Business College

Avril Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $4.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $54,080 per month, which includes depreciation of $3,840. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 3,200 direct labor-hours will be required in October. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for October should be:

Answers

Answer 1

Answer:

Estimated manufacturing overhead rate= $21.5 per direct labor hour

Explanation:

Giving the following information:

The variable overhead rate is $4.60 per direct labor-hour.

Budgeted fixed manufacturing overhead is $54,080 per month

The direct labor budget indicates that 3,200 direct labor-hours will be required in October.

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= (54,080/3,200) + 4.6

Estimated manufacturing overhead rate= $21.5 per direct labor hour

Related Questions

Marshall Grocery Delivery Service reports the following information: Rate per hour of direct labor is: Labor rate per hour $ 20 Rate per hour of direct labor $ 25.80 Materials markup 23 % Target profit margin 20 % The materials markup for a job that will use 100 labor hours and $2,000 of materials is:

Answers

Answer:

$460

Explanation:

The following information was reported from Marshall Grocery delivery service report

Labor rate per hour= $20

Rate per hour= $25.80

Materials markup= 23%

Target profit margin= 20%

The material markup for a job that will use 100 labor hours and $2,000 of materials is calculated as follows

Materials markup= Materials × percentage

= $2,000×23/100

= $2,000×0.23

= $460

Hence the materials markup is $460

On day 51 a project has an earned value of $600, an actual cost of $650, and a planned cost of $560. Compute the SV, CV, and CPI for the project. What is your assessment of the project on day 51

Answers

Answer and Explanation:

The computation is shown below:

a. Schedule variance (SV)

= Earned value - planned cost

= $600 - $560

= $40

b. Cost variance (CV)

= Earned value - actual cost

= $600 - $650

= -$50

c. Consumer price index (CPI)

= Earned value ÷ actual cost

= $600 ÷ 650

= 0.92

As we can see from the above calculation, the project showed negative CV i.e overbudgeted but at the same time, it also showed Positive SV i.e the project is on schedule.

And, the CPI determines that the completing cost is more than the planned cost that reflects the bad condition

Chen Inc.'s cash balance in the accounting records, before receiving the bank statement, at June 30th was $16,170. During June the company recorded $10,000 of deposits but the bank only showed $7,900 on the June statement. Some of the company's deposits were made on the last day of the month. The company's records also showed that the company wrote checks totalling $3,600 that had not yet cleared the bank. The June 30th bank statement showed a balance of $16,750. The company was surprised to see that the bank statement showed the following items that the company was not aware of until the bank statement arrived: NSF check for $935, bank fee of $10, and interest income totalling $25. What is the total amount of cash that should be reported on Chen Inc.'s balance sheet at June 30th?

a. $15,250
b. $17,120
c. $14,670
d. $17,850

Answers

Answer:

The total amount of cash that should be reported on Chen Inc., balance sheet at June 30th is $15,250

The answer is option A.

Explanation:

The total amount of cash that should be reported on Chen Inc., balance sheet at June 30th is as follows:

$ $

Balance as per bank statement at June 30 16,750

Add: Deposit in transit ($10,000 - $7,900) 2,100

Less:

Outstanding Checks 3,600

Adjusted Cash Balance $ 15,250

Balance as per accounting records at June 30 16,170

Add: Interest Income 25

Less:

NSF Checks 935

Bank Fees 10 945

Adjusted Cash Balance $ 15,250

Byer, a plastics processor, is considering the purchase of a high-speed extruder as one option. The new extruder would cost $50,000 and would have a residual value of $3000 at the end of its 6-year life. The annual operating expenses of the new extruder would be $5000. The other option that Byer has is to rebuild its existing extruder. The rebuilding would require an investment of $30,000 and would extend the life of the existing extruder by 6 years. The existing extruder has annual operating costs of $13,000 per year and does not have a residual value. Byer's discount rate is 12%. Using net present value analysis, which option is the better option and by how much? Present Value of $1 Periods 12% 14% 16% 6 0.507 0.456 0.410 8 0.404 0.351 0.305 10 0.322 0.270 0.227 12 0.257 0.208 0.168Present Value of Annuity of $1 Periods 12% 14% 16% 6 4.111 3.889 3.685 8 4.968 4.639 4.344 10 5.650 5.216 4.833 12 6.194 5.660 5.197

Answers

Answer:

Option of the new extruder is better by $14,411.16

Explanation:

The present value of each option needs to be determined in order that the cheaper option in present value terms can be recommended.

Present value of new extruder=$50,000/(1+12%)^0+$5000/(1+12%)^1+$5000/(1+12%)^2+$5000/(1+12%)^3+$5000/(1+12%)^4+$5000/(1+12%)^5+$5000/(1+12%)^6-$3000/(1+12%)^6=$ 69,037.14

The discount factor each year=1/(1+r)^n where is 12% discount rate and n is the year

resent value of old extruder=$30,000/(1+12%)^0+$13,000/(1+12%)^1+$13000/(1+12%)^2+$13000/(1+12%)^3+$13000/(1+12%)^4+$13000/(1+12%)^5+$13000/(1+12%)^6=$ 83,448.30

The first option is better since it has a lower preset value of costs of $ 69,037.14

Difference in PVs= 83,448.30-69,037.14=$14,411.16

Break-Even Sales Currently, the unit selling price of a product is $370, the unit variable cost is $300, and the total fixed costs are $1,001,000. A proposal is being evaluated to increase the unit selling price to $410. a. Compute the current break-even sales (units). units b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant. units

Answers

Answer:

a. 14,300 units

b. 9,100 units

Explanation:

a. For computation of current break-even sales (units) first we will find out the contribution margin per unit which is shown below:-

Contribution margin per unit = Selling price per unit - Variable cost

= $370 - $300

= $70

Current break-even sales (units) = Fixed cost ÷ Contribution margin per unit

= $1,001,000 ÷ $70

= 14,300 units

b. For computation of anticipated break-even sales (units) first we will find out the contribution margin per unit which is shown below:-

Contribution margin per unit = Selling price per unit - Variable cost

= $410 - $300

= $110

Anticipated break-even sales (units) = Fixed cost ÷ Contribution margin per unit

= $1,001,000 ÷ $110

= 9,100 units

So, we have applied the above formula.

