Answer:
The flexible budget report shows that variable costs were $1,300 below budget.
Explanation:
SORIA COMPANY
Selling Expense Flexible Budget Report
Clothing Department
For the Month Ended October 31, 2017
Budget Actual Difference
Fav /Unfav /Neither
Fav nor Unfav
Sales in units 10,000 10,000 -0- Neither Fav nor Unfav
Variable Expenses
Sales in Commission
(0.24) 2400 2400 -0- Neither Fav nor Unfav
Advertising Expenses
936/7800* 10,000 1200 900 300 Fav
Travel Expense
3120/7800 *10,000 4000 4000 -0- Neither Fav nor Unfav
Free Samples Given Out
1794/7800 *10,000 2300 1300 1000 Fav
Total Variable
Expenses (0.99) 9,900 8,600 1300 Fav
Fixed Expenses
Rent 1700 1,700 -0- Neither Fav nor Unfav
Sales salaries 1,100 1,100 -0- Neither Fav nor Unfav
Office salaries 800 800 -0- Neither Fav nor Unfav
Depreciation-autos (sales staff)
400 400 -0- Neither Fav nor Unfav
Total Fixed 4,000 4,000 -0- Neither Fav nor Unfav
Total Expenses 13900 12600 1300 Favorable
From the above flexible budget report, variable costs were $1,300 below budget.
The flexible budget report shows that the variable costs is $1,300 below the budget.
SORIA COMPANY
Selling Expense Flexible Budget Report
For the Month Ended October 31, 2017
Particulars Budget Actual Difference (F/U)
Sales in units 10,000 10,000 -
Variable Expenses
Sales in Commission 2,400 2,400 -
(0.24*10,000)
Advertising Expenses 1,200 900 300 F
(936/7800*10,000)
Travel Expense 4,000 4,000 -
(936/7800*10,000)
Free Samples given out 2,300 1,300 1,000 F
(1794/7800 *10,000)
Total Variable Cost 9,900 8,600 1,300 Fav
Fixed Expenses
Rent 1,700 1,700 -
Sales salaries 1,100 1,100 -
Office salaries 800 800 -
Depreciation - autos 400 400 -
Total Fixed Cost 4,000 4,000 -
Total Expenses 13,900 12,600 1,300 Fav
In conclusion, the flexible budget report shows that the variable costs is $1,300 below the budget.
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When a project has a "hard gate," like being ready on time, how does that affect normal success criteria? Is it fair to judge a project with a critical completion date by normal project success standards? Why or why not?
Explanation:
The issue that determines the success of a project is usually attributed to managing the scope of the project. Therefore, in some projects, the deadline for completion is not necessarily the most fundamental criterion that will incur your success.
Every project has a defined deadline for the beginning and the end, so the project management must be planned so that the time is sufficient for the execution of its tasks that will lead to the achievement of the objectives and goals.
Therefore, it is not fair to judge a project with a critical completion date, due to the fact that the project was developed and controlled so that success was related to other more important variables for such a project, not only time, but also its effectiveness , cost-benefit, quality, costs, etc.
Big data analytics programs (which analyze massive data sets to make decisions) use gigantic computing power to quantify trends that would be beyond the grasp of human observers. As the use of this quantitative analysis increases, do you think it may decrease the "humanity of production" in organizations?
Answer:
The correct answer is: No, it may not decrease the humanity of production in organizations.
Explanation:
To begin with, the term known as ''humanity of production'' refers to that human element that gives to the company its capability of leadership and other human abilities. Moreover, when it comes to the big data analytics those programs would not decrease the humanity of production because in order to create all those programs and in order to read all the information that those programs give and to use it and implement there will be a need of using human capital to complete the whole objective. So therefore that human will be as need as machines.
A chain of supermarkets specializing in gourmet food, has been using the average cost method to value its inventory. During the current year, the company changed to the first-in, first-out method of inventory valuation. The president of the company reasoned that this change was appropriate since it would more closely match the flow of physical goods. This change should be reported on the financial statements as A. Change in accounting estimate. B. Affecting only future periods. C. Cumulative-effect type accounting change. D. Correction of an error.
Answer: Affecting only future periods.
