Answer:
Incremental net income from further processing is $566,600
Explanation:
First of all, it would be necessary to compute profit from selling the product at cut off point and profit when it is further processed in order to determine whether or not it is worth processing further:
Sales revenue $400,000
cost of production(19,000*$25) $475,000
Loss from selling ($75,000)
Further processing:
sales revenue
Product B(5200*$108) $561,600
Product C(11,000*$55) $605,000
Total revenue $1,166,600
total cost
cost of production ($475,000)
cost of further processing ($200,000)
total costs ($675,000)
Profit $491600
By further processing the incremental net profit is $566,600 ($491,600-(-$75000)
Loger's, a high-end apparel company in Bruslon, an Asian country, cuts back on production as consumers start turning to basic products such as food because of the economic downturn in the country. The company also lays off many of its employees to further cut down expenses. In the context of the business cycle, Bruslon is most likely going through a period of _____.
Answer:
Contraction
Explanation:
The business cycle refers to the fluctuations that happen in an economic activity over time. This cycle has 4 stages that are:
-Expansion is when the economy grows and employment is higher.
-Peak is a transition between expansion and contraction and it is a point in which the economy reaches its highest output.
-Contraction is a stage in which growth stops and unemploymetnt rises.
-Trough is a stage in which the economy gets to its lowest point before a rise.
According to this, the answer is that in the context of the business cycle, Bruslon is most likely going through a period of contraction because there is an economic downturn that forced Loger's to lay off many employees.
In October, Pine Company reports 20,700 actual direct labor hours, and it incurs $124,200 of manufacturing overhead costs. Standard hours allowed for the work done is 20,700 hours. The predetermined overhead rate is $6.15 per direct labor hour. In addition, the flexible manufacturing overhead budget shows that budgeted costs are $4.45 variable per direct labor hour and $54,000 fixed. Compute the overhead volume variance. Normal capacity was 25,000 direct labor hours.
Answer:
$18,810 Unfavorable
Explanation:
The computation of the overhead volume variance is shown below:-
Overhead volume variance = Budgeted Overheads - Recovered Overheads
= (20,700 × $4.45 + $54,000) - (20,700 × $6.15)
= $92,115 + $54,000) - (20,700 × $6.15)
= $146,115 - $127,305
= $18,810 Unfavorable
Here, the budgeted overhead is more than recovered overhead so it becomes unfavorable.
Inflation in the Philippines was 6.7% in September, far above the central bank’s target of 2 – 4%. Suppose the central bank decides to raise interest rates. (a) Using the money market, describe the type of monetary policy (increase or decrease in the money supply) that would achieve higher interest rates. (b) The central bank's goal is to reduce inflation. Using the IS-LM-FE model, explain whether the policy of higher interest rates is appropriate or not. (c) Use the AD-AS model to predict the short-run and long-run effects of the central bank’s policy on Philippine inflation, output, and unemployment. Does it matter whether wages are flexible or not? Explain. (d) Suppose the demographic transition of the Philippines causes labor supply to grow more rapidly than usual. How does this affect your answer about unemployment and wages in (c)? Use the labor market.
Answer:
plsyes
Explanation:
Baker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $85,120 and 2,800 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $86,870 and actual direct labor-hours were 2,700. The pre-determined overhead rate for the year was closest to:_____.a. $31.60.b. $33.62.c. $30.36.d. $32.30.
Answer:
Overhead rate is $30.4
So option (c) is correct option
Explanation:
We have given total estimated overhead = $85120
Estimated direct labor hours = 2800
Actual manufacturing overhead for the year = $86870
Actual labor hour = 2700
We have to find overhead rate for the year
Overhead rate is equal to the ratio of estimated overhead to estimated labor hour
Therefore overhead rate [tex]=\frac{85120}{2800}=30.4[/tex]$
So option (c) is correct
At year end, Rebos Company's financial statements showed sales of $820 million, net income of $425 million, total assets of $750 million, total liabilities (including preferred stock) of $735 million, and 1.20 million shares of common stock outstanding. Rebos has been offered $742.50 million to sell their assets. Based on this information, calculate the company's book value per share and liquidation value per share of common stock, respectively.
