Answer:
1. Record the adjusting entry for advertisements at March 31 of the current year.
advertisement expense per month = $3,900 / 6 months = $650
$650 x 3 months = $1,950
Dr Advertising expense 1,950
Cr Prepaid advertising 1,950
2. Record the adjusting entry for the use of construction equipment during of the current year.
Dr Depreciation expense 42,400
Cr Accumulated depreciation - equipment 42,400
3. What amount should be reported on the current year's income statement for Advertising Expense?
$1,950
For Depreciation Expense?
$42,400
4. What amount should be reported on the current year's balance sheet for Prepaid Advertising?
$1,950 (= $3,900 - $1,950)
For Construction Equipment (at net book value)?
$358,800 (= $550,000 - $191,200)
Explanation:
Accrual accounting principle states that both revenues and expenses must be recognized during the periods that they effectively occur. They are not necessarily recorded during the periods in which they were collected or paid for.
1. The adjusting entry for advertisements at March 31 of the current year
Gauge Construction Company journal entry
1. March 31
Dr Advertising expense $1,950
Cr Prepaid advertising $1,950
($3,900×3/6)
(To record Advertising expense)
2. The adjusting entry for the use of construction equipment during of the current year.
Gauge Construction Company journal entry
Dr Depreciation expense $42,400
Cr Accumulated depreciation - equipment $42,400
(To record equipment expense)
3. The amount that should be reported on the current year's income statement for Advertising Expense and Depreciation Expense.
Advertising Expense=$3,900×3/6
Advertising Expense=$1,950
Depreciation Expense=$42,400
4. The amount that should be reported on the current year's balance sheet for Prepaid Advertising and Construction Equipment.
Prepaid Advertising=$3,900-($3,900×3/6)
Prepaid Advertising=$3,900-$1,950
Prepaid Advertising=$1,950
Construction Equipment=$550,000-($148,800+$42,400)
Construction Equipment=$550,000-$191,200
Construction Equipment=$358,800
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Given the series of demand data below Period: 1 2 3 4 5 6 7 8 9 10 Demand: 42 35 58 42 27 49 40 41 27 41 a. Calculate the forecasts for periods 7 through 11 using moving average models with n = 2, n = 4, and n = 6. (Round your intermediate calculations and final answers to 1 decimal place.)
Answer:
Kindly check Explanation
Explanation:
Given :
Period: 1 2 3 4 5 6 7 8 9 10
Demand: 42 35 58 42 27 49 40 41 27 41
Using n = 2
Week - - - - - - - - - - n = 2
7 - - - - - - ( 27 + 49)/2 = 38
8 - - - - - - (49 + 40)/2 = 44.5
9 - - - - - - -(40 + 41)/2 = 40.5
10 - - - - - - (41 + 27)/2 =34
11 - - - - - - - (27 + 41)/2 34
Using n = 4
Week - - - - - - - - - - n = 4
7 - - - - - - (58 + 42 + 27 + 49)/4 = 44
8 - - - - - - (42 + 27 + 49 + 40)/4 = 39.5
9 - - - - - - -(27 + 49 + 40 + 41)/4 = 39.3
10 - - - - - - (49 + 40 + 41 + 27)/4 =39. 3
11 - - - - - - - (40 + 41 + 27 + 41)/2 = 37.3
Using n = 6
Week - - - - - - - - - - n = 6
7 - - - - - - (42 + 35 + 58 + 42 + 27 + 49)/6= 42.2
8 - - - - - - (35 + 58 + 42 + 27 + 49 + 40)/6 = 41.8
9 - - - - - - -(58 + 42 + 27 + 49 + 40 + 41)/6= 42.8
10 - - - - - - (42 + 27 + 49 + 40 + 41 + 27)/6 =39.7
11 - - - - - - - (27 + 49 + 40 + 41 + 27 + 41)/6 = 37.5
The moving average model is the measurement tool that determines the cumulative average of certain period based upon the records and data of previous periods.
Based upon the previous records the forecasts for the future periods can be predicted and determined.
The moving average model is used to forecast the future values using the estimating trend cycles of the past time values.
The forecasts for periods 7 through 11 is shown in the tables attached below, while taking three different values of n.
The "n" is the time value based upon which the data of previous records are taken.
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Your bank account pays an interest rate of 9 percent. You are considering buying a share of stock in XYZ Corporation for $90. After 1, 2, and 3 years, it will pay a dividend of $4. You expect to sell the stock after 3 years for $100.Is XYZ a good investment?