Explanation:
From the question, we are informed that a chain of supermarkets specializing in gourmet food, that has been using the average cost method to value its inventory changed to the FIFO method in the current year.
This change should be reported on the financial statements as a retroactive effect type of an accounting change. This is necessary because it affects future period and in order to maintain comparability and consistency.
Indicate whether each of the following statements is true or faise Statement 1. The government can raise revenue by taxing the sellers without creating deadweight loss when the demand for the goods being taxed is perfectly inelastic 2. A tax that raises no revenue for the government cannot have any deadweight loss.
Answer and Explanation:
The indication of the following statement regarding true or false is
For Statement 1
This given statement is true as the demand is perfectly inelastic so there is no deadweight loss because quantity does not change or not have any impact
Therefore, in this case, the government only raise revenue but at the same time when there is an increase in elasticity so there is a change in deadweight loss
For Statement 2
This given statement is false as if no revenue is there, there will be deadweight loss
The common stock and debt of Northern Sludge are valued at $62 million and $38 million, respectively. Investors currently require a 16.8% return on the common stock and a/an 7.2% return on the debt. If Northern Sludge issues an additional $21 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? Assume that the change in capital structure does not affect the interest rate on Northern’s debt and that there are no taxes.
Answer:
the expected return on the stock will decrease
Explanation:
total firm's value $100 million
equity $68 milliondebt $32 millionrequired rate of return:
cost of equity 16.8%cost of debt 7.2%if the firm issues new stock and retires debt:
equity $89 milliondebt $11 millionThe return on equity (ROE) measures how much money a company earns per dollar invested, ROE formula = net income / total equity
now let's suppose that the firm's net income is $10 million:
under the old capital structure ROE = $10 / $68 = 14.7%
now under the new capital structure net income will increase by the amount of interests saved = $21 x 7.2% = 1.512
new net income = $11.512
new ROE = $11.512 / $89 = 12.9%
following this example, the new ROE will be 12.2% lower than before because the cost of debt was much lower than the cost of equity.
as the weight of equity increases, the company's WACC will increase also:
old WACC = (68/100 x 16.8%) + (32/100 x 7.2%) = 11.424 + 2.304 = 13.728%old WACC = (89/100 x 16.8%) + (11/100 x 7.2%) = 14.952 + 0.792 = 15.744%The annual fixed costs for a plant are $100,000, and the variable costs are $140,000 at 70% utilization of available capacity, with net sales of $280,000. What is the breakeven point in units of production if the selling price per unit is $40
Answer:
With the production 5000 units the plant will achieve it's break even point
Explanation:
Solution
The break even points is the point in a business when the total revenue is exactly the same to the equal expenditure.
The formula is given below:
D' = Cy/(p-cy)
Here
D' =the demand at break even point
p = the selling price
cy= the variable costs per unit
Cy = the total fixed cost
Thus
The total cost of the plant = $100,000
The variable costs = $140,000
The net sales = $280,000
The selling price per unit = $40
The total no units sold per year is given as :
Annual sale (units) = Total sales/Sale per unit
Now,
By the method of substitution we have the following.
Annual sale (units) = $280,000/40
=7000 units/year
The formula for variable cost per unit cy is
cy = Cy/Annual sale (units)
Now,
We substitute in the above equation the value of Cy as $140,000 and annual sale as 7000 units/per year
cy = $140,000/7000
=$20 units
For the demand at break even point D', we have the following:
D' = Cy/(p-cy)
We We substitute in the above equation the value of Cy as $100,000 and p as $40/unit and cy as $20 /unit
D' = 100000/(40 -20)
=5000 units/year
g A statement describing how the world is a. is a normative statement. b. is a positive statement. c. would only be made by an economist speaking as a policy adviser. d. would only be made by an economist employed by the government.
Answer:
b. is a positive statement
Explanation:
Positive statements describes what is and not ones personal opinion or value judgements.
An example of a positive statment is when prices increase, demand falls.
A normative statement describes value judgement and it is not based on empirical evidence.
An example of a normative statment is the government ought to increase prices of junk food so people can eat more healthy food.
