Answer:
a-i. Ending inventory = $5,800
a-ii. Ending inventory = $5,000
a-iii. Ending inventory = $5,400
b-i. Gross profit = $3,800
b-ii. Gross profit = $3,000
b-iii. Gross profit = $3,400
Explanation:
Note: This question is not complete as the sentence for the Total sales is not complete. The complete sentence of the Total sales is therefore provided before answering the question as follows:
Total sales for the year were 500 widgets sold at a retail price of $20.00 per widget.
The explanation of the answers is now provided as follows:
a) Calculate the ending inventory value under each of the following inventory methods
Ending units of inventory = 450
Therefore, we have:
a-i. Calculate the ending inventory value under first in first out (FIFO) inventory method
Ending inventory = Cost of 400 units purchased on 11/27 + Cost 50 units from 300 units purchased on 8/24 = (400 * $13) + (50 *$12) = $5,800
a-ii. Calculate the ending inventory value under Last in first out (LIFO) inventory method
Ending inventory = Cost of 100 units Beginning Inventory on 1/1 + Cost of 200 units purchased on 4/15+ Cost 150 units from 300 units purchased on 8/24 = (100 * $10) + (200 * $11) + (150 * $12) = $5,000
a-iii. Calculate the ending inventory value under Weighted Average inventory method
Cost of goods available for sale = (100 * $10) + (200 * $11) + (300 * $12) + (400 * $13) = $12,000
Units available for sale = 100 + 200 + 300 + 400 = 1,000
Weighted Average cost per unit = Cost of goods available for sale / Total units available for sale = $12,000 / 1,000 = $12
Ending inventory = Ending units of inventory * Weighted Average cost per unit = 450 * $12 = $5,400
b) Calculate the gross profit for each of the inventory methods.
Units of inventory sold = 500
Retail price per widget or unit = $20.00
Sales revenue = Units of inventory sold * Retail price per widget or unit = 500 * $20.00 = $10,000
Cost of goods available for sale = (100 * $10) + (200 * $11) + (300 * $12) + (400 * $13) = $12,000
Therefore, we have:
b-i. Calculate the gross profit under first in first out (FIFO) inventory method
Ending inventory = $5,800
Cost of goods sold = Cost of goods available for sale - Ending inventory = $12,000 - $5,800 = $6,200
Gross profit = Sales revenue – Cost of goods sold = $10,000 - $6,200 = $3,800
b-ii. Calculate the gross profit under last in first out (LIFO) inventory method
Ending inventory = $5,000
Cost of goods sold = Cost of goods available for sale - Ending inventory = $12,000 - $5,000 = $7,000
Gross profit = Sales revenue – Cost of goods sold = $10,000 - $7,000 = $3,000
b-iii. Calculate the gross profit under Weighted Average inventory method
Ending inventory = $5,400
Cost of goods sold = Cost of goods available for sale - Ending inventory = $12,000 - $5,400 = $6,600
Gross profit = Sales revenue – Cost of goods sold = $10,000 - $6,600 = $3,400
Jane currently has $5,300 in her savings account and $2,000 in her checking account at the local bank. Instructions:
A. If Jane withdraws $500 in cash from her savings account, by what dollar amount will the country's money supply (M1 and M2) change as a result of Jane's actions?
B. Suppose that after Jane withdraws $500 from her checking account, she uses $180 of this money to pay her federal income tax. After paying her taxes, Jane uses $160 to buy a set of used golf clubs from her neighbor, who then deposits the money into his checking account. Jane deposits the remaining cash from the $500 withdrawal into her savings account. By what dollar amount will the country's money supply change as a result of Jane's actions?
Answer:
A
M1 change = $500M2 change = $0B
M1 change = -$340M2 change = -$180Explanation:
A. M1 includes actual liquid cash in hand as well as cash in checking deposits.
M2 includes M1 as well as savings deposits and time deposits amongst others.
M1 change = +$500
$500 went from the Savings account which was not part of M1 to M1.
M2 change = $0
The money went from Savings to Checking which are both part of M2.
B.
M1 change = -$-180 - ( 500 - 180 -160 ) = -$340
Tax of $180 went out of the supply as tax. Jane deposits the remaining cash after paying $160 for goods into the savings account which is not part of M1. That remaining cash is = 500 - 180 - 160 = $160.
M2 change = -500 + 160 + 160 = -$180
For M2, only taxes will reduce money from it because the rest goes to checking deposits and savings accounts both of which are part of M2
The air pollution could be reduced if the company spent $10,000 on upgraded ventilators. The company agrees to install the ventilators if the affected families contribute the $10,000. However, because individuals will benefit from the reduction in air pollution whether they contribute or not, most people will not contribute and the firm will not install the ventilators. This outcome is an example of the
Answer:
free rider problem
Explanation:
The air pollution constitutes a negative externality
A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation. Taxation increases the cost of production and therefore discourages overproduction. Tax levied on externality is known as Pigouvian tax.