Answer: It is NOT a good investment.
Explanation:
Your bank account pays an interest of 9% per annum. This can be used as a discount rate to discount the dividends and the final Sales price to the present to see if the present value of Future benefits is more than what the stock is valued at now.
If the Present Value of the future benefits is higher than the cost now, XYZ is a good investment.
$4 are expected every year for 3 years and then on the third year, the stock will be sold for $100.
Discounting therefore gives us,
= (4 / (1 + 9%) ) + (4 / (1 + 9%)^2) + ( 4 / ( 1 + 9%) ^ 3) + ( 100 / ( 1 + 9%) ^ 3)
= 87.34
= $87.34
The Present Value of the future benefits including the future sales price is $87.34 which is less than the current cost of the stock at $90.
XYZ is NOT a good investment.
A company issues a callable (at par) ten-year, 6% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $104 per $100 of face value. What is the yield to worst of this bond when it is released
Answer:
6.32%
Explanation:
This can be calculate using the YTC using the following equation:
YTC = (C + (CP - P) / t) / ((CP + P) / 2) .......................... (1)
Where:
YTC = YTW = yield to call or yield to worst = ?
C = annual coupon interest payment = bond interest rate * Bond price = 6% * $100 = $6
CP = call price of the bond = $104
P = price of the bond = $100
t = time in years remaining until the call date = 10 - 1 = 9 years
Substituting the values into equation (1), we have:
YTC = ($6 + ($104 - $100) / 9) / (($104 + $100) / 2) = 0.0632, or 6.32%
Callas Corporation paid $380,000 to acquire 40 percent ownership of Thinbill Company on January 1, 20X9. The amount paid was equal to Thinbill’s underlying book value. During 20X9, Thinbill reported operating income of $45,000 and income of $20,000 from gains on derivative contracts that were designated as cash flow hedges, so these gains were reported in Other Comprehensive Income (OCI). Thinbill paid dividends of $9,000 on December 10, 20X9.
Required:
a. Give all journal entries that Callas Corporation recorded in 20X9, associated with its investment in Thinbill Company.
b. Give all closing entries at December 31, 20X9, associated with its investment in Thinbill Company.
Answer: Please refer to Explanation
Explanation:
A.
January 1 20X9
DR Investment in Thinbill Company $380,000
CR Cash $380,000
(To record Investment in Thinbill Company)
DR Investment in Thinbill Company $18,000
CR Income from Thinbill Company $18,000
(To record income from Thinbill company)
DR Investment in Thinbill Company $8,000
CR Unrealised gain on Investment $8,000
(To record share of OCI reported by Thinbill Company)
DR Cash $3,600
CR Dividend $3,600
(To record dividend received from Thinbill Company)
Workings
Income from Thinbill Comapny
Callas owns 40% of Thinbill company and so is entitled to 40% of income which is,
= 40% x 45,000
= $18,000
Dividends
= 9,000 x 40%
= $3,600
Unrealised Gain on Income
= 20,000 x 40%
= $8,000
b. The closing entries are as follows,
DR Income from Thinbill Company $18,000
CR Retained Earnings $18,000
(To recognise income from Thinbill Company)
DR Unrealised Gain on Investment $8,000
CR Accumulated OCI Income from Investee (Thinbill Company) $8,000
(To record accumulated OCI income)
One advantage of the direct organizational plan is that it:________.
A. Results in more formal messages.
B. Positions the major news first.
C. Presents key topic sentences before subsequent ideas.
D. Arranges supporting details in order of priority.
E. Gives reasons up front to prepare the reader for negative news.
Answer:
B
Explanation:
One advantage of the direct organizational plan is that it positions the major news first.
The major news receives the most attention because of it importance,hence it is given proper analysis which in turn brings attention.
When the direct approachis used, the main idea (such as a recommendation, conclusion, or request) comes in as the top on the priority list of the document, followed by the evidence. This is a deductive argument. This approach is used when your audience will be neutral or positive about your message.
You own shares in Yahoo that were purchased at a price of $ 24 per share. Microsoft has offered to purchase Yahoo and buy your shares at a price of $ 34 per share. What will be your return if you tender your shares to Microsoft and the deal is completed
Answer:
Return = 41.67%
Explanation
The return on a share is the sum of e capital gains and the dividend received all expressed as a percentage of the of the amount invested.