I hope my answer helps you
Engineering Wonders reports net income of $63 million. Included in that number is building depreciation expense of $5.3 million and a gain on the sale of land of $1.3 million. Records reveal decreases in accounts receivable, accounts payable, and inventory of $2.3 million, $3.3 million, and $4.3 million, respectively. What are Engineering Wonders' net cash flows from operating activities? (List cash outflows and any decrease in cash as negative amounts. Enter your answer in millions. (i.e., $10,000,000 should be entered as 10).)
Answer:
70.3
Explanation:
The calculation of net cash flows from operating activities is shown below:-
Engineering Wonders reports
Net cash flow from operating activities
Particulars Amount
Net income 63
Adjustment to reconcile net
income to net cash
flow from operating activities
Add: Depreciation expense 5.3
Less: Gain on sale of land 1.3
Add: Decrease in Accounts
receivable 2.3
Less: Decrease in accounts
payable 3.3
Add: Decrease in inventory 4.3
Net cash flow from operating
activities 70.3
Therefore the net cash flow from operating activities is 70.3.
"In the Modigliani Miller perfect world with no taxes, if we assume that the effect of adding debt to firm's capital structure is exactly balanced by an increase in the cost of equity as more debt is added, what is the effect of increased debt usage on the weighted average cost of capital (WACC)
Answer: WACC remains constant as leverage increases.
Explanation:
Here is the complete question:
In the Modigliani Miller perfect world with no taxes, if we assume that the effect of adding debt to firm's capital structure is exactly balanced by an increase in the cost of equity as more debt is added, what is the effect of increased debt usage on the weighted average cost of capital (WACC)?
a. WACC first increases, then decreases as leverage increases.
b. WACC remains constant as leverage increases.
c. WACC increases continuously as leverage increases.
d. WACC decreases continually as leverage increases.
In the Modigliani Miller perfect world with no taxes, the capital structure is not relevant as the way a company finances it operations does not really matter.
For the capital markets, they will be perfectly competitive and there will be no taxes, bankruptcy costs or transactions cost and investors all have the same expectations. The weighted average cost if capital will be thesame even though leverage increases.
Trio Company reports the following information for the current year, which is its first year of operations.
Direct materials $15 per unit
Direct labor $15 per unit
Overhead costs for the year
Variable overhead $3 per unit
Fixed overhead $120,000 per year
Units produced this year 20,000 units
Units sold this year 14,000 units
Ending finished goods inventory in
units 6,000 units
1. Compute the cost per unit using absorption costing and then using variable costing2. Determine the cost of ending finished goods inventory using absorption costing and then using variable costing3. Determine the cost of goods sold using variable costing and then using variable costing
Answer:
Instructions are below.
Explanation:
Giving the following information:
Direct materials $15 per unit
Direct labor $15 per unit
Overhead costs for the year
Variable overhead $3 per unit
Fixed overhead $120,000 per year
Units produced this year 20,000 units
Units sold this year 14,000 units
Ending finished goods inventory in
units 6,000 units
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).
1) Absorption costing method:
Unitary fixed overhead= 120,000/20,000= 6
Unit product cost= direct material + direct labor + total unitary overhead
Unit product cost= 15 + 15 + 3 + 6= 39
Variable costing:
Unit product cost= direct material + direct labor + variable overhead
Unit product cost= 33
2) Ending inventory:
Absorption costing= 6,000*39= $234,000
Variable costing= 6,000*33= $198,000
3) Cost of goods sold:
Absorption costing= 14,000*39= 546,000
Variable costing= 14,000*33= 462,000
Solve accepted a 60-day, 9 percent note from Pete Houghton in settlement of his past-due account for $6,000. On April 9, Westwood Company discounted the note at the First National Bank. The bank charged a discount rate of 12 percent. What is the amount of the proceeds
Missing information:
The note was accepted on March 10
Answer:
$6,029.10
Explanation:
in order to answer the question, I assumed a 360 day year, so 60 days = 2/12 of a year
the note's value on maturity date = principal + accrued interest = $6,000 + ($6,000 x 9% x 2/12) = $6,000 + $90 = $6,090
bank charges = note's value on maturity date x discount rate x 30 days = $6,090 x 12% x 1/12 = $60.90
net proceeds = $6,090 - $60.90 = $6,029.10
At the beginning of the month, Arthur's Olde Consulting Corporation had two jobs in process that had the following costs assigned from previous months:
Job Number Direct Labor Applied Overhead
SY-400 $ 23,790 ?
