Answer:
the value that should be recorded for variable cost is $66,375
Explanation:
The computation of the value that should be recorded for variable cost is shown below:
= Total variable cost ÷ budgeted units × flexible budget units
= ($22,000 + $25,000 + $12,000) ÷ 8,000 units × 9,000 units
= $59,000 ÷ 8,000 units × 9,000 units
= $66,375
hence, the value that should be recorded for variable cost is $66,375
The above formula is used
MillerCoors Brewing Company is the world’s fifth largest brewer. In the United States, its tie to the magical appeal of the Rocky Mountains is one of its most powerful trademarks. Some of the items included in its recent annual consolidated statement of cash flows presented using the indirect method are listed here. Indicate whether each item is disclosed in the Operating Activities (O), Investing Activities (I), or Financing Activities (F) section of the statement or use (NA) if the item does not appear on the statement. (Note: This is the exact wording used on the actual statement.)
Answer:
1. Purchase of stock. FINANCING ACTIVITIES.
Financing activities relate to transactions that involve the capital of the company. They include long term debt and equity. In this case, the company is buying back its own shares so this falls under Financing activities as it has to do with the company's own capital.
2. Principal payment on long-term debt. FINANCING ACTIVITIES.
Principal repayment retires long term debt and as mentioned above, financing activities relate to activities that involve long term debt.
3. Proceeds from sale of properties. INVESTING ACTVITIES.
Properties are fixed assets and transactions involving these are considered investing activities so the proceeds from a sale of properties would rightfully be an investing activity.
4. Inventories (decrease). OPERATING ACTIVITIES.
Transactions that have to do with the day to day operations of the business fall under operating activities and this includes inventories decreasing.
5. Accounts payable (decrease). OPERATING ACTIVITIES.
Operations of the business includes accounts payables decreasing as well.
6. Depreciation and amortization. OPERATING ACTIVITIES.
Depreciation and amortization arise from using the fixed assets for day to day operations so this will fall under Operating activities.
Prepare summary journal entries to record the following transactions and events a through g for a company in its first month of operations.
a. Raw materials purchased on account, $92,000.
b. Direct materials used in production, $40,000. Indirect materials used in production, $25,000.
c. Paid cash for factory payroll, $65,000. Of this total, $45,000 is for direct labor and $20,000 is for indirect labor.
d. Paid cash for other actual overhead costs, $7,750.
e. Applied overhead at the rate of 120% of direct labor cost.
f. Transferred cost of jobs completed to finished goods, $69,000.
g. Jobs that had a cost of $69,000 were sold.
h. Sold jobs on account for $98,000.
Answer:
Journal Entries:
a. Debit Raw materials $92,000
Credit Accounts payable $92,000
To record the purchase of raw materials on account.
b. Debit Work-in-Process $40,000
Debit Manufacturing overhead $25,000
Credit Raw materials $65,000
To record direct and indirect materials.
c. Debit Payroll Expense $65,000
Credit Cash $65,000
To record the payment of payroll.
Debit Work-in-Process $45,000 (direct labor)
Debit Manufacturing overhead $20,000 (indirect labor)
Credit Payroll Expenses $65,000
To record the payment of direct and indirect labor.
d. Debit Manufacturing overhead $7,750
Credit Cash $7,750
To record the payment for other overhead costs.
e. Debit Work-in-Process $54,000
Credit Manufacturing overhead $54,000
To record overhead applied at the rate of 120% of direct labor cost.
f. Debit Finished goods $69,000
Credit Work-in-Process $69,000
To record the transfer of completed jobs to finished goods inventory.
g. Debit Cost of goods sold $69,000
Credit Finished goods $69,000
To record the cost of goods sold.
h. Debit Accounts receivable $98,000
Credit Sales revenue $98,000
To record the sale of goods on account.
Explanation:
a. Raw materials $92,000 Accounts payable $92,000
b. Work-in-Process $40,000 Manufacturing overhead $25,000 Raw materials $65,000
c. Payroll Expense $65,000 Cash $65,000 Work-in-Process $45,000 (direct labor) Manufacturing overhead $20,000 (indirect labor) Payroll Expenses $65,000
d. Manufacturing overhead $7,750 Cash $7,750
e. Work-in-Process $54,000 Manufacturing overhead $54,000 (at the rate of 120% of direct labor cost)
f. Finished goods $69,000 Work-in-Process $69,000
g. Cost of goods sold $69,000 Finished goods $69,000
h. Accounts receivable $98,000 Sales revenue $98,000
Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Jake's paid an annual dividend in the amount of $1.593 per share. The dividend growth rate is 4%. Jake's also has 6,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7% coupon, pay interest annually, and mature in 4.89 years. The bonds are selling at 99% of face value. The company's tax rate is 34%. What is Jake's weighted average cost of capital
Answer:
WACC = 6.92%
Explanation:
total equity = 210,000 x $36 = $7,560,000,weight of equity = 56%
cost of equity:
36 = 1.65672 / (Re - 4%)
Re = 8.602%
total bonds = $5,940,000, weight of bonds = 44%
bond YTM = 7.24%
after tax cost = 7.24% x 66% = 4.78%
WACC = (.56 x 8.602$) + (.44 x 4.78%) = 4.817 + 2.103 = 6.92%
YTM = (70 + 10/4.89) / (1990/2) = 72.04 / 995 = 7.24%
715
Assume there is an economy with a single bank, and the central bank sets the reserve requirement ratio at 5%. Assume also that the only bank had no transactions (i.e., no loans, reserves, or deposits) prior to an individual who deposits $2000 of currency with the bank.
a. As a result of this deposit, calculate the amount of required reserves, actual reserves, and excess reserves.
b. After the bank has issued the maximum amount of loans, what will be the total amount of loans, deposits, and money in the economy?
c. What is the size of the money multiplier for this economy?