Zombie Corp. has a profit margin of 5.1 percent, a total asset turnover of 1.95, and ROE of 16.15 percent.
What is this firm's equity multiplier?
What is this firm's debt-equity ratio?

Answers

Answer:

This firm's equity multiplier is 1.6239

This firm's debt-equity ratio is 0.6239

Explanation:

According to the given data we have the following:

Profit Margin (PM) = 5.10%

That is, Net Profit/Sales = 5.10% = 0.051

Total Assets Turnover (TAT) = 1.95

That is, Sales/Total Assets = 1.95

Return on Equity (ROE) = 16.15%

That is, Net Profit/Total Equity = 16.15% = 0.1615

In order to calculate this firm's equity multiplier we would have to use the following formula:

Equity Multiplier (EM) = Total Assets / Total Equity

=(total assets/sales)*(sales/total equity)

=(total assets/sales)*(sales/net profit)*(net profit/total equity)

=(1/T AT)*(1/PM)*(ROE)

=(1/1.95)*(1/0.051)*(0.1615)

=1.6239

This firm's equity multiplier is 1.6239

In order to calculate this this firm's debt-equity ratio we would have to use the following formula:

Debt Equity Ratio = Debt/Equity

=(total assets- total equity)/(total equity)

=(total assets/total equity)-(total equity/total equity)

= equity multiplier-1

=1.6239-1

=0.6239

This firm's debt-equity ratio is 0.6239

Accounts Receivable Analysis A company reports the following: Sales $1,182,600 Average accounts receivable (net) 43,800 Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. a. Accounts receivable turnover b. Number of days' sales in receivables days

Answers

Answer:

a. The account Receivable Turnover is 27 times

b. 13.52 days approximately

Explanation:

1. Account Receivable Turnover = Net sales / Average Account Receivables

Account Receivable Turnover = $1,182,600 / $43,800

Account Receivable Turnover = 27 times

The account Receivable Turnover is 27 times

2. Number of days' sales in receivables days = (Average Account Receivables * 365 days) / Net sales

=(43,800 * 365) / 1,182,600

=13.5185

=13.52 days approximately

The selection process for a school teacher's job requires the applicant to keep a class of thirty students engaged in a classroom activity for an hour. The candidate is evaluated by the interviewers during this period, and the activity plays a vital role in the selection process. This is an example of which of the following types of tests?A. Physical ability test
B. Personality test
C. Ability test
D. Paper-and-pencil test
E. Performance Test

Answers

Answer:

E. Performance Test

Explanation:

Based on the scenario being described in the question it can be said that this is an example of a performance test. These are simply tests in which an individual is observed performing the tasks/actions that are required of them. Their performance is evaluated based on a predefined guideline in order to rate their efficiency. Which is what the interviewer is doing to the candidates in order to find the best individual to hire as a teacher.

Researchers have identified the tendency for increasing diversity among team members to create difficulties even as it offers improved potential for problem solving is known as the __________.

a. positive-negative dilemma
b. enhancement-enactment dilemma
c. upside-downside dilemma
d. good news-bad news dilemma
e. diversity-consensus dilemma

Answers

Answer:

. diversity-consensus dilemma

Explanation:

Even though it is important to have diverse people in a group to provide varying opinions

and perspectives, sometimes this diversity leads to conflicts among group members and this can hinder decision making even though the potential to make better decisions are improved. This is known as diversity-consensus dilemma.

I hope my answer helps you

Answer:

Explanation:

The standard deviation from investing in the asset is: (Round to the nearset hundredth percent. Answer in the percent format. Do not include % sign in your answer (i.e. If your answer is 4.33%, type 4.33 without a % sign at the end.))

Answers

Here is the complete question.

State of the Economy Probability of Percentage Returns

the States

Economic recession 25% 5%

Moderate economic growth 55% 10%

Strong economic growth 20% 13%

The standard deviation from investing in the asset is: (Round to the nearest hundredth percent. Answer in the percent format. Do not include % sign in your answer (i.e. If your answer is 4.33%, type 4.33 without a % sign at the end.))

Answer:

standard deviation from investing in the asset is: 2.76

Explanation:

From the information given above; the main task to do is to calculate for the standard deviation from investing in the asset ,but in order to do that; we must first determine the expected return value and the variance.

The expected return can either be the profit or loss the investor predict to get after investing on an instrument. It can be determined by multiplying the potential outcomes by the chances of them occurring and then totaling these results.

Here;

the potential outcome = Probability of the States

chances of them occurring = Percentage Returns

∴

Expected return = (0.25 × 5%) + (0.55 × 10%) + (0.20 × 13%)

Expected return = (1.25 + 5.5 + 2.6)%

Expected return = 9.35%

Variance = 0.25 × (5% - 9.35%)² + 0.55 × (10% - 9.35%)² + 0.20 × (13% - 9.35%)²

Variance = 0.25 ( -4.35%)² + 0.55 (0.3575%)² + 0.20 (3.65%)²

Variance = 0.0473 + 0.0023 + 0.0266

Variance = 0.0763

Finally; the standard deviation = [tex]\sqrt{variance}[/tex]

standard deviation = [tex]\sqrt {0.0763[/tex]

standard deviation = 0.276

To the nearest hundredth percent and by answering in the percent format without including the % sign ; we have

standard deviation = 2.76

The Melrose Corporation produces a single product, Product C. Melrose has the capacity to produce 90,000 units of Product C each year. If Melrose produces at capacity, the per unit costs to produce and sell one unit of Product C are as follows:

Direct materials $22.80
Direct labor $18.60
Variable manufacturing overhead $14.20
Fixed manufacturing overhead $16.00
Variable selling expense $12.80
Fixed selling expense $8.40

The regular selling price of one unit of Product C is $100.80. A special order has been received by Melrose from Moore Corporation to purchase 3,500 units of Product C during the upcoming year. If this special order is accepted, the variable selling expense will be reduced by 75%. Total fixed manufacturing overhead and fixed selling expenses would be unaffected except that Melrose will need to purchase a specialized machine to engrave the Moore name on each unit of product C in the special order. The machine will cost $6,300 and will have no use after the special order is filled. Assume that direct labor is a variable cost.