Government can regulate the amount of externality produced by placing an upper limit on the amount of negative externality permissible
Free rider is when some people benefit from the solution proffered but do not pay to enjoy these benefits
Langley Clinics, Inc., buys $400,000 in medical supplies each year (at gross prices) from its major supplier, Consolidated Supplies, which offers Langley terms of 2.5/10, net 45. Currently, Langley is paying the supplier the full amount due on day 45, but it is considering taking the discount, paying on day 10, and replacing the costly trade credit with a bank loan that has a 10 percent annual cost.
Required:
a. What is the amount of free trade credit that langley obtains from Consolidated Services?(assume 360 days per year throughout this problem)
b. What is the amount of costly trade credit?
c. What is the approximate annual cost of the costly trade credit?
d. Should Langley replace its trade credit with the bank loan? explain your answer.
e. If the bank loan is used, how much of the trade credit should be replaced?
Answer:
Explanation:
a. What is the amount of free trade credit that langley obtains from Consolidated Services?
Since there's a 2.5% discount, amount paid will be:
= $400000 - (2.5% × $400000)
= $400000 - $10000
= $390000
The amount of free trade credit that langley obtains from Consolidated Services since payment was made within 10 days will be:
= ($390000/360) × 10
= $1083 × 10
= $10833
b. What is the amount of costly trade credit?
Assuming Langley pays by day 45, the increase in its accounts payable will be:
= 45 x $1,083
= $48,735
Therefore, the amount of costly trade credit will be:
= Total trade credit – Free trade credit = $48,735 – $10,833
= $37,902
c. What is the approximate annual cost of the costly trade credit?
The percentage cost will be:
= 10000 / 37902
= 26.38%
d. Should Langley replace its trade credit with the bank loan?
Langley should replace the trade credit with a bank loan if it can get a bank loan that's can less than 26.38%, then the trade credit of $37902 should be replaced.
e. If the bank loan is used, how much of the trade credit should be replaced?
Only the trade credit of $37902 should be replaced.
Which of the following is true of the informal structure in an organization?
O A. It is formed through shared interests.
OB. It is easy to monitor and control.
O c. It is good at handling many routine tasks.
O D. It is slow to adapt to changing conditions.
Answer: i think A
Explanation:
A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 23%, while stock B has a standard deviation of return of 29%. Stock A comprises 70% of the portfolio, while stock B comprises 30% of the portfolio. If the variance of return on the portfolio is 0.042, the correlation coefficient between the returns on A and B is _________. Multiple Choice 0.088 0.304 0.213 0.091
Answer:
0.304
Explanation:
The calculation has been done step by step in order to understand the final result. Note that (p) in the below working refers to the correlation coefficient between Stock A and B.
0.042 = (0.70^2)(0.23^2) + (0.30^2)(0.29^2) + 2(0.70)(0.30)(0.23)(0.29)p
0.042 = 0.0259 + 0.0076 + 0.028p
0.042 = 0.0335 + 0.028p
0.042 - 0.0335 = 0.028p
0.0085 = 0.028p
p = 0.0085 / 0.028
p = 0.304
Corey is the city sales manager for RIBS, a national fast food franchise. Every working day, Corey drives his car as follows: Home to office Office to RIBS No. 1 RIBS No. 1 to No. 2 RIBS No. 2 to No. 3 RIBS No. 3 to home Miles 20 15 18 13 30 Corey renders an adequate accounting to his employer. As a result, Corey's reimbursable mileage is: a. O miles. b. 50 miles. C. 66 miles. d. 76 miles. e. None of these.
Answer: e. None of these
Explanation:
Based on the information given, Corey's reimbursable mileage will be:
= 15 miles + 18 miles + 13 miles
= 46 miles.
We should note that the mileage that she used for driving from her home to office and the one that she also used from driving from the last worksite to her home isn't deductible.
Since the answer of 46 miles isn't among the options given, then the answer is "None of these"
1. True or false. The first word of your answer has to be either true or false. If the first word of your answer is not true or false, you receive 0 points. If the statement is true you are finished answering. If your answer is false, briefly explain why it is false. a. "If leisure is a normal good, a rise in the wage rate must lead to an increase in the number of hours that an individual wishes to work." b. "A good is inferior only if quantity demanded falls as price falls." c. " If the income effect is greater than the substitution effect and leisure is an inferior good, the labor supply curve will be negatively sloped."
Answer:
a. FALSE, since leisure is a normal good, an increase in the wage rate will result in both substitution and income effect which will decrease the number of hours worked and increase the leisure hours.
b. TRUE
c. FALSE, if leisure is an inferior good, as rise in wages will result in more working hours and les leisure hours, meaning that the labor supply has a positive slope.
The real interest rate earned is the Group of answer choices same as the nominal interest rate when inflation is moderate cost of borrowing in current consumer prices cost of borrowing in current producer prices cost of borrowing adjust for the rate of change in the price level nominal interest rate adjusted for the growth rate of the economy
Answer:
cost of borrowing adjust for the rate of change in the price level
Explanation:
The real interest rate earned is the rate where the borrowing cost would be adjusted for the change in the rate in the level of the price as the real interest rate represent the interest rate that should be adjusted to the inflation
Hence, according to the given options, second option is correct
hence, the same would be relevant
Private producers have no incentive to provide public goods because A. the government subsidy granted is usually insufficient to enable private producers to make a profit. B. production of huge quantities of public goods entails huge fixed costs.
