Answer:
See below
Explanation:
Assets, Liabilities, and Equity form the basis for preparing the balance sheet. They make the accounting equation of Assets= Liabilities + Equity.
Assets are the valuables a business owns. They can be in the form of cash, money in the banks, financial instruments, properties, machines, or motor vehicles.
Assets will be
Cashcomputers,furnitureLiabilities are what the business owes to third parties and supplies. Liabilities are usually in the monetary form, such as loans, rent, and accounts payable.
Liabilities
Rent, Loanwages payable,Equity is the owner's contribution to the business. They include capital and retained earnings.
Equity
retained owners personal investment earnings,Geralds manufacturing firm sold goods worth $6000 to some customers on credit in the month of January. His customers plan to pay him the entire amount at once in March. Gerald plans to record and recognize this income in the business’s accounts in March. Which accounting method does Geralds business follow?
His business follows the (________) method of accounting.
Answer:
Cash accounting method
Explanation:
The cash accounting method records receipts and expenses during the period in which cash changes hands. In this method, revenue will be recorded when payment from a customer is received. Expenses are not recorded unless money is paid out. In short, revenues and expenses are recognized and recorded only when cash is received or paid.
Cash accounting contrasts with the accrual accounting system, which recognizes revenues and expenses when their respective events occur.
Consider a production line with three stations. The first station can process a unit in 10 minutes. The second station has two identical machines, each of which can process a unit in 12 minutes (each unit only needs to be processed on one of the two machines). The third station can process a unit in 8 minutes. Which station is the bottleneck station? a. station 1 b. station 2 c. station 3
Answer:
a. station 1
Explanation:
A bottleneck is basically the place or station where the production process is congested or delayed because that station lacks the capacity to process work. Bottlenecks are where queues are formed, and the whole process gets delayed.
In this case, station 1 can process 6 units per hour, station 2 can process 10 units per hour and station 3 can process 7.5 units per hour. The station that processes the least number of units is station 1, so that is the station that limits the whole production system. In this case, due to station 1's low processing capacity, a lot of idle time exists in the other 2 stations.
Need help with entreprenuer questions ASAP
Schedule of cash payments for a service company Horizon Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows:
March $160,800
April 152,800
May 139,000
Depreciation, insurance, and property taxes represent $35,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. 73% of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.
Prepare a schedule of cash payments for selling and administrative expenses for March, April, and May.
Answer:
Total Cash Payments are as follows:
For March = $91,834
For April = $119,960
For May = $107,726
Explanation:
Note: See the attached Excel file for the schedule of cash payments
The expenses paid in each month are estimated as follows:
a. March Expenses
Paid in March = (Total projected selling and administrative expenses for March - Depreciation, insurance, and property taxes for March) * Percentage of reminder paid = ($160,800 - $35,000) * 73% = $91,834
Paid in April = (Total projected selling and administrative expenses for March - Depreciation, insurance, and property taxes for March) * Percentage of balance paid = ($160,800 - $35,000) * (100% - 73%) = $33,966
b. April Expenses
Paid in April = (Total projected selling and administrative expenses for April - Depreciation, insurance, and property taxes for April) * Percentage of reminder paid = ($152,800 - $35,000) * 73% = $85,994
Paid in May = (Total projected selling and administrative expenses for April - Depreciation, insurance, and property taxes for April) * Percentage of balance paid = ($152,800 - $35,000) * (100% - 73%) = $31,806
c. May Expenses
Paid in May = (Total projected selling and administrative expenses for May - Depreciation, insurance, and property taxes for May) * Percentage of reminder paid = ($139,000 - $35,000) * 73% = $75,920
A firm issued 10,000 shares of $2 par-value common stock, receiving proceeds of $40 per share. The amount recorded for the paid-in capital in excess of par account is ________.A) $0 in the Common Stock account.
B) $0 in the Paid-in Capital in Excess of Par account.
C) $400,000 in the Common Stock account.
D) $400,000 in the Paid-in Capital in Excess of Par account.