In the absence of the payment of dividend, the return
Return = capital gain/ Price of share × 100
Capital gain= Price of shares now - cost of shares
Capital gain = 34- 24 = 10
Return = 10/24 × 100 = 41.66666667
Return (%) = 41.67%
According to the UN Charter, one of the four purposes of the UN is to:
a. be a center for harmonizing the actions of nations.
b. encourage high tariffs on imports of manufactured goods.
c. provide enhanced protection for patents.
d. promote the establishment of multinational treaties.
e. facilitate globalization of production.
Jasper Company has sales on account and for cash. Specifically, 70% of its sales are on account and 30% are for cash. Credit sales are collected in full in the month following the sale. The company forecasts sales of $525,000 for April, $535,000 for May, and $560,000 for June. The beginning balance of Accounts of $525,000 for Apri, $535,000 for May, and $560,000 for June. The beginning balance of Accounts Receivable is $400,000 on April 1
Prepare a schedule of budgeted cash receipts for April, May, and June Answer is complete but not entirely correct. April May Jur 30% |$ 157,500 $ 160,5000$ 70% Cash sales 374,500 535,000 5 Sales on account 367,500 Total sales $ 525,000 $ JASPER COMPANY Cash Receipts Budget For April, May, and June
Answer:
Jasper Company
Cash Receipts Budget for April, May, and June:
April May June Total
Cash Sales 30% $157,500 $160,500 $168,000 $486,000
Credit Sales 70% 400,000 367,500 374,500 1,142,000
Total $557,500 $528,000 $542,500 $1,628,000
Explanation:
1. Cash Receipts Budget shows the estimated cash receipts from customers and other sources.
2. Calculations:
a) Cash Sales for April = 30% of April Sales = 30% * $525,000 = $157,500. The difference of 70% is received in May.
b) Sales received on account for April = 100% of Accounts Receivable = $400,000.
c) Cash Sales for May = 30% of April Sales = 30% * $535,000 = $160,500. The difference of 70% is received in June.
d) Cash Sales for June = 30% of April Sales = 30% * $560,000 = $168,000. The difference of 70% is received in July.
Shelton Co. purchased a parcel of land six years ago for $873,500. At that time, the firm invested $145,000 in grading the site so that it would be usable. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land for $54,000 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $925,000. What value should be included in the initial cost of the warehouse project for the use of this land?
Answer:
$925,000
Explanation:
The value of the land that would be included in the initial cost of the warehouse is it market value of $925,000 which the land currently commands.
The rationale for this are numerous:
Firstly,if the land was not previously owned by Shelton Co, would have to purchase a similar land at its market value.
Secondly, if the land was not deployed to the project, it could be sold now for cash at $925,000
Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $3.50 per unit. Bluebird currently produces and sells 75,000 units at $7.50 each. This level represents 80% of its capacity. These bird feeders would be marketed under the wholesaler's name and would not affect Bluebird's sales through its normal channels. Production costs for these units are $4.25 per unit, which includes $2.50 variable cost and $1.75 fixed cost. If Bluebird accepts this additional business, the effect on net income will be:
Answer:
Effect on income= $15,000 increase
Explanation:
Giving the following information:
Offer= 15,000 bird feeders at $3.50 per unit.
Production costs:
$2.50 variable cost
Because it is a special offer that won't affect actual sales and there is unused capacity, we will not take into account the fixed costs.
Effect on income= 15,000*(3.5 - 2.5)
Effect on income= $15,000 increase
Nordstrom Inc. reports net income of $600 million for its fiscal year ended January 2016. At the beginning of that fiscal year, Nordstrom had $9,245 million in total assets. By fiscal year ended January 2016, total assets had decreased to $7,698 million.
What is Nordstrom's ROA?
Answer:
The answer is 7.1%
Explanation:
ROA means Return on Asset. It is one of the profitability ratios. It tells us how profitable a company is in using its assets. It is the rate of return on assets owned by the business and it is expressed as a percentage. The formula for calculating it is:
Net profit ÷ total assets.
In this the question we have the beginning and the ending total assets, what we need to do is to find the average i.e ($9,245 million + $7,698 million) / 2 =$8,472.5 million
Therefore, Nordstrom's ROA is:
$600 million / $8,472.5 million
= 7.1%
Which of the following statements is FALSE about opportunity cost? A. Opportunity cost exists only for goods with monetary values. B. Cost is always foregone opportunity. C. When a person buys two items, the concept of opportunity cost applies even though she can afford to buy both items. D. Opportunity cost is the next best alternative.