Answer:
Private producers have no incentive to provide public goods because
B. production of huge quantities of public goods entails huge fixed costs.
Explanation:
There is rivalry in the production and consumption of private goods. This rivalry is generally described as competition. Most public goods are produced naturally or provided by the government to her citizens. Since they are made available for the welfare of the people, there is usually no cost recovery or exclusion of persons based on financial affordability. But private goods are manufactured and sold by private companies or individuals for a profit motive.
You plan to visit Geneva, Switzerland in three months to attend an international business conference. You expect to incur the total cost of SF 5,000 for lodging, meals and transportation during your stay. As of today, the spot exchange rate is $0.60/SF and the three-month forward rate is $0.63/SF. You can buy the three-month call option on SF with the exercise rate of $0.64/SF for the premium of $0.05 per SF. Assume that your expected future spot exchange rate is the same as the forward rate. The three-month interest rate is 6 percent per annum in the United States and 4 percent per annum in Switzerland.
Required:
a. Calculate your expected dollar cost of buying $F5,000 if you choose to hedge by a call option on SF.
b. Calculate the future dollar cost of meeting this SF obligation if you decide to hedge using a forward contract.
c. At what future spot exchange rate will you be indifferent between the forward and option market hedges?
d. Illustrate the future dollar cost of meeting the SF payable against the future spot exchange rate under both the options and forward market hedges.
Answer:
A. 3403.75 dollars
B. 3150
C. 0.579
D. Is an attachment
Explanation:
A. We first find the premium cost
= 0.05x5000 x 1+0.06/4
= 250x1.015
= 253.75
From here we find expected dollar cost
= Exchange rate x units + premium
= 0.63x5000+253.75
= 3,403.75 dollars
B. Forward rate = 0.63
Total cost of dollar
= 0.63x5000
= 3150
C. The investor would be indifferent at 0.579
Forward rate = unit * future + premium
3150 = 5000 * future + 253.75
3150-253.75 = 5000*future
We solve and divide through by 5000
Future = 0.579
D is in the attachment
The expected dollar cost of buying $F5,000 through the call option is $3403.75.
The first thing to do is to calculate the premium cost. This will be:
= (5% × 5000) × (1 + 6%/4)
= (0.05 × 5000) × (1 + 0.06/4)
= 250 × 1.015
= 253.75
The expected dollar cost will be:
= Exchange rate × Number of units + Call premium cost
= 0.63 × 5000 + 253.75
= 3403.75
The future dollar cost of meeting this SF obligation will be calculated thus:
= Forward rate × Number of units
= 0.63 × 5000
= $3150
The future spot exchange rate that the person will be indifferent will be:
= (3150 - 253.75) / 5000
= $0.579
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Todd has a $100,000 25-year mortgage with a 12% nominal interest rate convertible monthly. The first payment is due one month after the mortgage is taken out. Twelve years after taking out the mortgage (after making his 144th payment), he refinances with a new nominal interest rate of 8%, again convertible monthly. The new mortgage will be paid off on the same date as the original one. Calculate the difference in the monthly mortgage payment after refinancing.
Answer:
The right solution is "$178.86".
Explanation:
The given values are:
Interest rate,
= 10%
New nominal interest rate,
= 8%
Years,
= 24
As per the question,
On the original loan, the annul installments will be:
= [tex]100000\times 0.01\times 1.01^{\frac{300}{1.01^{300-1}}}[/tex]
= [tex]1053.22[/tex] ($)
As we know,
The remaining 156 instalments are charged throughout the PV after the 144th deposit,
= [tex]1053.22\times \frac{(1.01^{156-1})}{(0.01\times 1.01^{156}})[/tex]
= [tex]83,017.90[/tex] ($)
On the refinanced loan, the annul installments will be:
= [tex]83017.90\times 0.01\times \frac{1.01^{300}}{(1.01^{300-1})}[/tex]
= [tex]874.36[/tex] ($)
hence,
After refinancing, the difference in mortgage will be:
= [tex]Annual \ installment \ on \ original \ loan-Annual \ installment \ on \ refinanced \ loan[/tex]
= [tex]1053.22-874.36[/tex]
= [tex]178.86[/tex] ($)
Cabinaire Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department:
Direct labor per filing cabinet 20 minutes
Supervisor salaries $117,000 per month
Depreciation $21,000 per month
Direct labor rate $15 per hour
Required:
Prepare a flexible budget for 12,000, 15,000, and 18,000 filing cabinets for the month of March
Answer:
Results are below.