Answer:
total sales $820 million
net income $425 million
total assets $750 million
total liabilities $735
1.2 million outstanding common stocks
an offer was made to buy their assets at $742.5 million
company's book value per share:
= (total assets - total liabilities) / total number of outstanding common stocks
= ($750,000,000 - $735,000,000) / 1,200,000 = $12.50 per stock
company's liquidation value per share:
= (total offer - total liabilities) / total number of outstanding common stocks
= ($742,500,000 - $735,000,000) / 1,200,000 = $6.25 per stock
Gitano Products operates a job-order costing system and applies overhead cost to jobs on production (not on the basis of raw materials purchased). Its predetermined overhead rate was based on a cost formula that estimated $124,600 of manufacturing overhead for an estimated allocation base of $89,000 direct material dollars to be used in production. The basis of direct materials used in the company has provided the following data for the just completed year
Purchase of raw materials 139,000
Direct labor cost $85,000
Manufacturing overhead costs:
Indirect labor $ 127,800
Property taxes $8,880
Depreciation of equipment $18,000
Maintenance $ 12,000
Insurance $ 11,300
Rent, building $ 40,000
Beginning Ending
Raw Materials $ 27,000 $ 13,000
Work in Process $ 46,000 $36,000
Finished Goods $71,000 $56,000
Required:
1. Compute the predetermined overhead rate for the year
2. Compute the amount of underapplied or overapplied overhead for the year
3. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials
4. Compute the unadjusted cost of goods sold for the year. Do not include any underapplied or overapplied overhead in your answer
Answer:
1.predetermined overhead rate for the year = $1.40
2.the amount of underapplied or overapplied overhead for the year = $3,780
3.schedule of cost of goods manufactured for the year
Raw Materials ($ 27,000+$139,000 -$ 13,000) 153,000
Direct labor cost 85,000
Applied Overheads 214,200
Add Opening Inventory - Work in Process 46,000
Less Closing Inventory - Work in Process (36,000)
cost of goods manufactured for the year 462,200
4.the unadjusted cost of goods sold for the year = $477,200
Explanation:
1.predetermined overhead rate for the year
predetermined overhead rate = Budgeted Fixed Overheads / Budgeted Activity
= $124,600/$89,000
= $1.40
2.the amount of underapplied or overapplied overhead for the year
Actual Fixed Overheads > Applied Fixed Overheads = Underapplied
Actual Fixed Overheads < Applied Fixed Overheads = Overapplied
Applied Fixed Overheads = $1.40×($ 27,000+$139,000 -$ 13,000)
= $214,200
Actual Fixed Overheads Calculation :
Indirect labor $ 127,800
Property taxes $8,880
Depreciation of equipment $18,000
Maintenance $12,000
Insurance $11,300
Rent, building $40,000
Total $217,980
Note that : Actual Fixed Overheads > Applied Fixed Overheads
Therefore we have an Underapplied
Underapplied = $217,980 - $214,200 = $3,780
3.schedule of cost of goods manufactured for the year
Raw Materials ($ 27,000+$139,000 -$ 13,000) 153,000
Direct labor cost 85,000
Applied Overheads 214,200
Add Opening Inventory - Work in Process 46,000
Less Closing Inventory - Work in Process (36,000)
cost of goods manufactured for the year 462,200
4.the unadjusted cost of goods sold for the year
Opening Inventory - Finished Goods $71,000
Add Cost of Goods Manufactured $462,200
Less Closing Inventory - Finished Goods ($56,000)
Cost of Goods Sold $477,200
Which one of the following is an argument in favor of a low dividend policy? Few, if any, positive net present value projects are available to the firm. A preponderance of stockholders have minimal taxable income. Corporate tax rates exceed personal tax rates. The tax on capital gains is deferred until the gain is realized. A majority of stockholders have other investment opportunities that offer higher rewards with similar risk characteristics.
Answer: The tax on capital gains is deferred until the gain is realized
Explanation:
The TAX DIFFERENTIAL VIEW of DIVIDEND POLICY is a notion that states that shareholders generally prefer capital gains fo dividend payouts because capital gains are taxed at a lower rate than dividend payouts.
Therefore they would like to pay less tax on dividends and instead wait until they make a capital gain as the taxes on that are less and are only charged after the gain is realized.
This translates to less dividends being paid by companies that follow this logic therefore the 4th option is correct.