Answer:
A. Opportunity cost exists only for goods with monetary values.
Explanation:
Fundamentally, these are costs in economics used in analysis of a project, and it can also be used for calculation of cost benefits. It is generally known to measure or do all calculation that deals with the current and also forgone alternatives in any condition but this is mainly in economics where it is mostly used.
It is said that when a person buys two or more items, the concept of opportunity cost applies even though she can afford to buy both items and also known to be the best alternative. Here also, cost is notified as foregone opportunity.
Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance and janitorial labors are performed throughout the production process by nonproduction employees. Maintenance and janitorial costs are allocated based on machine hours used and the number of trees in each department, respectively. The company estimates that the cutting and pruning areas typically have about 6 and 54 trees, respectively, in them at 1 time. The company also estimates that the cutting process requires about 9 times as many machine hours as the pruning process. The total costs of each department are as follows:
Maintenance Department $7,800
Janitorial Department 5,000
Cutting Department 54,500
Pruning Department 11,000
Using the direct method of support department cost allocation, determine the total cost of each production department after allocating all support costs to the production departments.
Answer:
Cutting = $62,020
Pruning = $16,280
Explanation:
The direct method does not consider the impact of reciprocal servicing arrangement when allocating the overhead of service centers and only allocates overhead to the production cost centers only.
Allocation of Overhead
Janitorial overhead
Cutting = 6/(6+54)× $5,000 = $500
Pruning =54/(6+54) × $5,000= $4,500
Maintenance overhead
Cutting = 9/(9+1)× $7,800 = $7020
Pruning =1/(9+1) × $7,800= $780
Total cost of production department
Cutting = 54,500 + 500 + 7020= 62,020
Pruning department = 11,000 + 4,500 + 780 = 16,280
Cutting = $62,020
Pruning = $16,280
Revise the following sentences to emphasize the perspective of the audience and the "you" view.
1. To help us process your order with our new database software, we need you to go to our website and fill out the customer information required.
Answer:
You are required to go to our website to fill out the required customer information. This will help us process your order.
Explanation:
The customer or client does not need to be informed of the existence of our new database software. We can simply request the customer to fill out the enclosed form by going to our website. This approach is more business-like and courteous. It emphasizes the customer as the subject and what the customer is required to do. The focus is shifted to the customer and not to the company. The customer learns immediately that his or her actions (going to the website and filling the form) are in their own interest.
In contemporary Japanese society, a group is associated with:______
a. the immediate family.
b. gender roles.
c. traditional friendships.
d. the company a person works for.
e. the educational environment.
Answer:
d. the company a person works for.
Explanation:
In contemporary Japanese society, a group is associated with the company a person works for.
A group typically comprises of two or more people who share some things in common such as identity, aims, interest and are willing to work in an accord.
Hence, the company or organization an individual works for, is usually considered to be a group in the contemporary Japanese society.
This is so because employees are blinded by a common goal, aim, interest to allow them work effortlessly, effectively and efficiently together.
In contemporary Japanese society, a group is associated with the company a person works for.
Japanese culture is known for its principle of working together as a group. Japan is known to be collectivistic nation as they focus on what is good for the group instead of the individual.
In Japanese society, there is self-employment in agriculture and business as well as low-income and unpaid family workers who work together in afamily like manner.
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A mine is for sale for $240,000. It is believed the mine will produce a profit of $65,000 the first year, but the profit will decline $5,000 a year after that, eventually reaching zero, whereupon the mine will be worthless. What rate of return would this $240,000 investment produce for the purchaser of the mine
Answer:
60.4%
Explanation:
Initial cost = $240,000
profit of first year = $65,000
this is reduced subsequently until it reaches zero
Note that this value reduces in an arithmetic progression from $65,000 , $60,000, ... , 0
the first term A1 = 65,000
the common difference d is 60,000 - 65,000 = -5000
the last term is An = 0
we calculate for number of terms
An = A1 + (n - 1)d
0 = 65,000 + (n - 1)(-5000)
0 = 65,000 - 5000n +5000
5000n = 70,000
n = 14
using the equation for summation of terms in an arithmetic progression Sn, we solve as
Sn = [tex]\frac{n}{2}[/tex][2A1 + (n - 1)d]
Sn = [tex]\frac{14}{2}[/tex][2(60,000) + (14 - 1)(-5000)]
Sn = 7[120,000 - 65,000]
Sn = 7 x 55,000
Sn = $385,000. This is the total profit on the mine
rate of return = (385,000 - 240,000)/240,000 = 145,000/240,000 = 0.604
i.e 60.4%
Helix Company has been approached by a new customer to provide 2,000 units of its regular product at a special price of $6 per unit. The regular selling price of the product is $8 per unit. Helix is operating at 75% of its capacity of 10,000 units. Identify whether the following costs are relevant to Helix's decision as to whether to accept the order at the special selling price. No additional fixed manufacturing overhead will be incurred because of this order. The only additional selling expense on this order will be a $0.50 per unit shipping cost. There will be no additional administrative expenses because of this order. Calculate the operating income from the order.
