Answer:
Direct material quantity variance= $10,000 favorable
Explanation:
Giving the following information:
Standard Direct materials 6.4 ounces $ 2.00 per ounce.
Actual output 6,000 units
Raw materials used in production 33,400 ounces
To calculate the direct material quantity variance, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (6.4*6,000 - 33,400)*2
Direct material quantity variance= (38,400 - 33,400)*2
Direct material quantity variance= $10,000 favorable
Suppose an economy has two industries producing corn (c) and tractor (t). The production functions for the two industries are.
Yc = min (Lc/2, Kc/1) and Yt = min (Lt/2.5, Kt/3),
where Li and Ki are the amount of labor and capital used in industry i (i = c, t). Constraints for labor and capital endowments are given as follows:
Lc + Lt ≤ 63 and Kc + Kt ≤ 42.
Derive the production transformation curve and show the output vector (Yc, Yt) that corresponds to full employment of both factors? (10 marks)
What range of output price ratio (Pc/Pt) is consistent with the full employment of both factors simultaneously? (10 marks)
Answer:
The answer would be y/b
Explanation:
Its really simple
On January 1, 2021, Ellison Company granted Sam Wine, an employee, an option to buy 1,000 shares of Ellison Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $6,000. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Ellison Co. stock in 2021 were:
July 1 $30 per share
October 1 $36 per share
December 1 $40 per share
The service period is for three years beginning January 1, 2021. As a result of the option granted to Wine, using the fair value method, Ellison should recognize compensation expense for 2021 on its books in the amount of:________
a. $6,000 21
b. $2,000
c. $1,500
d. $0
Answer:
b. $2,000
Explanation:
Using a fair value option pricing model, total compensation expense is determined to be $6,000.
The service period is for three years beginning January 1, 2021.
So, Ellison should recognize compensation expense for 2021 on its books in the amount of:
= $6,000 / 3 years
= $2,000.
As a result of the option granted to Wine, using the fair value method, Ellison should recognize $2,000 as compensation expense.
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 21,000 Accounts receivable, net 220,000 Merchandise inventory 320,000 Prepaid expenses 8,000 Total current assets 569,000 Property and equipment, net 860,000 Total assets $ 1,429,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 280,000 Bonds payable, 9% 390,000 Total liabilities 670,000 Stockholders’ equity: Common stock, $10 par value $ 110,000 Retained earnings 649,000 Total stockholders’ equity 759,000 Total liabilities and equity $ 1,429,000
Castile Products, Inc. Income Statement For the Year Ended December 31 Sales $ 3,010,000 Cost of goods sold 1,110,000 Gross margin 1,900,000 Selling and administrative expenses 640,000 Net operating income 1,260,000 Interest expense 35,100 Net income before taxes 1,224,900 Income taxes (30%) 367,470 Net income $ 857,430 Account balances at the beginning of the year were: accounts receivable, $210,000; and inventory, $280,000. All sales were on account.
Required: Compute the following financial data and ratios:
1. Working capital.
2. Current Ratio (round to 2 decimal places)
3. Acid-Test Ratio (round to 2 decimal places)
4. Debt-to-equity Ratio (round to 2 decimal places)
5. Times interest earned Ratio (2 decimal places)
6. Average collection period (days)
7. Average sale period (days)
8. Operating cycle (Days; round intermediate calculations and final answer to 1 decimal place)
Answer and Explanation:
The computation is shown below;
1.
Working capital = Current Asset - Current Liabilities
= $569,000 - $280,000
= $289,000
2.
Current ratio = Current Asset ÷ Current Liability
= $569,000 ÷ $280,000
= 2.03
3.
Acid-test (quick) ratio = {(Current Asset - Inventory - prepaid expense) ÷ Current Liabilities }
= {{$569,000- $320,000 - $8,000) ÷ ($280,000)}
= 0.86 times
4.
Debt-Equity ratio = Total Liability ÷ Shareholders' Equity
= $670,000 ÷ $759,000
= 0.88 times
5.
Times interest earned = EBIT ÷ Interest Charges
= ($1,224,000 + $35,100) ÷ ($35,100)
= 35.87 times
6.