Answer:
An Economy with a Single Bank
a. The amount of required reserves = $100
The amount of actual reserves = $100
The amount of excess reserves = $0.
b. The total amount of loans, deposits, and money in the economy
= $40,000
c. The size of the money multiplier for this economy
= 20
Explanation:
a) Data and Calculations:
Reserve requirement ratio = 5%
Customer's deposit = $2,000
Amount of required reserves
= Initial deposits multiplied by reserve ratio
= $100 ($2,000 * 5%)
Actual reserves = $100
Excess reserves = $0
Total amount of loans, deposits, and money in the economy
= Initial Deposits/Reserve Ratio
= $40,000 ($2,000/0.05)
The size of the money multiplier for this economy = Total money supply in the economy divided by the initial money deposits
= $40,000/$2,000
= 20
b) The Money Multiplier refers to how the initial deposit of $2,000 leads to a bigger final increase in the total money supply of $40,000. It means that the money multiplier is 20 or that the initial deposit of $2,000 has multiplied by 20 to $40,000.
While calculating the costs of products and services, a standard costing system ________. does not keep track of overhead cost traces direct costs to output by multiplying the standard prices or rates by the actual quantities uses standard costs to determine the cost of products allocates overhead costs on the basis of the actual overhead-cost rates
Answer:
uses standard costs to determine the cost of products
Explanation:
In the case when we determined the cost of the product and its services so here the standard costing system would be used to measure the cost of product as this is the costing system that are based upon the estimated or predicted values and are significant for generating a product
According to the video, an interactive website needs to be able to do what things? Check all that apply. invite people to provide information remove unwanted viewers send information, products, and services automatically play videos process payments send viewers to other websites
Answer:
A,C,E
Explanation:
Answer:
A,C,E
Explanation:
Riverview Company's budget for the coming year includes $7,000,000 for manufacturing overhead, 40,000 hours of direct labor, and 200,000 hours of machine time. If Riverview applies overhead using a predetermined rate based on machine-hours, what amount of overhead will be assigned to a unit of output which requires 0.4 machine hours and 0.30 labor hours to complete
Answer:
$70
Explanation:
With regards to the above, we need to compute first the overhead application rate.
Overhead application rate = Budgeted overhead / Budgeted activity/Budgeted machine hour
= $7,000,000 / 40,000 labor hours
= $175
Overhead application rate = $175 per direct labor hour
Assigned overhead = Overhead application rate × Number of machine hours consumed
= $175 × 0.4
= $70
Schweitzer realized that in many cases individuals could only accomplish direct human service in collaboration with official organization. What he wanted was: to help fund such organizations. to be a leader in such organizations. an absolutely personal and independent activity. to increase the number of official organizations dedicated to direct human service.
Answer: an absolutely personal and independent activity
Explanation:
Since Schweitzer realized that direct human service can only be accomplished when one collaborates with an official organization, this shows that he wanted to be an absolutely personal and independent activity.
In such case, he wants an activity that will be free from the outside control. Other options are wrong as he wasn't really interested in funding of organizations, or increasing the number of official organizations that are dedicated to direct human service.
Create a business decision based on the company where you work (can be any company), a small business you hope to own someday or just make something up - then identify, define and explain an incremental cost, opportunity cost and sunk cost. You will need to be somewhat creative in your response.
Respond to this question with 5-7 meaningful sentences (or more - this one could be more)
The correct answer to this open question is the following.
The business decision based on the company where you work would be this. To open a new small branch of the fast-food restaurant as a concession in the municipal stadium.
The incremental cost is the future costs as a result of this business decision. This means that we have to consider extra money on a monthly basis to pay for the rent of the concession booth at the Municipal stadium.
The opportunity cost is that instead of opening our branch in the new downtown mall, we decided to move with the stadium option. Having decided to be at the mall could have allowed us to have more clients on a daily basis, especially on weekends.
The sunk cost is a cost from the past, an historical cost that really is not important in the present time to make a decision. Maybe, just a reference to a case in the past. And that's it.
Here we can refer to a cost when we opened the first location of the restaurant, but it was five years ago. Those were different situations, necessities, and conditions.
A manufacturer has an estimated practical capacity of 90,000 machine hours, and each unit requires two machine hours. The following data apply to a recent accounting period: Actual variable overhead$ 240,000 Actual fixed overhead$ 442,000 Actual machine hours worked 88,000 Actual finished units produced 42,000 Budgeted variable overhead at 90,000 machine hours$ 200,000 Budgeted fixed overhead$ 450,000 Of the following factors, the manufacturer's production volume variance is most likely to have been caused by: A. A wage hike granted to a production supervisor. B. A newly imposed initiative to reduce finished goods inventory levels. C. Acceptance of an unexpected sales order. D. Temporary employment of workers with lower skill levels than originally anticipated.
Answer:
Of the following factors, the manufacturer's production volume variance is most likely to have been caused by:
D. Temporary employment of workers with lower skill levels than originally anticipated.
Explanation:
a) Data and Calculations:
Estimated practical capacity = 90,000 machine hours
Machine hours per unit = 2
Estimated production units based on capacity = 45,000 (90,000/2)
Budgeted Actual
Variable overhead = $200,000 $240,000
Actual fixed overhead = $450,000 $442,000
Machine hours 90,000 88,000
Units produced 45,000 42,000
Estimated units to be produced based on standard machine hour
= 44,000 units (88,000/2)
Variance between standard units to be produced and actual = 2,000 (44,000 - 42,000) Unfavorable
A mother notices that when she divides brownies equally between her two children and gives each child her share on a separate plate, the brownies last a long time. But when she gives her children a plate to share, the brownies are gone pretty quickly. The mother concludes from this that brownies given on a single plate are:_______.