Answer:
Helix decision would be to accept this order at the special price because from the calculations they will still have a net income of $2,000 at this special price of $6 per unit
Explanation:
Selling price: at $6 per unit; This is a relevant cost ; Revenue = ($6*2000) units) $12,000
_________________________
Direct material cost: at $1 per unit; This is a relevant cost; Revenue = (1 * 2000) $2000
____________________________
Direct labor cost: at $2 per unit; This is a relevant cost ; Revenue = (2 * 2000) $4000
____________________________
Variable manufacturing overhead: at $1.50 per unit; This is a relevant cost; Revenue = (1.50 * 2000) $3,000
____________________________
Fixed manufacturing overhead: at $0.75 per unif; This is not a relevant cost; Revenue = $0 (not relevant)
_____________________________
Regular selling expenses: at $1.25 per unit; This is not a relevant cost; Revenue = $0(not relevant)
______________________________
Additional selling expenses(shipping cost) : at $0.50 per unit; This is a relevant cost; Revenue = (0.50 * 2000) $1,000
______________________________
Administrative expenses: at $0.75 per unit; This is not a relevant cost; Revenue = $0
__________________________
Total operating expenses: Sum of all relevant cost = (Direct material cost + Direct labor cost + Variable manufacturing overhead + Additional selling expenses) = ($2,000 + $4,000 + $3,000 + $1,000) = $10,000
__________________________
Net income : (Selling price - Total operating expenses)= ($12,000 - $10,000) = $2,000
________________________
Yes, Helix should accept the order at the special price
______________
Helix decision would be to accept this order at the special price because from the calculations they will still have a net income of $2,000 at this special price of $6 per unit
The following revenue and expense account balances were taken from the ledger of Wholistic Health Services Co. after the accounts had been adjusted on February 28, 2019, the end of the fiscal year:
Depreciation Expense $9,000 Service Revenue $270,900
Insurance Expense 4,000 Supplies Expense 3,000
Miscellaneous Expense 6,000 Utilities Expense 1,760
Rent Expense 4,200 Wages Expense 213,000
Prepare an income statement.
Answer:
Wholistic Health Services Co.
Income Statement for the year end February 28, 2019
Service Revenue $270,900
Less: Supplies Expense $3,000
Gross Income $267,900
Less operating Expenses:
Insurance Expense $4,000
Depreciation Expense $9,000
Miscellaneous Expense $6,000
Utilities Expense $1,760
Rent Expense $4,200
Wages Expense $213,000
$237,960
Net Income $29,940
Explanation:
Income statement shows the performance of the company in a year. It provides the details of revenue, expenses and profits for the year. All the expenses are deducted from the revenue to determine the net earning of the business.
Ivanna, who has three children under age 13, worked full-time while her spouse, Sergio, was attending college for nine months during the year. Ivanna earned $28,000 and incurred $9,100 of child care expenses. Ivanna and Sergio's credit for child and dependent care expenses is?
Answer:
$1,260
Explanation:
Remember, we are dealing with a case of a married couple. Therefore, we apply the tax credit rule patterning to legally married couples.
Note that the rule is restricted to the lesser of
- real expenses,
- $6,000 (in this case they have three children which implies they have more than two qualifying children),
- the total earned income of the lowest taxpayer in the family.
Since the rule gives an exception for students. We could assumed that Sergio earned $500 for each month he was attending college. That is 9 * $500 = $4,500; the Credit = $4,500 * 28%= 1,260
Based on the period Sergio attended college and the relevant tax laws, Sergio's credit is $1,260.
When a person is going to college, they are assumed to make $500 per month. Sergio's earnings are therefore:
= 500 x 9 months
= $4,500
With a joint Adjusted Gross Income of $28,000 for the both of them, they can get a tax credit of 28% of their earnings.
As Sergio is assumed to have made $4,500, the tax credit is:
= 28% x 4,500
= $1,260
In conclusion, Sergio's credit is $1,260.
