Answer:
a) Internal rate of return (IRR) = 12.70 %
b) Park Co should make the return because the IRR is higher than the return on investment of 7%. This implies that undertaking the investment would increase the the wealth of the shareholders
Explanation:
The IRR is the discount rate that equates the present value of cash inflows to that of cash outflows. At the IRR, the Net Present Value (NPV) of a project is equal to zero
If the IRR greater than the required rate of return , we accept the project for implementation
If the IRR is less than that the required rate , we reject the project for implementation
IRR = a% + ( NPVa/(NPVa + NPVb)× (b-a)%
NPV = PV of cash inflow - initial cost
PV of cash inflow = A× (1- (1+r)^(-n) )/r
A- cash inflow , r- rate of return, n- number of years
Step 1 :
NPVa at 7%
NPV = (9300 × (1- 1.07^(-4)/0.07 ) - 28,245 = 3,256.06
Step 2:
NPVb at 20%
NPV = (9300 × (1- 1.07^(-4)/0.07 ) - 28,245 = (4,169.77)
Step 3 :
IRR = a% + ( NPVa/(NPVa + NPVb)× (b-a)%
= 7% + (3,256.06 /(3,256.06 + 4,169.77)) × (20-7)%= 12.70
IRR = 12.70%
a) Internal rate of return (IRR) = 12.70 %
b) Park Co should make the return because the IRR (12.70%) is higher than the return on investment of 7%. This implies that undertaking the investment would increase the the wealth of the shareholders
Onslow Co. purchases a used machine for $178,000 cash on January 2 and readies it for use the next day at a $2,840 cost. On January 3, it is installed on a required operating platform costing $1,160, and it is further readied for operations. The company predicts the machine will be used for six years and have a $14,000 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.Required:Prepare journal entries to record the machine's disposal under each of the following separate assumptions: a. It is sold for $22,000 cash. b. It is sold for $88,000 cash. c. It is destroyed in a fire and the insurance company pays $32,500 cash to settle the loss claim.
Answer:
All the requirements are solved below
Explanation:
Purchase = $178,000
Ready to use cost = $2,480
Installation cost = $1,160
Salvage value = $14,000
Depreciation method = Straight line
Useful life = 6 years
Solution
Requirement A If sold for $22,000
Entry DEBIT CREDIT
Cash $22,000
Accumulated depreciation $140,000
Profit/loss on disposal $20,000
Machinery $182,000
Requirement B If sold for $88,000
Entry DEBIT CREDIT
Cash $82,000
Accumulated depreciation $140,000
Profit/loss on disposal $40,000
Machinery $182,000
Requirement C If destroyed in fire and insurance company paid $32,500
Entry DEBIT CREDIT
Cash $30,000
Accumulated depreciation $140,000
loss from fire $12,000
Machinery $182,000
Workings
Cost =$178,000 + $2,480 + $1,160
Cost = $182,000
Accumulated depreciation = ([tex]\frac{182,000-14,000}{6}x5[/tex]
Accumulated depreciation = 140,000
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $4.3 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $4.6 million. The company wants to build its new manufacturing plant on this land; the plant will cost $11.8 million to build, and the site requires $700,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project? (Enter your answer as a positive value in dollars, not millions of dollars, e.g., 1,234,567.)
Answer:
$17.1 million
Explanation:
The proper cash flow amount to use as the initial investment in fixed assets when evaluating this project can be calculated as follows
DATA
Fair value of land = 4.6 million
Cost to build a plant = 11.8 million
Grading cost = 0.7 million
Solution
Initial investment = Fair value of land + Cost to build a plant + Grading cost
Initial investment = $4.6 million + $11.8 million + $0.7 million
Initial investment = $17.1 million
Use the following information and the indirect method to calculate the net cash provided or used by operating activities:
Net income $ 86,800
Depreciation expense 13,500
Gain on sale of land 6,800
Increase in merchandise inventory 3,550
Increase in accounts payable 7,650
A) $97,600.
B) $15,850.
C) $31,400.
D) $16,850.