The Bank of Key West is not going to have enough reserves at the end of the business day to meet its reserve requirement of 10%. It currently has two options to borrow money overnight in order to meet the requirement. First, it could borrow money from the Federal Reserve at a rate of 1.15% . Second, it could borrow money from other banks at a rate of 0.15% . What is the federal funds rate, and what is the discount rate
Answer: Federal Fund Rate = 0.15%
Discount rate = 1.15%
Explanation:
The Federal Fund Rate is the rate at which banks can borrow money from other Banks and is listed as 0.15%. This rate is usually lower than the discount rate as is usually suggested by the Federal Open Market Committee.
The Discount rate is the rate at which Banks can borrow from the Fed which is stated to be 1.15%. This rate is set by the Fed and can be used to control interest rates by either reducing or increasing the cost of borrowing for Banks which banks then reciprocate.
Doug Turner Food Processors wishes to introduce a new brand of dog biscuits composed of chicken- and liver-flavored biscuits that meet certain nutritional requirements. The liver-flavored biscuits contain 1 unit of nutrient A and 2 units of nutrient B; the chicken-flavored biscuits contain 1 unit of nutrient A and 4 units of nutrient B. According to federal requirements, there must be at least 40 units of nutrient A and 60 units of nutrient B in a package of the new mix. In addition, the company has decided that there can be no more than 15 liver-flavored biscuits in a package. If it costs 1¢ to make 1 liver-flavored biscuit and 2¢ to make 1 chicken-flavored, what is the optimal product mix for a package of the biscuits to minimize the
Answer: opt value = 65
Explanation:
This is quite easy to solve.
we will take a step by step process to solving this problem.
attached below are images showing the sheet for the formula used to run the program as well as the output(answer).
Let us begin;
we have from the problem that the variables Given are;
Y which is the number of chicken flavored biscuits in a package
and X represent the number of chicken flavored biscuits in a package7
Taking LLP as follows:
Min Z = 1X + 2Y where Z rep the Objective Minimum Function
subject to
1X + 1Y >= 40
2X + 4Y >= 60
1X + 0Y <= 15
X, Y >= 0
(i). attached is the excel sheet housing the formula
(ii). attached is the sheet generating the values
(iii). attached is the Excel solver
(iv). attached is final sheet showing the results
We have that the No of Liver Flavored biscuits and No of Chicken Flavored biscuits is 15 & 25
From the attached result, we have that the optimum solution value is 65
To find the optimal product mix, set up a linear programming problem to minimize cost while meeting nutritional requirements and constraints.
Explanation:To find the optimal product mix for the package of dog biscuits, we can set up a linear programming problem. Let's assume the number of liver-flavored biscuits in the package is represented by L and the number of chicken-flavored biscuits is represented by C.
The objective function to minimize the cost would be 0.01L + 0.02C since it costs 1¢ to make 1 liver-flavored biscuit and 2¢ to make 1 chicken-flavored biscuit.
The constraints would be:
1L + 1C ≥ 40 (nutrient A requirement)2L + 4C ≥ 60 (nutrient B requirement)L ≤ 15 (limit on liver-flavored biscuits)By solving this linear programming problem, we can find the values of L and C that minimize the cost while meeting the nutritional requirements and constraints.
A new barcode reading device has an installed cost basis of $21 comma 680 and an estimated service life of ten years. It will have a zero salvage value at that time. The 200% declining balance method is used to depreciate this asset. a. What will the depreciation charge be in year ten? b. What is the book value at the end of year nine? c. What is the gain (or loss) on the disposal of the device if it is sold for $700 after nine years?
Answer:
a. $2,910
b. $2,910
c. $2,210 loss
Explanation:
Note: See the attached excel file to see how the depreciation is calculated.
Since the useful life is 10, the normal depreciation rate is 10%. Therefore, 200% double declining depreciation rate implies 20% rate to be used (i.e. 10% * 200% = 20%).
a. What will the depreciation charge be in year ten?
Since the salvage value at year ten is zero, the depreciation charge in year 10 is $2,910.
b. What is the book value at the end of year nine?
The book value at the end of year nine = $2,910.
c. What is the gain (or loss) on the disposal of the device if it is sold for $700 after nine years
Loss = Sales proceed - book value at the end of year nine = $700 - $2,910 = 2,210 loss
At the beginning of 2019, Robotics Inc. acquired a manufacturing facility for $12.1 million. $9.1 million of the purchase price was allocated to the building. Depreciation for 2019 and 2020 was calculated using the straight-line method, a 20-year useful life, and a $1.1 million residual value. In 2021, the estimates of useful life and residual value were changed to 15 total years and $510,000, respectively. What is depreciation on the building for 2021?