Average collection period
= 365 ÷ ($3,010,00 ÷ $215,000)
= 26 days
The $215,000 comes from
= ($210,000 + $220,000) ÷ 2
= $215,000
7. The average sales period is
= 365 ÷ ($1,110,000 ÷ $300,000)
= 99 days
The $300,000 comes from
= ($280,000 + $320,000) ÷ 2
= $300,000
8. The operating cycle is
= 99 days - 26 days
= 73 days
Jacoby Company received an offer from an exporter for 25,400 units of product at $18 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $21 Unit manufacturing costs: Variable 13 Fixed 5 The differential revenue from the acceptance of the offer is
Answer:
Differential income from the special order= $127,000
Explanation:
A company should accept a special order where the order generates additional contribution. i.e where the special order sales exceeds all relevant cost.
The relevant cost for decision to accept the special order are
I Incremental Revenue from the special order
2. incremental variable cost
Contribution per unit = 18-13=5
Total contribution from special order = contribution per unit × units
= 5× 25,400=$127,000
Differential income from the special order= $127,000
Note that whether or not the special order is accepted the fixed manufacturing and fixed operating expenses of would be incurred either way. Therefore , they are not relevant for the decision
When amortizing the discount on bonds payable, the amount of interest expense reported on the income statement will always be less than cash paid for interest. True or false?
During January 2020, the first month of operations, a consulting firm had following transactions: Issued common stock to owners in exchange for $46,000 cash. Purchased $11,500 of equipment, paying $3,450 cash and signing a promissory note for $8,050. Received $20,700 in cash for consulting services performed in January. Purchased $3,450 of supplies on account; all of the supplies were used in January. Provided consulting services on account in the amount of $36,800. Paid $1,725 on account. Paid $6,900 to employees for work performed during January. Received a bill for utilities for January of $7,800; the bill remains unpaid. What is the total expenses that will be reported on the income statement for the month ended January 31
Answer:
The total expenses that will be reported on the income statement for the month ended January 31 are:
= $18,150.
Explanation:
a) Data and Analysis:
Cash $46,000 Common Stock $46,000
Equipment $11,500 Cash $3,450 Note Payable $8,050
Cash $20,700 Service Revenue $20,700
Supplies Expense $3,450 Cash $3,450
Accounts receivable $36,800 Service Revenue $36,800
Accounts Payable $1,725 Cash $1,725
Salaries Expenses $6,900 Cash $6,900
Utilities Expense $7,800 Utilities Payable $7,800
Expenses for January:
Supplies Expense $3,450
Salaries Expenses $6,900
Utilities Expense $7,800
Total Expenses $18,150
explain errors are not detected by a trial balance
Answer:
Errors not detected by a trial balance are:
1. Posting to Wrong Account
2. Error of Amounts in Original Book
3. Compensating Errors
4. Errors of Principle
5. Errors of Omission
Explanation:
The Trial Balance does not provide absolute assurance of ledger account accuracy. It is just an evidence of the postings' arithmetical accuracy. Even though the amount of debits equals the amount of credits, there may be inaccuracies.
A trial balance will not reveal such errors, and they are:
1. Posting to Wrong Account: IF accidentally posted something to the wrong account, but it was on the right side, the Trial Balance agreement will not be affected. For example, if a $200 purchase from John was credited to Joshua instead of John. As a result, Trial Balance will miss such an error.
2. Error of Amounts in Original Book: The Trial Balance will come out appropriately if an invoice for $632 is filed in Sales Book as $623, because the debit and credit have been recorded as $623. The arithmetical precision is there, yet there is a flaw.
3. Compensating Errors: This occurs one mistake is offset by a similar mistake on the other side. These errors are cancelled if one account in the ledger is debited $500 less and another account in the ledger is credited $500 less.
4. Errors of Principle: An errors of Principle is one that breaches the foundations of bookkeeping. Purchases of furniture, for example, are debited to the Purchase Account rather than the Furniture Account; wages paid for the erection of plant are debited to the Wages Account rather than the Plant Account; and the amount spent on a building extension is debited to the Repairs Account rather than the Building Account, and so on. These kind of errors do not alter the total debits and credits, but they do impair the bookkeeping principle.
5. Errors of Omission: There will be no effect on the Trial Balance if a transaction is completely omitted. An error of omission occurs when a transaction is fully unreported in both aspects, or when a transaction is documented in the books of primary entry but never entered in the ledger. For example, if a credit purchase is not recorded in the Purchase Day Book, it will not be posted to both the Purchase Account and the Supplier's Account. This error, on the other hand, will not cause Trial Balance to disagree.