Explanation:
Giving the following information:
Supervisor salaries $117,000 per month
Depreciation $21,000 per month
Direct labor rate $15 per hour
Cabinets per hour= 60/20= 3
We need to determine the flexible budget for different production levels:
12,000 units:
Total direct labor hours= (12,000 / 3)= 4,000 hours
Total variable cost= 4,000*15= 60,000
Total fixed costs= 21,000 + 117,000= 138,00
Total cost= $198,000
15,000 units:
Total direct labor hours= (15,000 / 3)= 5,000 hours
Total variable cost= 5,000*15= 75,000
Total fixed costs= 21,000 + 117,000= 138,00
Total cost= $213,000
18,000 units:
Total direct labor hours= (18,000 / 3)= 6,000 hours
Total variable cost= 6,000*15= 90,000
Total fixed costs= 21,000 + 117,000= 138,00
Total cost= $228,000
Assume today is December 31, 2019. Imagine Works Inc. just paid a dividend of $1.25 per share at the end of 2019. The dividend is expected to grow at 15% per year for 3 years, after which time it is expected to grow at a constant rate of 6% annually. The company's cost of equity (rs) is 9.5%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2019)
Answer:
Value of stock = $47.99
Explanation:
The price of a stock using the dividend valuation model is the present value of the the future dividend expected from the stock discounted at the required rate of return.
Year Present Value
1 1.25× 1.15^1 × 1.095^(-1) =1.31
2 1.25× 1.15^2 × 1.095^(-2) = 1.38
3. 1.25× 1.15^3 × 1.095^(-3)= 1.45
Present value of Dividend in Year 4 and beyond
This will be done in two steps
Step 1
PV in year 3 terms
= Dividend in year 4× (1.06)/(0.095-0.06)
1.25× 1.15^3 × 1.06/(0.095-0.06)=57.57
PV in year 0 terms =
PV in year 3 × 1.095^(-3)
=57.5759 × 1.095^(-3)= 43.852
Value of stock = 1.3 + 1.38 + 1.45 + 43.852= $47.99
Value of stock = $47.99
Portia owns and manages a sporting apparel company. Consider the given average cost (AC), average variable cost (AVC), and marginal cost (MC) curves for track suits. All but the MC curve have been placed incorrectly. Portia knows that the minimum average cost for a track suit is $7 and the minimum of average variable cost is $5.
Required:
Draw the AC and AVC curves so that they are consistent with the marginal cost curve.
Answer:
AVC curve will be below the AC curve
Explanation:
As we know,
[tex]AC = AFC + AVC[/tex]
This means that Average cost is the sum of average fixed cost and Average variable cost. Thus it can be shown that AC curve will be above the AVC curve.
Also we know that MC curve is upward sloping.
Thus, the MC curve will cut the AVC curve first and it will be to the right of the point where the MC curve cuts the AC curve.
So the curve must look like,
Why is it difficult to maintain relations with multiple stakeholders?
A. Because different stakeholders may have conflicting goals.
B. Because not all stakeholder needs are well known.
C. Because stakeholders want to harm the organization.
D. Stakeholders don't understand the organization's goals.
Answer:
A
Explanation:
Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following
Machine A could be purchased for $69,000. It will last 10 years with annual maintenance costs of $2,200 per year. After 10 years the machine can be sold for $7,245.
Machine B could be purchased for $57,500. It also will last 10 years and will require maintenance costs of $8,800 in year three, $11,000 in year six, and $13,200 in year eight. After 10 years, the machine will have no salvage value.
Required:
Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Calculate the present value of Machine A & Machine B. Which machine Esquire should purchase?
Answer:
Esquire should purchase Machine B
Explanation:
Below is the calculation of the present values of Machine A & Machine B.
Machine A Period Amount Present Value Factor Present Value
Purchase Cost 0 ($69,000) 1 ($69,000)
Maintenance Cost 1 - 10 ($2,200) 6.71008 ($14,762)
Salvage Value 10 $7,245 0.46319 $3,356
Present Value of A ($80,406)
Machine B Period Amount Present Value Factor Present Value
Purchase Cost 0 ($57,500) 1 ($57,500)
Maintenance Cost
Year 3 3 ($8,800) 0.79383 ($6,986)
Year 6 6 ($11,000) 0.63017 ($6.932)
Year 8 8 ($13,200) 0.54027 ($7,132)
Present Value of B ($78,550)
Note the Following:
The Net Present Value of B is lower than the Value of Machine A. So, Machine B should be opted.For the Present Value Factor of Machine A's Maintenance Cost, the 10 year annuity value of 8% was calculated.Machine B has no salvage value after the 10th year period.An asset falling under the MACRS five-year class was purchased three years ago for $200,000 (its original depreciation basis). Calculate the cash flows if the asset is sold now at a) $60,000 and b) $80,000. Assume the applicable tax rate is 40 percent.
Answer:
(a) The cash flows is $59,040.
(b) The cash flows is $71,040.
Explanation:
From the Modified Accelerated Cost Recovery System (MACRS) Tables, the depreciation rates for the first 3 years for an asset falling under the MACRS five-year class are 20%, 32% and 19.2%. Therefore, we have:
Accumulated depreciation rate = 20% + 32% + 19.2% = 71.20%
Accumulated depreciation = Cost of the asset * Accumulated depreciation rate = $200,000 * 71.20% = $142,400
Net book value of the asset = Cost of the asset - Accumulated depreciation = $200,000 - $142,400 = $57,600
We can now proceed as follows:
(a) Calculate the cash flows if the asset is sold now at $60,000
Capital gains = Sales proceeds - Net book value = $60,000 - $57,600 = $2,400
Capital gains tax = Capital gains * Tax rate = $2,400 * 40% = $960
Net sales proceeds = Sales proceeds - Capital gains tax = $60,000 - $960 = $59,040
Therefore, the cash flows is $59,040 net sales proceeds.