SY-403 15,870 ?
During the month, Jobs SY-400 and SY-403 were completed but not billed to customers. The completion costs for SY-400 required $26,700 in direct labor. For SY-403, $79,500 in labor was used.
During the month, the only new job, SY-404, was started but not finished. Total direct labor costs for all jobs amounted to $150,570 for the month. Overhead in this company refers to the cost of work that is not directly traced to particular jobs, including copying, printing, and travel costs to meet with clients. Overhead is applied at a rate of 70 percent of direct labor costs for this and previous periods. Actual overhead for the month was $107,600.
Required:
(a) What are the costs of Jobs SY-400 and SY-403 at the beginning of the month and when completed?
(b) What is the cost of Job SY-404 at the end of the month?
(c) How much was under- or overapplied service overhead for the month?
Answer:
Cost at the beginning:
Cost of SY-400 $40,443.00
Cost SY-403 $ 26,979.00
Cost at month end:
Cost of SY-400 $85,833.00
Cost of SY-403 $162,129.00
Cost of SY-404 $75429
Overhead was under-applied by $2,201.00
Explanation:
At the beginning of the month costs of jobs SY-400 and SY-403 are the direct labor costs incurred already plus 70% of the direct labor cost as overhead applied:
Cost of SY-400=$23,790+($23,790*70%)=$40,443.00
Cost SY-403=$15,870+($15,870*70%) =$ 26,979.00
Costs at the end of the month would be cost at the beginning plus new direct labor cost incurred as well as the overhead on the new direct labor cost:
Cost of SY-400=$40,443.00+$26,700+($26,700*70%)=$85,833.00
Cost of SY-403=$ 26,979.00+$79500+(70%*$79500)=$162,129.00
Direct labor cost of SY-404=$150,570- $26,700-$79,500=$44370
Cost of SY-404=$44370+(70%*$44370)=$75429
Actual overhead is $107,600
Overhead applied=(70%*$44370)+(70%*$79500)+($26,700*70%)=$105,399.00
Under-applied overhead=$107,600-$105,399=$2,201.00
a) The cost of Jobs SY-400 and SY-403 at the beginning of the month and on completion are:
SY-400 SY=403
Beginning costs $40,443 $26,979
Total costs $85,833 $162,129
b) The cost of Job SY-404 at the end of the month is $75,429.
c) The Service Overhead for the month was underapplied by $2,201.
Data and Calculations:
Job Number Direct Labor Applied Overhead Total Costs
SY-400 $ 23,790 ? = $16,653 ($23,790 x 70%) $40,443
SY-403 15,870 ? = $11,109 ($15,870 x 70%) $26,979
SY-400 SY=403 SY404 Total Costs
Beginning costs $40,443 $26,979 $0 $67,422
Direct labor 26,700 79,500 $44,370 $150,570
Overhead applied 18,690 55,650 31,059 105,399
Total costs $85,833 $162,129 $75,429 $323,391
Overhead applied = $105,399
Actual overhead $107,600
Underapplied o/h = $2,201
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Dollar-value LIFO:
a. Starts with ending inventory measured at current costs and re-creates LIFO layers for measuring inventory costs.
b. Increases the recordkeeping costs of LIFO.
c. Only is allowed for internal reporting purposes.
d. None of these answer choices are correct.
Answer:
a. Starts with ending inventory measured at current costs and re-creates LIFO layers for measuring inventory costs.
Explanation:
Dollar-value LIFO refers a technique of accounting that employed for inventory based on the last-in-first-out model.
To obtain the dollar-value LIFO, the conversion price index that will be used to calculate the LIFO cost layer for each period must be calculated first.
Therefore, Dollar-value LIFO starts with ending inventory measured at current costs and re-creates LIFO layers for measuring inventory costs.