Final answer:
The depreciation on the building for 2021 is $573,333.33.
Explanation:
The depreciation on the building for 2021 can be calculated using the straight-line method. The original useful life of the building was 20 years, and the residual value was $1.1 million. However, in 2021, the estimates were changed to a 15-year useful life and a residual value of $510,000. To calculate the depreciation for 2021, we need to find the annual depreciation expense.
First, we calculate the depreciable cost, which is the initial cost minus the residual value. The initial cost of the building was $9.1 million, so the depreciable cost is $9.1 million - $510,000 = $8.59 million.
Next, we divide the depreciable cost by the new useful life to find the annual depreciation expense: $8.59 million / 15 years = $573,333.33.
Therefore, the depreciation on the building for 2021 is $573,333.33.
ou have an outstanding student loan with required payments of $ 550 per month for the next four years. The interest rate on the loan is 9 % APR (compounded monthly). Now that you realize your best investment is to prepay your student loan, you decide to prepay as much as you can each month. Looking at your budget, you can afford to pay an extra $ 250 a month in addition to your required monthly payments of $ 550, or $ 800 in total each month. How long will it take you to pay off the loan? (Note: Be careful not to round any intermediate steps less than six decimal places.)
Answer:
Approx 34 months are required to payoff the loan
Explanation:
In order to calculate How long will it take you to pay off the loan we would have to calculate first the Loan amount outstanding as follows:
Loan amount outstanding = 600 *4 *12 = $ 28,800
Therefore, to calculate How long will it take you to pay off the loan we use the following formula:
Amount =Payment (1+ r/n)^t
28,800 = 775 (1+ .09/12)^t
28,800 /775 = (1 +.0075 ) ^t
37.16 = (1.0075)^ t
when we used it and trial method the compounded value comes to be 37.85 when t= 34 months
Hence, approx 34 months are required to payoff the loan
Dimitrov Corporation, a company that produces and sells a single product, has provided its contribution format income statement for July.
Sales (6,600 units) $429,000
Variable expenses 297,000
Contribution margin 132,000
Fixed expenses 103,500
Net operating income $28,500
Required:
a) If the company sells 6,500 units, its net operating income should be closest to __________.
Answer:
$27,000
Explanation:
Computation of the given data are as follows:
Net operating income = Contribution margin per unit × Reqd. Sales Unit - Fixed expenses
Where, Contribution margin per unit = Contribution margin ÷ Sales Unit
= $132,000 ÷ 6,600
= $20
So, by putting the value in the formula, we get
= $20 × 6,500 - $103,500
= $130,000 - $103,000
= $27,000
uppose that a Swiss watchmaker imports watch components from Sweden and exports watches to the United States. Also suppose the dollar depreciates, and the Swedish krona appreciates, relative to the Swiss franc. Speculate as to how each would hurt the Swiss watchmaker. Explain why the U.S. demand for Mexican pesos is downsloping and the supply of pesos to Americans is upsloping.
Answer:
1)
In this case, the depreciation of the US dollar will make the Swiss watches more expensive for American customers, which will probably lower their demand.
The Swedish krona appreciation will increase the production costs of the watches, so the company will suffer twice, its sales will lower and its costs will increase.
2)
The US demand for Mexican pesos is downsloping because there is an inverse relationship between the price of the Mexican peso against the US dollar and the quantity of Mexican pesos demanded. As the exchange rate of the Mexican pesos depreciates against the US dollar, the demand for Mexican products in the US will increase because Mexican products are cheaper.
When the Swiss franc depreciates and the Swedish krona appreciates, it would hurt the Swiss watchmaker by increasing their production costs and making their watches more expensive for American consumers. The downsloping demand for Mexican pesos in the United States can be attributed to the law of demand, while the upsloping supply of pesos to Americans can be explained by the law of supply.
Explanation:
If the Swiss franc depreciates and the Swedish krona appreciates, it would hurt the Swiss watchmaker in several ways. Firstly, importing watch components from Sweden would become more expensive because the watchmaker would need to pay more Swiss francs for the same amount of Swedish krona. This would increase their production costs. Secondly, when the Swiss watchmaker exports watches to the United States, the watches would become more expensive for American consumers because the dollar depreciated against the Swiss franc. This could lead to a decrease in demand for Swiss watches in the US market.