(b) Calculate the cash flows if the asset is sold now at $80,000
Capital gains = Sales proceeds - Net book value = $80,000 - $57,600 = $22,400
Capital gains tax = Capital gains * Tax rate = $22,400 * 40% = $8,960
Net sales proceeds = Sales proceeds - Capital gains tax = $80,000 - $8,960 = $71,040
Therefore, the cash flows is $71,040 net sales proceeds.
The cash flows is $59,040 and $71,040 when asset are sold at $60,000 and $80,000.
What is MACRS depreciation?MACRS stands for modified accelerated cost recovery system is the depreciation system in the U.S. where the cost of the asset is recovered in a specific period through deduction.
Given:
Asset=$200,000
The depreciation rate for 5 year asset are:20%, 32%, 19.2%, 11.52%, 11.52% and 5.76%
Accumulated depreciation for 3 years=20% + 32% + 19.2% = 71.20%
=asset cost X depreciation rate for 3 years
=$200,000 X 71.20% = $142,400
Net Book value=Asset Cost - Accumulated depreciation
=$200,000 - $142,400
= $57,600
(a)Cash flows if assets sold at $60,000
Capital gains = Sales - Net book value
=$60,000 - $57,600
= $2,400
Capital gains tax = Capital gains X Tax rate
= $2,400 * 40% = $960
Net sales proceeds = Sales proceeds - Capital gains tax
= $60,000 - $960 = $59,040
(b)Cash flows if assets sold at $80,000
Capital gains = Sales - Net book value
= $80,000 - $57,600
= $22,400
Capital gains tax = Capital gains X Tax rate
= $22,400 * 40% = $8,960
Net sales proceeds = Sales proceeds - Capital gains tax
= $80,000 - $8,960 = $71,040
Therefore the above calculation aptly gives the solution.
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Treasury Stock Coastal Corporation issued 25,000 shares of $9 par value common stock at $21 per share and 6,000 shares of $54 par value, eight percent preferred stock at $82 per share. Later, the company purchased 3,000 shares of its own common stock at $24 per share. a. Prepare the journal entries to record the share issuances and the purchase of the common shares. b. Assume that Coastal sold 2,000 shares of the treasury stock at $30 per share. Prepare the general journal entry to record the sale of this treasury stock. c. Assume that Coastal sold the remaining 1,000 shares of treasury stock at $19 per share. Prepare the journal entry to record the sale of this treasury stock.
Answer:
Treasury Stock Coastal Corporation
a. Journal Entries:
Debit Cash $525,000
Credit Common stock $225,000
Credit Additional Paid-in Capital - Common Stock $300,000
To record the issuance of 25,000 shares of $9 par value at $21.
Debit Cash $492,000
Credit 8% Preferred Stock $324,000
Credit Additional Paid-in Capital - Preferred Stock $168,000
To record the issuance of 6,000 shares of $54 par value at $82.
Debit Treasury Stock $27,000
Debit Additional Paid-in Capital - Common Stock $45,000
Credit Cash $72,000
To record the repurchase of 3,000 shares at $24.
b. Journal Entry
Debit Cash $60,000
Credit Treasury Stock $18,000
Credit Additional Paid-in Capital - Common Stock $42,000
To record the re-issuance of 2,000 treasury shares at $30.
c. Journal Entry:
Debit Cash $19,000
Credit Treasury STock $9,000
Credit Additional Paid-in Capital - Common Stock $10,000
To record the re-issuance of 1,000 treasury shares at $19.
Explanation:
a) Data and Calculations:
Cash $525,000 Common stock $225,000 Additional Paid-in Capital - Common Stock $300,000
Cash $492,000 8% Preferred Stock $324,000 Additional Paid-in Capital - Preferred Stock $168,000
Treasury Stock $27,000 Additional Paid-in Capital - Common Stock $45,000 Cash $72,000
b. Cash $60,000 Treasury Stock $18,000 Additional Paid-in Capital - Common Stock $42,000
c. Cash $19,000 Treasury STock $9,000 Additional Paid-in Capital - Common Stock $10,000
Black Bear Auto Company incurred $120,000 of indirect advertising costs for its operations. The following 2017 data have been collected for its three departments: New Cars Used Cars Parts and Service Direct advertising costs $30,000 $24,000 $6,000 Newspaper ad space 60% 30% 10% Sales $250,000 $200,000 $50,000 Required: Determine the costs allocated to each department using the following allocation bases: a. Direct advertising costs b. Newspaper ad space c. Sales
Answer:
a. Allocating cost using direct advertising costs
We have:
Cost allocated to New Cars = $60,000
Cost allocated to Used Cars = $48,000
Cost allocated to Parts and Service = $12,000
b. Allocating cost using Newspaper ad space
We have:
Cost allocated to New Cars = $72,000
Cost allocated to Used Cars = $36,000
Cost allocated to Parts and Service = $12,000
c. Allocating cost using Sales
We have:
Cost allocated to New Cars = $60,000
Cost allocated to Used Cars = $48,000
Cost allocated to Parts and Service = $12,000
Explanation:
Given:
New Cars Used Cars Parts and Service
Direct advertising costs $30,000 $24,000 $6,000
Newspaper ad space 60% 30% 10%
Sales $250,000 $200,000 $50,000
The costs allocated to each department can now be calculated as follows:
a. Allocating cost using direct advertising costs
The indirect advertising costs can be allocated using the following formula:
Cost allocated to a department = (Direct advertising costs of the department / Sum of direct advertising costs of the 3 departments) * Indirect advertising costs ................... (1)