Identify the information that the current Generally Accepted Accounting Principles and Auditing Standards require the financial statements of an entity to show for the reporting period:_________.1. Budgeting vs actual comparisons of key balance sheet and income statement accounts2. Market value of the entity's net assets3. Number of people employed by the entity4. Investments by and distribution to owners (ex: stockholders) during the period5. Financial Position at the end of the period6. Cash flows during the period7. Earnings for the period
Answer:
4. Investments by and distribution to owners (ex: stockholders) during the period.
5. Financial Position at the end of the period.
6. Cash flows during the period.
7. Earnings for the period.
Explanation:
The information that the current Generally Accepted Accounting Principles (GAAP) and Auditing Standards require the financial statements of an entity to show for the reporting period are;
1. Investments by and distribution to owners (ex: stockholders) during the period.
2. Financial Position at the end of the period.
3. Cash flows during the period.
4. Earnings for the period.
The Financial Accounting Standards Board (FASB) issued some standards, accounting principles, and procedures to be followed by public companies in the United States of America for reporting and recording statements of income, this is known as the Generally Accepted Accounting Principles (GAAP).
The GAAP is also adopted by the Securities and Exchange Commission (SEC) to measure, analyze and regulate the stock market.
2. The Fourth of July Company agreed to ship a quantity of fireworks to Behan. After Behan pays in full, he learns that state law prohibits this type of sale. Before the fireworks are sent, Behan calls to cancel this contract and to demand his money back. May he recover his money in court
Answer:
Behan will recover his amount.
Explanation:
The contract has not been formed as the contract is only enforceable if the contract is legally allowed which means that the selling of fireworks in this case scenario is not allowed and hence Behan and Fourth of July Company are both equally responsible for not committing to such type of agreements. So the company must payback the money as the contract is not enforceable in the jurisdiction.
A firm's average cost increases as it increases its output by expanding its plant and hiring additional workers (its only inputs to production). The firm's owner blames the increase in per-unit costs on the law of diminishing marginal productivity. The owner's reasoning is: A. correct because some inputs are fixed in the long run. B. incorrect because economies of scale are present. C. correct because marginal productivity must decrease in the short run. D. incorrect because all inputs are varied in the example.
Answer: D. incorrect because all inputs are varied in the example.
Explanation: While marginal productivity describes the extra output, or return, or profit gotten per unit by benefits from the production inputs of a company, the law of diminishing marginal productivity is one that recognizes that the quantity of all inputs of production cannot be changed at one time. The owner's reasoning of attributing the increase in per-unit costs on the law of diminishing marginal productivity is incorrect because all inputs are varied in the example. Marginal productivity eventually declines because some inputs are fixed, but however, in the long run where no inputs are fixed, the law does not apply.
Delta Corporation (a U.S. company) has several transactions with foreign entities. On December 2, 20X1, Delta bought items from foreign company at a price of 300,000 yen when the direct exchange rate was 1 yen = $1.17. Delta made payment to the foreign company on December 20, 20X1, when the exchange rate had changed to 1 yen = $1.21. The foreign exchange gain or loss reported by Delta from this transaction will be:
Answer:
$12,000 gain
Explanation:
From the above information given the yen has depreciated relative to the dollar amount between the date of the transaction and the date of payment.
The Amount of the gain will be:
Price = 300,000
Direct exchange rate( 1 yen )= $1.17
Change in exchange rate ( 1 yen)= $1.21
Hence:
($1.21x 300,000) – ($1.17x 300,000)
=$363,000-$351,000
=$12,000 gain
Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 $ 379,697 06/30/2021 $ 16,000 $ 18,985 $ 2,985 382,682 12/31/2021 16,000 19,134 3,134 385,816 06/30/2022 16,000 19,291 3,291 389,107 12/31/2022 16,000 19,455 3,455 392,562 06/30/2023 16,000 19,628 3,628 396,190 12/31/2023 16,000 19,810 3,810 400,000 THA buys back the bonds for $384,446 immediately after the interest payment on 12/31/2021 and retires them. What gain or loss, if any, would THA record on this date
Answer:
THA would record a gain of $1,370 on 12/31/2021
Explanation:
Particulars Amount ($)
Carrying value of bonds after the interest payment on 12/31/2021 385,816
Less: Amount paid on redemption on 12/31/2021 (384,446)
Gain on redemption of bonds 1,370
Entry would be-
Date Account titles and Explanation Debit ($) Credit ($)
12/31/2021 Bonds payable 385,816
Cash 384,446
Gain on redemption of bonds 1,370
(To record redemption of bonds)
Godcare, an insurance firm based in California, had difficulties expanding their operations to Asian markets as most of their target countries had strict regulations on transferring the details of the customers among the different branches of the firm. The company had to obtain an approval from its customers before sharing their personal information with its branches in other countries. Which of the following barriers is most likely to have affected the services of Godcare in the given scenario?a. Protectionismb. Control on transborder data flowsc. Protection of intellectual propertyd. Cultural requirements for adaptatione. Language translation barriers
Answer:
The correct answer is: b. Control on transborder data flows.