A) excludable but they might either be rival or nonrival.
B) nonexcludable and nonrival.
C) excludable and rival.
D) excludable and nonrival.
E) nonexcludable and rival.
Answer:
E
Explanation:
I think this because if the children had'nt rivaled over the brownies, they would've lasted longer.
there is deep relation between work and thinking
Answer:
nao sei como te ajudar mas
n an arm's length channel system where the supplier/steward exerts little direct control over channel intermediaries, the channel steward may have to resort to performing value-adding activities itself, such as TV advertising, consumer promotions, and so on, so that even before the consumer enters the store, she or he is looking only for the supplier's brand. Which promotional strategy does this discussion describe
Answer:
Pull marketing.
Explanation:
Pull marketing has the central objective of promoting products or services to make the customer come to you. For this purpose, various advertising channels are used, such as TV broadcasting, promotions, social media ads, etc., in order to promote a brand and thus attract consumers.
In this marketing strategy, the company seeks customer loyalty through targeting the brand, whose advertising will have great incentives to purchase the product when declaring its central benefits and how they can add to the consumer's life.
Olivia believes that the employees in her company require constant supervision and are not naturally motivated. She believes she should push them to reach their goals. Which theory of leadership can she utilize that would relate to her situation? Olivia can utilize in her company.
Answer:
Transformational Leadership Theory
The Transformational Leadership theory, also known as Relationship theories, focuses on the relationship between the leaders and followers. This theory talks about the kind of leader who is inspirational and charismatic, encouraging their followers to transform and become better at a task.
Transformational leaders typically motivated by their ability to show their followers the significance of the task and the higher good involved in performing it. These leaders are not only focused on the team's performance but also give individual team members the required push to reach his or her potential. This leadership theories will help you to sharp your Skill.
Transactional Theories
Transactional Theories, also referred to as Management theories or exchange theories of leadership, revolve around the role of supervision, organization, and teamwork. These theories consider rewards and punishments as the basis for leadership actions. This is one of the oft-used theories in business, and the proponents of this leadership style use rewards and punishments to motivate employees.
The theory of leadership she utilizes that would relate to her situation is Transformational leadership. This is further explained below.
What is Transformational leadership?Generally, Transformational leadership is simply described as a style of leadership that affects both people and societal systems.
In conclusion, Transformational leadership is the leadership idea that Olivia may use in her position.
Read more about Transformational leadership
https://brainly.com/question/11210892
#SPJ2
Olympic Sports has two issues of debt outstanding. One is a 6% coupon bond with a face value of $28 million, a maturity of 15 years, and a yield to maturity of 7%. The coupons are paid annually. The other bond issue has a maturity of 20 years, with coupons also paid annually, and a coupon rate of 7%. The face value of the issue is $33 million, and the issue sells for 96% of par value. The firm's tax rate is 40%.
Requied:
a. What is the before-tax cost of debt for Olympic?
b. What is Olympic's after-tax cost of debt?
Answer:
The responses to these question can be defined as follows:
Explanation:
Given:
[tex]Bond \ A \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Bond \ B\\\\[/tex]
[tex]Face \ Value \ \ \ \ \ \ \ \ \ \$1,000 \ \ \ \ \ \ \ \ \ \$ 1,000\\\\ Rate \ of \ Coupon \ \ \ \ \ \ \ \ \ 6\% \ \ \ \ \ \ \ \ \ 7\% \\\\Maturity \ in \ Years \ \ \ \ \ \ \ \ \ 15 \ \ \ \ \ \ \ \ \ 20 \\\\Selling - Price \ \ \ \ \ \ \ \ \ -\$ 908.92 \ \ \ \ \ \ \ \ \ \$960 \\\\ Yield \ To \ Maturity \ \ \ \ \ \ \ \ \ 7\% \ \ \ \ \ \ \ \ \ 7.39\% \\\\Total\ Outstanding \ \ \ \ \ \ \ \ \ \$2,80,00,000 \ \ \ \ \ \ \ \ \ \$ 3,30,00,000\\\\[/tex]
[tex]Rate\ Tax \ \ \ \ \ \ \ \ \ 40\% \\\\selling\ Price \ \ \ \ \ \ \ \ \ PV(7\% , 15 ,60, 1000)\\\\Yield \ To\ Maturity \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ RATE(20, 70, -960,1000)[/tex]
For point a:
Before tax [tex]FACE \ \ VALUE \ \ \ \ \ \ \ \ \ \ MARKET \ \ VALUE \ \ \ \ \ \ \ \ \ \ WEIGHT \ \ \ \ \ \ \ \ \ \ COST \ \ \ \ \ \ \ \ \ \ WACC\\\\[/tex][tex]Dr \ 1 \ \ \ \ \ \ \ \ \ \ \$2,80,00,000 \ \ \ \ \ \ \ \ \ \ 25449760 \ \ \ \ \ \ \ \ \ \ 0.445473 \ \ \ \ \ \ \ \ \ \ 7 \ \ \ \ \ \ \ \ \ \ 3.11831\\\\Dr \ 2 \ \ \ \ \ \ \ \ \ \ \$3,30,00,000 \ \ \ \ \ \ \ \ \ \ 31680000 \ \ \ \ \ \ \ \ \ \ 0.554527 \ \ \ \ \ \ \ \ \ \ 7.39 \ \ \ \ \ \ \ \ \ \ 4.097955\\\\[/tex]
[tex]57129760 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 7.216266\\\\[/tex]
For point b:
After tax
[tex]FACE \ \ VALUE \ \ \ \ \ \ \ \ \ \ MARKET \ \ VALUE \ \ \ \ \ \ \ \ \ \ WEIGHT \ \ \ \ \ \ \ \ \ \ COST \ \ \ \ \ \ \ \ \ \ WACC\\\\Dr \ 1 \ \ \ \ \ \ \ \ \ \ \$2,80,00,000 \ \ \ \ \ \ \ \ \ \ 25449760 \ \ \ \ \ \ \ \ \ \ 0.445473 \ \ \ \ \ \ \ \ \ \ 4.2 \ \ \ \ \ \ \ \ \ \ 1.870986\\\\Dr \ 2 \ \ \ \ \ \ \ \ \ \ \$3,30,00,000 \ \ \ \ \ \ \ \ \ \ 31680000 \ \ \ \ \ \ \ \ \ \ 0.554527 \ \ \ \ \ \ \ \ \ \ 4.434 \ \ \ \ \ \ \ \ \ \ 2.458773\\\\[/tex] [tex]57129760 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 4.329759\\\\[/tex]
So,
In a, answer is [tex]7.22\%[/tex]
In b, answer is [tex]4.33\%[/tex]
Required: Determine the specific eight- or nine-digit Codification citation (XXX-XX-XX-XX) that describes the following items: 1. If it is only reasonably possible that a contingent loss will occur, the contingent loss should be disclosed. 2. Criteria allowing short-term liabilities expected to be refinanced to be classified as long-term liabilities. 3. Accounting for the revenue from separately priced extended warranty contracts. 4. The criteria to determine if an employer must accrue a liability for vacation pay.