The following information relates to the only product sold by Harper Company. Sales price per unit $ 45 Variable cost per unit 27 Fixed costs per year 247,000 a. Compute the contribution margin ratio and the dollar sales volume required to break even. b. Assuming that the company sells 20,000 units during the current year, compute the margin of safety (in dollars).
Answer and Explanation:
The computation is shown below
a.
For Contribution Margin ratio
We know that
Contribution margin per unit = Sale price per unit - Variable cost per unit
= $45 - $27
= $18
Now
Contribution margin ratio = Contibution Margin per unit ÷ Sale price per unit
= $18 ÷ $45
= 0.4
Now
Break even sales dollar
Break even sales = Fixed Cost ÷ Contribution margin ratio
= $247,000 ÷ 0.4
= $617,500
b.
For Margin of Safety
The Margin of safety = Actual sales - Break Even Sales
where,
Actual sales(in $) = 20000 × 45
= $900,000
So, Margin of safety is
= $900,000 - $617,500
= $282,500
Harvey Hotels has provided a defined benefit pension plan for its employees for several years. At the end of the most recent year, the following information was available with regard to the plan: service cost: $6.2 million, expected return on plan assets: $1.2 million, actual return on plan assets: $1 million, interest cost: $1.4 million, payments to retired employees: $2 million, and amortization of prior service cost (created when the pension plan was amended causing a drop in the projected benefit obligation): $1.1 million. What amount should Harvey Hotels report as pension expense in its income statement for the year? Group of answer choices $7.5 million $8.7 million $7.7 million $1.4 million
Answer:
$7.5 million
Explanation:
Calculation to determine What amount should Harvey Hotels report as pension expense in its income statement for the year
Service cost $6.2 million
Add Interest cost $1.4 million
Less Expected return on plan assets($1.2 million)
Add Amortization of prior service cost $1.1 million
Pension expense $7.5 million
Therefore the amount that Harvey Hotels should report as pension expense in its income statement for the year is $7.5 million
At a price of $35, there would be Select one: a. excess demand, and the price would tend to fall from $35 to a lower price. b. a shortage, and the price would tend to rise from $35 to a higher price. c. excess supply, and the price would tend to fall from $35 to a lower price. d. a surplus, and the price would tend to rise from $35 to a higher price.
Answer: c. excess supply, and the price would tend to fall from $35 to a lower price.
Explanation:
At $35 there is excess supply because this is a price that most consumers are not willing to pay but most suppliers are willing to sell.
Supply at $35 = 600
Quantity demanded at $35 = 200
This would lead to prices falling as suppliers try to sell the excess supply. The prices would ideally keep falling till the equilibrium price is reached which is $25. At this point, the quantity demanded and supplied will be equal to each other.
Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. Beginning Inventory Ending Inventory Raw material* 30,000 40,000 Finished goods 70,000 60,000 * Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 510,000 units during next year, the number of units it would have to manufacture during the year would be:
Answer:
500,000 units
Explanation:
Giving the following information,
Beginning inventory = 70,000 units
Ending inventory = 60,000 units
Sales = 510,000 units
We will make use of the formula below to calculate the production required.
Production = Sales + Desired ending inventory - Beginning inventory
Production = 510,000 + 60,000 - 70,000
Production = 500,000 units
Use in your own words, what is corporate debt ?
Answer:
The corporate debt market is where companies go to borrow cash. And for over a decade, super-low interest rates left over from the 2008 financial crisis have made borrowing easier and easier. Since then, U.S. companies have regularly offered up bonds for sale, taking advantage of the cheap access to cash.
Explanation:
Hope this helps you
A dwelling with a replacement cost of $150,000 was insured under a Homeowners 3 policy for $105,000 at the time the roof was destroyed by a windstorm. The actual cash value of the loss was $10,000, but it will cost $15,000 to replace the roof. Ignoring any deductible, what will the insurer pay to settle this loss
Answer: $13125
Explanation:
The amount that the insurer will pay to settle this loss will be calculated thus:
= Insured claim × Insurance value / 80% of replacement value
= 15000 × 105,000 /80% × 150000.
