Answer:
$4700 Billion
Explanation:
Solution
Given that:
Assume that full-employment level of output is =$5000 billion
Natural employment rate is =5%
Current unemployment rate = 8%
Now,
We find the current level of output according to Okun's law when the Okun's law coefficient is 2 which is given below:
2 (unemployment rate -natural unemployment) = potential GDP - actual GDP/potential GDP *100% this is known as the Okun's law
Thus
2( 8 - 5 ) = 5000 - actual GDP / 5000 * 100
or (6 * 5000 ) / 100 = 5000 - actual GDP = $4700 Billion
or
300 = 5000 - actual GDP
Hence, the actual GDP or current output = 5000 - 300 = 4700 $ billion
The approach to ethical behavior which proposes that actions and plans should be judged by their consequences, thus producing the greatest benefit to society with the least harm or the lowest cost is called:__________.
A) individual rights approach.
B) mercantilism approach.
C) utilitarian approach.
D) justice approach.
E) moral imperialism approach.
Answer:
The correct answer is option (C)utilitarian approach.
Explanation:
Utilitarian approach: It is referred to as an action in relative to outcomes and reaction
For example, the cost and net benefits of all group of people based on an individual level. that is, by works towards achieving or aiming for the best for the greatest number while producing the least amount of suffering or harm.
Bob Clarke Corporation has provided the following data from its activity-based costing system: Activities Estimated Overhead Cost Expected Activity Assembly $1,005,040 68,000 machine-hours Processing orders $102,500 2,000 orders Inspection $139,840 1,900 inspection-hours The company makes 450 hockey sticks a year, requiring a total of 710 machine-hours, 42 orders, and 12 inspection-hours per year. The product's direct materials cost is $36.42 per hockey stick and its direct labor cost is $30.16 per hockey stick. Required: 1. Calculate the unit product cost of one hockey stick according to the activity-based costing system (Round your final answer to two decimal places).
Answer:
Total Unit Cost= $ 96.65
Explanation:
Bob Clarke Corporation
Activities Estimated Overhead Cost Expected Activity
Assembly $1,005,040 68,000 machine-hours
Processing orders $102,500 2,000 orders
Inspection $139,840 1,900 inspection-hours
First we find the overhead rates using ABC costing method.
Overhead Rates= Estimated Overhead Cost/ Expected Activity
Assembly Rate= $1,005,040 /68,000 = $ 14.78 per machine-hours
Processing rate= $102,500 / 2,000= $ 51.25 per orders
Inspection Rate= $139,840/ 1,900= $ 73.6 per inspection-hours
Then we find the overhead costs applying the ABC Costing rates
Overhead Costs Of 450 Hockey
Assembly= 710 machine-hours, * $ 14.78= $10493.8
Processing=42 orders, *$ 51.25= $ 2152.5
Inspection= 12 inspection-hours*$ 73.6 = $ 883.2
Total Overhead Costs of 450 Hockey = $ 13529.5
Overhead Cost of One Hockey= 13529.5/450= 30.065= $ 30.07
Then the:
Product Cost
Direct materials cost is $36.42 per hockey stick
Direct labor cost is $30.16 per hockey stick
Overhead Costs is $ 30.07
Total Unit Cost= $ 96.65
You are considering buying common stock in Grow On, Inc. The firm yesterday paid a dividend of $7.80. You have projected that dividends will grow at a rate of 9.0% per year indefinitely. If you want an annual return of 24.0%, what is the most you should pay for the stock now
Answer:
The answer is $56.68
Explanation:
Solution
We recall that:
The firm paid a dividend of =$7.80
The projected growth of dividends is at a rate = 9.0%
The annual return = 24.0%
Now,
V = ($7.80 * (1.09)/(.24 - 0.9)
= (8.502)/(.24-0.9)
= (8.502) * (-0.66)
= $56.68
Therefore, this would be the most we would pay for the stock. If we paid less than that, our return would be above the 24%.
Brett has almond orchards, but he is sick of almonds and prefers to eat walnuts instead. The owner of the walnut orchard next door has offered to swap this year's crop with him. Assume he produces 1,000 tons of almonds and his neighbor produces 800 tons of walnuts. If the market price of almonds is $100 per ton and the market price of walnuts is $110 per ton.
A. Should he make the exchange? The market value of the almond crop is _____.
B. Does it matter whether he prefers almonds or walnuts? Why or why not?
Answer:
(A) The almond market value is = 100,000 and the walnuts market value is 88,800. (B) His preferences are secondary, the most important choice is the market value of the profit and crop
Explanation:
Solution
Given that:
The first step to take is to find the almond crop market value which is stated as follows:
(A) The market value of almond is = 1000 * 100 = 100,000
Thus,
The walnuts market value is = 800* 111 = 88,800
he should not make the exchange because, the almond has more value
(B)His choice is not really important, the market value of the profit and crop should be of more importance.