E) $38,200
Answer:
A) $97,600
Explanation:
Calculation for the net cash provided or used by operating activities
OPERATING ACTIVITIES
Net Income $86,800
Depreciation Expense 13,500
Gain on Sale of Land (6,800)
Increase in Merchnadize Inventory (3,550)
Increase in Accounts Payable 7,650
Net Cash provided by Operations $97,600
Therefore the net cash provided or used by operating activities will be $97,600
The declaration, record, and payment dates in connection with a cash dividend of $77,000 on a corporation's common stock are October 1, November 7, and December 15.
Required:
Journalize the entries required on each date.
Answer:
Oct 1
Dr Cash Dividend $77,000
Cr Dividend Payable $77,000
Nov 7
No Entry required on the record date
Dec 15
Dr Dividend Payable $77,000
Cr Cash
Explanation:
Preparation of the Journal entries for each date
Based on the information given we were told that the cash dividend of the amount of $77,000 was a corporation's common stock are October 1, November 7, and December 15 which means that the transaction will be recorded as:
Oct 1
Dr Cash Dividend $77,000
Cr Dividend Payable $77,000
Nov 7
No Entry required on the record date
Dec 15
Dr Dividend Payable $77,000
Cr Cash
Assuming that the firm is maximizing profits, the marginal cost of the last unit produced equals:________
Price Quantity Total cost
10 10 80
9 20 100
8 30 130
7 40 170
6 50 230
5 60 300
4 70 380
a. $4
b. $40
c. $5
d. $50
e. $6
Answer: b. $40
Explanation:
A firm maximises its profits where Marginal Revenue equals marginal cost.
Marginal revenue is the additional revenue gained by selling one more unit of production.
At 40 units, the marginal revenue is equal to;
= Total revenue at 40 units - total revenue at 30 units
= ( 7 * 40) - ( 8 * 30)
= 280 - 240
= $40
At 40 units the marginal cost is;
= total cost at 40 units - total cost at 30 units
= 170 - 130
= $40
MR=MC which is $40.
A company releases a? five-year bond with a face value of? $1000 and coupons paid semiannually. If market interest rates imply a YTM of 8%, which of the following coupon rates will cause the bond to be issued at a? premium?
A. 6%
B.10%
C. 8%
D. 5%
Answer: B.10%
Explanation:
For a bond to be issued at a premium, the Coupon rate needs to be higher than the current Market Yield to Maturity as this will cause the price of the bond to be higher than Par signifying that the bond is an attractive one.
If the Coupon rate is equal to the YTM then the bond will trade at Par.
If the Coupon rate is less than the YTM then the bond will trade at a discount.
Only 10% of the coupon rate will allow the bond by issued at a premium.
The coupon rate of a a bond refers to the amount of interest income earned each year based on the face value.
The yield to maturity of a band refers to the total estimated return if the bond is held until maturity.
When coupon rate is equal to YTM at issue, then, bond is issued at par value.When coupon rate is lower than YTM at issue, then, bond is issued at a discount.When coupon rate is higher than YTM at issue, then, bond is issued at a premium.
Therefore, the Option B is correct because only 10% of the coupon rate will allow the bond by issued at a premium
See similar solution here
brainly.com/question/17030252
Effects of fixed and variable cost behavior on the risk and rewards of business opportunities LO 11-2
Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $5,000 per course taught. Denton pays its instructors $250 per student enrolled in the class. Both universities charge executives a $450 tuition fee per course attended.
Required
Prepare income statements for Kenton and Denton, assuming that 20 students attend a course.
Kenton University embarks on a strategy to entice students from Denton University by lowering its tuition to $240 per course. Prepare an income statement for Kenton assuming that the university is successful and enrolls 40 students in its course.
Denton University embarks on a strategy to entice students from Kenton University by lowering its tuition to $240 per course. Prepare an income statement for Denton, assuming that the university is successful and enrolls 40 students in its course.
Prepare income statements for Kenton and Denton Universities, assuming that 10 students attend a course, and assuming that both universities charge executives a $450 tuition fee per course attended.