Explanation:
Control on transborder data flows was the barrier that probably affected Godcare services in the scenario above.
The insurance company had this barrier of control of transborder data when expanding its business to Asian countries with stricter regulations on the transfer of customer data.
Generally, these government restrictions arise to protect against possible abuses and invasions of privacy, which meant that the company needed the approval of each customer to share their personal information with its branches in other countries.
Tom Reynold is the sole proprietor of Pretty Pets, a business specializing in the sale of high-end pet gifts and accessories. Pretty Pets' sales totaled $ 986 comma 000 during the most recent year. During the year, the company spent $ 52 comma 000 on expenses relating to website maintenance, $ 31 comma 300 on marketing, and $ 29 comma 500 on wrapping, boxing, and shipping the goods to customers. Pretty Pets also spent $ 640 comma 000 on inventory purchases and an additional $ 18 comma 000 on freight-in charges. The company started the year with $ 18 comma 250 of inventory on hand and ended the year with $ 18 comma 400 of inventory. Prepare Pretty Pets' income statement for the most recent year.
Answer and Explanation:
For preparing the income statement first we have to determine the cost of goods sold which is shown below:
Beginning inventory $18,250
Add Inventory purchase ($640,000 + $18,000) $658,000
Total goods available for sale $676,250
Less: Ending inventory ($18,400)
Cost of goods sold $657,850
Now the preparation of the income statement is presented below:
Income statement
Sales $986,000
Less: Cost of goods sold - $657,850
Gross profit $328,150
Less: Operating expenses
Expenses relating to website maintenance -$52,000
Marketing exp -$31,300
wrapping, boxing, and shipping Exp -$29,500
Net income $215,350
The following information is related to Kingbird Company for 2017.
Retained earnings balance, January 1, 2017 $981,000
Sales Revenue 26,100,000
Cost of goods sold 16,100,000
Interest revenue 71,000
Selling and administrative expenses 4,710,000
Write-off of goodwill 821,000
Income taxes for 2017 1,254,000
Gain on the sale of investments 111,000
Loss due to flood damage 391,000
Loss on the disposition of the wholesale division (net of tax) 441,000
Loss on operations of the wholesale division (net of tax) 91,000
Dividends declared on common stock 251,000
Dividends declared on preferred stock 81,000
Kingbird Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Kingbird sold the wholesale operations to Rogers Company. During 2017, there were 490,000 shares of common stock outstanding all year.
Required:
Prepare the mutiple step income statement.
Answer:
Net income is $2,474,000
Retained earning for the year 2017 is $2,142,000
Retained earnings balance at December 31, 2017 is $3,123,000
Explanation:
A multi-step income statement is an income statement that shows gross profit and the detailed of each category of expenses and incomes to arrive at the net income of a company for a particular period.
This can be prepared as follows:
Kingbird Company
Mutiple step income statement
for the year ended December 31, 2017
Details $
Sales Revenue 26,100,000
Cost of goods sold (16,100,000)
Gross profit 10,000,000
Operating expenses:
Selling and administrative expenses (4,710,000)
Operating income 5,290,000
Other income (loss):
Gain on the sale of investments 111,000
Write-off of goodwill (821,000)
Loss due to flood damage (391,000)
Interest income:
Interest revenue 71,000
Income before tax 4,260,000
Income taxes for 2017 (1,254,000)
Income after tax 3,006,000
Extraordinary items:
Loss on wholesale div. disp. (net of tax) (441,000)
Loss on wholesale div. op. (net of tax) (91,000)
Net income 2,474,000
Preferred stock dividend (81,000)
Common stock dividend (251,000)
Retained earning for the year 2017 2,142,000
Retained earnings balance, Jan. 1, 2017 981,000
Retained earnings bal., Dec. 31, 2017 3,123,000
Within the relevant range, the variable cost per unit: remains constant as activity changes. increases as activity increases. decreases as activity increases. can increase or decrease as the activity changes.