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Barry is the branch manager of a large toy store. He has been given the responsibility to communicate with, coach, and motivate supervising managers. In this scenario, Barry most likely requires _____ to perform his role efficiently.
1. Human skills
2. Conceptual skills
3. Technical skills
4. Cognitive skills
Answer:
Human Skills
Explanation:
Ready Ride is a trucking company. It provides local, short-haul, and long-haul services. It has developed the following three cost pools.
Activity Cost Pool Cost Drivers Estimated Overhead Estimated Use
of Cost Driver per Activity
Loading and unloading Number of pieces $85,785 90,300
Travel Miles driven 468,000 585,000
Logistics Hours 65,520 3,120
Compute the activity-based overhead rates for each pool.
Activity Cost Pool Activity-Based overhead Rate
Loading and unloading per piece
Travel per mile
Logistics per hour
Determine the overhead allocated to Job XZ3275 which has 150 pieces, requires 200 miles of driving, and 0.75 hours of logistics.
Answer:
Total allocation= $318.25
Explanation:
Giving the following information:
Loading and unloading: Number of pieces - $85,785 - 90,300
Travel: Miles driven - $468,000 - 585,000
Logistics: Hours - $65,520 - 3,120
Determine the overhead allocated to Job XZ3275 which has 150 pieces, requires 200 miles of driving, and 0.75 hours of logistics.
First, we need to calculate the estimated overhead rate for each activity:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Loading and unloading= 85,785/90,300= $0.95 per piece
Travel= 468,000/585,000= $0.8 per mile
Logistics= 65,520/3,120= $21 per hour
Finally, we can allocate overhead to Job XZ3275:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Loading and unloading= 0.95*150= $142.5
Travel= 0.8*200= $160
Logistics= 21*0.75= $15.75
Total allocation= $318.25
The employees of an organization have heard rumors about rapidly dropping profits and impending layoffs. The grapevine is abuzz with bad news. People are nervous and anxious, and are starting to believe whatever is being said without verifying the source. In this situation, an appropriate action for a manager to take is to
Answer:
A. neutralize the rumor by openly confirming any parts that may be true.
Explanation:
Here are the options to this question:
A. neutralize the rumor by openly confirming any parts that may be true.
B. restrict the length of breaks taken by the employees.
C. closely monitor each employee's activities in the office.
D. fire employees found spreading false stories.
E. block all forms of electronic communication in the office.
I hope my answer helps you
Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (5,700 units) $ 319,200 Variable expenses 188,100 Contribution margin 131,100 Fixed expenses 106,500 Net operating income $ 24,600 If the company sells 5,300 units, its net operating income should be closest to:
Answer:
Net operating income is $ 15,400.00
Explanation:
The company's operating income if it sells 5,300 units is calculated thus:
sales (5,300*$319,200/5,700) $296,800.00
variable expenses($188,100/5700*5300) ($174,900.00)
Contribution $ 121,900.00
Fixed expenses ($106,500.00)
Net operating expenses $ 15,400.00
The net operating expenses dropped when 5,300 units were sold because the higher the volume, the more the contribution towards covering fixed expenses
Answer:
Net operating income= $15,400
Explanation:
Giving the following information:
Sales (5,700 units) $319,200
Variable expenses 188,100
Contribution margin 131,100
Fixed expenses 106,500
Net operating income $ 24,600
Sales now= 5,300 units
First, we need to calculate the unitary contribution margin:
Unitary contribution margin= 131,100/5,700= $23
Contribution margin for 5,300:
Total contribution margin= 23*5,300= $121,900
Fixed costs= 106,500
Net operating income= $15,400
A registered investment adviser lives in State X. The adviser does business with 1 client in State A and 1 client in State B. The adviser gives seminars about investing to groups of potential customers in State C. The adviser is required to register in:
Answer:
State X and C
Explanation:
Remember, the clients themselves stay in state A and B, not the investment advisor. According to the requirements of the law, the investment advisor is to register in the state where he gives seminars–State C, and the state in which he resides–X.
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $3,250,000. Its useful life was estimated to be five years, with a $255,000 residual value. At the beginning of 2021, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows:Year Straight-Line Declining Balance Difference 2010 $ 400 $ 853 $ 453 2011 400 569 169 2012 400 379 (21) $ 1,200 $ 1,801 $ 601 Required:Prepare any 2013 journal entry related to the change.