= 15000 × 105,000 / 120000
= 13125
Therefore, the insurer will pay $13125
New Line Cinema is considering producing a new movie. To evaluate the proposal, the company needs to calculate its cost of capital. The firm has collected the following information:
a. The company wants to maintain is current capital structure, which is 20% equity, 20% preferred stock and 60% debt.
b. The firm has marginal tax rate of 34%.
c. The firm's preferred stock pays an annual dividend of $4.3 forever, and each share is currently worth $135.26.
d. The firm has one bond outstanding with a coupon rate of 6%, paid semiannually, 10 years to maturity, a face value of $1,000, and a current price of $1,163.51.
e. The company's beta is 0.8, the yield on Treasury bonds is is 0.6% and the expected return on the market portfolio is 6%.
f. The current stock price is $39.17. The firm has just paid an annual dividend of $1.13, which is expected to grow by 4% per year.
g. The firm uses a risk premium of 3% for the bond-yield-plus-risk-premium approach.
h. New preferred stock and bonds would be issued by private placement, largely eliminating flotation costs. New equity would come from retained earnings, thus eliminating flotation costs.
Required:
a. What is the cost of equity using the bond yield plus risk premium?
b. What is the midpoint of the range for the cost of equity?
c. What is the company's weighted average cost of capital?
Answer:
a.
7.00%
b.
5.96%
c.
1.20%
Explanation:
a.
First and foremost, we need to determine the yield to maturity on the bond, using a financial calculator as shown thus:
The financial calculator should be set to its default end mode before making the following inputs:
N=20(number of semiannual coupons in 10 years=10*2=20)
PMT=30(semiannual coupon=face value*coupon rate*/2=$1000*6%/2=$30)
PV=-1163.51(current price=$1,163.51)
FV=1000(face value of the bond=$1000)
CPT
I/Y=2.00%(semiannual yield=2%, annnual yield=2.00%*2=4.00%)
bond yield plus risk premium=bond yield(4.00%)+ risk premium(3%)
bond yield plus risk premium=7.00%
b.
In determining the midpoint range is the maximum plus minimum cost of equity divided by 2
Let us determine cost of equity using the Capital Asset Pricing Model and Constant Dividend Growth Model
cost of equity=risk-free rate+beta*(expected return on the market portfolio-risk-free rate)
risk-free rate=yield on Treasury bonds= 0.6%
beta=0.8
expected return on the market portfolio= 6%
cost of equity=0.6%+0.8*(6%-0.6%)
cost of equity=4.92%
cost of equity=expected dividend/share price+growth rate
expected dividend=last dividend*(1+growth rate)
expected dividend=$1.13*(1+4%)=$1.1752
share price= $39.17
growth rate=4%
cost of equity=($1.1752/$39.17)+4%
cost of equity=7.00%
midpoint range=(maximum cost of equity+minimum cost of equity)/2
midpoint rate=(7.00%+4.92%)/2
midpoint range=5.96%
c.
WACC=(weight of equity*cost of equity)+(weight of preferred stock*cost of preferred stock)+(weight of debt*after-tax cost of debt)
weight of equity= 20%
cost of equity=5.96%
weight of preferred stock=20%
cost of preferred stock=annual dividend/price
cost of preferred stock=$4.3/$135.26=3.18%
weight of debt=60%
aftertax cost of debt=4.00%*(1-34%)=2.64%
WACC=(20%*5.96%)+(20%*3.18%)*(60%*2.64%)
WACC=1.20%
On December 1, delivery equipment was purchased for $6,144. The delivery equipment has an estimated useful life of four years (48 months) and no salvage value. Using the straight-line depreciation method, analyze the necessary adjusting entry as of December 31 (one month) using T accounts, and then formally enter this adjustment in the general journal.
Answer and Explanation:
The presentation is shown below;
Depreciation expense
Adjustment $128 ($6,144 ÷ 48 months)
Accumulated depreciation
Adjustment $128
The journal entry is
Depreciation expense $128
To Accumulated depreciation $128
(Being depreciation expense is recorded)
Here the depreciation expense is debited as it increased the expense and credited the accumulated depreciation as it decreased the asset
From a firm's viewpoint, opportunity cost is the best alternative use customers can find for the firm's output. price a firm can charge for its output. cost the firm must pay for the factors of production it employs to attract them from their best alternative use. accounting cost of resources. cost of acquiring the opportunity to sell to its customers.
Answer:
cost the firm must pay for the factors of production it employs to attract them from their best alternative use.
Explanation:
Opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.
Simply stated, it is the cost of not enjoying the benefits, profits or value associated with the alternative forgone or best alternative choice available.
Factors of production can be defined as the fundamental building blocks used by individuals or business firms for the manufacturing of finished goods and services in order to meet the unending needs and requirements of their customers.