Imagine that you work in a call center. Your manager tells you that you need to answer 25% more calls per hour. In order to do this, you must spend less time with each caller, and your caller satisfaction scores are going down. By answering more phone calls but providing worse service, you ARE being __________ but NOT ___________.
Answer:
By answering more phone calls but providing worse service, you ARE being EFFICIENT but NOT SATISFY CUSTOMERS' NEEDS.
Explanation:
A worker's efficiency is measured by the total output per hour of labor. In this case, since you are answering more calls per hour, your efficiency is increasing (higher output per hour).
The quality of the service provided by a worker's is measured by the quality of their output (or performance), and if you satisfy your customers' needs. Since the service that you are providing is not that good, then your quality levels are decreasing.
You may be producing more services, but the services produced lack good quality.
What are the principles of logic and critical thinking?
Sammy's Shovels had sales of $ 90,880 in 2010. The cost of goods sold was $ 34,863 , operating expenses (excluding depreciation) were $ 11,490 , interest expenses were $ 1,317 , depreciation expense was $ 7,961 , and dividends paid were $ 3,415 . The firm's tax rate is 27 percent. What did Sammy's Shovels report as net income (or, net profit) in 2010
Answer: $25731.77
Explanation:
The attached picture explains the way to solve the question. It would be noted that the expenses like the operating, depreciation, interest expense and the cost of good sold were all subtracted from the sales revenue.
Then the income before tax was $35249. Then the tax expense of 27% was deducted.
Income Tax expense = 27% of $35249 = $9517.23
Net profit = $35249 - $9517.23 = $25731.77
The net profit for Sammy Shovels is $25731.77.
The law of diminishing marginal productivity states that:________.
a. As you expand output, your marginal productivity eventually increases
b. As you expand output, your marginal productivity eventually declines
c. As you expand output, the total product eventually increases
d. None of the above
2. What are economies of scale?
a. decreasing average costs as production increases
b. increasing average costs as production increases
c. increasing fixed costs as production increases
d. none of the above
3. What are economies of scope?
a. lower average costs when multiple different products are produced
b. higher average costs when multiple different products are produced
c. Constant average costs when multiple different products are produced
d. none of the above
Answer:
b. As you expand output, your marginal productivity eventually declines
a. decreasing average costs as production increases
a. lower average costs when multiple different products are produced
Explanation:
The law of diminishing marginal returns states that as more unit of variable factors of production are added to production, output would increase at first but after a period, it would increase at a negative rate.
Economies of scale is the reduction in cost thay accrue to firms as they increase production. For example, a supplier might give a firm a discount for buying in bulk.
Economies of scope states that average cost would fall as the production of similar products increases. For example, a fashion designer who makes women's clothings decides to make scarfs with the scraps of clothes left.
I hope my answer helps you
________ can track customer satisfaction directly, measure repurchase intention and also gauge a consumer's willingness to recommend the company and brand to others.
A) Periodic surveys
B) Mystery shoppers
C) Customer loss rates
D) Customer focus statements
E) Sales summary reports
Answer:
A) Periodic surveys
Explanation:
The periodic survey is the survey which takes place after delivering the product and services to the customer. It can be in the form of customer feedback with respect to the satisfaction level, repurchase intention, worth of mouth, etc
By maximizing the customer satisfaction the company can able to achieve their sales targets that results into capture a maximum share in the market
Hence, the first option is correct
Prepare three income statements for the year assuming that revenue is to be recognized when:_________.
1. Crocodiles have been caught (i.e. production complete).
2. Crocodiles have been sold and delivered
3. Cash collections are complete
Answer:
3
Explanation:
The right answer is "cash collections are complete"
Revenue can only be recognized when the amount of earning of whole year completes basically it's the total amount of money which is earned by the customer and income is the profit which can be calculated by subtracting the revenue and what remains after the expenses.
At the end of the year, Ilberg Company provided the following actual information:
Overhead $423,600
Direct labor cost 532,000
Ilberg uses normal costing and applies overhead at the rate of 80% of direct labor cost. At the end of the year, Cost of Goods Sold (before adjusting for any overhead variance) was $1,890,000.
Required:
a. Dispose of the overhead variance by adjusting Cost of Goods Sold.
b. Calculate the overhead variance for the year.
Answer:
Adjusted cost of goods sold =$ 1,888,000
Overhead variance = 2,000 favorable
Explanation:
Overhead variance:
is the difference between the absorbed overhead and the actual overhead.