Answer:
The codes for the Financial Accounting Standards Board (FASB) Accounting Standards Codification can be found on the FASB website.
The format is (XXX-XX-XX-XX).
The first XXX is the Topic.
The first XX is the Subtopic
The second XX is the Section
The third XX or X is the Paragraph.
The Codes for the following are:
1. If it is only reasonably possible that a contingent loss will occur, the contingent loss should be disclosed. 450-20-50-3
Topic ⇒ Contingencies
Subtopic ⇒ Loss Contingencies
Section ⇒ Disclosure
2. Criteria allowing short-term liabilities expected to be refinanced to be classified as long-term liabilities. 470-10-45-14
Topic ⇒ Debt
Subtopic ⇒ Overall
Section ⇒ Other Presentation Matters
3. Accounting for the revenue from separately priced extended warranty contracts. 605-20-25-3
Topic ⇒ Revenue Recognition
Subtopic ⇒ Services
Section ⇒ Recognition
4. The criteria to determine if an employer must accrue a liability for vacation pay. 710-10-25-1.
Topic ⇒ Compensation - General
Subtopic ⇒ General
Section ⇒ Recognition
Consider the following statements when answering this question I. Increases in the demand for a good, which is produced by a competitive industry, will raise the short-run market price. II. Increases in the demand for a good, which is produced by a competitive industry, will raise the long-run market price. I is true, and II is false. I and II are true. I is false, and II is true. I and II are false.
Answer:
I and II are true
Explanation:
I. Increases in the demand for a good, which is produced by a competitive industry, will raise the short-run market price
In the short run of the competitive industry when the market demand for goods rises then the price of these goods will also increase. This is because the price equals marginal revenue. Therefore, when price rises then marginal revenue will increase and as a result, the marginal cost curve moves up and firms produce more quantity of goods. This statement is therefore true.
II. Increases in the demand for a good, which is produced by a competitive industry, will raise the long-run market price
The effect of the increase in goods demand is the same in the long run of the competitive industry as it is in the short run. Therefore, a rise in demand would raise the price of the goods above ATC (Average Total Cost). Hence, the above statement is also true.
Michelle is an active participant in the rental condominium property she owns. During the year, the property generates a ($17,500) loss; however, Michelle has sufficient tax basis and at-risk amounts to absorb the loss. If Michelle has $120,000 of salary, $10,500 of long-term capital gains, $3,500 of dividends, and no additional sources of income or deductions, how much loss can Michelle deduct?
Answer: $8,000
Explanation:
A special rule allows Michelle to classify up to $25,000 as losses against her nonpassive income.
If Michelle's modified adjusted gross income (MAGI) exceeds $100,000 however, the amount that exceeds the $100,000 will be reduced by 50% and deducted from the exemption allowed.
Loss deduction = Exemption allowed - [(Nonpassive income - MAGI limit) * 50%)
= 25,000 - [ (120,000 + 10,500 + 3,500 - 100,000) * 50%]
= $8,000
Perez Modems has excess production capacity and is considering the possibility of making and selling paging equipment. The following estimates are based on a production and sales volume of 2,200 pagers. Unit-level manufacturing costs are expected to be $32. Sales commissions will be established at $2.20 per unit. The current facility-level costs, including depreciation on manufacturing equipment ($72,000), rent on the manufacturing facility ($62,000), depreciation on the administrative equipment ($15,600), and other fixed administrative expenses ($77,950), will not be affected by the production of the pagers. The chief accountant has decided to allocate the facility-level costs to the existing product (modems) and to the new product (pagers) on the basis of the number of units of product made (i.e., 6,200 modems and 2,200 pagers). Required a. Determine the per-unit cost of making and selling 2,200 pagers. (Do not round intermediate calculations. Round your answer to 3 decimal places.) b. Assuming the pagers could be sold at a price of $46 each, should Perez make the pagers
Answer and Explanation:
a. The computation of the per unit cost is shown below:
= Manufacturing cost per unit + sales commission per unit
= $32 + $2.20
= $34.20
Here we just add the two cost so that the per unit cost could come
b. Yes it should make the pagers as the cost per unit would be lower than the selling price i.e, $46
Therefore the above should be relevant for the given situation
The following information pertains to Sandhill Company.
