An investor is deciding whether to build a retail store. If she invests in the store and it is successful, she expects a return of $100,000 in the first year. If the store is not successful, she will suffer a loss of $80,000. She guesses that the probability that the store will be a success is 0.6. To remove some of the uncertainty from this decision, the investor tries to establish more information, but this market research will cost $20,000. If she spends this money, she will have more confidence in her investment. There is a 0.6 probability that this information will be favorable; if it is, the likelihood that the store will be a success increases to 0.9. If the information is not favorable, the likelihood that the store will be a success reduces to only 0.2. Of course, she can elect to do nothing.
A) Draw the associated decision tree.
B) What do you recommend?
C) How much is the information worth?
Replace all the monetary values with the following utilities
Monetary Value Utility
$100,000 1.00
$80,000 0.40
$0 0.20
-$20,000 0.10
-$80,000 0.05
-$100,000 0.00
A) What do you recommend, based on expected utility?
B) Is the investor a risk soeker or a risk avoider?
Answers
Answer:
Explanation:
Given that,
expects a return of $100,000 in the first year
loss of $80,000
probability that the store will be a success is 0.6
research will cost $20,000
0.6 probability that this information will be favorable
store will be a success increases to 0.9
store will be a success reduces to only 0.2
a) Decision tree is attachedEMV= (payoff of first outcome) * (probability of first outcome) + (payoff of second outcome) * (probability of second outcome) + (payoff of third outcome) * (probability of third outcome)
EMV(node 1) = EMV(new store)
= ($100,000 * 0.6) + (-80,000 * 0.4)
=$28,000
EMV (node 2) = EMV (no store)
= $0
EMV (node 3) = EMV ( new store and favourable research)
= ($100,000 * 0.9) + (-80,000 * 0.1)
=$82,000
EMV (node 4) = EMV ( no store and favourable research)
= $0
EMV (node 5) = EMV ( new store and unfavourable research)
= ($100,000 * 0.2) + (-80,000 * 0.8)
= -$44,000
EMV (node 6) = EMV ( no new store and unfavourable research)
= $0
B) Here we compare EMV of not conducting the market research ans EMV of conducting the market research and the maximum EMV shall be taken for decision making
Here the EMV of conducting the market research is higher than not conductingHence, the investor can go to market research test. If result is positive, she can invest in the store, if negative she can stop the proposal.
Related Questions
As a manager your organization is constantly confronted with a variety of changes in the market or a wide range of situations. You have to recruit and select a manager for a group of employees responsible for several related products. You have just read about Fiedler’s Contingency model and decided to use the LPC score to aid you in selecting a leader for the management group. You have interviewed four candidates for the job (Erin, Josh, Michael, Tabitha) and the scores for each of the candidates were Erin=high LPC, Josh=moderately high LPC, Michael=middle LPC, Tabitha=low LPC. Which of the candidates would you hire?A. ErinB. JoshC. MichaelD. TabithaE. None of these.
Answers
Answer:
C. Michael
Explanation:
The least preferred coworker scale is a method used to determine the leadership style of individuals. It was developed by Fred Fiedler and American scholar.
When a person gives positive feedback on coworkers they are more relationship oriented and get a high LPC score.
For those that give negative feedback on coworkers, they are task oriented and will get low LPC scores.
Relationship oriented style is used when employees are experienced and know what to do, while task oriented leadership is needed when the team is less experienced or results need to be delivered in a short time.
The organization is constantly confronted with a variety of changes in the market or a wide range of situations. So this requires a mix of both relationship and task oriented leadership to adapt to changing organisational needs.
Michael is the best option with middle LPC score.
At the beginning of July, CD City has a balance in inventory of $2,950. The following transactions occur during the month of July.July 3 Purchase CDs on account from Wholesale Music for $1,850, terms 2/10, n/30. July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $4,900, that had a cost of $2,550. July 15 Receive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,650, terms 2/10, n/30. July 22 Sell CDs to customers for cash, $3,750, that had a cost of $2,050. July 28 Return CDs to Music Supply and receive credit of $210. July 30 Pay Music Supply in full.Assuming that CD City uses a perpetual inventory system, record the transactions.
Answers
Answer and Explanation:
The Journal entries is shown below:-
1. Merchandise Inventory Dr, $1,850
To Accounts payable $1,850
(Being inventory is recorded)
2. Merchandise Inventory Dr, $110
To Cash $110
(Being cash paid is recorded)
3. Accounts payable Dr, $200
To Merchandise Inventory $200
(Being return inventory is recorded)
4. Accounts Payable Dr, $1,650 ($1,850 - $200)
Inventory Dr, $33 ($1,650 × 2%)
To Cash $1,617
(Being cash paid is recorded)
5. Accounts receivable Dr, $4,900
To Sales revenue $4,900
(Being sales revenue is recorded)
6. Cost of goods sold Dr, $2,550
To Merchandise Inventory $2,550
(Being cost of goods sold is recorded)
7. Cash Dr, $4,900
To Accounts receivable $4,900
(Being cash receipt is recorded)
8. Inventory Dr, $2,650
To Accounts payable $2,650
(Being inventory is recorded)
9. Cash Dr, $3,750
To Sales revenue $3,750
(Being cash receipt is recorded)
10. Cost of goods sold Dr, $2,050
To Merchandise Inventory $2,050
(Being cost of goods sold is recorded)
11. Accounts payable Dr, $210
To Merchandise Inventory $210
(Being inventory is recorded)
12. Accounts payable Dr, $2,440 ($2,650 - $210)
To Cash $2,440
(Being cash is recorded)
A company uses a process costing system. Its Welding Department completed and transferred out 100,000 units during the current period. The ending inventory in the Welding Department consists of 30,000 units (75% complete with respect to direct materials and 40% complete with respect to conversion costs). Determine the equivalent units of production for the Welding Department for direct materials and conversion costs assuming the weighted average method.