Absorbed overhead = OAR × direct labor cost
= 80% × 532,000 = $425,600
Over absorbed overhead = absorbed overhead - Actual overhead
= 425,600 - 423,600 = 2,000 over-absorbed
Overhead variance = 2,000 favorable
Adjusted cost of goods sold
= cost of goods sold - over absorbed overheads
= 1,890,000 - 2,000 =$ 1,888,000
At the current year-end, Simply Company found that its overhead was underapplied by $2,500, and this amount was not considered material. Based on this information, Simply should: Multiple Choice Close the $2,500 to Cost of Goods Sold. Close the $2,500 to Finished Goods Inventory. Do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year. Carry the $2,500 to the income statement as "Other Expense". Carry the $2,500 to the next period.
Answer:
Close the $2,500 to Cost of Goods Sold
Explanation:
The under applied overhead is added to the Cost of Goods Sold amount.
The same amount would be debited to the cost of goods sold and the manufacturing overhead would be credited with the same amount that is $ 2500.
Under applied overhead means that the overhead actually incurred is more than the overhead planned of to be incurred. So we add back the amount by which it is less.
commission earned but not received is debit or credit?
The following data relate to the accounts of LIK Cooperation. Prepare the necessary adjusting journal entries indicated by each item for the year ended December 31, 2018.
A. A four-year insurance policy was purchased on April 1, 2018. The $96,000 insurance premium was fulaid on that date and a debit to prepaid insurance was recorded.
B. Unpaid salaries at year-end amount to $200,550.
C. Pruitt Corp. rents out some of its office space to Alliance Corp at $2,400 per month. On November 1, 2018, Pruitt Corp. recorded a credit to Rent Revenue for receipt of a rent payment of $7,200 from Alliance Corp. to cover rent from November 1, 2018 to January 31, 2019.
D. Pruitt Corporation holds bonds of another corporation. The bonds were purchased by Pruitt on June 30, 2018. Interest in the amount of $1,100 is received each year every June 30th.
1. Prepare any necessary adjusting entries on December 31, 2018.
2. Prepare the journal entry to record the receipt of interest on June 30, 2019.
Answer:
See the entries for (1) and (2) below.
Explanation:
1. Prepare any necessary adjusting entries on December 31, 2018.
SN Details Dr ($) Cr ($)
A. Insurance expenses (W. 1) 18,000
Prepaid Insurance 18,000
(To record insurance expenses for 2018.)
B. Salaries expenses 200,550
Accrued expenses - Salaries 200,550
(To record unpaid salaries).
C. Rent revenue 2,400
Advance revenue - Rent 2,400
(To record liability for rent received for Jan. 31, 2019)
D. Accrued interest income (W.2) 550
Interest income 550
(To record accrued interest income for 2018).
2. Prepare the journal entry to record the receipt of interest on June 30, 2019.
SN Details Dr ($) Cr ($)
A. Cash 1,100
Interest income 550
Accrued interest income (W.2) 550
(To record the receipt of interest income.)
Workings:
W.1. Insurance expenses for 2018 (9 months: April 1 - December 31 = $96,000 * [9 months /(4 years * 12 months) = $18,000
W.1 Accrued interest revenue (July 1 to December 31) = $1,100 * (6 months / 12 months) = $550
In 2016, Hudson Corp. sold 3,000 units at $150.00 each. Variable expenses were $113.00 per unit, and fixed expenses were $58,240. The same variable expenses per unit and fixed expenses are expected for 2017. If the company cuts selling price by 6.00%, what is its break-even point in units for 2017?
Answer:
Break even in units (2017) = 2080 units
Explanation:
The break even point in units is the number of units where the total revenue equals total cost. It is a point of no profit and no loss. The break even point in units is calculated as follows,
Break even in units = Fixed cost / Contribution margin per unit
Contribution margin per unit = Selling price per unit - Variable cost per unit
A cut in selling price of 6% would mean that the new selling price will be,
New selling price = 150 - (150 * 0.06) = $141
Contribution margin per unit = 141 - 113 = $28
Break even in units = 58240 / 28
Break even in units (2017) = 2080 units
How can economies of scale benefit you as a customer and society as a whole? Can the taxicab industry, in large cities, be subject to significant economies of scale? Are ride-sharing services, such as Uber and Lyft, able to take advantage of economies of scale? How or why not?
Answer:
The answer to this question can be described as follows:
Explanation:
The economy scale with cost activity and total volumes of sales, which lowers the overall product prices as a result, and grows all economies of scale, because consumers purchase the stuff like those, who pay even less than the amount they expect to receive.