Answer and Explanation:
The Preparation of income statement of each point is shown below:-
A. Kenton and Denton Universities
Income Statement
Particulars Kenton Denton
Revenue (20 × $450) $9,000 $9,000
Less: Instruction fees
Per course fees $5,000
Per student fee (20 × $250) $5,000
Net income $4,000 $4,000
B. Kenton Universities
Income Statement
Particulars Kenton
Revenue (40 × $240) $9,600
Less: Instruction fees
Per course fees $5,000
Net income $4,600
C. Denton Universities
Income Statement
Particulars Denton
Revenue (40 × $240) $9,600
Less: Instruction fees
Per student fee (40 × $250) $10,000
Net income -$400
D. Kenton and Denton Universities
Income Statement
Particulars Kenton Denton
Revenue (10 × $450) $4,500 $4,500
Less: Instruction fees
Per course fees $5,000
Per student fee (10 × $250) $2,500
Net income -$500 $2,000
We simply deduct all the expenses from the revenue to arrive at net income and a net loss
Wookie Company issues 8%, five-year bonds, on January 1 of this year, with a par value of $108,000 and semiannual interest payments.
Semiannual Period-End Unamortized Premium Carrying Value
(0) January 1, issuance $8,271 $116,271
(1) June 30, first payment 7,444 115,444
(2) December 31, second payment 6,617 114,617
Use the above straight-line bond amortization table and prepare journal entries for the following:
a) The issuance of bonds on January 1.
b) The first interest payment on June 30.
c) The second interest payment on December 31.
Answer:
See the journal entries and explanation below.
Explanation:
The journal entries will look as follows
a) The issuance of bonds on January 1.
Date Accounts title Debit ($) Credit ($)
Jan. 1 Cash 111,671
Premium on Bonds Payable 8,271
Bonds Payable (w.1) 108,000
(To record issuance of bonds.)
b) The first interest payment on June 30.
Date Accounts title Debit ($) Credit ($)
Jun. 30 Interest Expense (w.4) 3,493
Premium on Bonds Payable (w.2) 827
Cash (w.3) 4,320
(To record first interest payment)
c) The second interest payment on December 31.
Date Accounts title Debit ($) Credit ($)
Dec. 31 Interest Expense (w.4) 3,493
Premium on Bonds Payable (w.5) 827
Cash (w.6) 4,320
(To record second interest payment)
Workings:
w.1: Bond payable = Cash - Premium on Bonds Payable = $111,671 - $8,271
w.2: Premium on Bonds Payable = January 1 Unamortized Premium - June 30 Unamortized Premium = $8,271 - $7,444 = $827
w.3: Cash = $108,000 * 8% * (6 / 12) = $4,320
w.4: Interest expense = w.3 - w.2 = $4,320 - $827 = $3.493
w.5: Premium on Bonds Payable = June 30 1 Unamortized Premium - December 31 Unamortized Premium = $7,444 - $6,617 = $827
w.6: Cash = $108,000 * 8% * (6 / 12) = $4,320
w.7: Interest expense = w.6 - w.5 = $4,320 - $827 = $3,493
Once a firm reaches the lowest point on the Long Run Average Total Cost Curve then the firm will automatically charge a lower prices for their product or service. The cost analysis model that we studied in Chapter 9 said that this is always the best strategy to effectively capture the maximum market share.
A- True
B- False
Answer:
B. False
Explanation:
As it is mentioned in the question that When a firm reaches a lowest point on the Long Run Average Total Cost Curve then it automatically charged a less price for the product and services they are rendering to the customer. But this lowest point deals in the only perfect competition also it would not capture the maximum market share but it would result into optimum production and goods supply at minimum price
The Chinese government chooses to control the value of its currency so that it is consistently worth some fixed amount of U.S. dollars. Which of the following terms would relate to what the Chinese government would be doing?
a. floating exchange rate
b. flexible exchange rate
c. exchange rate freedom
d. pegged exchange rate
Answer: pegged exchange rate
Explanation:
A pegged exchange rate also referred to as the fixed exchange rate, sometimes is an exchange rate regime type whereby the value of a currency is fixed by the monetary authority of a particular country against the value of the currency of another country.
This is the type of exchange rate used by the Chinese government in the question above.
