previously reported.
d. The Sea Around Us Project found several problems with the FAO data, such as the fact that data that were not available were reported as catches of zero fish.
Answer:
"Why We've Been Hugely Underestimating the Overfishing of the Oceans"
Determining whether each statement is true or false:
a. False
b. True
c. False
d. True
Explanation:
The article "Why We've Been Hugely Underestimating the Overfishing of the Oceans," was published by the Washington Post on January 19, 2016. It was written by Chelsea Harvey. It tried to show how the world fish stock had been declining due to overfishing. This is why it provided a report contrary to the FAO report.
While the FAO report noted that the peak of worldwide catches was at 86 million tons in 1996, the contrary and independent report, using "catch reconstruction" showed that the peak was at 130 million tons in 1996. The reconstructed research also showed that worldwide fish catches had suffered declines ever since the 1996 peak, thereby threatening "world food security and marine ecosystems". The contrary report also suggested that all stakeholders must collaborate so that fish stocks can rebuild naturally.
A sole proprietor owned an office building with a cost of $300,000 and accumulated depreciation of $40,000, using modified accelerated cost recovery system (MACRS) straight-line depreciation. In the current year, she sold the building for $320,000. What is the unrecaptured Section 1250 gain from this sale, if any
Answer:
The Correct Answer:
$40,000
Explanation:
IRC Section 1250 requires that excess depreciation (actual depreciation in excess of straight-line depreciation) be recaptured as ordinary income. Since the property has sold for more than the adjusted basis ($300,000 − $40,000 = $260,000 adjusted basis), the initial gains are recaptured based on the original purchase price of $300,000.
This makes the first $40,000 of the profit subject to the unrecaptured Section 1250 gain while the remaining $20,000 is considered regular long-term capital gains.
MicroTech Corporation maintains a capital structure of 40 percent debt and 60 percent common equity. To finance its capital budget for next year, the firm will sell 11% coupon bonds at par value (assume no flotation costs). The firm will finance the rest of its capital expenditures with retained earnings. MicroTech expects next year's dividend to be $1.30 per share. Dividends are expected to grow at 7% per year for the foreseeable future. The current market value of MicroTech's common stock is $30 per share. If the firm has a corporate tax rate of 21%, what is its weighted cost of capital for next year?
Answer:
weighted cost of capital for next year is 10.27 %.
Explanation:
Weighted cost of capital = Ke × (E/V) + Kd × (D/V)
Ke = Cost of Equity
= Dividend Yield + Expected growth rate
= $1.30 / $30.00 + 0.07
= 0.11333 or 11.33 %
Kd = Cost of Debt
= Interest × (1 - tax rate)
= 11% × ( 1 - 0.21)
= 8.69 %
Weighted cost of capital = 11.33 % × 60% + 8.69 % × 40%
= 10.27 %
According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2016. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2016.
2016 2015
Sales Revenue $ 109,000 $ 133,500
Cost of Goods Sold 64,500 75,100
Gross Profit 44,500 58,400
Selling, General, and Administrative Expenses 36,900 38,800
Interest Expense 590 520
Income before Income Tax Expense 7,010 19,080
Income Tax Expense 1,500 5,900
Net Income $ 5,510 $ 13,180
Required:
1. Compute the times interest earned ratios for 2016 and 2015. (Round your answers to 1 decimal place.) Times Interest Earned 2015 2016
2. Does Computer Tycoon generate sufficient net income in both years before taxes and interest) to cover the cost of debt financing?
a. Yes
b. No
Answer:
A.
2015 37.7
2016 12.9
B. Yes
Explanation:
Computation of the times interest earned ratios for 2016 and 2015
First step is to find the EBIT
EBIT: 2016 $ 2015 $
Gross profit 44,500 58,400
Less Selling, General and Administrative expenses (36,900) (38,800)
EBIT 7,600 19,600
Second step is to compute the times interest earned ratios for 2016 and 2015 using this formula
Time interest earned = EBIT / Interest expense
Let plug in the formula
Time interest earned 2016 2015
EBIT $7,600 $19,600
÷Interest expense $590 $520
=Time interest earned 12.9 37.7
Therefore the Time interest earned will be :
2015 37.7
2016 12.9
2. Yes Computer Tycoon generate sufficient net income in both 2015 and 2016 before taxes and interest in order to cover the cost of debt financing.