It is the transition, the same saved money it's spent on other commodities and the overall deficit as well as the actual boosting of financial social assistance that generates income as a whole. It also increases outlays and creates more jobs, and benefits people with higher median income levels and a decent standard of living, For example
Uber often encourages ride-sharing, in which the car is capable of serving 3-4 people simultaneously. This gives a win-win situation to all sides and generates economies of scale. Throughout the market like India, Uber already is introducing it and being extremely successful.
Gelb Company currently manufactures 53,500 units per year of a key component for its manufacturing process. Variable costs are $2.95 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $64,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.50 per unit. Calculate the total incremental cost of making 53,500 units and buying 53,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier
Answer and Explanation:
The computation of the total incremental cost is shown below;
For making 53,500 units
Particulars Relevant Relevant Total
Per Unit Fixed Costs Relevant Costs
Variable Cost
Per Unit $2.95 $157,825
(53,500 units × $2.95)
Fixed
Manufacturing
Costs $67,000 $67,000
Total Incremental Costs to Make $224,825
For making 53,500 units
Particulars Relevant Relevant Total
Per Unit Fixed Costs Relevant Costs
Purchase
Price
Per Unit $3.50 $187,250
(53,500 units × $3.50)
Total Incremental Cost to Buy $187,250
The company should buy the component from the outside supplier as it saves the cost for ($224,825 - $187,250) = $37,575 plus the buying cost is less than the making cost
Ben lives in an apartment building next to a children’s park. He is in his apartment when a baseball flies in through the window and lands in his room. Which of the following statements is true of this scenario?
1. Ben must return the baseball to the owner immediately as it is not an object of great value.
2. Ben can keep the baseball because of the rule of first possession.
3. The owner of the apartment building must take the final decision as the baseball landed on his premises.
4. The owner of the baseball can exercise his right of eminent domain and claim the baseball.
5. The baseball must be turned over to police and can only be claimed after a week has passed.
Answer:
1. Ben must return the baseball to the owner immediately as it is not an object of great value.
Explanation:
The owner of the baseball is still the rightful owner because he was the one who purchased the item. He does not lose ownership of the baseball simply because it landed on Ben's apartment.
Ben has not right to claim ownership of the baseball, and he must return it to the owner immediately.
An advertising expenditure approach that initially formulates the advertising goals and defines the tasks to accomplish these goals is known as a(n) _____. Group of answer choices objective approach functional approach task approach percentage sale approach
Answer:
Option C. Task Approach
Explanation:
Task approach is the approach that is based on the goals that expenditure must achieve and helps in defining what the advertising goals must be and what must be the tasks for goals accomplishment.
The advertising expenditure that is based on the sales that the expenditure must generate is percentage sale approach and it is not the case here.
Objective Approach is based on the set objectives and hence helps in designing the marketing expenditure from each aspects which is again not the case here because only advertising expenses are considered here.
The Functional Approach is the dealing of the tasks of the company by separate independent functions which performs the task which is also not the case here.
g You want to save sufficient funds to generate an annual cash flow of $50,000 a year for 20 years as retirement income. You currently have no retirement savings but plan to save an equal amount each year for the next 30 years until your retirement. How much do you need to save each year if you can earn 8 percent on the savings? (10 Points)
Answer:
You need to save $4,012.45 each year
Explanation:
Pertiuty in 20 years is $50,000.
So the amount must be in account after 30 years saving to enough for above pertiuty is calculated as below:
= $50000/(1+8%)+ $50000/(1+8%)^2+......+$50000/(1+8%)^20
= $50,000 * Annuity Factor ( 1-20 years) of 8%
=$50000*9.818
= $490,907
To have $490,907 (FV) in account after 30 years (tenor), now you have save an amount each year (PMT) calculated as below:
$490,907 = PMT*(1+8%)^30+....PMT*(1+8%)^2 + PMT*(1+8%)
= PMT * Discount Factor ( 1-30 years) of 8%
$490,907 = PMT * 122.346
-> PMT = $490,907/ 122.346
= $4,012.45
Sophia provides you with a list of business transactions that occurred during the year. You must use these transactions to demonstrate the first four steps in the accounting cycle: analyzing each transaction, using double entry accounting to record these transactions in the general journal, and posting them to their respective accounts. Finally, you prepare a trial balance, the fourth step in the accounting cycle, which ensures that the first three steps in the accounting cycle have been completed currently.