Disturbed Corp. needs to raise $57 million to fund a new project. The company will sell shares at a price of $23.70 in a general cash offer and the company's underwriters will charge a spread of 7.5 percent. The direct flotation costs associated with the issue are $725,000 and the indirect costs are $445,000. How many shares need to be sold?
Answer: 2653438 shares
Explanation:
From the information given in the question, the following can be deduced:
The share price will be:
= $23.70 × (1 - 7.5%)
= $23.70 × (1 - 0.075)
= $23.70 × 0.925
= $21.9225
The money that will be raised will be:
= 57,000,000 + 725,000 + 445,000
= $58,170,000
The number of shares that are needed to be sold will be:
= $58,170,000/$21.9225
= 2653438 shares
A(n) ____ is a computer-based information system designed to help knowledge workers select one of many alternative solutions to a problem.
Answer: decision support system (DSS)
Explanation:
A decision support system better known as (DSS) is a computer based program which is used to support or aid determinations, judgments, and courses of action been taken in an organization or a business. A DSS browses through and analyzes massive amounts of data, thereby compiling comprehensive information which can be used to solve problems and make important decisions in and organization or business.
Domingo Corporation uses the weighted...
Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 2,300 units. The costs and percentage completion of these units in beginning inventory were:
Cost Percent Complete
Materials costs $7,400 50%
Conversion costs $3,600 20%
A total of 8,700 units were started and 8,000 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
Cost
Materials costs $160,600
Conversion costs $122,300
The ending inventory was 85% complete with respect to materials and 75% complete with respect to conversion costs. How many units are in ending work in process inventory in the first processing department at the end of the month?
a. 700.
b. 1,700.
c. 6.400.
d. 2,700.
Answer:
3,000 units
Explanation:
Calculation for How many units are in ending work in process inventory
Using this formula
Ending work in process units =Beginning work in process units + Units started into production - Transferred to the second processing department units
Let plug in the formula
Ending work in process units= 2,300 units + 8,700 units - 8,000 units
Ending work in process units= 3,000 units
Therefore 3,000 units are in the ending work in process inventory in the first processing department at the end of the month.
Assume that investors have recently become more risk averse, so the market risk premium has increased. Also, assume that the risk-free rate and expected inflation have not changed. Which of the following is most likely to occur?a. The required rate of return will decline for stocks whose betas are less than 1.0 b. The required rate of return on the market, rm, will not change as a result of these changes c. The required rate of return for each individual stock in the market will increase by an amount equal to the increase in the market risk d. The required rate of return on a riskless bond will decline. e. The required rate of return for an average stock will increase by an amount equal to the increase in the market risk premium.
Answer: e. The required rate of return for an average stock will increase by an amount equal to the increase in the market risk premium.
Explanation:
The market risk premium is the interest rate over the risk-free rate that investors will be compensated with for taking on the risk. Returns consist of both the risk-free rate and a premium charged for risk.
If investors become more risk averse, they will have to be compensated for what they view as riskier investments by increasing the premium being given to them.
Should this happen, the return that they will require will therefore increase by the same amount that the premium has increased.
Torrid Romance Publishers has total receivables of $3,000, which represents 20 days’ sales. Total assets are $75,000. The firm’s operating profit margin is 5%. Find the firm's ROA and asset turnover ratio.
Answer:
Assets turnover ratio= 0.73
ROA= 3.65%
Explanation:
Torrid romance publishers have a total receivables of $3,000, it represents a 20 days sales
The total assets is $75,000
The operating profit margin is 5%
= 5/100
= 0.05
The first step is to calculate the total sales
= $3,000×365/20
= $3,000×18.25
= $54,750
The asset turnover ratio can be calculated as follows
= Total sales/Total assets
= $54,750/$75,000
= 0.73
The ROA can be calculated as follows
= Assets turnover ratio×operating profit margin
= 0.73×0.05
= 0.0365×100
= 3.65%
Hence the assets turnover ratio and ROA is 0.73 and 3.65% respectively.
Based on the following information, calculate the variable overhead rate variance. Actual variable overhead cost $15,500 Actual hours used 4,200 Standard hours allowed 4,000 Standard variable overhead rate $3.75 per hour
Answer:
Rate variance = $250 favorable
Explanation:
The variable overhead rate variance is the difference between the actual variable cost and the standard variable overhead cost the actual actual hours used.