1. Cash balance per books, August 31, $7,374.
2. Cash balance per bank, August 31, $7,338.
3. Outstanding checks, August 31, $708.
4. August bank service charge not recorded by the depositor $60.
5. Deposits in transit, August 31, $3,710.
In addition, $3,026 collected for Sandhill Company in August by the bank through electronic funds transfer. The accounts receivable collection has not been recorded Sandhill Company.
1. Prepare a bank reconciliation at August 31, 2022. (List items that increase balance as per bank & books first.)
CULLUMBER COMPANY
Bank Reconciliation
2. Journalize the adjusting entries at August 31 on the books of Cullumber Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date Account Titles and Explanation Debit Credit
July 31 (To record electronic funds transfer received by bank)
July 31 (To record bank service charge)
Answer:
Sandhill Company
Bank Reconciliation Statement for August
$
Cash balance per books 7374
Outstanding checks 708
August bank service charge (60)
Deposits in transit (3710)
Electronic funds transfer 3026
Balance per bank 7338
Adjusting entries
August bank service charge
Dr Bank charge $60
Cr Cash account $60
Being entries to record the bank charge for August
Electronic funds transfer
Dr Cash Account $3026
Cr Accounts receivable $3026
Being entries to record cash received from a customer
Explanation:
The bank reconciliation statement identifies transactions that have been correctly recorded by the bank but are yet to be correctly recorded in the books (if recorded).
Considering the given transactions;
Outstanding checks have been deducted from the cash book but are yet to be deducted from the bank.
The bank charge has been deducted from the bank balance but is yet to be recorded in the cash book.
Deposits in transit has been added to the cash book balance but is yet to be added to the bank balance hence it is deducted from the cash book balance to reconcile it to the bank balance.
Electronic funds transfer has been added to the bank balance and will be added to the cash book balance.
Only the bank charge and electronic transfer are yet to be adjusted for in the books hence adjusting entries are required for these 2 items.
Suppose two types of firms wish to borrow in the bond market. Firms of type A are in good financial health and are relatively low risk. The appropriate premium over the risk-free rate for lending to these firms is 2%. Firms of type B are in poor financial health and are relatively high risk. The appropriate premium over the risk-free rate for lending to these firms is 6%. As an investor, you have no other information about these firms except that type A and type B firms exist in equal numbers.
A. At what interest rate would you be willing to lend if the risk-free rate were 6%?
B. Would this market function well? What type of asymmetric information problem does this example illustrate?
Answer:
A. I would be willing to lend at average rate of 10%
B-1. No, this market will not function well.
B-2. This example illustrates an adverse selection problem.
Explanation:
A. At what interest rate would you be willing to lend if the risk-free rate were 6%?
Appropriate interest rate for type A firm bond = Premium over the risk-free rate of Type A firm + Risk-free rate = 2% + 6% = 8%
Appropriate interest rate for type B firm bond = Premium over the risk-free rate of Type B firm + Risk-free rate = 6% + 6% = 12%
Average rate = (Appropriate interest rate for type A firm bond + Appropriate interest rate for type B firm bond) / 2 = (8% + 12%) / 2 = 10%
Since the probability of any of the two firms is equal and I do not have the knowledge of which type of firm they are dealing with, I would be willing to lend at average rate of 10%.
B-1. Would this market function well?
No, this market will not function well.
The reason is that the average rate of 10% is higher than the Appropriate interest rate for type A firm bond of 8%. This would make the type A firm to withdraw from the market and only type B firm will be left in the market.
B-2. What type of asymmetric information problem does this example illustrate?
This example illustrates an adverse selection problem. This is because after type A firm which is a desirable leaves the market, only type B firm which is the less desirable firms will be willing to borrow. This makes the quality of the market to detoriorate.
Transic Corporation has the following financial data for 2016 and 2017. 2017 2016 ASSETS Current Assets: Cash $ 48,000 $ 14,000 Marketable Securities 9,000 13,000 Accounts Receivable 35,000 24,000 Other Current Assets 15,000 18,000 Total Current Assets 107,000 69,000 Fixed Assets (net) 140,000 130,000 Total Assets $247,000 $199,000 LIABILITIES Current Liabilities $ 72,000 $ 52,000 Long-term Liabilities 50,000 37,000 Total Liabilities $122,000 $ 89,000 Total Stockholders' Equity $125,000 $110,000 Total Liabilities And Stockholders' Equity $247,000 $199,000 What is Transic's current ratio for 2017
Answer:
1.49
Explanation:
Calculation to determine Transic's current ratio for 2017
Using this formula
2017 Current ratio=2017 Total Current Assets /2017 Current Liabilities
Let plug in the formula
2017 Current ratio=$107,000/$ 72,000
2017 Current ratio=1.486
2017 Current ratio=1.49 (Approximately)
Therefore Transic's current ratio for 2017 is 1.49
Kampus Corporation had the following eight investment transactions or events:
Jan 1 Purchased Argon Co. bonds for $10,000 cash. (Purchase is considered a short-term investment in available-for-sale (AFS) debt securities.)
Jan 3 Purchased 1,200 shares of Elmer, Inc. for $36,000 cash. (Purchase is considered a long-term stock investment with insignificant influence.)
Mar 31 Received cash dividend of $0.25 per share from Elmer, Inc.
Jun 1 Purchased 5,000 shares of Logan, Inc. for $60 per share. These shares represent a 40% ownership in Logan, Inc.
Sep 30 Received cash dividend of $2 per share from Logan, Inc.
Dec 31 Logan, Inc. reported net income of $150,000 for the year.
Dec 31 As of December 31, the Argon Co. bond had a fair (market) value of $12,000.