A. The Sisters invest $15,000 in cash in Happy Home Environmental Cleaning (HHEC)
B. HHEC buys a building for $10,000 in cash.
C. HHEC buys office equipment for $1,800 for cash.
D. HHEC buys cleaning supplies for $2,800, agreeing to pay the upplier in 30 days.
E. HHEC earns cleaning revenues of $16,460 in cash.
F. HHEC earns cleaning revenues of $2,200 on account.
G. HHEc paid the following expenses in cash:
Wages $4275
Utilities $985
Miscellaneous $195
H. HHEC pays $950 in cash to creditors on account.
I. HHEC purchases a two year insurance policy for $2,400 in cash
J. At the end of the year, the cost of cleaning supplies on hand is $2040.
K. The sisters withdrew $2,000 in cash.
Answer:
Happy Home Environmental Cleaning
Demonstration of the first four steps in accounting cycle:
1) Analyzing each transaction:
A) Cash + $15,000 and Owners' Equity + $15,000
B) Building + $10,000 and Cash -$10,000
C) Office Equipment + $1,800 and Cash - $1,800
D) Cleaning Supplies + $2,800 and Accounts Payable + $2,800
E) Cash + $16,460 and Equity (Retained Earnings) + $16,460
F) Accounts Receivable + $2,200 and Equity (Retained Earnings) + $2,200
G) Cash - Wages $4,275, Utilities $985, Miscellaneous $195 and Equity (Retained Earnings) - $4,275, $985, $195
H) Cash - $950 and Liabilities - $950
I) Cash - $2,400, Prepaid Insurance + $1,200, and Equity (Retained Earnings) - $1,200
J) Cleaning Supplies -$760 and Equity (Retained Earnings) - $760
K) Cash - $2,000 and Equity - $2,000
2) Using double entry accounting to record transactions in the general journal:
A) Debit Cash Account $15,000
Credit Owners' Equity $15,000
To record capital contributed to the business.
B) Debit Building $10,000
Credit Cash Account $10,000
To record purchase of building.
C) Debit Office Equipment $1,800
Credit Cash Account $1,800
To record purchase of office equipment.
D) Debit Cleaning Supplies $2,800
Credit Accounts Payable $2,800
To record purchase of cleaning supplies on account.
E) Debit Cash $16,460
Credit Service Revenue $16,460
To record cash sales of services.
F) Debit Accounts Receivable $2,200
Credit Service Revenue $2,200
To record sale of services on account.
G) Debit Wages $4,275
Debit Utilities $985
Debit Miscellaneous $195
Credit Cash Account $5,455
To record payment of expenses.
H) Debit Accounts Payable $950
Credit Cash Account $950
To record payment on account.
I) Debit Prepaid Insurance $2,400
Credit Cash $12,400
To record insurance prepaid.
I) Debit Insurance Expense $1,200
Credit Prepaid Insurance $1,200
To record insurance expense for the period.
J) Debit Cleaning Supplies Expense $760
Credit Cleaning Supplies $760
K) Debit Drawings Account $2,000
Credit Cash Account $2,000
To record cash drawings.
3) Posting transactions to the Ledger accounts:
Debit Credit Balance
Cash Account:
Owners' Equity 15,000 15,000
Building 10,000 5,000
Office Equipment 1,800 3,200
Service Revenue 16,460 19,660
Wages 4,275 15,385
Utilities 985 14,400
Miscellaneous 195 14,205
Accounts Payable 950 13,255
Prepaid Insurance 2,400 10,855
Drawings 2,000 8,855
Debit Credit Balance
Owners' Equity:
Cash 15,000 15,000
Debit Credit Balance
Service Revenue Account:
Cash 16,460 16,460
Accounts Receivable 2,200 18,460
Debit Credit Balance
Building Account:
Cash 10,000 10,000
Debit Credit Balance
Office Equipment Account:
Cash 1,800 1,800
Debit Credit Balance
Wages Expense:
Cash 4,275 4,275
Debit Credit Balance
Utilities Expense:
Cash 985 985
Debit Credit Balance
Miscellaneous Expense:
Cash 195 195
Debit Credit Balance
Cleaning Supplies:
Accounts Payable 2,800 2,800
Cleaning Supplies Expense 760 2,040
Debit Credit Balance
Cleaning Supplies Expense:
Cleaning Supplies 760 760
Debit Credit Balance
Accounts Payable:
Cleaning Supplies 2,800 2,800
Cash 950 1,850
Debit Credit Balance
Prepaid Insurance:
Cash 2,400 2,400
Insurance Expense 1,200 1,200
Debit Credit Balance
Insurance Expense:
Prepaid Insurance 1,200 1,200
Debit Credit Balance
Drawing Account:
Cash 2,000 2,000
4) Preparation of a Trial Balance:
Debit Credit
Cash $8,855
Owners' Equity $15,000
Building 10,000
Office Equipment 1,800
Cleaning Supplies 2,040
Cleaning Supplies Expense 760
Accounts Payable 1,850
Service Revenue 18,660
Accounts Receivable 2,200
Prepaid Insurance 1,200
Insurance Expense 1,200
Wages 4,275
Utilities 985
Miscellaneous 195
Drawings 2,000
Total $35,510 $35,510
Explanation:
The steps in the accounting cycle are:
a) Analyzing each transaction from source documents, e.g. from Sales Invoice. This shows the accounts affected and even the effect of the transaction on the accounting equation.