Answers
Answer and Explanation:
The computation of equivalent units of production for direct materials and conversion costs is shown below:-
Direct material Conversion
Completed 100,000 100,000
Ending Work in progress
Direct material 22,500
(30,000 × 0.75)
Conversion 12,000
(30,000 × 0.40)
Equivalent Units of
Production 122,500 112,000
So, to reach the equivalent units of production of direct material we simply added the completed and transferred out units with direct material and for conversion we added the completed and transferred out units with conversion units.
All of the following are techniques being used to make data centers more "green" except:________.
a) use of hydropower.
b) air-cooling.
c) use of wind power.
d) use of backup generators.
e) virtualization.
Answers
Answer:
d) use of backup generators.
Explanation:
Going green is a term used for practices that protect the environment by reducing, reusing and recycling resources. It involves engaging in ecologically friendly decisions and lifestyles with a view of preserving natural resources for future generations.
The use of backup generator causes production of green house gases like carbon dioxide. Green house gases erode the ozone layer and increases global warming.
The other options like use of hydropower, air cooling, use of wind power, and virtualisation do not have adverse effect on the environment.
The following items are reported on a company's balance sheet: Cash $510,000 Marketable securities 398,500 Accounts receivable (net) 338,900 Inventory 346,500 Accounts payable 693,000 Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place. a. Current ratio b. Quick ratio
Answers
Answer:
Current ratio= 2.3
Quick ratio= 1.8
Explanation:
Cash=$510,000
Marketable securities= $398,000
Account receivables= $338,900
Inventory= $346,000
Account payable = $693,000
Curent ratio= current assets/current liability
Current assets= cash+ marketable securities+ Account receivables+inventory
Current liability= Account payable
($510,000+$398,000+$338,900+$346,000)/$693,000
= $1,592,900/$693,000
= 2.29
Current ratio = 2.3 ( to 1 decimal place)
ii) Quick ratio= ( cash+ marketable securities+ Account receivable)/Current liability
=$510,000+$398,000+$338,900/$693,000
= $1,246,900/$693,000
= 1.79.
Quick ratio = 1.8 ( to 1 decimal place)
Answer: Current ratio 2.3
Quick ratio 1.8
Explanation:
Given Data:
Cash = $510,000
Marketable securities = $398,500
Account receivable ( net) = $338,900
Inventory = $346,500
Accounts payable = $693,000
( a.) The current ratio : this helps to determine the relationship between current assets and current liabilities
= current assets / current liabilities
Currents assets = ( cash + marketable securities + inventory + account receivable )
= $( 510,000 + 398,500 + 338,900 + 346,500)
= $1,593,900
Current liabilities = $693,000
Current ratio = $1,593,900 / $693,000
= 2.3
(b) Quick ratio is the ratio of quick asset against current liabilities.
Quick assets ( cash + marketable securities + accounts receivable)
= $( 510,000 + 398,500 + 338,900)
= $1,247,400
Quick ratio = $1,247,400 / $693,000
= 1.8
Carroll Corporation has two products, Q and P. During June, the company's net operating income was $24,000, and the common fixed expenses were $52,000. The contribution margin ratio for Product Q was 40%, its sales were $137,000, and its segment margin was $44,000. If the contribution margin for Product P was $42,000, the segment margin for Product P was:
Answers
Answer:
$32,000= Segment margin product P
Explanation:
Giving the following information:
Company net operating income= $24,000
Common fixed costs= $52,000
Product Q:
Segment margin= $44,000
Contribution margin for Product P= $42,000
We need to calculate the segment margin for Product P.
Net income= Segment margin product P + Segment margin product Q - common fixed costs
24,000= Segment margin product P + 44,000 - 52,000
32,000= Segment margin product P
The Rehe Comany sells its razors at $3 per unit. The company uses a first-in, first-out actual costing system. A fixed manufacturing cost rate is computed at the end of each year by dividing the actual fixed manufacturing costs by the actual production units. The following data are related to its first two years of operation:
2011 2012
Sales 1000 units
1200 units
Costs:
Variable manufacturing
Fixed manufacturing
Variable operating (marketing)
Fixed operating (marketing)
$ 700
700
1000
400
$ 500
700
1200
400
1. Prepare income statements based on variable costing for each of the two years.
2. Prepare income statements based on absorption costing for each of the two years.
3. Prepare a numerical reconciliation and explanation of the difference between operating income for each year under absorption costing and variable costing.
4. Critics have claimed that a widely used accounting system has led to undesirable buildups of inventory levels. (a) Is variable costing or absorption costing more likely to lead to such buildups? Why? (b) What can be done to counteract undesirable inventory buildups?