Dec 31 As of December 31, the Elmer, Inc. stock had a fair (market) value of $25 per share.
Required:
Prepare the journal entries Kampus Corporation should record for these transactions and events.
Answer:
Kampus Corporation
Journal Entries:
Jan 1 Debit Bonds Receivable (Argon Co.) $10,000
Credit Cash $10,000
To record a short-term investment in available-for-sale (AFS) debt securities.)
Jan 3 Debit Investments (Long-term) in Elmer, Inc. $36,000
Credit Cash $36,000
To record the long-term investment (1,200 shares of Elmer, Inc. at $30 each.)
Mar 31 Debit Cash $300
Credit Dividend Received $300
To record dividend received from Elmer's investment
($0.25 per share of 1,200 shares).
Jun 1 Debit Investment in Logan, Inc. $300,000
Credit Cash $300,000
To record the investment in 5,000 shares of $60 per share, representing a 40% equity ownership.
Sep 30 Debit Cash $10,000
Credit Investment in Logan, Inc. $10,000
To record dividend received from investment in Logan, Inc. ($2 per share of 5,000 shares).
Dec 31 Debit Investment in Logan, Inc. $60,000
Credit Retained Earnings $60,000
To record 40% share of the Net income of $150,000 in Logan, Inc.
Dec 31 No Journal Required: Argon Co. bond had a fair (market) value of $12,000.
Dec 31 Debit Unrealized Loss from Investment in Elmer, Inc. $6,000
Credit Investment in Elmer, Inc. $6,000
To record $5 lost in the (market) value of $25 per share.
Explanation:
a) Data and Analysis:
Jan 1 Bonds Receivable (Argon Co.) $10,000 Cash $10,000
a short-term investment in available-for-sale (AFS) debt securities.)
Jan 3 Investments (Long-term) in Elmer, Inc. $36,000 Cash $36,000 1,200 shares of Elmer, Inc. at $30 each.
Mar 31 Cash $300 Dividend Received $300
$0.25 per share of 1,200 shares.
Jun 1 Investment in Logan, Inc. $300,000 Cash $300,000
5,000 shares of $60 per share, represent a 40% ownership.
Sep 30 Cash $10,000 Dividend Received $10,000
$2 per share of 5,000 shares.
Dec 31 Investment in Logan, Inc. $60,000 Retained Earnings $60,000
40% share of the Net income of $150,000 in Logan, Inc.
Dec 31 No Journal Required: Argon Co. bond had a fair (market) value of $12,000.
Dec 31 Unrealized Loss from Investment in Elmer, Inc. $6,000 Investment in Elmer, Inc. $6,000 (market) value of $25 per share.
Assume the following: The standard price per pound is $2.00. The standard quantity of pounds allowed per unit of finished goods is 4 pounds. The actual quantity of materials purchased and used in production is 50,800 pounds. The actual purchase price per pound of materials was $2.20. The company produced 13,000 units of finished goods during the period. What is the materials price variance
Answer:
Direct material price variance =$10,160 unfavorable
Explanation:
Direct material price variance occurs when the actual quantity of materials are purchased at an actual price per unit higher or lower than the standard price.
Direct material price variance $
50,800 pounds should have cost (50,800× $2) = 101,600
but did cost (50,800× $2.20) = 111,760
Direct material price variance 10,160 unfavorable
Direct material price variance =$10,160 unfavorable
The materials price variance is $10,160 Unfavorable.
The difference between the standard cost and actual cost for the purchased actual quantity of material is the direct material price variance
The formulae for the direct Materials price variance is (Standard price – Actual price) * Actual quantity purchasedDirect Materials price variance = ($2.00 per pound – $2.20per pound) * 50800 pounds
Direct Materials price variance = ($0.20 * 50,800 pounds) Unfavorable
Direct Materials price variance = $10,160 Unfavorable
See similar solution here
brainly.com/question/22851732
Fraud Investigators Inc. operates a fraud detection service. On March 31, 10 customers were billed for detection services totaling $21,000. On October 31, a customer balance of $1,300 from a prior year was determined to be uncollectible and was written off. On December 15, a customer paid an old balance of $760, which had been written off in a prior year. On December 31, $460 of bad debts were estimated and recorded for the year.
Required:
1. Prepare journal entries for each transaction above. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
a) Record the service revenue of $34,000 billed on account.
Transaction General Journal Debit Credit
a
B) Record the write-off of a certain customer account from a prior year which is not collectible totaling $1,950..
Transaction General Debit Credit
C1.Record the reversal of the write-off of a $810 customer account.
C2. Record the receiptof cash of $810 from the customer.
D. Record the estimate bad debts of $590 for the year.
2. Complete the following table, indicating the amount and effect (+ for increase, − for decrease, and NE for no effect) of each transaction. Ignore income taxes.
Transaction Net Receivable Net Sales Income From Operation
A
B
C
D
Option for A : NE, +/- 34,000, +34,000, -34,000
Option for B : NE, +/- 1950, +1950, -1950
Option for C: NE, +/- 810, +810, -810
Option for D : NE, +/- 590, +590, -590
Answer:
Fraud Investigators Inc.
1. Journal Entries:
March 31: Debit Accounts Receivable $21,000
Credit Service Revenue $21,000
To record the rendering of service on account.
Oct. 31: Debit Allowance for Uncollectible Accounts $1,300
Credit Accounts Receivable $1,300
To write-off uncollectible accounts.
Dec. 15: Debit Accounts Receivable $760
Credit Allowance for Uncollectible Accounts $760
To reverse a previously written-off account.
Dec. 15: Debit Cash $760
Credit Accounts Receivable $760
To record the cash collected from the customer.
Dec. 31: Debit Bad Debts Expense $460
Credit Allowance for Uncollectible Accounts $460
To record bad debts expense for the year.