We would compare the actual cost to the standard cost of the actual hours used . This is done below as follows:
$
4,200 hours should have cost (4200 × 3.75 ) 15,750
but did cost 15,500
Rate variance 250 Favorable
Note the actual hours of 4,200 cost $250 less than it should be have cost . Hence the variance is favorable
Rate variance = $250
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:
Sales in Units
April 70,000
May 85,000
June 110,000
July 90,000
The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 15% of the following month’s sales. The inventory at the end of March was 10,500 units.
Required:
Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total.
Answer:
Results are below.
Explanation:
Giving the following information:
Sales in Units
April 70,000
May 85,000
June 110,000
July 90,000
Desired ending inventory= 15% of the following month’s sales.
The inventory at the end of March was 10,500 units.
To calculate the production required for each month, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
April:
Sales= 70,000
Desired ending inventory= 85,000*0.15= 12,750
Beginning inventory= (10,500)
Total production= 72,250
May:
Sales= 85,000
Desired ending inventory= 110,000*0.15= 16,500
Beginning inventory= (12,750)
Total production= 88,750
June:
Sales= 110,000
Desired ending inventory= 90,000*0.15= 13,500
Beginning inventory= (16,500)
Total production= 107,000
Total quarter= 268,000
Nordquist Company's net income last year was $44,000. The company did not sell or retire any property, plant, and equipment last year. Changes in selected balance sheet accounts for the year appear below:
Increases
(Decreases)
Asset and Contra-Asset Accounts:
Accounts receivable $17,500
Inventory $(4,400)
Prepaid expenses $13,000
Accumulated depreciation $32,000
Liability Accounts:
Accounts payable $17,000
Accrued liabilities $(8,900)
Income taxes payable $3,500
Based solely on this information, the net cash provided by operating activities under the indirect method on the statement of cash flows would be:
a) $78,600
b) $113,700
c) $61,500
d) $26,500
Answer:
Explanation:
c) $61,500
Particulars Amount$
Net Income 44,000
Add Decrease in Inventory 4,400
Add Accumulated Depreciation 32,000
Add Increase in Accounts Payable 17,000
Add Increase in Taxes Payable 3,500
Less Increase in Accounts Receivables (17500)
Less Increase in Prepaid Expenses (13,000)
Less Decrease in Accrued Liabilities (8,900)
Net cash provided by operating activities $61,500
under the indirect method
You bought a stock one year ago for $49.52 per share and sold it today for $57.04 per share. It paid a $1.14 per share dividend today. How much of the return came from dividend yield and how much came from capital gain?
Answer:
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"A customer opens a margin account by purchasing 300 shares of XYZ stock at $80 per share and deposits the required margin. If the stock declines in value by 25%, the customer's equity in the account will:"
Answer:
Equity will increased by 50%
Explanation:
Given:
Number of stock = 300
Per share value = $80
Stock value decline = 25%
Find:
Customer's equity will ?
Computation:
Market value = 300 × $80 = $24,000
New market value = $24000 × (100% - 25%) = $18,000
Margin = $24000 × 50% = $12,000
Credit balance = $24,000 (100% / 75%)
Credit balance = $24,000 + $12,000
Credit balance = $36,000
Equity % = [Credit balance - New market value / Credit balance]100
Equity % = [($36,000 - $18,000) / $18,000]100
Equity will increased by 50%
Costs that are capitalized because they are expected to have future value are called product costs; costs that are expensed are called period costs. This classification is important because it affects the amount of costs expensed in the income statement and the amount of costs assigned to inventory on the balance sheet. Product costs are commonly made up of direct materials, direct labor, and overhead. Period costs include selling and administrative expenses.
A service company has which of the following costs
a. Direct Material
b. Overhead Costs
c. Product Costs
d. Expensed in the period incurred
Answer:
b. Overhead Costs
d. Expensed in the period incurred
Explanation:
-Direct material refers to the cost of the material used to manufacture a product.
-Overhead costs are the costs related to the operation of the business and they can't be assigned to a good or service.