Answers
Answer:
2011 2012
Sales 1000 units 1200 units
Production 1400 1000
Costs:
Variable manufacturing $700 $500
per unit $0.50
Fixed manufacturing $700 $700
Variable operating (marketing) $1000 $1200
Fixed operating (marketing) $400 $400
cogs under absorption costing 2011 = ($1,400 / 1,400) x 1,000 = $1,000
cogs under absorption costing 2012 = $400 + ($1,200 / 1,000) x 800 = $1,360
1. INCOME STATEMENTS
VARIABLE COSTING
2011 2012
Total sales revenue: $3,000 $3,600
Opening inventory: ($0) ($200)
Variable manufacturing: ($700) ($500)
Ending inventory: $200 $100
Gross contribution margin: $2,500 $3,000
Variable operating: ($1,000) ($1,200)
Contribution margin: $1,500 $1,800
Fixed manufacturing: ($700) ($700)
Fixed operating: ($400) ($400)
Net operating income: $400 $700
2. INCOME STATEMENTS
ABSORPTION COSTING
2011 2012
Total sales revenue: $3,000 $3,600
COGS: ($1,000) ($1,360)
Gross margin: $2,000 $2,240
Operating costs: ($1,400) ($1,600)
Net operating income: $600 $640
3. Under variable costing, closing inventory = 400 units x $0.50 (variable production costs per unit) = $200.
Under absorption costing, closing inventory = 400 units x $1 (production cost per unit) = $400
Since closing inventory is $200 higher under absorption costing, then net operating income during 2011 increases by $200.
4. a) Variable costing is more likely to result in inventory buildups. Since variable costing determines the value of closing inventory only using variable manufacturing costs, their value is much lower. E.g. in this case the value of closing inventory 2011 under variable costing is $200, while under absorption costing it is $400. This means that less costs are transferred from one year to another.
b) Cost of goods sold must include all production costs (both variable and fixed). This way COGS costs cannot be over estimated during one year and under estimated the next.
Which two answers identify the two middle core processes, i.e. core process 3 and 4? (choose two)
a. Build and test the system
b. Plan and monitor the project
c. Understand the details of the problem
d. Design the components
Answers
Answer:
c. Understand the details of the problem
d. Design the components
Explanation:
Systems development life cycle (SDLC) consists of six main phases:
System planningSystem analysis: involves understanding the details of the problem to be solved by the proposed system. What are the end-users' requirements and expectations?System design: involves designing the components, elements interfaces and architecture of the proposed system. System implementation and deploymentSystem testing and integrationSystem maintenanceAt Jose's Bakersfield Espresso, Jose charges $3.50 for an average cup of espresso. If his fixed cost (salary, insurance, etc.) are $100,000 a year, and the variable cost for each cup of espresso are $1.25.
A) State the total fixed cost
B) State the variable cost
C)State the price
D) Given the available data, at what quantity will Jose's Bakersfield Espresso break even?
Answers
Answer:
A. $100,000
B. $1.25 per unit
C. $3.5 per unit
D. Break even point = 44,444 units
Explanation:
Break even point denotes that level of sales at which total costs equal or even total revenues.
Contribution represents the sales revenue in excess of variable costs to cover up for fixed costs.
Break even point in units = [tex]\frac{Fixed\ Cost}{Contribution\ per\ unit}[/tex]
Contribution per unit = Selling price per unit - Variable cost per unit
Contribution per unit = $3.50 - $1.25 = $2.25
Break even point = [tex]\frac{100,000}{2.25}[/tex] = 44,444 units approx.
As of December 31, 2019, Armani Company’s financial records show the following items and amounts. Cash $ 10,300 Accounts receivable 9,300 Supplies 6,300 Equipment 5,300 Accounts payable 11,600 Common stock 14,300 Retained earnings, Dec. 31, 2018 3,300 Retained earnings, Dec. 31, 2019 5,300 Dividends 13,300 Consulting revenue 33,600 Rental revenue 22,600 Salaries expense 20,300 Rent expense 12,300 Selling and administrative expenses 8,300 Required: Prepare the 2019 year-end income statement for Armani Company.
Answers
Answer:
Net income is $15,300
Explanation:
The income statement for Armani Company as at 31st December is shown below:
$ $
Consulting revenue 33,600.00
Rental revenue 22,600.00
Total revenue 56,200.00
Salaries expense 20,300.00
rent expense 12,300.00
selling and administrative expense 8,300.00
Total expenses ( 40,900.00 )
Net income for the year 15,300.00
The net income is total revenue less all expenses incurred in the year.
The total revenue comprises of consulting and rental revenue while expenses consist of salaries,rent as well as selling and administrative expenses.
Prist Co. had not provided a warranty on its products, but competitive pressures forced management to add this feature at the beginning of 2016. Based on an analysis of customer complaints made over the past two years, the cost of a warranty program was estimated at 0.2% of sales. During 2016, sales totaled $4,208,000. Actual costs of servicing products under warranty totaled $19,900.
Required:
Record the journal entry to show the effect of having the warranty program during 2019. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answers
Answer:
Event 1:
Debit Warranty expense for $8.416.
Credit Warranty liability $8,416.
Event 2:
Debit Warranty liability for $8,416.
Debit Warranty expenses for $11,484.
Credit Cash for $19,900.
Explanation:
Estimated warranty liability = $4,208,000 * 0.2% = $8,416.
Excess of actual and over extimated warranty liability = $19,900 - $8,416 = $11,484
The journal entries will look as follows:
Details Dr ($) Cr ($)
Warranty expense 8.416
Warranty liability 8,416
(To record the estimated warranty liability).
Warranty liability 8,416
Warranty expenses 11,484
Cash 19,900
(To record actual warranty cost).
The journal entries for representing the effect to having the warranty program is shown below.