Answer and Explanation:
The journal entry is shown below:
Depreciation expense Dr $398,000
To Accumulated depreciation $398,000
(Being the depreciation expense is recorded)
For recording this we debited the depreciation expense as it increased the expenses and credited the accumulated depreciation as it decreased the value of the assets
The computation of the depreciation expense is as follows
Cost of the asset $3,250,000
Less: accumulated
depreciation till date ($1,801,000)
Undepreciation cost $1,449,000
Less:
Estimated residual value ($255,000)
Value for remaining
3 years $1,194,000
Divided by 3 years ÷ 3
Depreciation expense $398,000
Arbor Systems and Gencore stocks both have a volatility of 33%. Compute the volatility of a portfolio with 50% invested in each stock if the correlation between the stocks is (a) +1.00, (b) 0.50, (c) 0.00, (d) −0.50, and (e) −1.00.
In which of the cases is the volatility lower than that of the original stocks?
Answer:
In case of b, c, d ,e volatility is less than that of original stockExplanation:
The formula to compute the volatility of a portfolio
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
Here,
The standard deviation of the first stock is σ₁
The standard deviation of the second stock is σ₂
The weight of the first stock W₁
The weight of the second stock W₂
The correlation between the stock c
a) If the correlation between the stock is +1
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times1} \\\\=0.33[/tex]
Hence, the volatility of the portfolio is 0.33 0r 33%
b) If the correlation between the stock is 0.50
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times0.5} \\\\=0.29[/tex]
Hence, the volatility of the portfolio is 0.29 0r 29%
c) If the correlation between the stock is 0.00
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times0.0} \\\\=0.23[/tex]
Hence, the volatility of the portfolio is 0.23 0r 23%
d) If the correlation between the stock is -0.50
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times-0.5} \\\\=0.17[/tex]
Hence, the volatility of the portfolio is 0.17 or 17%
e) If the correlation between the stock is -1
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times-1} \\\\=0[/tex]
Hence, the volatility of the portfolio is 0
In case of b, c, d ,e volatility is less than that of original stockThe Dominican Republic is considering placing a room tax on Eco Hotels. The preliminary analysis requires them to calculate consumer and producer surplus before the tax. Below are the demand and supply equations for eco hotel rooms in the Dominican Republic.
Demand equation: Qd = 2500 - 5P
Supply equation: Qs = 1OP - 500
Calculate consumer surplus. Number
Calculate producer surplus.
Answer:
The consumer surplus is 225,000
The producer surplus is 112,500
Explanation:
According to the given data we have the following:
Demand equation: Qd = 2500 - 5P
Supply equation: Qs = 1OP - 500
Therefore, the equilibrium is at demand equal to the supply
2500-5P=10P-500
15P=3000
P=200
Q=10P-500=10*200-500=1500
The inverse demand function is
P=500-0.2Q
Therefore, CS=0.5*(Pmax -Pe)*Qe
=0.5*(500-200)*1500
=225,000
The consumer surplus is 225,000
Regarding PS, maximum price or y-intercept of the demand curve
Pe and Qe are equilibrium price and quantity the inverse supply curve
P=50+0.1Q
PS=0.5*(Pe-Pl)Qe
Pl=y intercept of supply curve
PS=0.5*(200-50)*1500
=112,500
The producer surplus is 112,500
Shrinkage at Walmart In 2015, the world’s largest retailer, Walmart, announced a quarterly increase in sales that was accompanied by an increase in expenses that reduced its hoped-for profit. In discussing the higher expenses, the company mentioned "shrinkage" three times in its written press release and 13 times in its conference call with financial analysts. The company attributed a significant part of its increased shrinkage to shoplifting and outright theft, including one instance in which a team of thieves pushed a shopping cart full of electronics out a back door and loaded them into a waiting car. To combat these problems, which are unfortunately common in retailing, the company announced it was restarting a training program for employees that helps them learn how to spot shoplifters and fellow employees who are pilfering, along with adding staff to areas of the store that contain high-value or easy-to-steal items. They also plan to start checking customers’ receipts at store exits. In addition to these measures, however, the company also reported that a sizable portion of the shrinkage results from difficulties encountered in managing inventory flow throughout the company’s distribution network and its stores. When warehouses and store backrooms become overstocked with inventory, it can be difficult to determine which items should be discounted and moved to the store’s shelves. In recent years, Walmart has increased its sales of grocery and food items, which can be damaged more easily than its other inventory and for which failure to monitor expiration dates can be costly. To deal with these backroom inventory management issues, the company has added employees to staff those areas. Walmart’s U.S. supply chain includes more than 100 distribution centers from which the company makes deliveries to its more than 5000 stores and Sam’s Club locations using its fleet of more than 6000 trucks. Managing the flow of inventory from the company’s suppliers through its distribution centers and into its retail outlets is a mammoth task and, as discussed in this chapter, the company has made attempts to use technology in new and creative ways to address these challenges in the past.