The four factors of production are;
I. Land: this refers to the natural resources and raw materials extracted from the ground or grown in the soil e.g oil, gold, rubber, cocoa, etc.
II. Labor (working): this is the human capital or workers who are saddled with the responsibility of overseeing and managing all the aspects of production.
III. Capital resources: it includes the physical assets used for production of goods and services such as equipment, money, plant, etc.
IV. Entrepreneurship: it is intellectual capacity required to drive a business and the skills to develop an idea into a money making venture (business).
These four (4) factors of production when combined effectively and efficiently are used for the manufacturing or production of goods and services that meets the unending requirements or needs of the consumers.
From a firm's viewpoint, opportunity cost is cost the firm must pay for the factors of production it employs to attract them from their best alternative use.
Concord Company sells merchandise on account for $5700 to Ivanhoe Company with credit terms of 2/10, n/30. Ivanhoe Company returns $1000 of merchandise that was damaged, along with a
check to settle the account within the discount period. What is the amount of the check?
$4700
$4606
$5586
$5606
Answer:
The right solution is Option b ($4606 ).
Explanation:
The given values are:
Company sells merchandise,
= $5700
Company returns,
= $1000
Now,
The amount of the check will be:
= [tex](5700-1000)\times 98 \ percent[/tex]
= [tex](5700-1000)\times 0.98[/tex]
= [tex]4700\times 0.98[/tex]
= [tex]4606[/tex] ($)
Old Quartz Gold Mining Company is expected to pay a dividend of $8 in the coming year. Dividends are expected to decline at the rate of 2% per year. The risk-free rate of return is 6%, and the expected return on the market portfolio is 14%. The stock of Old Quartz Gold Mining Company has a beta of -0.25. The intrinsic value of the stock is
Answer:
$133.33
Explanation:
Cost of equity (Ke) = Rf + beta*(Rm-Rf)
Cost of equity (Ke) = 6% - 0.25*(14%-6%)
Cost of equity (Ke) = 4%
Cost of equity (Ke) = 0.04
According to the dividend distribution model Ke = D1/ P0 + g. P0 = D1/(ke-g, where D1 = 8, g = -0.02 and Ke = 0.04
P0 (Intrinsic price) = 8/(0.04+0.02)
P0 (Intrinsic price) = 8/0.06
P0 (Intrinsic price) = $133.33
Therefore, he intrinsic value of the stock is $133.33.
During the first quarter, Francum Company incurs the following direct labor costs: January $55,200, February $51,000, and March $64,600. For each month, prepare the entry to assign overhead to production using a predetermined rate of 71% of direct labor cost.
Answer:
See below
Explanation:
Date General journal Debit Credit
Jan. Work in process $39,192
Manufacturing overhead $39,192
($55,200 × 71%)
Feb. Work in process $36,210
($51,000 × 71%)
Manufacturing overhead $36,210
March. Work in process $45,866
($64,600 × 71%)
Manufacturing overhead $45,866
Cooper Company currently uses the FIFO method to account for its inventory but is considering a switch to LIFO before the books are closed for the year. Selected data for the year are:
Merchandise inventory, January 1 $1,430,000
Current assets 3,603,600
Total assets (operating) 5,720,000
Cost of goods sold (FIFO) 2,230,800
Merchandise inventory, December 31 (LIFO) 1,544,400
Merchandise inventory, December 31 (FIFO) 1,887,600
Current liabilities 1,144,000
Net sales 3,832,400
Operating expenses 915,200
1. Compute the current ratio, inventory turnover ratio, and rate of return on operating assets assuming the company continues using FIFO.
