Answer:
e. Company Heidee has a higher ROE than Company Leaudy.
Explanation:
Return on equity measures how well the management of a business uses owner's equity to get returns. It is calculated by dividing net income by owner's equity.
That is
ROE= Net Income ÷ Owner's equity
Considering the accounting equation
Asset= Liability + Owner equity
Owner equity= Asset - Liability
From the equation when a company that take on more debt owner's equity will reduce.
The effect of reduction in owner's equity on Return on Equity is that it will increase the ratio, since owner's equity is the denominator.
In this scenario both companies have the same profit margin so if company Heidee has higher debt ratio it follows that it also has a higher ROE than Company Leaudy
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.
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.
N
Select the correct answer.
Which type of investment offers both capital gains and interest income?
OA
property
OB.
CDs
C. stocks
OD
bonds
Reset
Next
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
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).
15) A market is defined as A) a physical place where people buy only goods. B) a physical place where people buy both goods and services. C) a store where people buy physical goods. D) any arrangement that brings buyers and sellers together. E) a place where one good is bartered for another.
Answer:
D) any arrangement that brings buyers and sellers together.
Explanation:
In earlier times before now a market has a specific way of defining it. But due to recent advancement in technology, it can be described or defined to be any arrangement that brings buyers and sellers together.
The power of online presence totally altered the initial marker definitions the world know as any physical place where these buyers and sellers meet to do their tradings or businesses or a place where goods are bartered for another. Therefore any arrangement, be it via mail, sms, codes, online stores, video meetings etc are all forms of market places.
Bergstrom accepted the return of merchandise by a customer. The merchandise had been sold on account, and payment had not been received on the date of return. The returned goods retailed for $400, but cost Bergstrom only $300. The appropriate journal entry for Bergstrom is:
Answer:
Debit Sales Return and allowances $400
Credit Accounts receivable $400
Explanation:
In the given scenario the sale was made on account. That means that no money was collected for the transaction.
So we do not consider the $300 it would cost Bergstrom.
When a good is sold on account, the accounts receivable is debited for the sale amount ($400). As the customer pays the money owed the account is credited to balance it up.
In this case however the good is being returned. So we will debit the Sales Return and Allowance account to recognise the returned item.
Accounts receivable is credited to remove the credit sale since the product has been returned.
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
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
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.
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.
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
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
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
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
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.
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%.
________ 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
Martin wants to provide money in his will for an annual bequest to whichever of his living relatives is oldest. That bequest will provide $ 9 comma 000 in the first year, and will grow by 7 % per year, forever. If the interest rate is 10 %, how much must Martin provide to fund this bequest?
Answer:
$300,00
Explanation:
In a situation where the interest rate is said to be 10% the amount that Martin must provide in order to fund this bequest will therefore be:
Bequest first year $9,000/(Interest rate 10%-
Increase of 7 % per year)
Hence:
$9,000/0.03
=$300,000
Therefore $300,00 will be provided to fund the bequest
Moonlight Bay Inn is incorporated on January 2, 2014, by its three owners, each of whom contributes $20,000 in cash inexchange for shares of stock in the business. In addition to the sale of stock, the following transactions are entered into during the month ofJanuary:
January 2: A Victorian inn is purchased for $50,000 in cash. An appraisal performed on this date indicates that the land is worth $15,000, and the remaining balance of the purchase price is attributable to the house. The owners estimate that the house will have an estimated useful life of 25 years and an estimated salvage value of $5,000.
January 3: A two-year, 12%, $30,000 promissory note was signed at the Second State Bank. Interest and principal will be repaid on the maturity date of January 3, 2019.
January 4: New furniture for the inn is purchased at a cost of $15,000 incash. The furniture has an estimated useful life of 10 years and no salvage value.
January 5: A 24-month property insurance policy is purchased for $6,000 in cash.
January 6: An advertisement for the inn is placed in the local newspaper. Moonlight Bay pays $450 cash for the ad, which will run in the paper throughout January.
January 7: Cleaning supplies are purchased on account for $950. The bill is payable within 30 days.
January 15: Wages of $4,230 for the first half of the month are paid in cash.
January 16: A guest mails the business $980 in cash as a deposit for a room to be rented for two weeks. The guest plans to stay at the inn during the last week of January and the first week of February.
January 31: Cash receiptsfrom rentals of rooms for the month amount to $8,300.
January 31: Cash receiptsfrom operation of the restaurant for the month amount to $6,600.
January 31:. Each stockholder is paid $200 in cash dividends.
Required 1. Prepare journal entries to record each of the preceding transactions. Don’t forget the stock.
2. Post each of the journal entries to T accounts.
3. Prepare adjusting journal entries for each of the following transactions as of January 31.
a. Depreciation of the house
b. Depreciation of the furniture
c. Interest on the promissory note
d. Recognition of the expired portion of the insurance
e. Recognition of the earned portion of the guests’ deposit
f. Wages earned during the second half of January amount to $520 and will be paid on Feb. 3
g. Cleaning supplies on hand on January 31 amount to $230
h. A utility bill is received amounts to $740 and is payable by Feb. 5
i. Income taxes are to be accrued at a rate of 30% of income before taxes
4. Post each adjusting journal entry to T accounts
5. Prepare the following financial statements: a. Income statement for month ended January 31 b. Statement of retained earnings for the month ended January 31 c. Balance sheet at January 31
6. What are your reactions to Moonlight’s first month of operations? Is the bank comfortable with the loan it made?
Answer:
1. Prepare journal entries to record each of the preceding transactions.
January 2, 2014, Moonlight Bay Inn is incorporated
Dr Cash 60,000
Cr Common stock 60,000
January 2, 2014, a Victorian Inn is purchased
Dr Land 15,000
Dr Building 35,000
Cr Cash 50,000
January 3, 2014, promissory note signed at bank
Dr Cash 30,000
Cr Notes payable 30,000
January 4, 2014, furniture is purchased
Dr Furniture 15,000
Cr Cash 15,000
January 5, 2014, insurance policy is purchased
Dr prepaid insurance 6,000
Cr cash 6,000
January 6, 2014, advertisement is placed in the local newspaper
Dr Advertising expense 450
Cr Cash 450
January 7, 2014, cleaning supplies purchased on account
Dr Cleaning supplies 950
Cr Accounts payable 950
January 15, 2014, wages for first 15 days are paid
Dr Wages expense 4,230
Cr Cash 4,230
January 16, 2014, check received form customer
Dr Cash 980
Cr Unearned revenue 980
January 31, 2014, cash receipts from room rentals are accounted for
Dr Cash 8,300
Cr Rental revenue 8,300
January 31, 2014, cash receipts from restaurant are accounted for
Dr Cash 6,600
Cr Restaurant revenue 6,600
January 31, 2014, dividends are distributed
Dr Retained earnings 600
Cr Dividends payable 600
Dr Dividends payable 600
Cr Cash 600
2. Post each of the journal entries to T accounts.
I used an excel spreadsheet to post the T accounts (attached file).
3. Prepare adjusting journal entries for each of the following transactions as of January 31.
a. Depreciation of the house
depreciation expense per month = $30,000 x 1/25 x 1/12 = $116.67 ≈ $117
Dr Depreciation expense 117
Cr Accumulated depreciation - building 117
b. Depreciation of the furniture
depreciation expense per month = $15,000 x 1/10 x 1/12 = $125
Dr Depreciation expense 125
Cr Accumulated depreciation - furniture 125
c. Interest on the promissory note
interest expense per month = $30,000 x 12% x 28/365 = $276.16 ≈ $276
Dr Interest expense 276
Cr Interest payable 276
d. Recognition of the expired portion of the insurance
insurance per month = $6,000 /24 = $250
Dr insurance expense 250
Cr Prepaid insurance 250
e. Recognition of the earned portion of the guests’ deposit
Dr Unearned revenue 490
Cr Rental revenue 490
f. Wages earned during the second half of January amount to $520 and will be paid on Feb. 3
Dr Wages expense 520
Cr Wages payable 520
g. Cleaning supplies on hand on January 31 amount to $230
cleaning supplies expense = $950 - $230 = $720
Dr Cleaning supplies expense 720
Cr Cleaning supplies 720
h. A utility bill is received amounts to $740 and is payable by Feb. 5
Dr Utilities expense 740
Cr Accounts payable 740
i. Income taxes are to be accrued at a rate of 30% of income before taxes
Dr Income taxes expense
Cr income taxes payable
4. Post each adjusting journal entry to T accounts
I used an excel spreadsheet to post the T accounts (attached file).
5. Prepare the following financial statements: a. Income statement for month ended January 31
Income Statement
Rental revenue $8,790
Restaurant revenue $6,600
Wages expense ($4,750)
Advertising expense ($450)
Depreciation expense ($242)
Insurance expense ($250)
Cleaning supplies expense ($720)
Utilities expense ($740)
EBIT $8,238
Interest expense ($276)
Net income before taxes $7,962
Income taxes ($2,389)
Net income after taxes $5,573
b. Statement of retained earnings for the month ended January 31
Retained earnings at the beginning of the period: $0
Net income: $5,573
Dividends distributed: ($600)
Retained earnings at the end of the period $4,973
c. Balance sheet at January 31
Assets:
Cash $29,600
Prepaid insurance $5,750
Cleaning supplies $230
Furniture $14,875
Land $15,000
Building $34,883
Total Assets: $100,338
Liabilities and Stockholders' Equity:
Accounts payable $1,690
Unearned revenue $490
Wages payable $520
Interest payable $276
Income tax payable $2,389
Notes payable $30,000
Common stock $60,000
Retained earnings $4,973
Total Liabilities and Stockholders' Equity: $100,338
6. What are your reactions to Moonlight’s first month of operations? Is the bank comfortable with the loan it made?
Yes, the bank should be OK with the loan since the Inn was able to make a profit during the first month of operations (something very uncommon).
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.
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.
What are the principles of logic and critical thinking?
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
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.
How will you use PowerPoint to enhance the presentation of information and engage your audience in your professional or academic life? What are the benefits of using a PowerPoint presentation?
Answer:
Using power point to enhance the presentation of information certainly come with many different benefits which are discussed as under:
1. Visual impact can help retain the interest of audience.
2. highly flexible and persoanlization is allowed according to the needs.
3. easily embed many different tools directly into the PPT like videos, spreadsheets etc.
4. color schemes can be used and data can be presented in a compact form.
5. easy to convert into any formats like .docs or .pdf.
6. easy to share
7. user friendly
8. tons of automated templates to use on the go.
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
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.
Employees at Diving Swallow Custom Tattoo in Oakland, California, practice an age-old art. They may use electric equipment today, but their business still involves crafting a design and inking it into skin, as all tattoo artists have done for generations. Fortunately, there are no shortages of ink, artists, or clients for the Diving Swallow.At Diving Swallow, the environment is____________(stable or dynamic) because of the __________(number of factors that are changing or pace of change) and ___________(complex or simple) because of the____________(pace of change or number of factors that are changing). Resources are________(scarce or abundant).The managers at Diving Swallow are facing conditions of _______(low or high) uncertainty. This means that it will be__________(difficult or easy) for them to make strategic decisions about the types of products the company will offer in the future.
Answer:
1. Dynamic
2. Number of factors that are changing
3. Complex
4. Pace of change
5. Abundant
6. Low
7. Easy
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.
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