REQUIRED
Q1) Become familiar with RFID technology and its potential uses in Walmart’s supply chain using the information presented in this chapter and information you obtain through the Web Links, your favorite search engine, and your library. In about 200 words, outline the advantages Walmart might gain by using RFID in its retail stores. As you draft your answer, be sure to consider the nature of the stores’ backroom environments, which include metal shelving. Also consider Walmart’s possible use of RFID and other technologies as an alternative or addition to the increased staffing levels the company has announced for its retail stores. As you draft your answer, be sure to consider the nature of the stores’ backroom environments, which include metal shelving. Also consider Walmart’s possible use of RFID and other technologies as an alternative or addition to the increased staffing levels the company has announced for its backroom inventory storage areas.
Q2) In about 100 words, discuss the advantages Walmart might gain if it were to use RFID tracking technologies in all of its retail stores to manage every single item as opposed to using either case-level RFID or tracking only part of each store’s inventory at the item level.
Answer:
Explanation:
There are many advantages Walmart will gain if it were to use RFID tracking technology
1. In all its retail stores and
2. To manage every single item
As opposed to
A. Using case-level RFID or
B. Tracking only a part of each store's inventory at the item level (backroom inventory)
Radio frequency identification makes use of electromagnetic fields, to instantly identify and track tags attached to objects. The tags could be
1. Active or 2. Passive
These tags are the unique form of identification of an item in the store.
The advantages:
1. The main advantage of using the RFID in all Walmart's stores and to manage every single item, is: unlike barcodes, multiple RFID tags can be read at a time.
2. Whether the tag is showing openly or is covered by a part of the object to which it is affixed, it can still be read, if passed by a reader.
3. It can be used to track pilferers or shoplifters.
4. The RFID code is also used to bill the customers.
5. It is used to access the item or good.
6. Active RFID tags can be read from a far distance from the reader.
On December 31, 2017, Reggit Company held the following short-term investments in its portfolio of available-for-sale securities. Reggit had no short-term investments in its prior accounting periods. Prepare the December 31, 2017, adjusting entry to report these investments at fair value.
Complete Question:
Fair Value Adjustment Journal General Computation of fair value adjustment. Fair Value Adjustment Computation - Available for Sale Portfolio Cost Fair ValueUnrealized Verrizano Corporation bonds payable Preble Corporation notes payable Lucerne Company common stock Total $ 66,500 S 61,900 46,400 85,100 $ 208,400 $ 193,400 54,000 87,900 Fair Value Adjustment General Journal
Answer:
Dr Unrealized loss — Equity $15,000
Cr Available-For-Sale Securities $15,000
Explanation:
The difference of the cost and fair value of the portfolio gives us the loss of $15,000 which must be accounted for in accounting books as under:
Dr Unrealized losses $15,000
Cr Available-For-Sale Securities $15,000
Pennewell Publishing Inc. (PP) is a zero growth company. It currently has zero debt and its earnings before interest and taxes (EBIT) are $80,000. PP's current cost of equity is 10%, and its tax rate is 40%. The firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. Refer to the data for Pennewell Publishing Inc. (PP). Assume that PP is considering changing from its original capital structure to a new capital structure with 35% debt and 65% equity. This results in a weighted average cost of capital equal to 9.4% and a new value of operations of $510,638. Assume PP raises $178,723 in new debt and purchases T-bills to hold until it makes the stock repurchase. PP then sells the T-bills and uses the proceeds to repurchase stock. How many shares remain after the repurchase, and what is the stock price per share immediately after the repurchase?
Answer:
Price per share after repurchase = $51.064
Shares remaining after repurchase = 6500
Explanation:
Given the following :
Value of operations = $510,638
Value of T-bills = value of debt = $178,723
Therefore, value of equity = $510,638
Number of common shares = 10,000
Price per share = Value of equity / Number of shares
Price per share = $510,638 / 10,000 = $51.064
Price per share prior to repurchase is the same as price per share after repurchase.
However, number of shares repurchased equals;
$178,723 / $51.064 = 3499.99 = 3500 shares
Number of shares left after repurchase :
Totals shares - shares repurchased
10,000 - 3500 = 6,500