The downsloping demand for Mexican pesos in the United States can be attributed to the law of demand. When the price of Mexican pesos increases, American consumers would demand fewer pesos as they become more expensive. On the other hand, the upsloping supply of pesos to Americans can be explained by the law of supply. When the price of Mexican pesos increases, Mexican sellers would be willing to supply more pesos to American consumers as they can now sell them for a higher price.
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Heller Enterprises reports the following information. 2017 2016 Cash $10,800 $10,600 Operating assets $18,500 $18,800 Operating liabilities $14,100 $14,800 Net operating profit after tax $10,200 $10,300 Weighted average cost of capital 6.0% 6.0% What is the company's residual operating income (ROPI) for 2017? A. $9,072 B. $6,200 C. $9,312 D. $9,960 E. None of the above
Answer:
The company's residual operating income (ROPI) for 2017 is $9,960. The right answer is D.
Explanation:
In order to calculate the company's residual operating income (ROPI) for 2017 we would have to use the following formula:
Company's Residual operating Income = NOPAT - [ WACC x NOA at beginning ]
Where, NOPAT = Net operating profit after tax for 2017 = $10,200, WACC = weighted average cost of capital = 6%
NOA at beginning = Net operating assets at beginning of the year (NOA of 2016 closing) = $18,800 - $14,800 = $4000
Therefore, Company's residual operating income = $10,200 - [ 6% x $4000 ] = $9,960
Lithium, Inc. is considering two mutually exclusive projects, X and Y. Project X costs $95,000 today (year 0) and is expected to generate $65,000 in year one and $75,000 in year two. Project Y costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. The firm's investors require a rate of return of 16% and the weighted average cost of capital is 13%. What is the net present value for Project Y
Answer:
$52,521
Explanation:
As per Given Data
Project Y
Costs $120,000
Cash Inflows
Year 1 $64,000
Year 2 $67,000
Year 3 $56,000
Year 4 $45,000
Required rate of return = 16%
Weighted Average cost of Capital = 13%
Net Present Value
As we know Net Present value is calculated by discounting each years cash flows using using the Weighted Average cost of Capital.
Costs $120,000
Year Cash Inflows Discount factor 13% Present values
Year 0 $(120,000) (1+13%)^-0 $(120,000)
Year 1 $64,000 (1+13%)^-1 $56,640
Year 2 $67,000 (1+13%)^-2 $52,471
Year 3 $56,000 (1+13%)^-3 $38,811
Year 4 $45,000 (1+13%)^-4 $27,599
Net present value $52,521
Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $400,000 of net income, declared no dividends, and the following selected transactions occurred in the order given:
1) Issued 100,000 shares of the common stock at $55 cash per share.
2) Reacquired 25,000 shares at $50 cash per share.
3) Reissued 10,000 shares from the treasury for $51 per share.
4) Reissued 10,000 shares from the treasury for $49 per share.
Required:
Prepare the stockholders' equity section of the balance sheet at December 31, 2013. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
Total equity of stock holder = $5,650,000
Explanation:
As per the data given in the question,
Balance sheet Equity of Stock holder
Capital Contribution Amount
Common stock = $500,000 ((100,000 × $55) - ( 1,000,000 × $5))
Additional paid in capital = $5,000,000 ($5,000,000 + 10,000 - 10,000)
Retained earnings = $400,000
Total = $5,900,000 ($500,000 + $5,000,000 + $400,000)
Treasury stock at cost = $250,000 ($1,250,000 - $500,000 - $500,000)
Total equity of stock holder = $5,650,000 ($5,900,000 - $250,000)
Final answer:
To prepare the stockholders' equity section, account for the common stock issued, treasury stock transactions, and retained earnings of Global Marine. The balance sheet will include common stock, additional paid-in capital, treasury stock, and retained earnings.
Explanation:
Stockholders' Equity Section
To prepare the stockholders' equity section of Global Marine's balance sheet, we need to account for the common stock issued, treasury stock transactions, and retained earnings for the year. Here's a breakdown:
Common Stock: 100,000 shares were issued at $55 per share, but the par value of the stock is $5. The excess over par ($50 per share) is recorded in the additional paid-in capital account.
Treasury Stock: 25,000 shares were reacquired at $50 cash per share and later, 10,000 shares were reissued at $51 per share and another 10,000 at $49 per share.
Retained Earnings: The company earned $400,000 net income and declared no dividends.