Assume that Melrose expects to sell 68,000 units of Product C to regular customers next year. At what selling price for the 3,500 units would Melrose be economically indifferent between accepting and rejecting the special order from Moore?

a. $59.10
b. $60.60
c. $81.10
d. $82.60

Answers

Answer:

Indifferent selling price =$67 per units

Explanation:

The selling at which Mel rose would be economically be indifferent between accepting and rejecting the special order from Moore is that that equates the relevant cost of making to the revenue from t

Relevant variable cost making

= 22.80 + 18.60 + 14.20 + (75%×12.80) = $65.2

Variable cost of special order (= $65.2 × 3,500)= 228,200

Cost of machine 6,300

Total relevant cost of special order 234,500

The price at which Melrose would be indifferent

= total relevant cost/ number of units

$234,500/3500 units

=$67 per units

Sunset Corporation (a C corporation) had operating income of $200,000 and operating expenses of $175,000. In addition, Sunset had a $30,000 long-term capital gain, a $52,000 short-term capital loss, and $5,000 tax-exempt interest income. What is Sunset Corporation's taxable income for the year

Answers

Answer:

Sunset Corporation's taxable income is $3,000

Explanation:

Calculation of Sunset Corporation's taxable income is as worked below

Taxable Income = Operating Income - Operating Expenses + Capital Gains - Capital Losses

Taxable Income = $200,000 - $175,000 + $30,000 - $52,000

Taxable Income = $3,000. Hence, Sunset Corporation's taxable income is $3,000

Note that taxable income is the amount of income used to calculate how much tax an individual or a company owes or is going to pay the government in a particular tax year.

If he goes to college, he will spend $22,000 on tuition, $11,000 on room and board, and $1,700 on books. If he does not go to college, he will earn $12,000 working in a store and spend $6,000 on room and board. Taio's cost of going to college is

Answers

Answer:

$40,700

Explanation:

To determine Taio's cost of going to college you need to find the economic cost that involves all the costs that you need to cover to receive a benefit and the opportunity costs that refer to what you would have received if you had chosen a different alternative. According to this, Taio's cost is equal to all the acounting costs related to going to college plus the opportunity costs that are the benefits lost from the other option which was not going to college.

Accounting costs= $22,000+$11,000+$1,700= $34,700

Opportunity costs= $12,000-$6,000= $6,000

Taio's cost of going to college is equal to the acount costs plus the opportunity costs:

$34,700+$6,000= $40,700

Jamal just inherited some money from a distant cousin overseas. He would like to put some of it in a bond and is looking at two choices. Bond A has five years to maturity, a semiannual coupon of 6% and a face value of $1,000. Bond B has ten years to maturity, an annual coupon of 4% and a face value of $1,000. Jamal knows that the rate expected in the marketplace for investments similar to these is 5%.
1. What is the present value of the coupon stream on each bond?
2. What is the present value of the face value on each bond?
3. What is the total value of each bond?
4. If Jamal sees the two bonds in the Wall Street Journal and they are both priced at 99, which bond should he buy?

Answers

Answer:

i. = $262.56 , = $308.87

ii. = $781.198 , = $613.91

iii. Bond A = $1,043.76 , Bond B = $922.78

Explanation:

(i) Present Value of Coupon Payment

Bond A :- Semiannual Coupon Amount = $1,000 * 6% * 6 / 12 = $30

Total Semiannual Period = 5 * 2 = 10

Semiannual Interest = 5% / 2 = 2.5%

Present Value of Coupon Payment = $30 * PVAF (2.5% , 10)

= $30 * 8.752

= $262.56

Bond B :- Annual Coupon Amount = $1,000 * 4% = $40

Annual Periods = 10

Annual Interest = 5%

Present Value of Coupon Payment = $40 * PVAF ( 5% , 10)

= $40 * 7.72

= $308.87

(ii) Present Value of Face Value of Bond

Bond A = $1,000 * PVF (2.5% , 10 periods)

= $1,000 * 0.7812

= $781.198

Bond B = $1,000 * PVF (5% , 10)

= $1,000 * 0.6139

= $613.91

(iii) Total Value of Each Bond

Bond A = $262.56 + $781.198 = $1,043.76

Bond B = $308.87 + $613.91 = $922.78

(iv)If Jamal sees the two bonds in the Wall Street Journal and they are both priced at 99, he should consider:

If the Bond Current Price is lower than Bond Fair Price then he should Buy the Bond

If the Bond Current Price is higher than Bond Fair Price then he should not buy the bond

Market Price of Bond = $99

He should buy Bond A But not Bond B

The following inventory balances relate to Lequin Manufacturing Corporation at the beginning and end of the year: Beginning Ending Raw materials $14,000 $19,000 Work in process $31,000 $7,000 Finished goods $25,000 $23,000 Lequin's total manufacturing cost was $543,000. What was Lequin's cost of goods sold?