b) Journal Entries: This involves using the doubt entry system of accounting to record transactions in the general journal. This is the first accounting record. It shows the accounts to be debited and the ones to be credited in the General Ledger.
c) General Ledger: Each transaction is posted to their respective accounts in the ledger, depending on journal entries. Usually, two accounts are affected by each transaction, just like in the journal.
d) The fourth step is the extraction of a Trial Balance. This is an accounting tool for checking that the first three steps have been completely and correctly followed.
For the item below, determine whether the amount would be disclosed in the cash flow statement under: Operating (CFO), Investing (CFI), or Financing (CFF), as well as if would be a net increase (+) or decrease (-) in cash or cash equivalents:
A. Principal payments on long-term borrowings
B. Decrease in accounts receivable
C. Proceeds from long-term borrowings
D. Increase in deferred income tax net liability
E. Net earnings
F. Increase in prepaid expenses
G. Increase in merchandise inventories
H. Cash dividends paid
I. Proceeds from issuance of common stock
J. Increase in accrued salaries, wages, and related benefits
K. Payments for repurchase of common stock
L. Capital Expenditures
M. Increase in accounts payable
N. Depreciation and amortization expenses
Answer:
Explanation:
Operating Cashflows have to do with the transactions dealing with the day to day activities of the business including calculations of net income and revenue and expenses.
Investing Cashflow has to do with the transactions involving fixed assets such as Property, Land and Equipment since these are Capital Expenditure. Also included are stock ownership and bond holding of other entities.
Financing Cashflows refer to transactions relating to the provision of capital for the business through loans or Equity.
A. Principal payments on long-term borrowings.
FINANCING - decrease (-)
This is a financing transaction that deals with long term loans. It will decrease the cash or cash equivalents held.
B. Decrease in accounts receivable.
OPERATING - Increase +
This is an operating cashflow and it is an increase because Receivables reduce when they pay the business so cash increases.
C. Proceeds from long-term borrowings.
FINANCING - Increase +
This is a financing activity and the increase is due to money from Issuing Bonds or borrowing money coming into the business.
D. Increase in deferred income tax net liability.
OPERATING - Increase +
By reducing the amount that we pay in tax that means that less cash has been paid which also means that more cash is kept in the business which increases the Cash balance.
E. Net earnings.
OPERATING - Increase +
So long as the Net Earnings are positive, they go to the Operating Section and increase the amount of cash and cash equivalents.
F. Increase in prepaid expenses.
OPERATING - Decrease -
By increasing the amount of prepaid expenses, this means that the company used money to pay for expenses it hasn't incurred yet which reduces the cash in hand.
G. Increase in merchandise inventories.
OPERATING - Decrease -
By buying more Inventory, more cash was spent and this therefore reduces the cash and cash equivalents balance.
H. Cash dividends paid.
FINANCING - Decrease -
Dividends relate to equity and Equity is a Financing Cashflow Transaction. Paying Dividends means giving out cash so it reduces the cash and cash equivalents balance.
I. Proceeds from issuance of common stock.
FINANCING - Increase
Similar to proceeds from long term borrowings, Equity is a Financing activity as it finds the business, the proceeds received from here increase the cash and cash equivalents balance.
J. Increase in accrued salaries, wages, and related benefits.
OPERATING - Increase +
These are Operating Cashflow transactions and by withholding them, the business does not spend cash on them. That cash that was not paid is an increase to the cash and cash equivalents balance.
K. Payments for repurchase of common stock.
FINANCING - Decrease -
By repurchasing stock which is an Equity transaction, this goes to the Financing Section. The cash spent to repurchase the stock reduces the amount of cash and cash equivalents on hand.
L. Capital Expenditures.
INVESTING - Decrease -
By buying capital items or spending on Capital Investments, the company makes an investment and as such this goes to the Investment Section. The expenses are a reduction on cash.
M. Increase in accounts payable.
OPERATING - Increase +
Accounts Payable are an Operating Activity and when they are increased that means that the company paid less cash and bought more things on credit. That cash that wasn't paid is an increase in the cash balance.
N. Depreciation and amortization expenses.
OPERATING - Increase +
By including depreciation and amortization in the operating cashflow, these increase the Cashflow because they are non cash items. Even though they are recorded, no physical cash actually flows to them. This cash that was supposed to flow to them is in increase.