Answer:
remains constant as activity changes.
Explanation:
The Variable Cost per unit is the actual production cost that is incurred in order to produce each unit that is affected by changes in the company's output or activity level. Within the relevant range, the variable cost per unit remains constant as activity changes, even though the total dollar amount varies in accordance to the various changes in the company's activity, the variable cost will stay constant on a per unit basis.
Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 10 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the "money multiplier" is given by 1 / (RR + ER ).
Where
RR = the percentage of deposits that banks are required to keep as reserves
ER = the percentage of deposits that banks voluntarily hold as excess reserves
Consider the balance sheet of one of several identical banks:
Assets Liabilities and Net Worth
Reserves 400 Checking Deposits 2,000
Loans 1,600 Net Worth 0
Total Assets 2,000 Liabilities and Net Worth 2,000
The required reserve ratio in this economy is _________%. (Enter your response as an integer.)
If the total money stock (supply) is $600,000, the total amount of reserves held in the banking system is_____ $
Answer and Explanation:
The computation is shown below:
(1) The required reserve ratio is
= Required reserves ÷ Checkable deposit
where,
Required reserves
= Total reserves - Excess reserves
= 400 - 2,000 × 10%
= $400 - $200
= $200
And, the checkable deposit is $2,000
So, the required reserve ratio is
= $200 ÷ $2,000
= 10%
(2) Now the total amount of reserves is
But before that first we have to determine the money multiplier is
Money multiplier (MM) = 1 ÷ (ER + RR)
= 1 ÷ (0.10 + 0.10)
= 1 ÷ 0.20
= 5
Now
Monetary base (MB) is
= Money stock ÷ Money multiplier
= $600,000 ÷ 5
= $120,000
And as we know that
Monetary base = Currency + Reserves, and Currency (i.e held by public) = 0
So,
Reserves = Monetary base = $120,000
Management of Carla Vista, Inc., is planning to raise $1,215,000 in new equity through a private placement. If the sale price is $20.25 per share, how many shares does the company have to issue
Answer:
Number of shares to be issued = 60,000 units
Explanation:
A private placement involves the issue of new shares to a few number of individual and institutional investors. Unlike initial public offering, here the shares are not offered to the general public.
The number of units to be issued is determined as follows
Units to be issued = Total capital to be raised / issue price per share
Number of units to be raised = $1215,000/$20.25 per share= 60,000 units
Number of shares to be issued = 60,000 units
Some of the information found on a detail inventory card for Headland Inc. for the first month of operations is as follows.
Received
Date No. of Units Unit Cost Issued, No. of Units Balance, No. of Units
January 2 1,700 $3.39 1,700
7 1,200 500
10 1,100 $3.62 1,600
13 1,000 600
18 1,500 $3.73 800 1,300
20 1,100 200
23 1,800 $3.84 2,000
26 1,300 700
28 2,100 $3.96 2,800
31 1,800 1,000
Calculate average-cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)
Average-cost per unit $ _____
From these data compute the ending inventory on each of the following bases. Assume that perpetual inventory records are kept in units only.
(1) First-in, first-out (FIFO).
(2) Last-in, first-out (LIFO).
(3) Average-cost. (Round final answers to 0 decimal places, e.g. 6,548.)
(1) FIFO (2) LIFO (3) Average-cost
Ending Inventory $ $ $
If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, would the amounts shown as ending inventory in (1), (2), and (3) above be the same? What amount would be shown as ending inventory? (Round average cost per unit to 4 decimal places, e.g. 2.7621 and final answers to 0 decimal places, e.g. 6,548.)