Based on these transactions, the stockholders' equity section would appear as follows:
Common Stock (100,000 shares issued and outstanding at $5 par value): $500,000
Additional Paid-In Capital (100,000 shares × $50 excess over par): $5,000,000
Treasury Stock (25,000 shares reacquired at $50 per share): -$1,250,000 (Net of 20,000 shares reissued at $51 and $49 per share)
Retained Earnings from Net Income: $400,000
The treasury stock reissued at a different price affects the balance of treasury stock and additional paid-in capital. The total treasury stock is computed by subtracting the cost of reissued shares from the cost of acquired treasury stock.
Variable Input Fixed Input Output Marginal Physical Product of Variable Input Total Fixed Cost Total Variable Cost Marginal Cost (units) (units) (units) (units) (dollars) (dollars) (dollars) 0 1 0 $500 $0 1 1 10 (A) $500 $200 (F) 2 1 25 (B) $500 $400 (G) 3 1 45 (C) $500 $600 (H) 4 1 60 (D) $500 $800 (I) 5 1 70 (E) $500 $1000 (J) Refer to Exhibit 21-3. What is the average total cost of producing 60 units of output
Answer:
$21.67
Explanation:
Exhibit 21-3 is attached with the answer .Please find it.
Total cost of production includes the fixed cost and variable cost. Fixed Cost remains constant as $500 in the exhibit, but the variable cost changes with each production level.
Cost of producing 60 units
Variable cost = $800
Fixed cost = $500
Total cost = $800+500 = $1,300
Product cost per unit = Total cost / numbers of unit = $1,300 / 60 = $21.67
Kamal reproduces Lorena’s copyrighted work "Musica" without paying royalties. Kamal is most likely excepted from liability for copyright infringement under the "fair use" doctrine if a. Kamal copies the entire work. b. Kamal’s use has no effect on the market for Lorena’s work. c. Kamal distributes the copies without charge to the public. d. Kamal’s use is for a commercial purpose.
Answer:
Option B
Explanation:
In simple words, Fair use refers to the one of the patent protections designed to align the rights of copyright owners with that of the public's best interest in the broader dissemination and use of artistic works by enabling such restricted uses that would otherwise be deemed infringing complaints as a protection against copyright violation.
Thus, from the above we can conclude that the correct option is B .
A Dutch auction underwriting is best described as an underwriting in which: Select one: a. the offering price varies with each investor paying his or her bid amount. b. investors determine the amount of the spread via competitive bidding. c. the number of shares sold is determined by a public auction. d. the underwriters are committed to purchase any unsold shares. e. the offer price is set based on competitive bidding by investors.
Answer: the offer price is set based on competitive bidding by investors.
Explanation: A Dutch auction is defined as a type of reverse auction that starts at a high price that is gradually reduced by the auctioneer until someone is willing to buy or when it reaches it predetermined price.
Here, the price is determined based on competitive bidding by investors.
Answer:
e. The offer price is set based on competitive bidding by investors.
Explanation:
A Dutch Auction Underwriting is a form of public auction wherein, several investors make their bidding and then, the highest price is the amount at which the offering would be sold. This is a form of competitive bidding among the investors. The auctioneers wait for all the investors to make their bidding before selecting the highest.
Sometimes also in Dutch Auction, the price tag could be reduced, till there is a buyer for it. Once the going price is good enough by the bidder, the auction can then come to a successful end. Investment bankers are the underwriters in a public offering like this and they determine the prices of the items being sold.
The Card Shoppe needs to maintain 18 percent of its sales in net working capital. Currently, the store is considering a four-year project that will increase sales from its current level of $279,000 to $308,000 the first year and to $314,000 a year for the following three years of the project. What amount should be included in the project analysis for net working capital in Year 4 of the project?
Answer:
$56,520
Explanation:
As per given data
Year Sales Working Capital 18%
0 $279,000 ($50,220)
1 $308,000 ($5,220)
2 $314,000 ($1,080)
3 $314,000 $0
4 $314,000 $56,520
As the sales value of year 2, 3 and 4 are same, as capital is adjusted in year 2 and company has equal working capital required in year 3, years 4 is the last year of the project so, working capital will be recovered from the project
Net Working capital will be reimbursed at the end of the project. The accumulated value of investment in working capital will be recorded as cash inflow in the analysis.