Variable costs as a percentage of sales for Lemon Inc. are 62%, current sales are $563,000, and fixed costs are $189,000. How much will operating income change if sales increase by $39,200
Answer:
Effect on income= $14,896 increase
Explanation:
Giving the following information:
Variable costs= 62% of sales
Current sales are $563,000
Fixed costs are $189,000.
Sales increase by $39,200.
To calculate the effect on income, we need to use the following formula:
Effect on income= sales increase*contribution margin ratio
Effect on income= 39,200*(1 - 0.62)
Effect on income= $14,896 increase
Prove:
Actual income= 563,200*0.38 - 189,000= 25,016
New income= 602,400*0.38 - 189,000= 39,912
Difference= $14,896 increase
Kerbow Corporation uses part B76 in one of its products. The company's Accounting Department reports the following costs of producing the 12,000 units of the part that are needed every year. An outside supplier has offered to make the part and sell it to the company for $27.40 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $6,000 of these allocated general overhead costs would be avoided. In addition, the space used to produce part B76 could be used to make more of one of the company's other products, generating an additional segment margin of $29,000 per year for that product.A. Prepare a report that shows the effect on the company's total net operating income of buying part B76 from the supplier rather than continuing to make it inside the company.B. Identify which alternative the company should choose and explain why.C. Determine what errors managers may make when considering make or buy decisions and basing the decision solely on the data?
Answer:
12,000 units
outside supplier offers at $27.40 each = $328,800
current relevant costs:
direct materials $7.20 x 12,000 = $86,400direct labor $7.10 x 12,000 = $85,200variable overhead $3.50 x 12,000 = $42,000 supervisor's salary $4.70 x 12,000 = $56,400total = $270,000only $6,000 of allocated fixed costs can be avoided
additional revenue from using the freed space $29,000
A. Prepare a report that shows the effect on the company's total net operating income of buying part B76 from the supplier rather than continuing to make it inside the company.
Keep Buy Differential
producing from vendor amount
production cost $270,000 $0 $270,000
purchase cost $0 $328,800 ($328,800)
avoidable costs $0 ($6,000) $6,000
additional revenue $0 ($29,000) $29,000
total $270,000 $293,800 ($23,800)
B. Identify which alternative the company should choose and explain why.
The company should keep producing the part because production costs are lower than buying it from an outside vendor.
C. Determine what errors managers may make when considering make or buy decisions and basing the decision solely on the data?
If we had made this decision based on total production costs, then management would have erroneously chosen to purchase the part from an outside vendor. Total production costs are $28.30 per unit, but almost $5.80 per unit are not avoidable (mostly fixed and general overhead), so the company will incur them no matter what. You have to compare only relevant costs or revenues.
1. Of the 4 strategic approaches to international markets, which one(s) might be the best for a manufacturing company? a financial services company? or a company like Coke or Pepsi? Thoughts? 2. What strategy option for entering a foreign market might you employ if your firm is technology-centric? 3. What strategy option for entering a foreign market might you use if you were a start-up or smaller firm? 4. Why is the Think Global- Act Local strategy appear to be the best for many companies wishing to go global?
Answer:
1a. For manufacturing company– Buying a local manufacturing company
b. For a financial services company– Partnership
c. A company like Coke or Pepsi– Greenfield Investments
Explanation:
1a. Buying a local company saves valuable resources for the foreign manufacturing, and it allows for quick market knowledge since this company has already been in operations for a long time.
b. A partnership would be best for a financial services company, this would involve a smooth transition into new markets without having to spend much on physical structures as the domestic company is already having necessary infrastructures in place.
c. Coke and Pepsi would preferably choose to use the Greenfield investment strategy by building a new plant from the ground up because of its established quality standards as well as trade mark and intellectual property protection.
2. A technology-centric firm would benefit most by buying a Company because of the already available market share as well as benefiting from reduced government regulations.
3. If one is operating a start-up or smaller firm of course cost would be a major consideration, therefore selling out License to foreign companies may be effective. This would transfer the rights to use a product or service in a different market geography.
4. It provides a good foresight into the requirements needed to enter foreign markets.
N
Select the correct answer.
Which type of investment offers both capital gains and interest income?
OA
property
OB.
CDs
C. stocks
OD
bonds
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Which type of investment offers both capital gains and interest income
Answer:
Stocks is the type of investments that offers both capital gains and interest income.
Question:
Compare the capital gains from investing in the three stocks with the interest income on a one-year CD. Which would have been a more profitable investment—the stocks or a one-year CD? Explain your reasoning.
Answer:
The one-year CD rate during the past year ranged from 1 percent to 1.3 percent. This rate of return is much lower than the returns on the J C Penney and Apple stocks. Therefore, these two stocks would have been better investment options than a one-year CD. However, the CD would be a better investment than the Ford Motor Company stock, which gave a negative return over the past year.