2. Repeat part (a) assuming the company adjusts its accounts to the LIFO inventory method.
Answer:
Cooper Company
1. FIFO:
Current ratio
= 3.15
Inventory turnover ratio
= 1.34
Rate of return on operating assets
= 12%
2. LIFO:
Current ratio
= 2.85
Inventory turnover ratio
= 1.73
Rate of return on operating assets
= 12.8%
Explanation:
a) Data and Calculations:
Merchandise inventory, January 1 $1,430,000
Current assets 3,603,600
Total assets (operating) 5,720,000
Cost of goods sold (FIFO) 2,230,800
Merchandise inventory, December 31 (LIFO) 1,544,400
Merchandise inventory, December 31 (FIFO) 1,887,600
Current liabilities 1,144,000
Net sales 3,832,400
Operating expenses 915,200
FIFO
Merchandise inventory, December 31 (FIFO) $1,887,600
Cost of goods sold (FIFO) 2,230,800
Goods available for sale $4,118,400
Merchandise inventory, January 1 1,430,000
Purchases $2,688,400
LIFO:
Goods available for sale $4,118,400
Merchandise inventory, December 31 (LIFO) 1,544,400
Cost of goods sold (LIFO) $2,574,000
Income Statements FIFO LIFO
Net sales $3,832,400 $3,832,400
Cost of goods sold (FIFO) 2,230,800 2,574,000
Gross profit $1,601,600 $1,258,400
Operating expenses 915,200 915,200
Net income $686,400 $343,200
Merchandise inventory, December 31 (LIFO) 1,544,400
Merchandise inventory, December 31 (FIFO) 1,887,600
Difference between FIFO and LIFO = 343,200
FIFO Difference LIFO
Current assets 3,603,600 343,200 3,260,400
Total assets (operating) 5,720,000 343,200 5,376,800
Cost of goods sold (FIFO) 2,230,800 2,574,000
Merchandise inventory, January 1 1,430,000 1,430,000
Merchandise inventory, December 31 1,887,600 1,544,400
Current liabilities 1,144,000 1,144,000
Average inventory 1,658,800 1,487,200
FIFO:
Current ratio = current assets/current liabilities
= $3,603,600/$1,144,000 = 3.15
Inventory turnover ratio = Cost of goods sold/Average Inventory
= $2,230,800/$1,658,800
= 1.34
Rate of return on operating assets = Net income/Total assets * 100
= $686,400/$5,720,000 * 100
= 12%
LIFO:
Current ratio = $3,260,400/$1,144,000
= 2.85
Inventory turnover ratio = $2,574,000/$1,487,200
= 1.73
Rate of return on operating assets = $686,400/$5,376,800 * 100
= 12.8%
1 points eBookPrintReferencesCheck my workCheck My Work button is now enabledItem 6 Beverly Company has determined a standard variable overhead rate of $3.80 per direct labor hour and expects to incur 0.50 labor hour per unit produced. Last month, Beverly incurred 1,600 actual direct labor hours in the production of 3,300 units. The company has also determined that its actual variable overhead rate is $2.40 per direct labor hour. Calculate the variable overhead rate and efficiency variances as well as the total amount of over- or underapplied variable overhead.
Answer:
$8,700
Explanation:
Variable Overhead Rate Variance = Actual Hours *(Actual Rate - Standard Rate) =
Variable Overhead Rate Variance = 1,600 * ($2.40 - $3.80)
Variable Overhead Rate Variance = 1,600 * $1.40 F
Variable Overhead Rate Variance = $2240 F
Variable Overhead Efficiency Variance = Standard Rate*(Actual Hours - Standard Hours) =
Variable Overhead Efficiency Variance = $3.80*(1,600 - 0.50*3,300)
Variable Overhead Efficiency Variance = $3.80* 50 F
Variable Overhead Efficiency Variance = $190 F
Over- or Underapplied Variable Overhead = Actual Overhead Incurred - Overhead Applied
Over- or Underapplied Variable Overhead = 1600*$2.40 - 3,300*$3.80
Over- or Underapplied Variable Overhead = $3840 - $12540
Overapplied Variable Overhead = $8,700
Everything else held constant, in the market for reserves, when the federal funds rate is 2%, lowering the interest rate paid on excess reserves rate from 1% to 0.5% has no effect on the federal funds rate. has an indeterminate effect on the federal funds rate. lowers the federal funds rate. raises the federal funds rate.
Answer: lowers the federal funds rate.
Explanation:
The federal funds rate is the rate at which banks lend money to their selves overnight to ensure that they meet lending and reserve requirements.
The interest rate paid on excess reserves rate is the amount of interest that the Fed pays banks to keep excess reserves. If this rate was to decrease, banks would have less incentive to keep excess reserves at the Fed and so would have more money to meet lending and reserve requirements such that they won't need to borrow from other banks as much which would then lead to the federal funds rate decreasing due to less demand.
The phase of the business cycle that includes a period of consistent growth
in GDP and falling unemployment is called a(n).
A. trough
B. contraction
C. expansion
D. peak
The phase of the business cycle that includes a period of consistent growth in GDP and falling unemployment is called expansion.
What do you mean by business cycle?A business cycle is characterized by four main stages that are expansion, peak, contraction, and trough.