Journal entries:Warranty expense(4208000*0.2%) 8416
Extended Warranty Liabilities 8416
(Being warranty expense is recorded)
Here warranty expense is debited as it increased the expense and credited the warranty liabilities because it also increased the liabilities
Extended Warranty Liabilities 8416
Warranty expense (19900-8416) 11484
Cash 19900
(Being cash paid is recorded)
Here liabilities and expense is debited because it decreased the liabilities and increase the expenses while on the other hand, the cash is credited as it decreased the assets.
Learn more about journal entry here: https://brainly.com/question/24741269
Restaurants do a large volume of business by credit and debit cards. Suppose Spring Garden Salads restaurant had these transactions on January 28, 2016: National Express credit card sales $10,500 ValueCard debit card sales 6,000 Requirements 1. Suppose Spring Garden Salads' processor charges a 3% fee and deposits sales net of the fee. Journalize these sales transactions for the restaurant. 2. Suppose Spring Garden Salads' processor charges a 3% fee and deposits sales using the gross method. Journalize these sales transactions for the restaurant.
Answers
Answer and Explanation:
The journal entries are shown below:
1. Processor charges - Credit card expense Dr ($10,500 × 3%) $315
Cash Dr $10,185
To Sales Revenue $10,500
(Being the credit card expense is recorded)
For recording this we debited the cash and expenses as it increased the asset and expenses and credited the sales revenue as it also increased the revenue
Processor charges - debit card expense Dr ($6,000 × 3%) $180
Cash Dr $5,820
To Sales Revenue $6,000
(Being the debit card expense is recorded)
For recording this we debited the cash and expenses as it increased the asset and expenses and credited the sales revenue as it also increased the revenue
2. Cash Dr $10,500
To Sales Revenue $10,500
(Being the cash receipt is recorded)
For recording this we debited the cash as it increased the asset and credited the sales revenue as it also increased the revenue
Cash Dr $6,000
To Sales Revenue $6,000
(Being the cash receipt is recorded)
For recording this we debited the cash as it increased the asset and credited the sales revenue as it also increased the revenue
Requirements
1. Record each transaction in the journal using the following account titles: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Furniture; Accounts Payable; Utilities Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; and Utilities Expense. Explanations are not required.
2. T-accounts have been opened for each of the accounts. Post the journal entries to the T-accounts, using transaction dates as ledger accounts. Label the balance of each account Bal posting references in the ledger accounts.
3. Prepare the trial balance of Beth Stewart, Designer, as of November 30, 2018.
Nov.1 Received $41,000 cash and issued common stock to Stewart Nov. 1
4 Purchased office supplies, $1,200, and furniture, $2,300, on account.
6 Performed services for a law firm and received $2,100 cash.
7 Paid $27,000 cash to acquire land to be used in operations.
10 Performed services for a hotel and received its promise to pay the $800 within one week.
14 November 4 on account Paid for the furniture purchased 14 on.
15 Paid assistant's semimonthly salary, $1,470.
17 Received cash on account, $500.
20 Prepared a design for a school on account, $680.
25 Received $1,900 cash for design services to be performed in December.
28 Received $3,100 cash for consulting with Plummer & Gordon.
29 Paid $840 cash for a 12-month insurance policy starting on December 1.
30 Paid assistant's semimonthly salary, $1,470.
30 Paid monthly rent expense, $650.
30 Received a bill for utilities, $650. The bill will be paid next month
30 Paid cash dividends of $2,800.
Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal.We will post to the accounts one transaction at a time. Begin by posting the events from the 1st.July1: Yangcontributed $64,000 cash to the business in exchange for Common Stock.
Date Accounts Debit Credit
Jul.1 Cash 68,000
Commom Stock 68,000
Answers
Journal entries:
Nov. 1, common stocks issued
Dr Cash 41,000
Cr Common stock 41,000
Nov. 4, office supplies and furniture purchased
Dr Office supplies 1,200
Dr Furniture 2,300
Cr Accounts payable 3,500
Nov. 6, service revenue
Dr Cash 2,100
Cr Service revenue 2,100
Nov. 7, land purchased
Dr Land 27,000
Cr Cash 27,000
Nov. 10, service revenue
Dr Accounts receivable 800
Cr Service revenue 800
Nov. 14, payment of furniture
Dr Accounts payable 2,300
Cr Cash 2,300
Nov. 15, wages expense
Dr Wages expense 1,470
Cr Cash 1,470
Nov. 17, collection of accounts receivable
Dr Cash 500
Cr Accounts receivable 500
Nov. 20, service revenue
Dr Accounts receivable 680
Cr Service revenue 680
Nov. 25, received cash in advance
Dr Cash 1,900
Cr Unearned revenue 1,900
Nov. 28, service revenue
Dr Cash 3,100
Cr Service revenue 3,100
Nov. 29, purchase prepaid insurance
Dr Prepaid insurance 840
Cr Cash 840
Nov. 30, wages expense
Dr Wages expense 1,470
Cr Cash 1,470
Nov. 30, rent expense
Dr Rent expense 650
Cr Cash 650
Nov. 30, utilities expense
Dr Utilities expense 650
Cr Accounts payable 650
Nov. 30, dividends distributed
Dr Retained earnings 2,800
Cr Dividends payable 2,800
Dr Dividends payable 2,800
Cr Cash 2,800
Since there is not enough space here, I prepared an excel spreadsheet with the T-accounts.
In order to prepare a trial balance sheet, I must first prepare an Income Statement:
Service revenue $6,680
Wages expense ($2,940)
Rent expense ($650)
Utilities expense ($650)
Net income: $2,440
Retained earnings = $2,440 (net income) - $2,800 (dividends) = ($360)
STEWART CO.