A) Debit Accounts Receivable $34,000
Credit Service Revenue $34,000
To record the rendering of service on account.
B) Debit Allowance for Uncollectible Accounts $1,950
Credit Accounts Receivable $1,950
To write off uncollectible accounts.
C1) Debit Accounts Receivable $810
Credit Allowance for Uncollectible Accounts $810
To reverse a previously written-off debt.
C2) Debit Cash $810
Credit Accounts Receivable $810
To record the receipt of cash from the customer.
D) Debit Bad Debts Expense $590
Credit Allowance for Uncollectible Accounts $590
To record bad debts expense for the year.
2. Transaction Net Receivable Net Sales Income From Operation
A +34,000 +34,000 +34,000
B -1,950 NE -1950
C +/- 810 NE +810
D NE NE -590
Explanation:
a) Data and Analysis:
March 31: Accounts Receivable $21,000 Service Revenue $21,000
Oct. 31: Allowance for Uncollectible Accounts $1,300 Accounts Receivable $1,300
Dec. 15: Accounts Receivable $760 Allowance for Uncollectible Accounts $760
Dec. 15: Cash $760 Accounts Receivable $760
Dec. 31: Bad Debts Expense $460 Allowance for Uncollectible Accounts $460
A) Accounts Receivable $34,000 Service Revenue $34,000
B) Allowance for Uncollectible Accounts $1,950 Accounts Receivable $1,950
C1) Accounts Receivable $810 Allowance for Uncollectible Accounts $810
C2) Cash $810 Accounts Receivable $810
D) Bad Debts Expense $590 Allowance for Uncollectible Accounts $590
An airline is considering a project of replacement and upgrading of machinery that would improve efficiency. The new machinery costs $400 today and is expected to last for 5 years with no salvage value. Straight line depreciation will be used. Project inflows connected with the new machinery will begin in one year and are expected to be $200 each year for 5 consecutive years and project outflows will also begin in one year and are expected to be $90 each year for 5 consecutive years. The corporate tax rate is 32% and the required rate of return is 9%. Calculate the project's net present value.
$-9.48
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow = (revenue - cost - depreciation) (1 - tax rate) + depreciation
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
(400 - 0) / 5 = 80
(200 - 90- 80) x (1 - 0.32) + 80 = $100.40
Cash flow in year 0 = $-400
Cash flow each year from year 1 to 5 = $100.40
I = 9%
NPV = $-9.48
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Grey Corp owns 100% of Blue Company. On January 1, 2017 Grey sold Blue a machine for $66,000. Immediately prior to the sale, the machine was recorded on Grey's books at a net book value of $25,000. Prior to the sale, Grey was depreciating the machine on a straight-line basis with 9 years of remaining life and no salvage value. Blue plans to adopt the same depreciation assumptions as Grey. What elimination adjustments with respect to this sale must be made to consolidated net income in 2018 (ignoring income tax effects)
Answer:
Journal 1 - Eliminate gain on sale :
Debit : Other Income ($66,000 - $25,000) $41,000
Credit : Machinery $41,000
Journal 2 - Eliminate the unrealized profit from the sale :
Debit : Accumulated depreciation $4,556
Credit : Depreciation $4,556
Explanation:
Grey Corp and Blue Company are in a group of Companies. Grey Corp is the Parent and should prepare Consolidated Financial Statements . Blue Company is a subsidiary (Grey owns more that 50 % of voting rights in Blue Company).
When preparing Consolidated Financial Statements, intragroup transaction must be eliminated. As they happen, a Company trades within its-self that is the reason they should be eliminated.
Concerning the sale of machine by Grey (Parent) to Blue (Subsidiary), we must first eliminate the Income (gain on sale) in Parent as well as the asset that sits in the Subsidiary.
Debit : Other Income ($66,000 - $25,000) $41,000
Credit : Machinery $41,000
Also, we have to eliminate the unrealized profit on the gain of the asset sold.
Debit : Accumulated depreciation $4,556
Credit : Depreciation $4,556
Deprecation calculation :
Deprecation = $41,000 ÷ 9 = $4,556
You have been given the following information about the production of Usher Co., and are asked to provide the plant manager with information for a meeting with the vice president of operations.
Standard Cost Card
Direct materials (5 pounds at $5 per pound) $25.00
Direct labor (0.90 hours at $10) 9.00
Variable overhead (0.90 hours at $4 per hour) 3.60
Fixed overhead (0.90 hours at $9 per hour) 8.10
$45.70
The following is a variance report for the most recent period of operations.
Variances
Costs Total Standard Cost Price Quantity
Direct materials $405,000 $8,298 F $9,900 U
Direct labor 145,800 4,590 U 7,200 U
(a) How many units were produced during the period? (Round answers to 0 decimal places, e.g. 125.)
Number of units
You have been given the following information abou
(b) How many pounds of raw material were purchased and used during the period? (Round answers to 0 decimal places, e.g. 125.)
Raw material
You have been given the following information abou
pounds
(c) What was the actual cost per pound of raw materials? (Round to 2 decimal places, e.g. 1.25.)