Net Present Value Method
The following data are accumulated by Geddes Company in evaluating the purchase of $150,000 of equipment, having a four-year useful life:
Net Income Net Cash Flow
Year 1 $42,500 $80,000
Year 2 27,500 65,000
Year 3 12,500 50,000
Year 4 2,500 40,000
Present Value of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 0.890 0.826 0.797 0.756 0.694
3 0.840 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162
a. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. If required, round to the nearest dollar. Use the table of the present value of $1 presented above.
Present value of net cash flow $
Amount to be invested
Net present value $
b. Would management be likely to look with favor on the proposal?
Yes , because the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 15%.
Answer:
year net cash flow
0 -$150,000
1 $80,000
2 $65,000
3 $50,000
4 $40,000
A) NPV = -$150,000 + ($80,000 x .87) + ($65,000 x .756) + ($50,000 x .658) + ($40,000 x .572) = -$150,000 + $69,600 + $49,140 + $32,900 + $22,880 = -$150,000 + $174,520 = $24,520
B) Yes , because the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 15%. Since the NPV is positive ($24,520), it means that the cash inflows are higher than the cash outflows when we use a 15% discount rate.
All-Mart Discount Stores Corporation contracts to buy ten acres from Suburban Enterprises, Inc., as a site for a new store. The contract calls for a "warranty deed." According to a survey that All-Mart commissions, one corner of an adjacent, enclosed parking lot is on part of the property that Suburban is attempting to convey. Can All-Mart avoid the contract? If so, on what basis? If not, why not?
Answer:
All-Mart can avoid the contract since it didn't meet their specification for the siting of their new store which they planned for. The warranty deed which they called for was to ensure that, all land purchased has guarantee that it would not become an issue for them in the future.
Since one part is an enclosed parking lot which is a public property that Suburban is trying to sell to them, the best would be to avoid it.
Explanation:
Kosher Pickle Company acquires all the outstanding stock of Midwest Produce for $12.5 million. The fair value of Midwest's assets is $8.5 million. The fair value of Midwest's liabilities is $1.3 million. Calculate the amount paid for goodwill
Answer:
$5.3 million
Explanation:
Kosher pickle company acquires outstanding stock of Midwest produce for $12.5 million
Fair value of Midwest assets is $8.5 million
Fair value of Midwest liabilities is $1.3 million
The first step is to calculate the fair value of net identifiable assets
= $8.5 million-$1.3 million
=7.2 million
Therefore, the amount paid for goodwill can be calculated as follows
= $12.5 million-$7.2 million
= $5.3 million
Hence the amount paid for goodwill is $5.3 million
The following information was available for the year ended December 31, 2013: Sales $ 520,000 Dividends per share $ 1.36 Net income 74,480 Earnings per share 3.00 Average total assets 820,000 Market price per share at year-end 28.50 Average total stockholders’ equity 380,000 Required: a. Calculate margin, turnover, and ROI for the year ended December 31, 2013. (Do not round intermediate calculations and ro
Answer:
Margin ratio = 14.32%
Assets turnover ratio = 63.41%
Return on investment = 9.08%
Explanation:
The computation of margin, turnover, and ROI for the year is shown below:-
Margin ratio = Net income ÷ Sales
= $74,480 ÷ $520,000
= 0.1432
or
= 14.32%
Assets turnover ratio = Sales ÷ Average total assets
= $520,000 ÷ $820,000
= 0.6341
or
= 63.41%
Return on investment = Net income ÷ Average total assets
= $74,480 ÷ $820,000
= 0.0908
or
= 9.08%
Write a detailed note on Manufacturing Process types and Service process types in process design?
Answer:
Each of the process are used to the crosses organizational borders.