Answer:
Average-cost per unit $ $3.73
ending inventory in units only:
FIFO = 1,000 x $3.96 = $3,960LIFO = 1,000 x $3.39 = $3,390 Average = $3,728
ending inventory including $:
FIFO = 1,000 x $3.96 = $3,960 (this will not change)LIFO = 1,000 x $3.96 = $3,960 (this will change) Average = $3,728 / (this will not change)Explanation:
Date units units unit total balance
purchased sold price
January 2 1,700 $3.39 $5763 1,700
7 1,200 500
10 1,100 $3.62 $3982 1,600
13 1,000 600
18 1,500 $3.73 $5595 2,100
18 800 1,300
20 1,100 200
23 1,800 $3.84 $6912 2,000
26 1,300 700
28 2,100 $3.96 $8316 2,800
31 1,800 1,000
total 8,200 $3.7278 $30,568
Ace Ventura, Inc., has expected earnings of $5 per share for next year. The firm's ROE is 15%, and its earnings retention ratio is 40%. If the firm's market capitalization rate is 10%, to the nearest dollar what is the present value of its growth opportunities
Answer: $25
Explanation:
Value with no growth = Expected earnings/Market capitalization rate
= $5/10%
= $5/0.1
= $50
Growth rate = Earnings retention ratio × ROE
Growth rate = 40% × 15%
= 40/100 × 15/100
= 0.4 × 0.15
= 0.06 = 6%
Value with growth = [$5 × (1-0.4)]/(0.10 - 0.06)
= ($5 × 0.6)/0.04
= $3/0.04
= $75
Present value of growth opportunities will now be:
= Value with growth - value with no growth
= $75 - $50
= $25
Business strategy focuses on:_______.
a. ensuring that the company maintains the existing market share that it has historically enjoyed.
b. improving the competitive position of a corporation's products or services within the industry or market segment served.
c. providing adequate shareholders' return on investment. preventing the competition from gaining a competitive edge by undermining their marketing plan.
d. recovering the competitive lead by using all available resources that the company can provide.
Answer:
b. improving the competitive position of a corporation's products or services within the industry or market segment served.
Explanation:
Business strategy is defined as various decisions and actions a business takes in order to reach its goals and stay competitive in the industry.
This guides the business on resource allocation.
Adjustments to business strategy is continous to tackle challenges a business faces in maintaining bits competitive advantage in the market.
So business strategy focuses on improving the competitive position of a corporation's products or services within the industry or market segment served.
You are considering acquiring a firm that you believe can generate expected cash flows of $10,000 a year forever. However, you recognize that those cash flows are uncertain. a. Suppose you believe that the beta of the firm is 0.4. How much is the firm worth if the risk-free rate is 4% and the expected rate of return on the market portfolio is 11%
Answer:
PV or value of the firm = $147058.8235
Explanation:
To calculate the worth of the firm, we first need to determine the required rate of return of this firm. Using the CAPM equation, we calculate the required rate of return to be,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free raterM is the return on marketr = 0.04 + 0.4 * (0.11 - 0.04)
r = 0.068 or 6.8%
As the firm is expected to generate a constant cash flow forever, it can be treated as a perpetuity. To calculate the value of the firm, we use the present value of perpetuity. The formula for present value of perpetuity is,
PV = Cash flow / r
Where,
r is the required rate of returnPV or value of the firm = 10000 / 0.068
PV or value of the firm = $147058.8235
Salaries for professions (such as architect or medical doctor) that require a long period of study are typically higher than those for other jobs. The reasons for this are all of the following EXCEPT __________.a. students sacrifice a good deal of present incomeb. status deserves more reward in the form of wagesc. long periods of schooling incur greater current costsd. future income is worth less than present income
Answer:
d. future income is worth less than present income
Explanation:
Remember, since we want an exception to all the possible reasons for higher salaries of those in medical and architectural profession, we carefully examine the reasons given.
However, in no way is it because those of this profession (architect, medical doctors) would earn future income worth less than their present income a basis for their higher salaries than other jobs, since most often they earn more as they the years goes by in their profession.
Which of the following is an expense of this period? Multiple Choice Costs of items paid for in this period but used up next period Repayment of debt from a loan in a prior period Cost of land purchased and paid for this period Costs of items used up this period but paid for next period
Answer: Costs of items used up this period but paid for next period
Explanation:
Period Expenses for the period are transactions that should be expensed because they were used in the current period.
Therefore if a period cost is not used in the period, it is not considered a period cost even if the company pays for it in the current period which also means that if a period cost for the period is not paid in the current period but in the next one, it is still a period cost for the current period.
From the above therefore, the period cost is the cost of items used up in this period but paid for in the next one.
The land purchased might look like the obvious choice but it is not because Assets are capitalised and not expensed.