The business cycle stage of expansion is when an economy experiences relatively rapid growth, interest rates tend to be low, production increases and inflationary pressures build.
Therefore, C is the correct option.
Learn more about the business cycle here:
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When Argentina fixed the exchange rate of their peso to the U.S. dollar, one outcome was: Group of answer choices Argentinean central bankers effectively gave control of their domestic interest rate to the FOMC. Argentinean central bankers regained control of their domestic interest rate. Argentinean central bankers were finally able to focus their attention on domestic monetary policy. Argentineans began using the U.S. dollar for all of their transactions.
Answer: Argentinean central bankers effectively gave control of their domestic interest rate to the FOMC.
Explanation:
The Federal Open Market Committee(FOMC) is a committee of the Federal Reserve which influences the interest rate in the country by engaging in Open Market Operations (OMO). In doing so, they also influence the value of the dollar which is the currency of the U.S.
By pegging the Argentine Peso to the U.S. dollar, the Argentines effectively gave control of their domestic interest rate to the FOMC because the FOMC in deciding the interest rate for the U.S. and therefore the dollar, will be deciding for any other currency that moves exactly as the dollar does which is what the Peso is now going to do.
The outcome was that Argentinean central bankers effectively gave control of their domestic interest rate to the FOMC.
The Federal Open Market Committee is a committee of the Federal Reserve which influences the interest rate in the country by engaging in Open Market Operations (OMO).
Now, by pegging the Argentine Peso to the U.S. dollar, the Argentines will effectively gave control of their interest rate to the Federal Open Market Committee for interest rate decision, therefore, will be deciding for any other currency that moves exactly as the dollar does.Hence, the Option A is correct because the outcome was that Argentinean central bankers effectively gave control of their domestic interest rate to the FOMC.
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Holbrook, a calendar year S corporation, distributes $89,500 cash to its only shareholder, Cody, on December 31. Cody's basis in his stock is $107,400, Holbrook's AAA balance is $40,275, and Holbrook has $13,425 AEP before the distribution. According to the distribution ordering rules, complete the chart below to indicate how much of the $89,500 is from AAA and AEP as well as how Cody's stock basis is affected. If an amount is zero, enter "0".
Distribution from Account Affect on Stock Basis Balance after Distribution
From AAA Account $8000 $8000 $0
From AEP Account $2500 $0 $0
From Cody's stock basis $ $ $
Answer:
Explanation:
........................
Crane, Inc., is preparing its direct labor budget for 2020 from the following production budget based on a calendar year.
Quarter Units Quarter Units
1 20,330 3 35,270
2 25,370 4 30,390
Each unit requires 1.70 hours of direct labor. Prepare a direct labor budget for 2020. Wage rates are expected to be $17 for the first 2 quarters and $19 for quarters 3 and 4.
Answer:
Total labor hour = Units*Operating hours
Labor cost= Total labor hours * Hourly wage rate
QUARTER
1 2 3 4
Units 20,330 35,270 25,370 30,390
DLH time per unit 1.70 1.70 1.70 1.70
Total labour hours need 34561 43129 59959 51663
Hourly wage rate 17 17 19 19
Budgeted direct labor hour 587535 733193 1138221 981597
Malibu Corporation has monthly fixed costs of $59,000. It sells two products for which it has provided the following information. Sales Price Contribution Margin Product 1 $ 15 $ 9 Product 2 20 4 a. What total monthly sales revenue is required to break even if the relative sales mix is 30 percent for Product 1 and 70 percent for Product 2
Answer:
$184,375
Explanation:
The computation of the monthly sales revenue that needed to be break even is given below:
Here we assume the sales be x
0.18x + 0.14x = $59,000
0.32x = $59,000
x = $59,000 ÷ 0.32
= $184,375
The 0.18x come from
= ($9) ÷ ($15) × 0.30x
= 0.18x
And, the 0.14x come from
= ($2) ÷ ($20) × 0.70x
= 0.14x
The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017.
Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $510,000 at face value.
Sep. 1 Acquired $1,230,000 of American Instruments' 10% bonds at face value.
Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds.
Oct. 2 Sold the Distribution Transformers bonds for $590,000.
Nov. 1 Purchased $1,950,000 of M&D Corporation 6% bonds at face value.
Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are:
American Instruments bonds$1,181,000
M&D Corporation bonds$2,021,000
(Hint: Interest must be accrued.)
Required:
Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end.