Answers

Answer:

Cost of goods sold = $564,000

Explanation:

The cost of goods sold would be determined as follows:

Opening inventory

Raw material = 14,000

Work in progress 31,000

Manufacturing cost 543,000

588,000

Add open inventory of Finished goods 25,000

Less Closing inventory

raw material ( 19,000)

Work in progress ( 7,000)

Total cost of goods available for sale 587,000

Less closing inventory of finished goods 23,000

Cost of goods sold 564,000

Note that the opening inventory of raw material and work in progress would increase the manufacturing cost while their respective closing inventory represent cost incurred on production during the period on inventories not yet completed

Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months: January February March $ 3 Material purchases 14,870 11,690 12,760 Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase. The December Accounts Payable balance is $7,200. The budgeted cash payments for materials in January are
A. $13,580.
B. $13,815
C. $9,980
D. $7,200.
E. $19,960.

Answers

Answer:

Total= $14,635

Explanation:

Giving the following information:

Cost of materials:

January= 14,870

February= 11,690

March= 12,760

Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase.

The December Accounts Payable balance is $7,200.

To calculate the cash disbursement for January, we need to use the following structure:

Cash collection:

Accounts Payable= 7,200

Cash From January= (14,870*0.5)= 7,435

Total= $14,635

You are looking to buy a car. You can afford $700 in monthly payments for five years. In addition to the loan, you can make a $800 down payment. If interest rates are 9.25 percent APR, what price of car can you afford (loan plus down payment)

Answers

Answer:

$34,333

Explanation:

A fix periodic payment for a specific period of time is an annuity payment. Price of the car can be determined by the sum of the present value of all payments and down payment made.

First we need o calculate the present value of annuity using following formula

Present value of annuity = P x [ 1 - ( 1 + r )^-n / r ]

P = periodic payment = $700

r = APR = 9.25 /12% = 0.77%

n = numbers of periods = 5 years x 12 months per year = 60 months

Placing values in the formula

Present value of annuity = $700 x [ 1 - ( 1 + 0.77% )^-60 / 0.77% ]

Present value of annuity = $33,532.88

Price of the car = Present value of annuity + Down Payment

Price of the car = $33,532.88 + $800 = $34,332.88

4.Swan Manufacturing is approached by a customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The following per unit data apply for sales to regular customers: Direct materials$1,825 Direct labor900 Variable manufacturing support1,300 Fixed manufacturing support3,000 Total manufacturing costs$7,025.00 Markup (50%)3,512.50 Targeted selling price$ 10,537.50 Swan Manufacturing has excess capacity. Required: a.What is the full cost of the product per unit if the marketing costs is $3,000

Answers

Answer:

the full cost of the product per unit if the marketing costs is $3,000 is $7,025.

Explanation:

The cost of the special order will exclude the Fixed manufacturing support as these are common whether the order is accepted or not thus irrelevant. Remember to include the marketing costs as an additional cost.

Calculation of cost of the product :

Direct materials $1,825

Direct labor $900

Variable manufacturing support $1,300

marketing costs is $3,000

Total $7,025

Conclusion :

Thus, the full cost of the product per unit if the marketing costs is $3,000 is $7,025.

Nenn Co.'s allowance for uncollectible accounts was $190,000 at the end of 2024 and $200,000 at the end of 2023. For the year ended December 31, 2024, Nenn reported bad debt expense of $26,000 in its income statement. What amount did Nenn debit to the appropriate account in 2024 to write off actual bad debts?

Answers

Answer:

The amount Nenn debited to write off of actual bad debt is $36,000

Explanation:

Allowance for Uncollectible beginning = $200,000

Allowance for Uncollectible at the end = $190,000

Bad debt expense reported = $26,000

Amount Nenn debited to write off of actual bad debt = $200,000 + $26,000 - $190,000 = $36,000

lyssa and Crystal are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Alyssa takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Crystal takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza. Alyssa's opportunity cost of brewing a gallon of root beer is__________ , and Crystal's opportunity cost of brewing a gallon of root beer is__________ , has an absolute advantage in brewing root beer, and has a comparative advantage in brewing root beer. If Alyssa and Crystal trade foods with each other, will trade away pizza in exchange for root beer. The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that would make both roommates better off is of root beer, and the lowest price that makes both roommates better off is of root beer per pizza.

Answers

Answer:

a. 1.5 pizza

b. 1.39 pizza

c. Alyssa has an absolute advantage in brewing beer

d. Crystal has a comparative advantage in brewing beer

e. Crystal will easily trade away pizza for root beer

f. there's no limit to the highest price

g. lowest price is 0.719 beer root/pizza

Explanation:

Alyssa takes 3 hrs to brew a gallon of root beers and 2 hrs to make a pizza

Crystal takes 7 hrs to brew a gallon of root beer and 5 hrs to make a pizza

Alyssa make 1 gallon/3 hrs = 0.33 gallons/hr of beer, and the same way makes 0.5 pizza/hr

Crystal makes 0.143 gallon/hr of beer, and 0.2 pizza/hr

for Alyssa, 0.33 gallons/hr = 0.5 pizza/hr, therefore

1 gallon of beer = 0.5/0.33 = 1.51 pizza

for crystal, 1 gallon of beer = 0.2/0.143 = 1.39 pizza

price of pizza:

Alyssa = 0.662 root beer/pizza

Crystal = 0.719 root beer/pizza

There are many perfumes on the market, but Demeter, a superior brand of perfume, has memorable scents that leads to emotional ties. Which element of the marketing plan is being considered when the marketing manager decided initially to market the perfume in a limited number of very exclusive specialty stores?

Answers

Answer:

Place

Explanation:

The four P's of marketing is a number of tactics employed in a marketing plan to achieve better sales of a product. These four P's include; Price, Place, Promotion, and Product. The place factor takes note of the location where the target customers are most likely to be reached. To achieve better sales of a product, it is very important that the right location is chosen so that consumers who are interested in it can access it easily. For example, it would make no sense to sell grocery products in a boutique. That is not where the target customers are.