Using equation (1), we have:
Cost allocated to New Cars = ($30,000 / ($30,000 + $24,000 +$6,000)) * $120,000 = $60,000
Cost allocated to Used Cars = ($24,000 / ($30,000 + $24,000 +$6,000)) * $120,000 = $48,000
Cost allocated to Parts and Service = ($6,000 / ($30,000 + $24,000 +$6,000)) * $120,000 = $12,000
b. Allocating cost using Newspaper ad space
The indirect advertising costs can be allocated using the following formula:
Cost allocated to a department = Percentage of Newspaper ad space of the department * Indirect advertising costs ................... (2)
Using equation (2), we have:
Cost allocated to New Cars = 60% * $120,000 = $72,000
Cost allocated to Used Cars = 30% * $120,000 = $36,000
Cost allocated to Parts and Service = 10% * $120,000 = $12,000
c. Allocating cost using Sales
The indirect advertising costs can be allocated using the following formula:
Cost allocated to a department = (Sales of the department / Sum of Sales of the 3 departments) * Indirect advertising costs ................... (3)
Using equation (3), we have:
Cost allocated to New Cars = ($250,000 / ($250,000 + $200,000 + $50,000)) * $120,000 = $60,000
Cost allocated to Used Cars = ($200,000 / ($250,000 + $200,000 + $50,000)) * $120,000 * $120,000 = $48,000
Cost allocated to Parts and Service = ($50,000 / ($250,000 + $200,000 + $50,000)) * $120,000 * $120,000 = $12,000
Discuss the economic conditions and economic institutions that affect personal finance.
Answer:
Economics and Personal Finance. Instruction in economics and personal finance prepares students to function effectively as consumers, savers, investors, entrepreneurs, and active citizens. Students learn how economies and markets operate and how the United States' economy is interconnected with the global economy.
On September 30, 2016, the Esquire Company sold some merchandise to Callxpress Company. In payment, Esquire agreed to accept a note maturing on June 30, 2017. The note is a $50,000, 9-month, 8% interest-bearing note requiring the payment of principal and interest on June 30, 2017. The 6% rate is appropriate in this situation. The adjusting entry that the Callxpress Company should prepare on December 31, 2016 includes a:
Answer:
Book value of note receivable = $50,000 (same as face value since the note earns interest)
Interest revenue = $50,000 face value x 8% per year x 3/12 months = $1,000
Adjusting entry:
December 31, 2016, interest receivable
Dr Interest receivable 1,000
Cr Interest revenue 1,000
$7,000 of merchandise inventory was ordered on September 2, 2009 2. $3,000 of this merchandise was received on September 5, 2009 3. On September 6, 2009, an invoice dated September 4, 2009, with terms of 3/10, net 30 for $3,250 which included a $250 prepaid freight cost, was received. 4. On September 10, 2009, $800 of the merchandise was returned to the seller. Based on the above information, what would be recorded as net purchases amount after all of the transactions have been recorded
Answer:
the amount of the net purchase is $2,384
Explanation:
The computation of the amount of the net purchase is shown below:
Net purchases is
= purchases - purchase Discount - purchase returns
= $3,250 - ($3,250 - $250 - $800) × 3% - $800
= $3,250 - $66 - $800
= $2,384
hence, the amount of the net purchase is $2,384
Basically the above formula would be used
Fraud is encouraged when a notary does what?
Answer:
Overcharging for notary public services. Notarizing a document without the signer being in the notary's presence. Notarizing the notary's own signature. Issuing identification cards.
Explanation:
Excessive fees for notarial services, signing a document without the signer being present and notarizing it. the notary's signature is notarized. making identity cards available.
What is notary fraud?If a Notary Public violates the law while carrying out their responsibilities, they are held personally accountable. A Notary Public must post a bond in order to protect the injured party's right to recover up to $10,000. Despite this, the Notary Public is still personally responsible for any damages they may have caused, and they risk criminal prosecution as well as the revocation or suspension of their notary public commission.
A few examples of notary fraud include:
ignoring your documents' acknowledgmentcounterfeit stampsletting a signer sign a document without the presence of a notary publicA Notary Public who has been paid off to falsely recognize a document is the starting point of many fraud cases, particularly those involving real estate fraud. Due to the fact that practically all papers submitted in the county records require a notary stamp, this scenario occasionally occurs.
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For each of the following examples, identify whether a positive or negative externality is present and whether there will be too little or too much of the activity relative to the socially optimal outcome.
A. Jerome has a beautifully landscaped front lawn with lots of colorful flowers. Landscaped lawns produce a externality. landscaped lawns exist relative to the socially efficient quantity.