Disney and Paramount are both releasing an animated movie at the same time. Each company is fairly well known, and they are both deciding between pursuing two advertising strategies. Each firm knows that its profits will be affected by its own decision and the decision of the competing firm. The payoff matrix contains the estimated profits for both companies for all possible strategies. Paramount's profits are in the lower (green) triangle of each cell and Disney's profits are in the upper (blue) triangle of each cell. Profits (payoffs) are in millions of dollars. Disney Strategy 1 Strategy 2 Paramount Strategy 1 A $75 $75 B $25 $300 Strategy 2 C $300 $25 D $150 $150 What is Disney's dominant strategy? strategy 1 strategy 2 Disney does not have a dominant strategy. What is the Nash equilibrium in this game? B There is not a Nash equilibrium. A C D
Answer:
we can prepare a matrix to determine the best strategy:
Disney
strategy 1 strategy 2
$75 / $25 /
strategy 1 $75 $300
Paramount
strategy 2 $300 / $150 /
$25 $150
What is Disney's dominant strategy?
Disney's dominant strategy is strategy 1 with an expected value = $75 + $300 = $375. Strategy 2's expected value is only $175.
Paramount's dominant strategy is strategy 1 with an expected value = $75 + $300 = $375. Strategy 2's expected value is only $175.
What is the Nash equilibrium in this game?
There is a Nash equilibrium because both players' (Disney and Paramount) dominant strategy is Strategy 1.
Disney does not have a dominant strategy as their profit varies depending on Paramount's decision. The Nash Equilibriums are where both firms use Strategy 1 (option 'A') and where both firms use Strategy 2 (option 'D').
Explanation:To determine Disney's dominant strategy, we analyze the given payoff matrix. If Paramount chooses Strategy 1, Disney's profit would be $75 million with Strategy 1 and $300 million with Strategy 2. If Paramount uses Strategy 2, Disney makes $150 million with Strategy 1 and $25 million with Strategy 2. Thus, there is no single strategy for Disney that always gives them a higher profit regardless of Paramount's choice. Therefore, Disney does not have a dominant strategy.
To find the Nash Equilibrium, we need to look for a situation where neither of the firms would want to unilaterally switch their strategy, given that the strategy of the other firm stays the same. From the given payoff matrix, using Strategy 1 gives Paramount $75 million if Disney uses Strategy 1, and $300 million if Disney uses Strategy 2. Using Strategy 2 gives Paramount $25 million if Disney uses Strategy 1, and $150 million if Disney uses Strategy 2. From Disney's perspective, we have already discussed. Given these payoffs, we see that the situation where both firms use Strategy 1 (i.e., option 'A') and where both firms use Strategy 2 (i.e., option 'D') are Nash Equilibriums, since neither firm would want to switch strategies unilaterally in those cases.
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Linwood is making an equipment change at his company. An old piece of equipment, with a salvage value of $60,000, is being replaced by new equipment. The new equipment costs $980,000 and would have a 10 year useful life and no salvage value. By replacing the equipment, Linwood will save $164,000 per year in cash operating costs. The simple rate of return on this investment is
Answer:
The simple rate of return is 0.178 or 17.8%
Explanation:
From the given question, we solve for the simple rate return on this investment
Solution
Recall that, the simple rate of return is defined as:
The simple rate of return = The operating net cash savings / Cash net investment
Thus,
The operating net cash savings = $164000 and
The cash net investment = $980000- $60000 = $920000
Then,
The Simple rate of return = $164000 / $920000 = 0.178 i.e. 17.8%
Therefore the simple rate of return on this investment is 0.178 or 17.8%
The simple rate of return for Linwood's new equipment investment is approximately 6.7%. Thus, option (b) is correct.