So, when the marketing manager of Demeter Perfumes decided to market the perfume in a limited number of very exclusive specialty stores, it is because that place is where the target market (most likely, high income earners), can be found easily.

An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. By the end of the year, $400 has been earned. What is the correct adjusting entry that should be include?

Answers

Answer:

The answer is "$400"

Explanation:

Given:

advance payment = $ 1,000

by the end of year he earned= $ 400

So, the total eared value is $ 400 because it is the Debit unearned income.

Answer:

Debit unearned revenues for $400

Explanation:

Adjusting entries are journal entries made to record revenues and expenses accounts. These entries are made at the end of an accounting cycle.

Payment received for services on December 1 that was recorded as a liability = $1,000

Amount earned by the end of the year = $400

Therefore,

adjusting entry: Debit unearned revenues for $400 so that expenses matched to the accounting period in which the revenue paying for them is earned.

Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance.
Accounts Payable $ 26,800
Accounts Receivable 17,200
Accumulated Depreciation—
Equipment 68,000
Cash 8,000
Common Stock 35,000
Cost of Goods Sold 614,300
Freight-Out 6,200
Equipment 157,000
Depreciation Expense 13,500
Dividends 12,000
Gain on Disposal of Plant Assets 2,000
Income Tax Expense 10,000
Insurance Expense 9,000
Interest Expense 5,000
Inventory 26,200
Notes Payable 43,500
Prepaid Insurance 6,000
Advertising Expense 33,500
Rent Expense 34,000
Retained Earnings 14,200
Salaries and Wages Expense 117,000
Sales Revenue 904,000
Salaries and Wages Payable 6,000
Sales Returns and Allowances 20,000
Utilities Expense 10,600

Answers

Answer:

Wolford Department Store

Income Statement

For the Year Ended November 30,2017

Sales Revenue $904,000

Sales Returns and Allowances ($20,000 )

Net Sales $884,000

Cost of Goods Sold ($614,300)

Gross profit $269,700

Operating expenses:

Wages Expense $117,000 Advertising Expense $33,500 Rent Expense $34,000 Depreciation Expense $13,500 Insurance Expense $9,000 Utilities Expense $10,600Freight-Out $6,200

Total operating expenses ($223,800)

Income from operations $45,900

Other revenues:

Gain on Disposal of Plant Assets $2,000

Other expenses:

Interest Expense ($5,000 )

Income before income taxes $42,900

Income Tax Expense ($10,000)

Net income after taxes $32,900

Wolford Department Store

Balance Sheet

For the Year Ended November 30,2017

Assets:

Cash $8,000

Accounts Receivable $17,200

Prepaid Insurance $6,000

Inventory $26,200

Equipment $157,000

Accumulated Depreciation - Equipment (68,000)

Total Assets: $146,400

Liabilities and Stockholders' Equity:

Accounts Payable $26,800

Wages Payable $6,000

Notes Payable $43,500

Common Stock $35,000

Retained Earnings $35,100

Total Liabilities and Stockholders' Equity: $146,400

Wolford Department Store

Statement of Retained Earnings

For the Year Ended November 30,2017

Retained earnings at the beginning of the period: $14,200

Net income after taxes: $32,900

Dividends ($12,000)

Retained earnings at he end of the period: $35,100

a. The Wolford Department Store's Multi-level Income Statement, Balance Sheet, and Statement of Retained Earnings as of November 30, 2017 are as follows:

Wolford Department Store

Income Statement

For the Year Ended November 30,2017

Sales Revenue $904,000

Sales Returns and Allowances ($20,000)

Net Sales $884,000

Cost of Goods Sold ($614,300)

Gross profit $269,700

Operating expenses:

Wages Expense $117,000

Advertising Expense 33,500

Rent Expense 34,000

Depreciation Expense 13,500

Insurance Expense 9,000

Utilities Expense 10,600

Freight-out 6,200

Total operating expenses ($223,800)

Income from operations $45,900

Other revenues:

Gain from Disposal of Plant Assets $2,000

Other expenses:

Interest Expense ($5,000)

Income before Income Taxes $42,900

Income Tax Expense ($10,000)

Net Income After Taxes $32,900

Wolford Department Store

Balance Sheet

As of November 30,2017

Assets:

Current Assets:

Cash $8,000

Accounts Receivable 17,200

Prepaid Insurance 6,000

Inventory 26,200

Current assets $57,400

Long-term assets:

Equipment $157,000

Accumulated Depreciation (68,000) $89,000

Total Assets $146,400

Liabilities and Stockholders' Equity:

Current Liabilities:

Accounts Payable $26,800

Wages Payable 6,000

Current liabilities $32,800

Long-term liabilities

Notes Payable $43,500

Total liabilities $76,300

Equity:

Common Stock $35,000

Retained Earnings 35,100

Total Equity $70,100

Total Liabilities & Stockholders' Equity $146,400

Wolford Department Store

Statement of Retained Earnings

As of November 30,2017

Retained earnings 1 Dec. 2016 $14,200

Net income after taxes 32,900

Dividends ($12,000)

Retained earnings, Nov. 30, 2017 $35,100

b) The profitability ratios are computed as follows:

1. Profit Margin = (Net Income/Net Sales x 100)

= $32,900/$884,000 x 100

= 3.72%

2. Gross Profit rate = Gross Profit/Net Sales x 100)

= $269,700/$884,000 x 100

= 30.51%

c. If the net sales increases by 15%, the Net sales = $1,016,600 ($884,000 x 1.15)

If Gross profit increases by $40,443, the Gross profit = $310,143 ($269,700 + $40,443)

If Expenses increase by $58,600, the total operating Expenses = $282,400 ($223,800 + $58,600)

Revised Net Income:

Gross Profit $310,143

Total operating expenses (282,400)

Income from operations $27,743

Other revenues:

Gain from Disposal of Plant Assets $2,000

Other expenses:

Interest Expense ($5,000)

Income before Income Taxes $24,743

Income Tax Expense ($10,000)

Net Income After Taxes $14,743

b) The profitability ratios are computed as follows:

1. Profit Margin = (Net Income/Net Sales x 100)

= $14,743/$1,016,600 x 100

= 1.45%

2. Gross Profit rate = Gross Profit/Net Sales x 100)

= $310,143/$1,016,600 x 100

= 30.51%

d. With the proposed changes, the gross profit rate remains the same (without any impact) because the net sales increased by the same rate (15%) as the cost of goods sold and the gross profit.