B. Dave takes advantage of the low price of gas to purchase a sports utility vehicle. Sports utility vehicles generate a externality. sports utility vehicles are produced relative to the socially efficient quantity.
C. Susan decides to walk to work instead of driving. Walking to work creates a externality. walks to work exist relative to the socially efficient quantity.
D. Anita decides to smoke a cigarette while she is waiting at a busy bus stop. Cigarettes create a externality. cigarettes are produced relative to the socially efficient quantity.
Answer:
A. Landscape lawns produce positive externality.
B. Sports vehicle generates a positive externality
C. Walk to work creates positive externality.
D. Cigarettes create a negative externality.
Explanation:
Positive externality occurs when society gets benefit from a persons act. Susan has created lawns near her house and there are beautiful flowers in the lawn. This will be relaxing for those who pass near by the lawns. There will be fresh air coming from the lawn and society will look pleasant.
Negative externality is one in which society is harmed by the act of a person. This happens when Anita smokes at a bus stop. There are other travelers who will be present at the bus stop might be harmed from the smoke which arises from the cigarette.
Cincinnati t-shirts prints custom t-shirts. The cost to produce one shirt is: direct materials, $10; direct labor, $1.20; and manufacturing overhead $4.50. Cincinnati Children’s Hospital asked Cincinnati t-shirt to sell them custom t-shirts for $12 each for a local charity event. Direct material and direct labor are required for each t-shirt. Of the manufacturing overhead, $1.50 is variable and would be incurred on each additional unit. The remaining $3 in overhead is allocated fixed overhead that would not be increased or decreased by this order. What would be the effect on net income if they accept this special order and sell 200 shirts to Cincinnati Children’s Hospital for $12 each?
Answer:
Effect on income= $140 decrease
Explanation:
Giving the following formula:
Production costs:
Direct material= 10
Direct labor= 1.2
Variable overhead= $1.5
Selling price= $12
Number of units= 200
Because it is a special offer and there is unused capacity, we will not take into account the fixed costs.
Effect on income= Units sold*unitary contribution margin
Effect on income= 200*(12 - 10 - 1.2 - 1.5)
Effect on income= $140 decrease
Molo Oil Company produces gasoline, home heating oil, and jet fuel from crude oil in a joint processing operation. Joint processing costs up to the split-off point total $385,000 per month. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product Selling Price Monthly Output Gasoline $ 27.00 per gallon 14,400 gallons Heating Oil $ 21.00 per gallon 22,400 gallons Jet Fuel $ 33.00 per gallon 5,600 gallons Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Product Additional Processing Costs Selling Price Gasoline $ 89,220 $ 32.80 per gallon Heating Oil $ 129,170 $ 27.80 per gallon Jet Fuel $ 60,160 $ 41.80 per gallon Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point
Answer:
Molo Oil Company
The financial advantage of further processing of each of the three products beyond the split-off point is:
= $182,430
(which is the additional profit gained from the further processing).
Explanation:
Joint processing costs = $385,000 per month
Product Selling Price Monthly Output Sales Value
Gasoline $ 27.00 per gallon 14,400 gallons $388,800 ($27*14,100)
Heating Oil $ 21.00 per gallon 22,400 gallons 470,400 ($21*22,400)
Jet Fuel $ 33.00 per gallon 5,600 gallons 184,800 ($33*5,600)
Total sales value = $1,044,000
Joint costs = 385,000
Profit = $659,000
Allocation of joint processing costs of $385,000
Gasoline = $143,379 ($388,800/$1,044,000 * $385,000)
Heating Oil 173,471 ($470,400/$1,044,000 * $385,000)
Jet Fuel 68,150 ($184,800/$1,044,000 * $385,000)
Total cost $385,000
Total costs:
Additional
Joint Cost Monthly Cost Total Costs
Gasoline $143,379 $29,740 $173,119
Heating Oil 173,471 43,057 216,528
Jet Fuel 68,150 20,053 88,203
Total costs $385,000 $92,850 $477,850
Product Additional Processing Selling Price
Costs (per quarter)
Gasoline $ 89,220 $ 32.80 per gallon
Heating Oil $ 129,170 $ 27.80 per gallon
Jet Fuel $ 60,160 $ 41.80 per gallon
Product Additional Processing Selling Price
Costs (per month)
Gasoline $ 29,740 $ 32.80 per gallon
Heating Oil $ 43,057 $ 27.80 per gallon
Jet Fuel $ 20,053 $ 41.80 per gallon
Determination of profit after further processing:
Product Selling Price Monthly Output Sales Value
Gasoline $ 32.80 per gallon 14,400 gallons $462,480 ($32.80*14,100)
Heating Oil $ 27.80 per gallon 22,400 gallons 622,720 $27.80*22,400)
Jet Fuel $ 41.80 per gallon 5,600 gallons 234,080 ($41.80*5,600)
Total sales revenue = $1,319,280
Total costs = 477,850
Profit = $841,430
Financial advantage
Profit after further processing = $841,430
Profit with Joint processing = 659,000
Financial advantage = $182,430
Explain how art sellers use the 4 P's of marketing to promote expensive art to the desired patrons. Then, consider: Do you think it makes sense to view art as a product and promote it using the marketing mix? How is it similar to other products? On the other hand, what makes art different or "special" in comparison to the products we usually buy in a store?