Explanation:
Process structure of manufacturing:
Job process: It is highly adaptable, scaled operation and structured around particular events. Batch process: It most common used in industries. It is small to large batches. Line process: It is the repetitive process and have modular production with large quantity. Continuous flow chart: It is product focused process. It processed only one item at a time.Process design: There are three major process of design
Professional service designMass service designService shop designThe EOQ model assumes inventory: Multiple Choice can be delivered immediately upon order. is sold at a steady rate until it is depleted. will be available just as it is needed for production. is held at a constant level. has seasonal fluctuations.
Answer:
is sold at a steady rate until it is depleted
Explanation:
The EOQ means Economic order quantity that refers to a quantity which the company should purchase for its inventory
In this order quantity, the carrying cost and the ordering cost are equivalent to each other
Also we assume that the demand would remain the same and the inventory should be depleted at a fixed rate unless it reaches to a zero
Hence, the second option is correct
An exchange-rate policy in which the government usually allows the exchange rate to be set by the market, but sometimes intervenes is called a __________________ exchange rate system.
Answer: Managed Float
Explanation:
Also called "Dirty Float", the Managed float is an exchange rate system that allows for the currency of a country to be set by the forces of demand and supply in the market.
However, unlike in a clean float, the Central bank will occasionally intervene in the market to influence the how fast the currency is changing value or to control the direction it is going.
This is usually done to protect the domestic economy from sudden shocks in the global economy.
Messing Company has their own credit card and makes a credit sale on February 1 to one of its customers for $5,000. Prepare the February 1 journal entry for Messing Company by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
February 1
DR Accounts Receivable.......................................$5,000
CR Sales........................................................................................$5,000
(To record sales on credit)
The credit card was that of Messing company itself.
Choose the statement that is incorrect.
A. In the long run, a rise in the foreign price level brings dollar appreciation and a rise in the U.S. price level brings dollar depreciation.
B. In the long run, a change in the nominal exchange rate brings an equivalent change in the real exchange rate.
C. In the long run, the nominal exchange rate is a monetary phenomenon.
D. In the long run, the nominal exchange rate is determined by the quantities of money in two countries.
Answer:
B. In the long run, a change in the nominal exchange rate brings an equivalent change in the real exchange rate.
Explanation:
As we know that in the short run there is a decline in the nominal exchange that results in a decrease of real exchange rate due to which there is a reduction of the import and the export is risen.
But in the case of the long run, if there is a change in the nominal exchange rate so the real exchange rate would remain the same
This results that if there is a change in the nominal exchange rate so it would not bring the equal change in the real exchange rate
Hence, option B is incorrect
A company has a merit pay plan based on the relative performances of workers teams. Each worker is a team gets the same wage as other team members, but those in more productive teams get higher wages. Which of the following would NOT explain why this incentive might be better than other methods for motivating workers to work harder?
A) If a worker works harder, it increases the productivity of other team members.
B) If a team works harder, it does not affect the productivity of other teams.
C) One worker can easily sabotage the productivity of other workers.
D) One team can easily sabotage the productivity of other teams.
Answer:
C) One worker can easily sabotage the productivity of other workers.
Explanation:
This is a form of compensation by merit that comprises the performance of a team as a whole, so this is a way of motivating both group work and individual work.
In the scenario above, we can see that this compensation plan would be effective in leveraging the performance of individual workers, and of teams, because if each member of the team is more productive, it will benefit the team as a whole. And this method will not affect the productivity of other teams, as each team will be encouraged and engaged to do the best job possible to achieve merit pay.
The alternative that does not correspond to the question that this incentive may be better than other methods to motivate workers to work harder, is the one that says that a worker can sabotage the productivity of other workers, as that worker is also likely to be engaged in not sabotaging the work of other team members, as the remuneration bonuses depend on the effort of the entire team to work together, and not just one employee.
In Macroland autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. Planned aggregate expenditure equals:________a.1,000. b.1,160. c.1,280. d.1,440.