BALANCE SHEET
NOV. 30, 2018
Assets:
Cash $12,070
Accounts receivable $980
Prepaid insurance $840
Office supplies $1,200
Furniture $2,300
Land $27,000
Total assets: $44,390
Liabilities and stockholders' Equity:
Accounts payable $1,850
Unearned revenue $1,900
Common stock $41,000
Retained earnings ($360)
Total liabilities and stockholders' equity: $44,390
g Real and nominal variables are highly intertwined, and changes in the money supply change real GDP. Most economists would agree that this statement accurately describes a. both the short run and the long run. b. the short run, but not the long run. c. the long run, but not the short run. d. neither the long run nor the short run.
Answers
Answer:
The correct answer is C.
Explanation:
GDP usually, is fixed in the short run. Thus, in the short-term, money supply will increase aggregate demand and prices will follow.
In the long term, however, real GDP (which is economic output that has been adjusted for price fluctuations), an increase in the money supply will create an increase in the GDP due to aggregate demand.
The US economy, for example, displays a strong positive correlation between the amount of money supplied and it's GDP growth between 1994 and 2009.
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The operations manager of a mail order house purchases double (D) and twin (T) beds for resale. Each double bed costs $500 and requires 100 cubic feet of storage space. Each twin bed costs $300 and requires 90 cubic feet of storage space. The manager has $75,000 to invest in beds this week, and her warehouse has 18,000 cubic feet available for storage. Profit for each double bed is $300 and for each twin bed is $150. The manager's goal is to maximize profits.
Required:
What is not a feasible solution?
Answers
Answer:
Please see below for answer
Explanation:
It would not be feasible to invest the entire $75,000 amount on making double beds. Although the profit margin for the double beds is twice that of twin beds, it also requires more storage space and the market demand for double beds may not be as high as the twin beds. Hence, making double beds and ignoring twin beds completely might not make as much profit due to not being sold to begin with.
Cherokee Inc. is a merchandiser that provided the following information: Amount Number of units sold 13,000 Selling price per unit $ 16 Variable selling expense per unit $ 2 Variable administrative expense per unit $ 3 Total fixed selling expense $ 21,000 Total fixed administrative expense $ 15,000 Beginning merchandise inventory $ 11,000 Ending merchandise inventory $ 25,000 Merchandise purchases $ 88,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement.
Answers
Answer:
1. Gross margin is $134,00; and Net profit is $33,000.
2. Contribution margin is $69,000; and Net profit is $33,000.
Explanation:
To prepare the statements, the following calculations are done first:
Sales revenue = Number of units sold * Selling price per unit = 13,000 * $16 = $208,000
Variable selling expenses = Number of units sold * Variable selling expense per unit = 13,000 * $2 = $26,000
Total selling expenses = Variable selling expenses + Total fixed selling expense = $26,000 + $21,000 = $47,000
Variable administrative expense = Number of units sold * Variable administrative expense per unit = 13,000 * $3 = $39,000
Total administrative expense = Variable administrative expense + Total fixed administrative expense = $39,000 + $15,000 = $54,000
Cost of goods sold = Beginning merchandise inventory + Merchandise purchases - Ending merchandise inventory = $11,000 + $88,000 - $25,000 = $74,000
The statements are now prepared as follows:
1. Prepare a traditional income statement.
The purpose of the traditional income statement is to obtain the gross margin and the net profit. These can be obtained as follows:
Cherokee Inc.
Traditional income statement
Details $
Sales 208,000
Cost of goods sold (74,000)
Gross margin 134,000
Selling and Admin. Expenses:
Selling expenses (47,000)
Administrative expense (54,000)
Net profit 33,000
2. Prepare a contribution format income statement
The purpose of the contribution format income statement is to obtain the contribution margin and the net profit. These can be obtained as follows:
Cherokee Inc.
Contribution format income statement
Details $
Sales 208,000
Variable expenses:
Cost of goods sold (74,000)
Selling expenses (26,000)
Administrative expense (39,000)
Contribution margin 69,000
Fixed expenses:
Selling expenses (21,000)
Administrative expense (15,000)
Net profit 33,000
Note:
Note that under both methods, the net profit is the same. This always holds no matter the method used.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Amount Number of units sold 13,000
Selling price per unit $16
Variable selling expense per unit $2
Variable administrative expense per unit $3
Total fixed selling expense $21,000
Total fixed administrative expense $15,000
Beginning merchandise inventory $11,000
Ending merchandise inventory $25,000
Merchandise purchases $88,000
First, we need to calculate the cost of goods sold:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 11,000 + 88,000 - 25,000= 74,000
1) Traditional income statement:
Sales= 13,000*16= 208,000
COGS= (74,000)
Gross profit= 134,000
Total selling expense= (2*13,000) + 21,000= (47,000)
Total administrative expense= (3*13,000) + 15,000= (54,000)
Net operating income= 33,000
2) Contribution format income statement:
Total variable cost= (3 + 2)*13,000 + 74,000= $139,000
Sales= 208,000
Total variable cost= (139,000)
Contribution margin= 69,000
Total fixed selling expense= (21,000)
Total fixed administrative expense= (15,000)
Net operating income= 33,000
Consider the following scenario and Identify which formal research method would be appropriate.
1. You are preparing a comprehensive report on telecommunication practices in your industry. You need some background information on the history of Internet use in professional environments.
A. Access traditional sources and electronic sources.
B. Conduct primary research for firsthand information.
C. Conduct a scientific experiment. Routine tasks often require informal research methods.
2. Identify which informal research technique would be most appropriate for each situation. After complaining about parking accommodations at your office, you have been asked by your boss to propose a simple solution that will satisfy your coworkers. The best informal information gathering technique for this situation would be to:_______.