However, the net income reduced drastically, especially with the income tax remaining the same amount.

Thus, without the income tax effect, there is no merit in this proposal as it reduced the net income margin from 3.72% to 1.45%.

Learn more: https://brainly.com/question/24127784

Laser World reports net income of $620,000. Depreciation expense is $47,000, accounts receivable increases $11,000, and accounts payable decreases $27,000. Calculate net cash flows from operating activities using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

Answers

Answer:

$629,000

Explanation:

The net cash flow from operating activities is the net income plus depreciation, minus the increase in accounts receivable as well as the decrease in accounts payable.

Net income is $620,000

depreciaton expense $47,000

Increase in accounts receivable ($11,000)

decrease in accounts payable ($27,000)

Net cash flow from operations $629,000

The increase in accounts receivable denies the business of additional cash,hence it is deducted ,the same applies to increase in accounts payable

Sheridan Company uses the periodic inventory system. For the current month, the beginning inventory consisted of 485 units that cost $66 each. During the month, the company made two purchases: 725 units at $69 each and 364 units at $71 each. Sheridan Company also sold 1198 units during the month. Using the average cost method, what is the amount of ending inventory? (Round average cost per unit to 2 decimal places, e.g. 21.48.)

Answers

Answer:

Value of closing inventory = $25771.04

Explanation:

To calculate the value of ending inventory under a periodic average cost method, we will calculate the average price per unit of inventory at the end of the month. To calculate the average price per unit, we simply divide the total cost of the inventory by the total number of units for the month.

Average cost per unit = Total cost of all units for the month / Total units available for the month

Total cost of all units:

Beginning inventory (485 * 66) 32010

Purchase 1 (725 * 69) 50025

Purchase 2 (364 * 71) 25844

Total 107879

Total Units

Beginning Inventory 485

Purchase 1 725

Purchase 2 364

Total 1574

Average cost per unit = 107879 / 1574

Average cost per unit = $68.54

Units of closing inventory = 1574 - 1198 = 376 units

Value of closing inventory = 376 * 68.54

Value of closing inventory = $25771.04

Suppose the U.S. government cuts back on government spending and increases taxes in an effort to reduce the budget deficit. What would be the effect of these changes on the U.S. balance of payments?

a. There would be no change because the balance of payments always equals zero.
b. There would be an increase in the current account and an increase in the capital account.
c. There would be a decrease in the current account and a decrease in the capital account.
d. There would be a decrease in the current account and an increase in the capital account.
d. There would be an increase in the current account and a decrease in the capital account.

Answers

Answer:

d. There would be a decrease in the current account and an increase in the capital account.

Explanation:

The balance of payment in accounting typically comprises of capital account and current account, it is used for the recording of business transactions between two countries. Capital accounts are used to record any trade between two countries relating to financial assets and liabilities.

The current account is used to record trades relating to import and export of goods and services in a country.

Hence, if the U.S. government cuts back on government spending and increases taxes in an effort to reduce the budget deficit. The effect of these changes on the U.S. balance of payments is that there would be a decrease in the current account because it has no effect on the value of assets and liabilities, thereby affecting the export and import of goods and services.

Also, there would be an increase in the capital account due to the fact that the government tends to borrow more and seeks foreign investors.

Exercise 4-7 (Algo) Income statement presentation; discontinued operations; restructuring costs [LO4-1, 4-3, 4-4] Esquire Comic Book Company had income before tax of $1,650,000 in 2021 before considering the following material items: Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting principles. The before-tax loss on disposal was $405,000. The division generated before-tax income from operations from the beginning of the year through disposal of $630,000. The company incurred restructuring costs of $70,000 during the year. Required: Prepare a 2021 income statement for Esquire beginning with income from continuing operations. Assume an income tax rate of 25%. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.)

Answers

Answer:

Net income = $1,353,750

Note: See the income statement below.

Explanation:

Before preparing the income statement, the following calculations are done first:

Income from operations of discontinued component = Income before-tax generated by the division - Before-tax loss on disposal = $630,000 - $405,000 = $225,000

Income from continuing operations = Income before tax - Restructuring costs = $1,650,000 - $70,000 = $1,580,000

The income statement can now be prepared as follows:

Esquire Comic Book Company

Partial Income Statement

For the year ended December 31, 2021

Details $

Income from continuing operations 1,580,000

Discontinued operations gain (loss):

Income from discontinued component 225,000

Total income before tax 1,805,000

Tax expenses (1,805,000.00 * 25%) (451,250)

Net income 1,353,750

Bond A pays $8,000 in 20 years. Bond B pays $8,000 in 10 years. (To keep things simple, assume these are zero-coupon bonds, which means the $8,000 is the only payment the bondholder receives.)

Suppose the interest rate is 7 percent.

Using the rule of 70, the value of Bond A is approximately_______ , and the value of Bond B is approximately_______ .
Now suppose the interest rate increases to 14 percent.