-Product Costs are the costs to manufacture a product.
-Expensed in the period incurred are the period costs which are costs not related to the production of a good.
According to these definitions, a service company has the following costs: overhead costs and expensed in the period incurred because these are costs that are not related to the creation of a product.
On the other hand, the other options direct material and product costs are not right because these costs are directly related to products.
Redford's salary was $123,000 in 2019. What would his total combined FICA tax (OASDI & Medicare) withheld from his salary be for the year?
Answer:
$9,409.50
Explanation:
Calculation for the total combined FICA tax (OASDI & Medicare) withheld from Redford's salary for the year
For the year 2019 the total FICA tax rate is 7.65%
Which are :
OASDI tax = 6.2%
+ Medicare tax =1.45%
Now let calculated the amount of OASDI tax for Redford's salary
Using this formula
OASDI tax =Salary ×OASDI tax rate
Let plug in the formula
OASDI tax =$123,000×6.2%
OASDI tax =$7,626
Let let calculated the amount of the Medicare tax for Redford's salary
Using this formula
Medicare tax =Salary ×Medicare tax rate
Let plug in the formula
Medicare tax=$123,000*1.45%
Medicare tax=$1,783.50
Total combined FICA tax
OASDI tax =$7,626
Medicare tax=$1,783.50
Total=$9,409.50
Therefore what the total combined FICA tax (OASDI & Medicare) withheld from his salary will be for the year is $9,409.50
Suppose you have $ cash today and you can invest it to become worth $ in years. What is the present purchasing power equivalent of this $ when the average inflation rate over the first years is % per year, and over the last years it will be % per year?
Answer: $900,599.04
Explanation:
The present purchasing power equivalent is the present worth of this investment.
The investment will earn 5% for the first 7 years and then 9% for the next 10.
As there are different rates, the present worth calculation will have to reflect that.
At the end of the first 7 years, the present worth of the invested amount given 10 more years of investing at 9%. The Present worth is;
= 3,000,000(Present worth factor, 9%, 10 years)
= 3,000,000 * 0.4224
= $1,267,200
Then what is the Present worth of $1,267,200 in the current year given that it will be invested for 7 years at 5% to get to $1,267,200.
= 1,267,200 (Present worth factor, 5%, 7 years)
= 1,267,200 * 0.7107
= $900,599.04
Whispering Corporation began 2017 with a $94,200 balance in the Deferred Tax Liability account. At the end of 2017, the related cumulative temporary difference amounts to $352,400, and it will reverse evenly over the next 2 years. Pretax accounting income for 2017 is $505,400, the tax rate for all years is 40%, and taxable income for 2017 is $388,500.
Part 1
Compute income taxes payable for 2017.
Income taxes payable
$
Part 2
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit Credit
Part 3
Prepare the income tax expense section of the income statement for 2017 beginning with the line "Income before income taxes.". (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Answer:
1. Income tax payable = Taxable income for 2017 * Income tax rate
Income tax payable = $388,500 * 40%
Income tax payable = $155,400
2. Journal Entry
Account Titles and Explanations Debit Credit
Income tax expense $202,160
($505,400*40%)
Deferred tax liability $46,760
($202,160-$155,400)
Income tax payable $155,400
($388,500*40%)
3. Income Statement (Partial)
For the Year Ended Dec 31, 2017
Income before income taxes $505,400
Income tax expense
Current $155,400
Deferred $46,760 $202,160
Net Income $303,240
Petrus Framing's cost formula for its supplies cost is $2,300 per month plus $6 per frame. For the month of March, the company planned for activity of 861 frames, but the actual level of activity was 856 frames. The actual supplies cost for the month was $7,790. The activity variance for supplies cost in March would be closest to:
Answer:
$30 Favorable
Explanation:
Calculation for the activity variance for supplies cost in March
Using this formula
Activity variance = (Actual units - Budgeted units) * Variable cost
Where,
Actual units=856
Budgeted units=861
Variable cost=$6
Let plug in the formula
Activity variance=(856-861) * $6
Activity variance=5*$6
Activity variance=$30 Favorable
Therefore the activity variance for supplies cost in March would be closest to: $30 Favorable
The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.8 hours Standard labor rate $13.60 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,600 hours Actual total labor cost $100,320 Actual output 950 units What is the labor efficiency variance for the month?