Answer:
the amount recorded for the paid-in capital in excess of par account is $380,000
Explanation:
The computation of the amount of paid in capital in excess of par account is shown below:
= Number of shares issued × (per share value - par value of the common stock)
= 10,000 shares × ($40 - $2)
= 10,000 shares × $38
= $380,000
Hence, the amount recorded for the paid-in capital in excess of par account is $380,000
The options that are given are wrong
Leaf's Paper Company is planning to launch a new notebook product that is water resistant. The company wants to sell 30,000,000 of the new notebooks next year and wants to know what trial rate is required to achieve this goal. The market research group forecasts an awareness rate of 78% and an ACV% of 51%. Of those that try the product by purchasing 1 notebook, 21% will repurchase 5 notebooks per year. There are 200,000,000 notebook consumers in the target market. Total fixed costs to Leaf Paper Company to manufacture this new notebook are $11,000,000, with variable costs of $2.56 per notebook. What trial rate is required to achieve the company's goal?
Answer:
7.5%.
Explanation:
This question can be solved by using the formula below;
The trial rate is required to achieve the company's goal = ( number of new notebooks that the company wants to sell the following year) ÷ awareness rate × units per trial × ACV × number in target market.
From the Question above, we have the following information which is going to be slot in to the formula above and use in solving this question;
=> The number of new notebooks that the company wants to sell the following year = 30,000,000.
=> The awareness rate = 78%.
=> ACV% = 51%.
=> The percentage of people that will repurchase 5 notebooks per year = 21%.
=> The total number of notebook consumers in the target market = 200,000,000 .
=>'' The Total fixed costs to Leaf Paper Company to manufacture this new notebook = $11,000,000''
=> The variable costs per Notebook = $2.56.
Thus, slotting in the values respectively, we have;
Trial rate = 30,000,000 ÷ (0.78 × 5 × 0.51 × 200,000,000).
Trial rate = 0.07541478129713423.
Thus, 0.07541478129713423 × 100 = 7.5%.
Trial rate = 7.5%.
Consider the estimated equation from your textbook: Test Score = 698.9 - 2.28 times STR, R^2 = 0.051, SER = 18.6 (10.4) (0.52) The t-statistic for the slope is approximately: a) 67.20. b) 4.38. c) 1.76. d) 0.52.
Answer:
b) 4.38
Explanation:.
Calculation for the t-statistic for the slope
Using this formula
Slope = Regression equation / Standard Error
Let plug in the formula
Slope= 2.28 / .52
Slope = 4.38
Therefore the t-statistic for the slope is approximately 4.38
If assets total 45,000, expenses total 10,000, revenues total 35000, and stockholders' equity equals 30,000 what is the amount of net income?
Answer:
$25,000
Explanation:
Calculation for the what is the amount of net income
Using this formula
Net income= Total Revenues-Total expenses
Let plug in the formula
Net income= 35,000+10,000
Net income=$25,000
Therefore the amount of net income will be $25,000
Chance, Inc. sold 3,300 units of its product at a price of $87 per unit. Total variable cost per unit is $63, consisting of $41 in variable production cost and $22 in variable selling and administrative cost. Compute the manufacturing margin for the company under variable costing.
a) $135,300
b) $207,900
c) $151,800
d) $287,100
e) $128,700
Answer:
Total manufacturing margin= $151,800
Explanation:
Giving the following information:
Units sold= 3,300
Unitary variable manufacturing cost= $41
Selling price per unit= $87
Because we need to calculate the manufacturing margin, we will not take into account the administrative costs:
Total manufacturing margin= 3,300*(87 - 41)
Total manufacturing margin= $151,800
Assume that England and Spain can switch between producing cheese and producing bread at a constant Labor Hours Needed to Make 1 Unit of Number of Units Produced in 24 Hours Cheese Bread Cheese BreadEngland 2 3 12 8Spain 3 6 8 4Assume that England and Spain each has 24 labor hours available. If each country divides its time equally between the production of cheese and bread, then total production is:_________. a. 10 units of cheese and 6 units of bread. b. 25 units of cheese and 7.5 units of bread. c. 20 units of cheese and 12 units of bread. d. 12 units of cheese and 8 units of bread.
Answer:
a. 10 units of cheese and 6 units of bread.
Explanation:
Total there are 24 labor hours
So, for each there is 12 hours
Now the distribution is as follows
For england
= 12 ÷ 2 + 12 ÷ 3
= 6 units + 4 units
= 10 units
For Spain
= 12 ÷ 3 + 12 ÷ 6
= 4 units + 2 units
= 6 units
Hence, the correct option is a
And, the same is to be considered
All other options are wrong
Differentiate between manmade and natural attraction
If one of the objective coefficients changes within of its allowable increase or allowable decrease (same as within of Maximum and Minimum Objective Coefficients), then:______.
A. The final objective function value will change by the size of the change times the final value of the decision variable related to this objective coefficient.