Using the rule of 70, the value of Bond A is now approximately_________ , and the value of Bond B is approximately________ . Comparing each bond's value at 7 percent versus 14 percent, Bond A's value decreases by a_______ percentage than Bond B's value. The value of a bond__________ when the interest rate increases, and bonds with a longer time to maturity are _________sensitive to changes in the interest rate.

Answers

Answer:

To find the value of bond, let's use the formula:

Value of bond = price of bond / (1 + interest rate)ⁿ

Here n represents number of years.

At 7% interest rate:

Value of bond A = [tex]\frac{8000}{(1+0.07)^2^0} = 2067.35[/tex]

Value of bond B = [tex]\frac{8000}{(1+0.07)^1^0} = 4066.79[/tex]

At 14% interest rate:

Value of bond A = [tex] = \frac{8000}{(1+0.14)^20} = 582.09 [/tex]

Value of bond B = [tex] = \frac{8000}{(1+0.14)^10} = 2157.95 [/tex]

The difference between bond A at 7% and 14%:

$582.09 - $2067.35 = -$1485.26

The difference between bond B at 7% and 14%:

$2157.95 - $4066.79 = -$1908.84

% decrease between bond A and B:

[tex] \frac{1908.84 - 1485.26}{1908.84} * 100 = 22.19 [/tex]

Therefore, from the above calculations, we have the following:

Suppose the interest rate is 7%, Using the rule of 70, the value of Bond A is approximately $2067.35, and the value of Bond B is approximately $4066.79 .

Now suppose the interest rate increases to 14 percent.

Using the rule of 70, the value of Bond A is now approximately $528.09 , and the value of Bond B is approximately $2157.95 .

Comparing each bond's value at 7 percent versus 14 percent, Bond A's value decreases by a 22.19 percentage than Bond B's value.

The value of a bond decreases when the interest rate increases, and bonds with a longer time to maturity are more sensitive to changes in the interest rate.

Tipton Processing maintains its internal inventory records using average cost under a perpetual inventory system. The following information relates to its inventory during the year: Jan. 1 Inventory on hand—80,000 units; cost $4.25 each. Feb. 14 Purchased 120,000 units for $4.50 each. Mar. 5 Sold 150,000 units for $14.00 each. Aug. 27 Purchased 50,000 units for $4.80 each. Sep. 12 Sold 60,000 units for $14.00 each. Dec. 31 Inventory on hand—40,000 units. Required: 1. Determine the amount Tipton would calculate internally for ending inventory and cost of goods sold using average cost under a perpetual inventory system. 2. Determine the amount Tipton would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. 3. Determine the amount Tipton would report for its LIFO reserve at the end of the year. 4. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $8,000.

Answers

Answer:

1. Determine the amount Tipton would calculate internally for ending inventory and cost of goods sold using average cost under a perpetual inventory system.

COGS = $936,000Ending inventory = $184,000

2. Determine the amount Tipton would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system.

COGS using LIFO = $950,000Ending inventory = $170,000

3. Determine the amount Tipton would report for its LIFO reserve at the end of the year.

$22,000

4. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $8,000.

Dr Cost of goods sold 14,000

Cr LIFO reserve 14,000

Explanation:

Jan. 1 Inventory on hand—80,000 units; cost $4.25 each.

Feb. 14 Purchased 120,000 units for $4.50 each.

Mar. 5 Sold 150,000 units for $14.00 each.

COGS = {[(80,000 x $4.25) + (120,000 x $4.50)] / 200,000} x 150,000 = $660,000

remaining inventory 50,000 units at $4.40 = $220,000

Aug. 27 Purchased 50,000 units for $4.80 each.

Sep. 12 Sold 60,000 units for $14.00 each.

COGS = {[(50,000 x $4.40) + (50,000 x $4.80)] / 100,000} x 60,000 = $276,000

Dec. 31 Inventory on hand—40,000 units at $4.60 = $184,000

Jan. 1 Inventory on hand—80,000 units; cost $4.25 each.

Feb. 14 Purchased 120,000 units for $4.50 each.

Mar. 5 Sold 150,000 units for $14.00 each.

Aug. 27 Purchased 50,000 units for $4.80 each.

Sep. 12 Sold 60,000 units for $14.00 each.

Dec. 31 Inventory on hand—40,000 units at $4.60 = $184,000

total units sold = 210,000

COGS using LIFO = (50,000 x $4.80) + (120,000 x $4.50) + (40,000 x $4.25) = $240,000 + $540,000 + $170,000 = $950,000

Ending inventory = 40,000 x $4.25 = $170,000

3) LIFO reserve = FIFO inventory - LIFO inventory

FIFO inventory = $192,000 - $170,000 = $22,000

4) $22,000 - $8,000 = $14,000

Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $10. At the start of January 2015, VGC’s income statement accounts had zero balances and its balance sheet account balances were as follows:

Cash $2,360,000
Accounts Receivable 152,000
Supplies 19,100
Equipment 948,000
Land 1,920,000
Building 506,000
Accounts Payable 109,000
Unearned Revenue 152,000
Notes Payable (due 2018) 80,000
Common Stock 2,200,000
Retained Earnings 3,364,100

In addition to the above accounts, VGC’s chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense.

Required:
1. Analyze the effect of the January transactions (shown below) on the accounting equation, and indicate the account, amount, and direction of the effect (+ for increase and − for decrease) of each transaction. (Enter any decreases to account balances with a minus sign.)

a. Received $52,250 cash from customers for subscriptions that had already been earned in 2014.
b. Received $235,000 cash from Electronic Arts, Inc. for service revenue earned in January.
c. Purchased 10 new computer servers for $41,900; paid $12,000 cash and signed a three-year note for the remainder owed.
d. Paid $15,600 for an Internet advertisement run on Yahoo! in January.
e. Sold 10,100 monthly subscriptions at $10 each for services provided during January. Half was collected in cash and half was sold on account.
f. Received an electric and gas utility bill for $5,900 for January utility services. The bill will be paid in February.
g. Paid $310,000 in wages to employees for work done in January.
h. Purchased $5,100 of supplies on account.
i. Paid $5,100 cash to the supplier in (h).