A. Talk with your boss.
B. Conduct an informal survey
C. Look in the files.
3. Read the following scenario, and determine which is the best research approach.
While working for an international development agency, you must develop a presentation about primary and secondary education in the Middle East, a topic you are not familiar with. Which is the best research approach?
A. Formal. On the Internet, find statistics gathered by the United Nations showing the dropout rates of students by gender and age. Request that certain reports be sent to you, so you can examine the date yourself.
B. Informal. To get a local perspective on Middle Eastern affous, we nema to a professor there.
C. Informal. To get a local perspective on Middle Easter affairs, conduct a one survey of me who live in the area.
Answers
Answer: 1. A. Access traditional sources and electronic sources.
2. B. Conduct an informal survey
3. A. Formal. On the Internet, find statistics gathered by the United Nations showing the dropout rates of students by gender and age. Request that certain reports be sent to you, so you can examine the date yourself.
Explanation:
1. This is a research into the history of the internet in professional Environments. Considering how long the internet has been around which isn't too long but long enough that first hand information is not readily available, consulting Traditional sources and Electronic sources is the best way to go.
It will have information from the past that you can use to come up with a chronological report on the use of the internet in a professional setting.
2. This is not a serious research and involves your immediate surroundings so an informal method can be used. The best informal method would be an informal survey amongst your co-workers who are also affected by the problem. This survey will help you come up with a solution faster and easier because you are getting first hand information from those directly affected.
3. You are working for an International Development Agency and as such can not afford to present information that is false or void of due procedure in way because it will affect the reputation of the Agency if you do so.
For this reason your sources must be formal sources with definite information and the United Nations is a very good source for that. To go a step further you can request reports and double check the figures yourself to ensure that the information used is of the highest quality and accuracy.
Betty is considering investing in a company's stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment.
Probability Return
Boom 0.3 25.00%
Good 0.4 15.00%
Level 0.1 10.00%
Slump 0.2 -5.00%
a) What is hte expected return on Barbara's investment? (Round answer to 3 decimal places, e.g. 0.076)b) What is the standard deviation of the return on Barbara's investment? (Round answer to 5 decimal places, e.g. 0.07680)
Answers
Answer:
a) What is the expected return on Barbara's investment?
0.135 or 13.5%b) What is the standard deviation of the return on Barbara's investment?
0.04029 or 4.029%Explanation:
Economy Probability Return
Boom 0.3 25.00% = 7.5%
Good 0.4 15.00% = 6%
Level 0.1 10.00% = 1%
Slump 0.2 -5.00% = -1
total 0.135 or 13.5%
0.075
0.06
0.01
-0.01
.135 / 4 = 0.03375 mean
0.075 - 0.03375 = 0.04125² = 0.001701562
0.06 - 0.03375 = 0.02625² = 0.000689062
0.01 - 0.03375 = -0.02375² = 0.000564062
-0.01 - 0.03375 = -0.04375² = 0.00191406
0.00486875
0.00486875 / (4 - 1) = 0.00486875 / 3 = 0.001622916
√0.001622916 = 0.04029
The following information applies to the questions displayed below.] Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2018 2019 Sales ($46 per unit) Cost of goods sold ($31 per unit) Gross margin Selling and administrative expenses $920,000 620,000 300,000 290,000 $1,840,000 1,240,000 600,000 340,000 Net income 10,000 260,000 Additional Information a. Sales and production data for these first two years follow. 2019 30,000 40,000 2018 Units produced Units sold 30,000 20,000 b. Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company's $31 per unit product cost consists of the following. Direct materials b. Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company's $31 per unit product cost consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($300,000/30,000 units) S 5 10 Total product cost per unit $31 . Selling and administrative expenses consist of the following 2018 2019 Variable selling and aeministrative expenses ($2.50 per unit) Fixed selling and administrative expenses 50,000 $100,000 240,000 240,000 Total selling and administrative expenses $290,000 $340,000 neck my Work Required:Prepare income statements for the company for each of its first two years under variable costing. (Loss amounts should be entered with a minus sign.) DOWELL Company Variable Costing Income Statements 2018 2019 Sales 920,000 1,840,000 Less: Variable costs Variable overhead Variable selling and administrative expenses 50,000 100,000 Direct labor Direct materials 50,000 100,000 Total variable costs 900,000 Contribution margin 450,000 Less: Fixed expenses 300,000 240,000 300,000 Fixed overhead 240,000 Fixed selling and administrative costs 540,000 540,000 Total foxed expenses (90,000) 360,000 Net income (loss)
Answers
Answer:
DOWELL Company Variable Costing Income Statements for 2018 and 2019:
2018 2019
Sales 920,000 1,840,000
Less: Variable costs
Total variable costs 470,000 940,000
Contribution margin 450,000 900,000
Less: Fixed expenses:
Fixed selling costs 300,000 300,000
Fixed administrative costs 240,000 240,000
Total fixed expenses 540,000 540,000
Net income (loss) (90,000) 360,000
Explanation:
a) Dowell Company Income Statements under absorption costing:
2018 2019
Sales $920,000 $1,840,000
Cost of goods sold 620,000 1,240,000
Gross margin 300,000 600,000
Selling & Admin. Expenses 290,000 340,000
Net Income 10,000 260,000
b) Production & Sales Data:
Units Sold Units Produced
2018 20,000 30,000
2019 30,000 40,000
c) Variable costing and absorption costing produce different net income results. Variable costing takes into consideration the variable costs of production to produce a contribution while absorption costing considers the cost of goods sold to produce the gross profit. Variable costing is more of a management accounting technique for decision making while absorption costing follows the financial accounting procedures.