Answer:
the labor efficiency variance for the month is $23,256 Favorable.
Explanation:
Labor efficiency variance = (Aq × SP) - (Sq × Sp)
= (7,600 × $13.60) - ((950 × 9.8) × $13.60)
= (7,600 × $13.60) - (9.310 × $13.60)
= $23,256 Favorable
Green Inc. made no adjusting entry for accrued and unpaid employee wages of $38,000 on December 31. This error would Multiple Choice Understate assets by $38,000. Overstate net income by $38,000. Understate net income by $38,000. Have no effect on net income.
Answer:
The answer is B. Overstate net income by $38,000.
Explanation:
Accrued expense is an expense that has been enjoyed or incurred but has been paid for. Examples of an accrued expense are unpaid wages/salary, unpaid electricity bill etc.
Usually, the adjusting entry for accrued expense is to debit the expense and debit increases expense while credit decreases it. Since there is no adjusting entry, that means no expense is being recognized on the income statement for this transaction. Hence, the net income increases (overstated). because ordinarily expense reduces net income.
Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours; and Wales 1 hour. Assuming that Widgeon Co. can sell all of the products it can make, what is the maximum contribution margin it can earn per month
Answer:
$3,400
Explanation:
Particulars Bales Tales Wales
Selling price 55 78 32
- Variable costs 20 50 15
Contribution margin 35 28 17
Required hours to process 5 hrs 7 hrs 1 hrs
Contribution margin per hours 7 4 17
Therefore, Widgeon Co. will earn maximum contribution only if it uses all its machine hours for production of wales
Maximum contribution margin = Contribution margin per hour * Number of machine hours
Maximum contribution margin = 17 * 2,000 hours
Maximum contribution margin = $3,400
Assuming that Widgeon Co. can sell all of the products it can make, the maximum contribution margin it can earn per month is $3,400. The difference between the sales price and the variable cost is the contribution margin.
A contribution margin calculates a product's profitability during production. The contribution margin of a business indicates how much income is left over after variable expenditures like raw materials and transportation are subtracted.
A product must have a higher leftover income after variable costs than the business' fixed expenses, such as salaries and insurance, in order to be profitable.
Particulars Bales Tales Wales
Selling price 55 78 32
Less: Variable costs 20 50 15
Contribution margin 35 28 17
Required hours to process 5 hours 7 hours 1 hours
Contribution margin per hours 7 4 17
Widgeon Company will earn maximum contribution only if it uses all its machine hours for production of wales
Maximum contribution margin will be
= Contribution margin per hour × Number of machine hours
= $17× 2,000 hours
= $3,400
Therefore, $3400 is the maximum contribution margin for Widgeon Company.
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A company with 99,006 authorized shares of $8 par common stock issued 48,828 shares at $13 per share. Subsequently, the company declared a 2% stock dividend on a date when the market price was $22 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?
A. $43,563
B. $21,484
C. $7,812
D. $13,672
Answer:
$21,484
Explanation:
A company has 99,006 authorized shares of $8 par
The common stock was issued at 48,828 shares at the price of $13 for one share
The company made a 2% dividend declaration
= 2/100
= 0.02
The market price is $22 per share
Therefore, the amount that was transferred from the retained earnings account to the paid-in capital accounts can be calculated as follows
= 48,828 shares × 0.02 × $22
= $21,484
Hence the amount that was moved from the retained earnings account to the paid-in capital accounts as a result of stock dividend is $21,484
You just won the lottery, which promises you $260,000 per year for the next 20 years, starting today (annuity due). If your discount rate is 7%, what is the present value of your winnings?
Answer:
the present value of your winnings will be $2,947,254.76.
Explanation:
The Present Value, PV of the Annuity due can be calculated as follows :
Pmt = $260,000
P/yr = 1
n = 20
r = 7%
Fv = $0
Pv = ?
Using a financial Calculator, the Present Value, PV of the Annuity due is $2,947,254.76