Answer:
1. Mar.31
Dr Investment in Distribution Transformers bonds $510,000
Cr Cash $510,000
2. September 01,
Dr Investment in American Instruments bonds
$1,230,000
Cr Cash $1,230,000
3 September 30
Dr Cash $20,400
Cr Interest revenue $20,400
4 October 02
Dr Fair value adjustment $80,000
Cr Unrealized holding gain—NI $80,000
5.October 02
Dr Cash $590,000
Cr Investment in Distribution Transformers bonds $510,000
Cr Fair value adjustment $8,000
6. November 01
Dr Investment in M&D Corporation bonds $1,950,000
Cr Cash $1,950,000
7 December 31
Dr Interest receivable $41,000
Cr Interest revenue $41,000
8 December 31
Dr Interest receivable $19,500
Cr Interest revenue $19,500
9. December 31
Dr Fair value adjustment $22,000
Cr Unrealized holding gain—NI $22,000
Explanation:
Preparation of the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end
1. Mar.31
Dr Investment in Distribution Transformers bonds $510,000
Cr Cash $510,000
2. September 01,
Dr Investment in American Instruments bonds
$1,230,000
Cr Cash $1,230,000
3 September 30
Dr Cash $20,400
Cr Interest revenue $20,400
(8%/2*$510,000)
4 October 02
Dr Fair value adjustment $80,000
Cr Unrealized holding gain—NI $80,000
($590,000-$510,000)
5.October 02
Dr Cash $590,000
Cr Investment in Distribution Transformers bonds $510,000
Cr Fair value adjustment $8,000
6. November 01
Dr Investment in M&D Corporation bonds $1,950,000
Cr Cash $1,950,000
7 December 31
Dr Interest receivable $41,000
Cr Interest revenue $41,000
($1,230,000 x 10% x 4/12)
8 December 31
Dr Interest receivable $19,500
Cr Interest revenue $19,500
($1,950,000* 6% x 2/12)
9. December 31
Dr Fair value adjustment $22,000
Cr Unrealized holding gain—NI $22,000
Available for sale securities Cost Fair market Value Profit/Loss
M & D Corporation shares
$1,950,000 $2,021,000 $ -71,000
American Instruments bonds $1,230,000 $1,181,000 $49,000
Totals $3,180,000 $3,202,000 $22,000
Never-Die Battery manufactures batteries for industrial and consumer use. The company purchased a commercial package policy (CPP) to cover its property exposures. In addition to common policy conditions and declarations, the policy contains a building and personal property coverage form and an equipment breakdown protection coverage form. The policy also contains the causes-of-loss broad form. With respect to each of the following losses, indicate whether or not the loss is covered.
a. An explosion occurred that damaged the building where finished batteries are stored.
b. Because of the explosion, the company incurred expenses for expedited shipping of replacement parts for machines used to manufacture the batteries.
c. The explosion injured several employees who received emergency treatment at a local hospital.
d. An automatic sprinkler system accidentally discharged in the finished goods building. Some recently manufactured batteries were ruined because of water damage and corrosion.
Answer:
a. An explosion occurred that damaged the building where finished batteries are stored. COVERED.
The policy covers their property exposures which includes a building and property coverage which means that damage to the building will be covered.
b. Because of the explosion, the company incurred expenses for expedited shipping of replacement parts for machines used to manufacture the batteries. COVERED.
There is a coverage for equipment breakdown as well and because some machines were damaged in the explosion, they will need to be replaced and as they qualify as broken down, they will be covered.
c. The explosion injured several employees who received emergency treatment at a local hospital. COVERED.
With business and property insurance, employees are covered in the policy when they incur injuries related to business operations so these employees are covered.
d. An automatic sprinkler system accidentally discharged in the finished goods building. Some recently manufactured batteries were ruined because of water damage and corrosion. COVERED.
The sprinkler is considered equipment so in breaking down its effects are covered by the equipment breakdown so this is covered as well.
A company buys a machine for $69,000 that has an expected life of 7 years and no salvage value. The company uses straight-line depreciation. The company anticipates a yearly net income of $3,300 after taxes of 38%, with the cash flows to be received evenly throughout each year. What is the accounting rate of return
Answer:
9.57%
Explanation:
Accounting rate of return = Annual after tax net income/Average investment
Accounting rate of return = $3,300 / ($69,000/2)
Accounting rate of return = $3,300 / $34,500
Accounting rate of return = 0.095652174
Accounting rate of return = 9.57%