2. Prepare journal entries for the January transactions listed in part 1, using the letter of each transaction as a reference.
3. Create T-accounts, enter the beginning balances shown above, post the journal entries to the T-accounts, and show the unadjusted ending balances in the T-accounts.
4. Prepare an unadjusted trial balance as of January 31, 2015.

Answers

Answer:

Vanishing Games Corporation (VGC)

1. Analysis of the effect of transactions on the accounting equation:

Assets = Liabilities + Equity

Assets (Cash) increases +$52,500 and Assets (Accounts Receivable) decreases -$52,500 = Liabilities + Equity.

b. Assets (Cash) increases +$235,000 = Liabilities + Equity (Retained Earnings) increase + $235,000.

c. Assets (Equipment) increases +41,900; Cash decreases -$12,000 = Liabilities (Notes Payable) increase +$29,900 + Equity.

d. Assets (Cash) decreases -$15,600 = Liabilities + Equity (Retained Earnings) decrease - $15,600.

e. Assets (Cash) increases + $50,500 and (Accounts Receivable) increases + $50,500 = Liabilities + Equity (Retained Earnings) increase + $101,000.

f. Assets = Liabilities (Accounts Payable) increase +$5,900 + Equity (Retained Earnings) decrease -$5,900.

g. Assets (Cash) decreases - $310,000 = Liabilities + Equity (Retained Earnings) decreases - $310,000.

h. Assets (Supplies) increase + $5,100 = Liabilities (Accounts Payable) increase +$5,100 + Equity.

i. Assets (Cash) decreases - $5,100 = Liabilities (Accounts Payable) decrease - $5,100 + Equity.

2. Journal Entries:

a. Debit Cash Account $52,500

Credit Accounts Receivable $52,500

To record cash from customers.

b. Debit Cash Account $235,000

Credit Service Revenue $235,000

To record cash for service revenue.

c. Debit Equipment $41,900

Credit Cash Account $12,000

Credit Notes Payable $29,900

To record purchase of 10 new computer services

d. Debit Advertising Expense $15,600

Credit Cash Account $15,600

To record payment for advertising.

e. Debit Cash Account $50,500

Debit Accounts Receivable $50,500

Credit Service Revenue $101,000

To record subscriptions for services sold.

f. Debit Utilities Expense $5,900

Credit Utilities Payable $5,900

To record utilities expense.

g. Debit Wages & Salaries Expense $310,000

Credit Cash Account $310,000

To record wages paid.

h. Debit Supplies Account $5,100

Credit Accounts Payable $5,100

To record purchase of supplies on account.

i. Debit Accounts Payable $5,100

Credit Cash Account $5,100

To record payment on account.

3. T-Accounts:

Cash Account

Beginning Balance $2,360,000 c. Equipment 12,000

a. Accounts Receivable 52,250 d. Advertising Expense 15,600

b. Electronic Arts, Inc. 235,000 g. Wages & Salaries 310,000

e. Service Revenue 50,500 i. Accounts Payable 5,100

Balance c/d 2,355,050

2,697,750 2,697,750

Balance b/d 2,355,050

Accounts Receivable

Beginning Balance 152,000 a. Cash 52,250

e. Service Revenue 50,500 Balance c/d 150,250

202,500 202,500

Balance b/d 150,250

Supplies

Beginning Balance 19,100 Balance c/d 24,200

Accounts Payable 5,100

24,200 24,200

Balance b/d 24,200

Equipment

Beginning Balance 948,000 Balance c/d 989,900

c. Cash 12,000

c. Notes Payable 29,900

989,900 989,900

Balance b/d 989,900

Land

Beginning Balance 1,920,000

Building

Beginning Balance 506,000

Accounts Payable

i. Cash 5,100 Beginning Balance 109,000

Balance c/d 109,000 h. Supplies 5,100

114,100 114,100

Balance b/d 109,000

Unearned Revenue

Beginning Balance 152,000

Advertising Expense

d. Cash 15,600

Utilities Expense

f. Utilities Payable 5,900

Utilities Payable

f. Utilities Expense 5,900

Wages & Salaries Expense

g. Cash 310,000

Service Revenue

b. Cash 235,000

Balance c/d 336,000 e. Cash 50,500

e. Accounts Receivable 50,500

336,000 336,000

Balance b/d 336,000

Notes Payable (due 2018)

Balance c/d 109,900 Beginning Balance 80,000

c. Equipment 29,900

109,900 109,900

Balance b/d 101,000

Common Stock

Beginning Balance 2,200,000

Retained Earnings

Beginning Balance 3,364,100

4. Trial Balance as at January 31:

Debit Credit

Cash $2,355,050

Accounts Receivable 150,250

Supplies 24,200

Equipment 989,900

Land 1,920,000

Building 506,000

Advertising expense 15,600

Utilities Expense 5,900

Utilities Payable $5,900

Wages & Salaries 310,000

Service Revenue 336,000

Notes Payable 109,900

Accounts Payable 109,000

Unearned Revenue 152,000

Common Stock 2,200,000

Retained Earnings 3,364,100

Total $6,276,900 $6,276,900

Explanation:

a) Note: the adjustment of the Utilities could have been eliminated to produce the same result, with totals reduced by $5,900.

Vanishing Games Corporation (VGC)

Answer 1:

Analysis of the effect of transactions on the accounting equation:

Assets = Liabilities + Equity

a. Assets (Cash) increases +$52,500 and Assets (Accounts Receivable) decreases -$52,500 = Liabilities + Equity.