Answer:
b) $1,160
Explanation:
From the above information,
I=Investment = 50
G=Government expenditure = 150
X=Net export = 20
a=autonomous consumption = 100
b=Marginal propensity to consume = 0.75
Y=Equilibrium GDP
C = consumption ;
C = 100 + 0.75Y (Y income - 40 taxes)
Planned aggregate expenditure (PAE)
PAE = C + l +G +X
Substituting for C in the above equation,
PAE = 100 + 0.75 (Y - 40) + 50 + 150+ 20
= 100 + 0.75Y -30 + 50 + 150 + 20
= 290 + 0.75Y
Since short run exists when Y = PAE
Therefore,
Y = 290 + 0.75Y
Collect like terms
Y - 0.75Y = 290
0.25Y =290
Y = 290/0.25
Y = 1,160
A firm has a required return of 14.2% and a beta of 1.63. If the risk-free rate is currently 5.4%, what is the expected return to the market? Assume that CAPM is correct.
Answer:
10.8%
Explanation:
Required rate of return = Risk free rate + Beta x ( Expected rate - Risk free rate )
14.2% = 5.4% + 1.63 x ( market rate - 5.4% )
14.2% - 5.4% = 1.63 x ( market rate - 5.4% )
8.8% / 1.63 = market rate - 5.4%
5.4% = market rate - 5.4%
Market rate = 5.4% + 5.4%
Market rate = 10.8%
Market rate = 10.8%
TB MC Qu. 149 A machine with a cost... A machine with a cost of $133,000 and accumulated depreciation of $86,500 is sold for $53,000 cash. The amount that should be reported in the operating activities section reported under the direct method is:
Answer:
$0
Explanation:
Under the direct method of cash flow statement the operating activities recorded the cash revenues and cash payment only
In the given situation, there is a machine cost, accumulated depreciation and the sale of the machine is given
Nothing should be recorded in operating activities as the sale of the machine come under the investing activity
Therefore $0 should be reported
For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 350,000 Permanent difference (14,700 ) 335,300 Temporary difference-depreciation (19,900 ) Taxable income $ 315,400 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as its income tax expense for its first year of operations
Answer:
Tringali should report $78,850 as its income tax expense for its first year of operation.
Explanation:
The company should use the taxable income of $305,600 to calculate it's income tax expense as it is only on it basis that the tax payable by a firm is determine
Income tax expenses = Taxable income * Tax rate
Income tax expenses = $315,400 x 25%
Income tax expenses = $78,850
Tyler Company applies manufacturing overhead to production at the rate of $4.9 per direct labor hour and ended August with $12,900 underapplied overhead. Actual manufacturing overhead incurred for August amounted to $110,410.
How many direct labor hours did Tyler Company incur during August?
Answer: 19,900 hours
Explanation:
Direct Labor hours = Applied Manufacturing Overhead/ Applied Overhead rate per hour
Applied Manufacturing Overhead
When the overhead is said to be under-applied, the Applied overhead is less than the Actual Overhead.
To find the Applied overhead therefore;
= Actual Overhead - Under-applied amount
= 110,410 - 12,900
= $97,510
Direct Labor hours = Applied Manufacturing Overhead/ Applied Overhead rate per hour
= 97,510/4.9
= 19,900 hours
Busch Company has these obligations at December 31. For each obligation, indicate whether it should be classified as a current liability, long-term liability, or both. (a) A note payable for $100,000 due in 2 years. select a balance sheet section (b) A 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments. select a balance sheet section (c) Interest payable of $15,000 on the mortgage. select a balance sheet section (d) Accounts payable of $60,000. select a balance sheet section
Answer:
Busch Company
Indication of whether the obligation be classified as a current liability, long-term liability, or both:
(a) A note payable for $100,000 due in 2 years. Long-term Liability
(b) A 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments. Both.
Every year, $20,000 would be classified as Current Liability while the remaining balance is long-term liabilities.
(c) Interest payable of $15,000 on the mortgage. Both
If the interest payable is to be settled at the end of the mortgage, then it is classified as only long-term.
(d) Accounts payable of $60,000. Current Liability
Explanation:
Busch's current liabilities are financial obligations that are due for settlement within the next accounting period of 12 months or less.
The long-term liabilities of Busch Company are those financial obligations that are not due for settlement within the next accounting period.
For some long-term liabilities, Busch may settle some part within 12 months. That part that can be settled within the accounting period are classified as current while the other parts are non-current.