B. The model must be resolved to know the full effects of the change.
C. The final objective function value will change by the size of the change times the difference between the left and side and the right-hand side of the constraint.
D. The final objective function value will change by the size of the change times the shadow price.
Answer:
A. The final objective function value will change by the size of the change times the final value of the decision variable related to this objective coefficient.
Explanation:
By modifying the one coefficient of the objective with the rise or decrease in the permitted modify the amount of the objective function i.e. final. Also the magnitude of modifying the value would be equivalent to the modify of the change in terms of coefficient times the final value with respect to the decision variable that is interrelated to the coefficient of the objective
hence, the correct option is a.
The expected return of Stock A is 7%, Stock B is 10% and Stock C is 12%. If you equally invest in these three stocks, what is the expected return of your three-stock portfolio?
Answer:
Portfolio return = 0.09667 or 9.667% rounded off to 9.67%
Explanation:
To calculate the expected rate of return of a stock portfolio, we take the weighted average of the expected return for each stock. The formula to calculate the expected return of portfolio is,
Portfolio return = wA * rA + wB * rB + ... + wN * rN
Where,
w represents the weight of each stockr represents the return of each stock
As we have 3 stocks with equal investment in each stock, we can say the weight of each stock is 1/3.
Portfolio return = 1/3 * 0.07 + 1/3 * 0.1 + 1/3 * 0.12
Portfolio return = 0.09667 or 9.667% rounded off to 9.67%
What was the opening price of Dow Jones Industrial Average on Dec 04, 2018 in the format of XXXXX.XX?
Answer:
$17,910.02
Explanation:
As per online search, the opening price was $17,910.02
Dow Jones Industrial Average (^DJI)
DJI - DJI Real-Time Price. Currency in USD
Summary
Time Period:
Dec 03, 2014 - Dec 05, 2014
Currency in USD
Download
Date Open High Low Close
Dec 03, 2014 17,880.90 17,924.15 17,855.59 17,912.62
Dec 04, 2014 17,910.02 17,937.96 1 7,814.81 17,900.10
Sprinkle Co. sells its product for $20 per unit. During 2013, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $5, direct labor $3, and variable overhead $1. Fixed costs are: $240,000 manufacturing overhead, and $30,000 selling and administrative expenses. Under absorption costing, what amount of fixed overhead is deferred to a future period?
A 14-week construction activity requires a crane that rents for $1,000 per week and a crew of general laborers that costs $5,000 per week. In order to complete this activity within 10 weeks, you must hire additional general laborers at a cost of $2,000 per week. What is the slope for this activity?A) $0 per week.B) $1,000 per week.C) $2,000 per week.D) $6,000 per week.
Answer: C) $2,000 per week.
Explanation:
The slope of the project refers to the additional amount that it would cost to be able to finish the project faster than schedule.
In the question, the construction activity is for 14 weeks at a rate of $5,000 for the laborers per week. If you wanted to reduce this project duration to 10 weeks, you will have to spend an additional $2,000 more per week.
This $2,000 is therefore the slope of the activity.
The correct option is C.
The following information should be considered:
The slope of the project means the additional amount that it would cost to be able to finish the project faster than schedule. In the question, the construction activity is for 14 weeks at a rate of $5,000 for the laborers per week. If you wanted to decrease this project duration to 10 weeks, you will have to spend an additional $2,000 more per week. This $2,000 is therefore the slope of the activity.Learn more: brainly.com/question/17429689
Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows:
Activity Cost Pool Total Cost
of Pool Cost Driver Estimated Total of Cost Driver
Machining $ 312,000 Number of machine hours 80,000
Designing costs 73,600 Number of design hours 8,000
Setup costs 71,600 Number of batches 500
Suppose that Gable Company manufactures three products, A, B, and C. Information about these products follows:
Product A Product B Product C
Number of machine hours 30,000 40,000 10,000
Number of design hours 3,200 1,800 3,000
Number of batches 50 175 275
Required:
Determine the amount of overhead assigned to each product.
Answer:
Results are below.