Management of Mittel Rhein AG of Köln, Germany, would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year the following data were reported: Inspection time 0.3 days Wait time (from order to start of production) 14.0 days Process time 2.7 days Move time 1.0 days Queue time 5.0 days
1.Compute the throughput time.
2. Compute the manufacturing cycle efficiency (MCE) for the quarter. (Round your answer to 2 decimal places.)
3. What percentage of the throughput time was spent in non–value-added activities? (Enter your answer as a percentage (i.e., 0.12 should be entered as 12).)
4.Compute the delivery cycle time.
5. If by using Lean Production all queue time during production is eliminated, what will be the new MCE? (Round your percentage answer to 1 decimal place (i.e., 0.123 should be entered as 12.3).)
Answers
Answer:
1. The throughput time is 9 days
2. The MCE is 0.30
3. 70% of the throughput time was spent on non-value added activities.
4. The delivery cycle time is 23 days
5. The New MCE is 67.5%
Explanation:
1. To calculate the throughput time we would have to use to make the following calculation:
throughput time=process time+inspection time+movie time+queue time
throughput time=2.7+0.3+1+5
throughput time=9 days
2. To calculate the MCE we would have to use to make the following calculation:
MCE=value added time/throughput time
MCE=2.7/9=0.30
3. MCE is 30% which means that out of the total throughput time, time spent on value added activities was 30%. Thus it means that 70% of the throughput time was spent on non-value added activities.
4. To calculate the delivery cycle time we would have to use to make the following calculation:
delivery cycle time=wait time+throughput time
delivery cycle time=14+9=23 days
5. To calculate the new MCE we would have to use to make the following calculation:
New MCE=value added time/throughput time
New MCE=2.7/4
New MCE=67.5%
1. Based on the information given the throughput time is 9 days.
2. The manufacturing cycle efficiency (MCE) for the quarter is 30%.
3. The percentage of the throughput time is 70%.
4. The delivery cycle time is 23 days.
5. The New MCE is 68%.
1. Throughput time
Throughput time = Process time + Inspection time + Move time + Queue time
Throughput time= 2.7 +0.3+ 1.0 + 5.0
Throughput time=9 days
2. Manufacturing cycle efficiency (MCE)
Manufacturing cycle efficiency (MCE) = Value-added time / Throughput time
Manufacturing cycle efficiency (MCE) = 2.7 /9
Manufacturing cycle efficiency (MCE)=30%
3. Non-value-added activities
Non-value-added activities = 100% - 30%
Non-value-added activities = 70%
4. Delivery cycle time
Delivery cycle time = Wait time + throughput time
Delivery cycle time = 14.0 + 9.0
Delivery cycle time = 23 days
5. New MCE
New MCE = Value-added time / Throughput time
New MCE=2.7/(0.3+2.7+1.0)
New MCE 2.7 / 4
New MCE =67.5%
New MCE =68% (Approximately)
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Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $201,000 of raw materials on credit; issued materials to production of $198,000 of which $27,000 were indirect. Minstrel incurred a factory payroll of $153,000, of which $37,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $180,000 during the month, compute the amount of under- or overapplied overhead:
Answers
Answer:
Underapplied overhead= $6,000
Explanation:
Giving the following information:
Direct labor= $153,000 - $37,000= $116,000
The predetermined overhead application rate= 150% of direct labor cost.
Actual overhead= $180,000
First, we need to allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 116,000*1.5= $174,000
Now, we can calculate the over/under allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 180,000 - 174,000
Under/over applied overhead= $6,000 underallocated
In the context of the competitive environment of business, unlike leading-edge firms, bleeding-edge firms offer products just as the market becomes ready to embrace them. a. True b. False
Answers
Answer:
False
Explanation:
Bleeding edge firms provide products that are untested and carry a high risk. Products are unreliable and lead adopters stand the risk of making big losses in event that the product is not well received in the market
Leading edge firms on the other hand deal in products that are well tested and accepted by the market.
So the statement that - unlike leading-edge firms, bleeding-edge firms offer products just as the market becomes ready to embrace them. Is not true
Products offered by bleeding edge firms are not embraced by the market as they are untested and risky
Goodwill should:________.
a. be written off as soon as possible against retained earnings.
b. absent impairment, not be written off because it has an indefinite life.
c. written off as soon as possible as an expense.
d. amortized over a maximum of forty years.
Answers
Answer:
d.amortized over a maximum of forty years
You would like to combine a risky stock with a beta of 1.87 with U.S. Treasury bills in such a way that the risk level of the portfolio is equivalent to the risk level of the overall market. What percentage of the portfolio should be invested in the risky stock
Answers
Answer:
46.5%
Explanation:
The treasury bills have zero beta as they have no systematic risk. Beta is used in the Capital asset pricing Model to demonstrate a relationship between systematic risk and rate of return.