Answer:
Usher Co.
a. The units produced during the period is:
= 16,200 units
b. The pounds of raw materials purchased and used during the period is:
= 82,980 pounds
c. The actual cost per pound of raw materials is:
= $4.90
Explanation:
a) Data and Calculations:
Standard Cost Card
Direct materials (5 pounds at $5 per pound) $25.00
Direct labor (0.90 hours at $10) 9.00
Variable overhead (0.90 hours at $4 per hour) 3.60
Fixed overhead (0.90 hours at $9 per hour) 8.10
$45.70
Variances
Costs Total Standard Cost Price Quantity
Direct materials $405,000 $8,298 F $9,900 U
Direct labor 145,800 4,590 U 7,200 U
Units produced = Total standard cost/direct materials standard cost per unit
= $405,000/$25
= 16,200 units
Pounds of raw materials purchased and used = (Total standard cost + Unfavorable Quantity Variance)/direct materials standard cost per pound
= ($405,000 + $9,900)/$5
= 82,980 pounds
Actual costs:
Direct materials = $406,602 ($405,000 - $8,298 + $9,900)
Actual price per pound = $4.90 ($406,602/82,980)
Direct labor = $157,590 ($145,800 + 4,590 + 7,200)
Actual price per pound = ((Actual Quantity * Standard Price) - Favorable Price Variance)/Actual Quantity
= ((82,980 * $5) - $8,298)/82,980
= ($414,900 - $8,298)/82,980
= $406,602/82,980
= $4.90
A. The units produced during the period are 16200 (rounded off to nearest zero).
B. 82980 pounds of raw material was being required during the period.
C. The actual cost of raw materials come out of $4.90/pound
We know that formula to find units produced is,[tex]\rm units\ produced=\dfrac{\rm{total standard cost}}{\rm{direct materials}}\\\\units \ produced = \dfrac{405000}{25}\\\\\rm units\ produced = 16200[/tex]
So, 16200 units were produced.
Raw material purchased and used can be obtained by the following formula,[tex]\rm raw\ material\ used = \dfrac{\rm{total\ standard\ cost+\ unfavourable \ quantity\ variance}}{\rm{direct\ material \ standard\ cost\ per \pound}} \\\\ =\dfrac{4149000}{5}\\\\=829800[/tex]
So, 829800 pounds of raw material was consumed during the period.
The actual cost of raw material per pound can be calculated by simply dividing direct materials with pounds purchased and used which comes out to $4.90.Hence, the answers are calculated as
Actual cost per pound = $4.90
Raw material consumed and purchased = 829800 pounds
Units produced = 16200 units
To know more about raw materials, please refer below links.
https://brainly.com/question/730278
Waterway Company sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot. It offers two bundles with the following terms.
a. Shamrock Company sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot. It offers two bundles with the following terms. 1. Shamrock Bundle A sells a tablet with 3 years of Internet service. The price for the tablet and a 3-year Internet connection service contract is $469. The standalone selling price of the tablet is $230 (the cost to Shamrock Company is $157). Shamrock Company sells the Internet access service independently for an upfront payment of $292. On January 2, 2017, Shamrock Company signed 100 contracts, receiving a total of $46,900 in cash.
b. Shamrock Bundle B includes the tablet and Internet service plus a service plan for the tablet PC (for any repairs or upgrades to the tablet or the Internet connections) during the 3-year contract period. That product bundle sells for $574. Shamrock Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $145. Shamrock Company signed 220 contracts for Shamrock Bundle B on July 1, 2017, receiving a total of $126,280 in cash.
Required:
a. Prepare any journal entries to record the revenue arrangement for Headland Bundle A on January 2, 2017, and December 31, 2017.
b. Prepare any journal entries to record the revenue arrangement for Headland Bundle B on July 1, 2017, and December 31, 2017.
Answer:
Waterway or Shamrock Company
Journal Entries:
Bundle A:
Debit Cash $46,900
Credit Tablet Revenue $20,665
Credit Annual Internet Access Revenue $8,745
Credit Deferred Revenue: Internet Access $17,490
To record revenue from Bundle A.
Debit Cost of Sale of Tablets $15,700
Credit Tablet Inventory $15,700
To record the cost of tablets sold.
Bundle B:
Debit Cash $126,280
Credit Tablet Revenue $43,545
Credit Annual Tablet Service Plan $9,151
Credit Annual Internet Access Revenue $18,428
Credit Deferred Revenue: Service Plan $18,300
Credit Deferred Revenue: Internet Access $36,856
To record revenue from Bundle B.
Debit Cost of Sale of Tablets $34,540
Credit Tablet Inventory $34,540
To record the cost of tablets sold.
Explanation:
a) Data and Calculations:
Bundle A contract = $469
Tablet standalone selling price = $230 (Total = $23,000 ($230 * 100)
Cost of tablet = $157 (Total costs of 100 tablets = $15,700)
Internet access service standalone selling price = $292 (Total = $29,200)
Total standalone selling price per bundle = $522 (Total = $52,200)
Contracts signed = 100
Revenue received = $46,900
Revenue from Tablet = $23,000/$52,200 * $46,900 = $20,665
Revenue from Internet Access = $29,200/$52,200 * $46,900 = $26,235
Annual interest access = $8,745 ($26,235/3)
Bundle B contract = $574
Tablet standalone selling price = $230 (Total = $50,640 ($230 * 220)
Cost of tablet = $157 (Total costs = $34,540 ($257 * 220)
3-year Tablet Service Plan standalone selling price = $145 (Total = $31,900 ($145 * 220)
Internet access service standalone selling price = $292 (Total = $64,240 ($292 * 220)
Total standalone selling price per bundle = $667 (Total = $146,740 ($667 * 220)
Contracts signed = 220
Revenue received = $126,200
Revenue from Tablet = $50,600/$146,740 * $126,280 = $43,545
Revenue from 3-year Tablet Service Plan = $31,900/$146,740 * $126,280 = $27,452
Annual revenue = $9,151 ($27,452/3)
Revenue from Internet Access = $64,240/$146,740 * $126,280 = $55,283
Annual revenue from internet access = $18,428 ($55,283/3)
Reuse of large amounts of copyrighted film in a documentary would not constitute a copyright infringement.
a) True
b)False
Answer:
B. False
Explanation:
I majored in Business