Explanation:
First, we need to calculate the activity rate for each activity:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Machining= 312,000/80,000= $3.9 per machine hour
Designing costs= 73,600/8,000= $9.2 per design hour
Setup costs= 71,600/500= $143.2 per batch
Now, we can allocate overhead to each product:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Product A:
Machining= 3.9*30,000= 117,000
Designing costs= 9.2*3,200= 29,440
Setup costs= 143.2*50= 7,160
Total overhead= $153,600
Product B:
Machining= 3.9*40,000= 156,000
Designing costs= 9.2*1,800= 16,560
Setup costs= 143.2*175= 25,060
Total overhead= $197,620
Product C:
Machining= 3.9*10,000= 39,000
Designing costs= 9.2*3,000= 27,600
Setup costs= 143.2*275= 39,380
Total overhead= $105,980
Overhead assigned to product A, B and C are $153,600 , $197,620 and $105,980
Overhead based problem:Computation of activity rate;
Cost (A) Cost Driver(B) Activity Rate(A / B)
Machining $312000 $80000 3.9
Designing $73600 $8000 9.2
Setup $71600 $500 143.2
Overhead assigned = Machining + Designing + Setup
Overhead assigned to product A = (3.9)(30,000) + (9.2)(3200) + (143.2)(50)
Overhead assigned to product A = 117,000 + 29440 + 7160
Overhead assigned to product A = $153,600
Overhead assigned to product B = (3.9)(40,000) + (9.2)(1800) + (143.2)(175)
Overhead assigned to product B = 156,000 + 16,560 + 25,060
Overhead assigned to product B = $197,620
Overhead assigned to product C = (3.9)(10,000) + (9.2)(3,000) + (143.2)(275)
Overhead assigned to product C = 39,000 + 27,600 + 39380
Overhead assigned to product C = $105,980
Find out more information about 'Overhead assigned'
https://brainly.com/question/26652123?referrer=searchResults
Jackson Company's payment policy is to pay 40 percent of its accounts payable in the quarter urchases are made and 60 percent in the following quarter. Assume Jackson's credit purchases totaled $400,000 in quarter 1, $420,000 in quarter 2, $530,000 in quarter 3 and $580,000 in quarter 4. What will Jackson's cash payments be for quarter 3? A. $482,500 B. $560,000 C. $530,000 D. $464,000 E. None of the above.
Answer: D. $464,000
Explanation:
To calculate Jackson's cash payments be for quarter 3 goes thus:
60% of Quarter 2 will be calculated as:
= 60% × $420,000
= 0.6 × $420,000
= $252,000
40% of Quarter 3 will be calculated as:
= 40% of $530,000
= 0.4 × $530,000
= $212,000
We then add the values gotten together. This will be:
= $252,000 + $212,000
= $464,000
Therefore, the correct option is D.
What's a benefit of creating playlists?
Answer:
By organizing similar content together, it increases the likelihood that viewers will watch multiple videos in one sitting. Another benefit of playlists is that they provide additional opportunities to appear in You Tube search results.
Sanders, Inc., paid a $4 dividend per share last year and is expected to continue to pay out 60% of its earnings as dividends for the foreseeable future. If the firm is expected to generate a 13% return on equity in the future, and if you require a 15% return on the stock, the value of the stock is _________.
Answer:
The correct solution is "$42.94".
Explanation:
The given values are:
D0 = 4
Ks = 15%
As we know,
⇒ [tex]g = (1-Div \ payout \ ratio)\times ROE[/tex]
[tex]=(1-60 \ percent)\times 13 \ percent[/tex]
[tex]=5.20 \ percent[/tex]
By using the Gordon Model, we get
⇒ [tex]P0=Do\times \frac{(1+g)}{(Ks-g)}[/tex]
[tex]=4\times \frac{ (1+5.20 \ percent)}{(15 \ percent-5.20 \ percent)}[/tex]
[tex]=42.94[/tex] ($)
At the beginning of her current tax year, Angela purchased a zero-coupon corporate bond at original issue for $46,000 with a yield to maturity of 5 percent.Given that she will not actually receive any interest payments until the bond matures in 10 years, how much interest income will she report this year assuming semiannual compounding of interest?
Answer:
Semiannual compounding of interest = $2,328.75
Explanation:
Given:
Semi annual rate = 5/2 = 2.5 = 0.025
P = $46,000
Find:
Semiannual compounding of interest
Computation:
Semiannual compounding of interest = 46,000[1 - (1 + 0.025)²]=
Semiannual compounding of interest = $2,328.75
Gordon Company started operations on January 1 of the current year. It is now December 31, the end of the current annual accounting period. The part-time bookkeeper needs your help to analyze the following three transactions:
a. During the year, the company purchased office supplies that cost $2,300. At the end of the year, office supplies of $670 remained on hand.
b. On January 1 of the current year, the company purchased a special machine for cash at a cost of $23,500. The machine's cost is estimated to depreciate at $2,350 per year.
c. On July 1, the company paid cash of $840 for a two-year premium on an insurance policy on the machine; coverage began on July 1 of the current year.