Expected Return = Rf + Beta * Rp
The percentage that should be invested in the risky portfolio will be,
1 - 1 / Beta
1 - 1 / 1.87
= 46.5%
On December 31, the following data were accumulated for preparing the adjusting entries for Bellingham Realty: • The supplies account balance on December 31 is $5,635. The supplies on hand on December 31 are $1,495. • The unearned rent account balance on December 31 is $4,600 representing the receipt of an advance payment on December 1 of four months’ rent from tenants. • Wages accrued but not paid at December 31 are $2,035. • Fees earned but unbilled at December 31 are $15,450. • Depreciation of office equipment is $4,420. Required: 1. Journalize the adjusting entries required at December 31. Refer to the Chart of Accounts for exact wording of account titles. 2. What is the difference between adjusting entries and correcting entries?
Answers
Answer and Explanation:
Date Adjusting entries Debit Credit Asset Liabilities Equity
Dec 31 Supplies Expense $4,140 Decrease
To Supplies $4,140 Decrease
(Being the supplies expense is recorded)
It is computed below:
= Account balance - still on hand
= $5,635 - $1,495
= $4,140
Dec 31 Unearned Rent revenue $1,150 Decresae
To Rent revenue $1,150 Increase
(Being the unearned rent revenue is recorded)
It is computed below:
= $4,600 ÷ 4 months
= $1,150
Dec 31 Wages Expense $2,035 Decrease
To Wages payable $2,035 Increase
(Being the wages expense is recorded)
Dec 31 Accounts Receivable $15,450 Increase
To Fees earned $15,450 Increase
(Being the fees earned is recorded)
Dec 31 Depreciation expense $4,420 Decrease
To Accumulate depreciation
- Office Equipment $4,420 Decresae
(Being the depreciation expense is recorded)
2 Adjusting entries are the entries that are to be adjusted at the end of the accounting period but it is planed but the correcting entries are not planned it is required when we want to just correct the errors
. Gwen is leading a meeting and wants to make sure that they stick to the agenda and end on time. What should she do to move the meeting along? a. Say as much as possible during the meeting. b. Move divergent topics to a separate list to be discussed later. c. Not worry so much about time; the most important thing is to make sure that all agenda items are discussed fully. d. Ask anyone who monopolizes the conversation to leave.
Answers
Answer:
b.
Explanation:
When leading a meeting with many different topics, the best way to move the meeting along faster so that it ends in time is to move divergent topics to a separate list to be discussed later. This would remove the unimportant topics from that specific meeting and allow the very specific important topics to be discussed thoroughly in that meeting, thus moving it along but still being as efficient as possible. The divergent topics can be scheduled to be discussed at a later date when they are of a higher priority.
A promise to make a gift for a charitable or educational purpose is unenforceable unless and until the institution to which to promise was made incurs obligations by relying on the promise. This exception is usually justified on the basis of either _____ or _____.
Answers
Answer:
This exception is usually justified on the basis of either promissory estoppel or public policy.
Explanation:
There are many Judicial devices and one of them is the Estoppel. In common law, there are legal systems which allow a court to use this device to prevent a person (corporate or individual) from making pronouncements or from defecting on their promise.
With regard to public policy, courts in recent cases have reached conclusions that pledges are legally enforceable regardless of whether or not the recipient of the promise has incurred liabilities based on the pledge, and that, the only way to ensure compliance with requirements of the law, a test of public policy is to ensure the promise is made good.
This thought holds true in Ohio where for example, a pledge has the same weight as a promissory note.
According to precedence established in Pennsylvania, any written promise can be enforced regardless of whether or not the pledger intends to be legally bound.
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Marina had an accident with her car and the repair bill came to $900. She didn't have any emergency fund money and no extra
money in her monthly budget, so she ended up borrowing from a pay-day loan company. As long as she can pay the loan back at
the end of the 30 day period she won't be charged any interest, technically. However, she did have to pay an $18 processing fee
per $100 that she borrowed.
If she were to consider the processing fee to represent interest paid in her formula, what would she discover to
be the annual interest rate she was charged on her short term loan?
Answers
Answer:
216%
Explanation:
Ordinary interest is computed on the basis of a 360-day year, so Marina's borrowing period is 1/12 of a year. The annual rate is then 12 times the rate Marina pays for 30 days:
12 × 18/100 = 216/100 = 216%
Marina would discover the annual interest rate is 216%.
Support agents at Universal Containers research solutions to customer issues by asking various subject matter experts (SMEs) at the company.Which three features will allow Support Agents to quickly document the details of these meetings? (Choose three.)
A. Case Feed
B. Workflow Email Alerts
C. Case Group
D. Case Comments
E. Events
Answers
Answer:
A,C,D
Explanation:
Remember, we are told the issue concerns "support agents" working for a company–Universal Containers. Thus, they will be using Salesforce inorder to document their findings.
i. Case feed is one useful feature that quickly allows the support agents to edit, store and change the status of cases where necessary.
Ii. Case group is another useful feature to group cases that the support agents consider as been interrelated.
iii. Case comments feature allows them to read through case by case comment from the participants in the research, allowing proper insight into minds of the customers.
Richard Palm is the accounting clerk of Olive Limited. He uses the source documents such as purchase orders, sales invoices and suppliers’ invoices to prepare journal vouchers for general ledger entries. Each day he posts the journal vouchers to the general ledger and the related subsidiary ledgers. At the end of each month, he reconciles the subsidiary accounts to their control accounts in the general ledger to ensure they balance. Discuss the internal control weaknesses and risks associated with the above process.
Answers
Answer:
The possible monitoring vulnerability in this case will be as follows:
• No division of service
• Too much dependence on the individual
• credibility and location of information, if any, are questionable
• The measurement errors are high
Throughout such a situation, the programme would be configured to include end-users as well as GL offices with a comprehensive checklist of journal coupons and accounts operation records throughout order to prepare for the possible harm.