Explanation:
Yes, the art market can benefit from the use of the marketing mix, since the 4p's of marketing, which are the product, price, place and promotion, will directly influence the positioning of a product in the market and consequently increase sales.
In the case of works of art, the marketing mix helps to align marketing strategies to reach the potential audience that consumes art. It can then be considered that the arts make up a specific type of market niche, which has consumers willing to pay certain prices according to the artist, the rarity of the artwork, the time, etc. Therefore, the marketing mix works as a strategic set that will help art sellers to position their product with their consumers and thus achieve the final goal of making sales.
A lottery winner can take $6million now or be paid $600,000 at the end of each year for the next 16 years. The winner calculates the internal rate of return of taking the money at the end of each year, and estimating that the discount rate across this period will be 5%, decides to take the money at the end of each year. Was her decision correct
Answer:
yes
the present value of the 16 year annuity is 6502661.74. this is greater than $6 million
Explanation:
Prepare journal entries to record the following four separate issuances of stock.
1. A corporation issued 4,000 shares of $30 par value common stock for $144,000 cash.
2. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $39,000. The stock has a $2 per share stated value.
3. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $39,000. The stock has no stated value.
4. A corporation issued 1,000 shares of $50 par value preferred stock for $89,000 cash.
Answer:
Item 1
Debit : Cash $144,000
Credit : Common Stock $120,000
Credit : Common Stock Paid in Excess of Par $24,000
Item 2
Debit : Cash $39,000
Credit : Common Stock $39,000
Item 3
Debit : Cash $39,000
Credit : Common Stock $39,000
Item 4
Debit : Cash $89,000
Credit : Preferred Stock $50,000
Credit : Preferred Stock paid in excess of par $39,000
Explanation:
Take a careful note on Par value Stocks and No Par Value Stocks. A reserve is created whenever Stocks are issued above their Par Value.
Bushard Company (buyer) and Schmidt, Inc. (seller) engaged in the following transactions during February 2019:
Bushard Company
DATE TRANSACTIONS
2019
Feb. 10 Purchased merchandise for $5,000 from Schmidt, Inc., Invoice 1980, terms 1/10, n/30.
13 Received Credit Memorandum 230 from Schmidt, Inc., for damaged merchandise totaling $200 that was returned; the goods were purchased on Invoice 1980, dated February 10.
19 Paid amount due to Schmidt, Inc., for Invoice 1980 of February 10, less the return of February 13 and less the cash discount, Check 2010. Schmidt, Inc.
DATE TRANSACTIONS
2019
Feb. 10 Sold merchandise for $5,000 on account to Bushard Company, Invoice 1980, terms 1/10, n/30.
13 Issued Credit Memorandum 230 to Bushard Company for damaged merchandise totaling $200 that was returned; the goods were purchased on Invoice 1980, dated February 10.
19 Received payment from Bushard Company for Invoice 1980 of February 10, less the return of February 13 and less the cash discount, Check 2010.
Required:
Journalize the transactions above in a general journal for both Bushard Company and Schmidt, Inc.
Answer:
Bushard Company (buyer) and Schmidt, Inc. (seller)
Journal Entries:
Bushard Company
Feb. 10 Debit Inventory $5,000
Credit Accounts payable (Schmidt, Inc.) $5,000
To record the purchase of goods on account, via Invoice 1980, terms 1/10, n/30.
13 Debit Accounts payable (Schmidt, Inc.) $200
Credit Inventory $200
To record the return of damaged goods and received Credit Memorandum 230.
19 Debit Accounts payable (Schmidt, Inc.) $4,800
Credit Cash $4,752
Credit Cash Discounts $48
To record the payment on account and discounts.
Schmidt, Inc.
Feb. 10 Debit Accounts receivable (Bushard Company) $5,000
Credit Sales revenue $5,000
To record the sale of goods on account, Invoice 1980, terms 1/10, n/30.
13 Debit Sales returns $200
Credit Accounts receivable (Bushard Company) $200
To record the return of damaged, issuing Credit Memorandum 230.
19 Debit Cash $4,752
Debit Cash Discounts $48
Credit Accounts receivable (Bushard Company) $4,800
To record the receipt of cash from customer, including discounts.
Explanation:
a) Data and Analysis:
Bushard Company
Feb. 10 Inventory $5,000 Accounts payable (Schmidt, Inc.) $5,000, Invoice 1980, terms 1/10, n/30.
13 Accounts payable (Schmidt, Inc.) $200 Inventory $200 Credit Memorandum 230, damaged merchandise.
19 Accounts payable (Schmidt, Inc.) $4,800 Cash $4,752 Cash Discounts $48
Schmidt, Inc.
Feb. 10 Accounts receivable (Bushard Company) $5,000 Sales revenue $5,000, Invoice 1980, terms 1/10, n/30.
13 Sales returns $200 Accounts receivable (Bushard Company) $200 Credit Memorandum 230, damaged merchandise.
19 Cash $4,752 Cash Discounts $48 Accounts receivable (Bushard Company) $4,800