Answer:
Gordon Company
Analysis of Transactions at December 31:
a. Office Supplies $670 (DR)
Office Supplies Expense $1,630 (DR)
b. Equipment $23,500 (DR)
Accumulated Depreciation on Equipment $2,350 (CR)
Depreciation Expense - Equipment $2,350 (DR)
c. Prepaid Insurance $630 (DR)
Insurance Expense $210 (DR)
Explanation:
1. The Office Supplies Account will be debited with $2,300 and credited with $1,630 ($2,300 - $670) as Office Supplies Expense (used supplies) for the year. This will leave a debit balance of $670 in the account.
2. The equipment account will be maintained at its cost, while a contra account (accumulated depreciation) is created to accumulate the depreciation expenses over the years. The useful life of the equipment is 10 years ($23,500/$2,350) with an annual depreciation expense of $2,350.
3. The Prepaid Insurance Account will be debited with $840 and credited with $210 ($840/4) representing Insurance that expired during the year for six months. The balance of $630 is carried forward for the remaining one and half years.
The person granting another person to act on their behalf using a power of attorney is called a _______________. A) Potentate B) Premier C) Principal D) Agent E) None of the above Mark for follow up
Answer:
Principal
Explanation:
On January 2, 2017, Kellogg Corporation acquired equipment for$800,000. The estimated life of the equipment is 5 years or 80,000 hours. The estimated residual value is $10,000. What is the book value of the asset on December 31, 2018, if Kellogg Corporation uses the straight−line method of depreciation? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)
A. $790,000
B. $800,000
C. $484,000
D $642,000
Answer:
Book value of the asset = $484,000
Explanation:
Given:
Equipment cost = $800,000
Residual value = $10,000
Computation:
Depreciation = (Equipment cost - Residual value) / Life
Depreciation = ($800,000 - $ 10,000) / 5
Depreciation = $ 158,000 per year
Depreciation for 2 year =$ 158,000 x 2
Depreciation for 2 year = $316,000
Book value of the asset = Equipment cost - Depreciation for 2 year
Book value of the asset = $800,000 - $316,000
Book value of the asset = $484,000
On January 1, 2016, Horton Inc. sells a machine for $25,800. The machine was originally purchased on January 1, 2014 for $46,700. The machine was estimated to have a useful life of 5 years and a residual value of $0. Horton uses straight-line depreciation. In recording this transaction: a. a loss of $2,220 would be recorded. b. a loss of $20,900 would be recorded. c. a gain of $25,800 would be recorded. d. a gain of $2,20 would be recorded.
Answer:
a) a loss of $2220 would be recorded.
Explanation:
Calculation for the Loss on sale
First step is to calculate the Depreciation per annum using this formula
Depreciation per annum = (Purchase Cost-salvage value) / Useful life
Depreciation per annum = 46700/5
Depreciation per annum= $9,340
Second Step will be to calculate the 31/12/15 Book Value
1/1/14 Purchase cost $46,700
Less: 31/12/14 Depreciation for the year ended 31 ($9,340)
31/12/14 Book Value $37,360
($46,700-$9,340)
Less: 31/12/15 Depreciation for the year ended ($9,340)
31/12/15 Book Value $28,020
($37,360-$9,340)
Last step is to calculate the Loss on sale
1/1/16 Value $28,020
1/1/16 Less Sale value ($25,800)
Loss on sale $2220
(28,020-25,800)
Therefore the correct option is :a loss of $2220 would be recorded.
On August 1, 2021, Trico Technologies, an aeronautic electronics company, borrows $19.7 million cash to expand operations. The loan is made by FirstBanc Corp. under a short-term line of credit arrangement. Trico signs a six-month, 9% promissory note. Interest is payable at maturity. Trico’s year-end is December 31.
Required:
Record the necessary entries in the Journal Entry Worksheet below for Trico Technologies. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)
Answer: Please see answers in explanation ncolumn
Explanation:
Journal entry for Trico Technologies
1) To record issuance of notes
Date General Journal Debit Credit
Aug 1st 2021 Cash $19,700,000
Notes Payable $19,700,000
Adjustment for Interest
= Principal x rate x time ( from August to December 31st)
$19,700,000 X 9% X 5/12=$738,750
To record accrual of interest at Year end.