Explanation: edmentum sample answer
Honey Corporation, a merchandising company, reported the following results for January:
Number of units sold 5,800
Selling price per unit $892
Unit cost of goods sold $517
Variable selling expense per unit $31
Total fixed selling expense $152,600
Variable administrative expense
per unit $48
Total fixed administrative expense $390,200
Cost of goods sold is a variable cost in this company.
a. Prepare a traditional format income statement for January.
b. Prepare a contribution format income statement for January.
Answer:
Results are below.
Explanation:
Giving the following information:
Number of units sold 5,800
Selling price per unit $892
The unit cost of goods sold $517
Variable selling expense per unit $31
Total fixed selling expense $152,600
Variable administrative expense per unit $48
Total fixed administrative expense $390,200
1) Traditional income statement:
Sales= 5,800*892= 5,173,600
GOGS= 5,800*517= (2,998,600)
Gross profit= 2,175,000
Selling expense= (31*5,800) + 152,600= (332,400)
Administrative expense= (48*5,800) + 390,200= (668,600)
Net operating income= 1,174,000
2) Contribution margin income statement:
Sales= 5,800*892= 5,173,600
Total variable cost= 5,800*(517 + 31 + 48)= (3,456,800)
Contribution margin= 1,716,800
Total fixed selling expense= (152,600)
Total fixed administrative expense= (390,200)
Net operating income= 1,174,000
Managers involved in negotiation should:__________.
1. Search for the absolute best answer.
2. Exercise premature judgment.
3. Realize that solving the other party's problem is actually the other party's problem.
4. Verify whether there is only a fixed set of alternatives.
Which of the following phenomena would be most likely to occur if the project team did not have clear and commonly understood project goals?
1. The level of trust among team members would increase.
2. The motivation level of team members would increase.
3. The interdependency among team members would increase.
4. Conflict among team members would increase.
Answer:
For question (1): 4. Verify whether there is only a fixed set of alternatives.
For question (2): 4. Conflict among team members would increase.
Explanation:
Managers involved in negotiation should always verify whether there is only a fixed set of alternatives.
It is ideal that when managers are making a negotiation and by extension decision-making, they should ensure there are one or more alternative options. A fixed set of alternatives would only mean they're absolutely liable to the other party, without any reasonable benefits to their organization in the event of a crisis with the deal.
Conflict among team members would increase if the project team did not have clear and commonly understood project goals.
As a rule and standard, it is necessary to ensure that team members share common understanding, aims, ideas and vision in order to achieve their project goals and objectives.
When team members are in sync, they're bound to collaborate and use collective intelligence to attain success.
Hence, to increase the level of trust, motivation level, and interdependency among team members, project managers should ensure they've clear and commonly understood project goals.
Under a partnership agreement, Sherry is to receive 25% of the partnership income, but not less than $10,000. The partnership has net income of $30,000 for Year 1 before any allocation. Calculate Sherry’s guaranteed payment from the partnership for Year 1.
Answer:
$2,500
Explanation:
since Sherry will receive at least $10,000 or 25% of the partnership's net income, then the guaranteed payment = $10,000 - ($30,000 x 25%) = $10,000 - $7,500 = $2,500
When partnerships include guaranteed minimum payments, he/she will receive that amount even if the partnership's net income is not high enough. If the partnership's net income would have been $40,000 or more, then there would be no guaranteed payment (= $40,000 x 25% = $10,000).
A metal-cutting operation has a target value of 20 and consistently averages 19.8 with a standard deviation of 0.5. The design engineers have established an upper specification limit of 22 and a lower specification limit of 18. What is the process capability index? A) 1.20 B) 1.33 C) 1.46 D) 1.66 12. Following Q11, what is the process capability ratio? A) 1.33 B) 1.50 C) 1.66 D) 2.00
Answer:
process capability index = Cpl ( lower ) = 1.20 ( A )
The process capability ratio = 1.33
Explanation:
Target value = 20
mean = 19.8
standard deviation = 0.5
upper specification limit = 22
lower specification limit = 18
The process capability index =
Cpu = [tex]\frac{22- 18}{6(0.5)}[/tex] = 4 / 3 = 1.33
Cpk ( upper ) = (22 - mean ) / 3 * std
= ( 22 - 19.8 ) / ( 3 * 0.5 ) = 2.2 / 1.5 = 1.47
Cpl ( lower ) = ( mean - 18 ) / ( 3 * 0.5 ) = ( 19.8 - 18 ) / 1.5
= 1.8 / 1.5 = 1.2
hence the process capability index is Capability index with the minimum value which is Cpl ( lower ) = 1.20 ( A )
The process capability ratio = 1.33 refer to Cpu equation