Date General Journal Debit Credit
Dec 31st,2021 Interest expense $738,750
Interest payable $738,750
3. Record Payment of Note at maturity
Date General Journal Debit Credit
Jan 31st,2022 Notes payable $19,700,000
Interest Expense $147,750
Interest payable $738,750
Cash $20,586,500
Interest Expense =Principal x rate x time ( the remaining one month
$19,700,000 X 9% X 1/12=$147,750
The police chief mentions that unionized emergency personnel had already been deployed, so pulling them back would not be worth it. However, there may be long term savings in pulling them back. If the police chief is looking solely at short-term costs and benefits, what type of decision-making bias would this represent? a) discounting the future b) traming effects c) illusion of control d) representativeness
Answer:
a) discounting the future
Explanation:
Police chief mentions that unionized emergency personnel and When police superiors look only at short-term costs and benefits, decision-making bias discounts the future in this case because it is a bias such as prioritizing the present, rejecting it, or avoiding future going. Long-term effect.so that here the correct option is a) discounting the futureAn architecture firm earned earned $2320 for architecture services provided with the fee to be paid in the future. No entry was made at the time the service was provided. If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause:________.A) revenues to be understated B) revenues to be overstated C) liabilities to be understated. D) net income to be overstated.
Answer:
A) revenues to be understated
Explanation:
In this scenario, this would cause revenues to be understated. This is mainly because the financial report of profit would state an amount that is less than the amount that was actually earned by the Architecture Firm. This is due to the profit of $2320 that was already fully earned by the Firm not being included in the financial report, therefore missing a piece of the profits in the report (understated).
Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares?
A. the rate of return the corporation promised will be more difficult to deliver
B. more shares will dilute the existing value of the stock, causing its market price to fall
C. the market will view the new share issue as a sign the company is in financial difficulty
D. issuing bonds is a more secure method for corporations to raise needed money
Answer:
B. more shares will dilute the existing value of the stock, causing its market price to fall
Explanation:
A bond can be defined as a debt or fixed investment security, in which a bondholder (creditor or investor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time.
Generally, the bond issuer is expected to return the principal at maturity with an agreed upon interest to the bondholder, which is payable at fixed intervals.
The reason a large publicly traded corporation would likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares is because more shares will dilute the existing value of the stock, causing its market price to fall and may negatively affect by reducing the value and proportional ownership of the investor's shares in the corporation.
Applying ExcelData Unit sales 10,000 unitsSelling price per unit $70 per unitVariable expenses per unit $42 per unitFixed expenses $140,000Enter a formula into each of the questions below. If your formulas are correct, you should get the correct answers to the following questions. Show your work and formulas.(a) What is the break-even in dollar sales?Break-even in dollar _____(b) What is the margin of safety percentage?Margin of safety percentage _____(c) What is the degree of operating leverage? (Round your answer to 2 decimal places.)Degree of operating leverage _____3. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%Percentage increase in the operating income _____4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like thisData Unit sales 12,000 unitsSelling price per unit $70 per unitVarable expenses per unit $42 per unitFixed expenses $140,000(a) What is the net operating income? (Negative amount should be indicated by a minus sign.)Net operating income (loss) _____(b) By what percentage did the net operating income increase?Percentage increase in net operating income _____%
Answer:
Please see solution below
Explanation:
a. Break even in dollar sales
= [ Fixed cost / Contribution margin ] × Selling price per unit
Fixed cost = $140,000
Selling price per unit = $70
Variable expenses per unit = $42
BEP in dollars = [$140,000 / $70 - $42] × $70
= $350,000
b. Margin of safety percentage
= [ Current sales level - Break even point / Current sales level ] × 100
Current sales level = 10,000 units
Break even point = Fixed cost / Contribution margin
= $140,000 / $70 - $42
= 5,000 units
Margin of safety = [10,000 - 5,0000/10,000 ] × 100
= 50%
C. Degree of operating leverage.
= Contribution margin / Net operating income
Contribution margin = $70 - $42 = $28
Net operating income
Sales ($70 × 10,000)
$700,000
Less Variable cost ($42 × 10,000)
$420,000
Contribution margin
$280,000
Less Fixed cost
$140,000
Net operating income
$140,000
Degree of operating leverage = $280,000 / $140,000
= 20%
D. Percentage in net income
Sales ($70 × 12,000)
$840,000
Less variable cost
$420,000
Contribution margin
$420,000
Less fixed cost
$140,000
Net operating income
$280,000
Percentage change in net income
= [$140,000 / $280,000] × 100
= 50%