Let's calculate it step-by-step:
The cost of the new equipment: $980,000Annual savings in cash operating costs: $164,000The useful life of the new equipment: 10 yearsTo calculate the simple rate of return, we use the formula:
Simple Rate of Return = (Annual Incremental Net Operating Income) / Initial InvestmentSince the new equipment has no salvage value, the annual depreciation is:
Annual Depreciation = Initial Investment / Useful Life = $980,000 / 10 = $98,000Next, we calculate the annual incremental net operating income:
Annual Incremental Net Operating Income = Annual Cost Savings - Annual Depreciation = $164,000 - $98,000 = $66,000Finally, the simple rate of return is:
Simple Rate of Return = $66,000 / $980,000 ≈ 6.7%Complete Question:
Linwood is making an equipment change at his company. An old piece of equipment, with a salvage value of $60,000, is being replaced by new equipment. The new equipment costs $980,000 and would have a 10-year useful life and no salvage value. By replacing the equipment, Linwood will save $164,000 per year in cash operating costs. The simple rate of return on this investment is:
a. 7.2%
b. 6.7%
c. 16.7%
d. 17.8%
A corporation is considering expanding operations to meet growing demand. With the capital expansion, the current accounts are expected to change. Management expects cash to increase by $20,000, accounts receivable by $40,000, and inventories by $60,000. At the same time accounts payable will increase by $50,000, accruals by $10,000, and longdashterm debt by $100,000. The change in net working capital is ________.
Answer:
$60,000
Explanation:
The computation of change in net working capital is shown below:-
Change in net working capital = Increase in cash + Increase in accounts receivables + Increase in inventories - Increase in payable - Increase in accruals
= $20,000 + $40,000 + $60,000 - $50,000 - $10,000
= $120,000 - $60,000
= $60,000
Therefore for computing the change in net working capital we simply applied the above formula.
6. If two portfolios are well-diversified with a risk-free rate of 3.11% and the S&P market return for the past year has been 12.87%. Portfolio ABC has a return of 15.75% and has a beta of 1.4, while Portfolio XYZ returns 11.92% and has a beta of .85. Based on Jack Treynor's Model what are the Treynor Indexes for each stock, and assuming that the correlation of each the same, which stock would you add to your own portfolio based solely on the results of the Treynor Index? And what results would the Jensen Model provide and what would be your decision then?
Answer:
Answer 1---- D. none of the above
Answer 2---- B. the project will delay by one day
Explanation:
See attached image
The Wood Valley Dairy makes cheese to supply to stores in its area. The dairy can make 454 pounds of cheese per day (355 days per year), and the demand at area stores is 62 pounds per day. Each time the dairy makes cheese, it costs $295 to set up the production process. The annual cost of carrying a pound of cheese in a refrigerated storage area is $1.01. Determine the minimum total annual cost.
Answer:
$245,277
Explanation:
The dairy makes 454 pounds per day of which only 62 pounds is sold, thus the extra pounds of cheese per day are (454-62) = 392.
Now, the dairy operated 355 days a year, hence the annual cost of storage is,
(355 * 392) * $1.01 => $140,552.
Now the setup cost is $295 a day, so the annual would be,
(295 * 355) => $104,725.
Hence the minimum total annual costs will be = 140552+104725 = $245,277.
Hope I made myself clear.
Thanks
Consider a Caribbean cruise route served by two cruise lines, Carnival and Royal Caribbean. Both lines must choose whether to charge a high price ($320) or a low price ($300) to vacationers. These price strategies with corresponding profits are illustrated in the payoff matrix to the right. Carnival's profits are in red and Royal Caribbean's are in blue. Suppose the cruise lines decide to collude. At which outcome are joint profits maximized?
Answer:
Consider a Caribbean cruise route served by two cruise lines, Carnival and Royal Caribbean. Both lines must choose whether to charge a high price ($320) or a low price ($300) to vacationers. These price strategies with corresponding profits are illustrated in the payoff matrix to the right. Carnival's profits are in red and Royal Caribbean's are in blue. Suppose the cruise lines decide to collude. At which outcome are joint profits maximized?
Joint profits are maximized when Carnival picks $320 and Royal Caribbean picks $320.
Explanation:
When Carnival picks $320 and Royal Caribbean picks $320, then joint profits are maximized.
Nash equilibrium would exist only when Royal chooses $300 and the carnival chooses $300.
However, if both Carnival and Royal Caribbean charge a lower price, both of them can earn a higher profit.
Carnival and Royal Caribbean can collude to set prices and act like a monopoly, which involves reducing output and raising prices to maximize profits.
Explanation:In the scenario presented, Carnival and Royal Caribbean have the option to collude and set their prices to maximize joint profits. Collusion would involve agreeing to charge the same price to eliminate competition and act like a monopoly.
When firms collude in such a manner, they tend to reduce output and increase prices to maximize profits, just like a monopolist would. In the context of a payoff matrix, colluding to charge a higher price would typically result in higher joint profits when compared to both firms charging a low price.
For a perfectly competitive firm, the goal is to maximize profit by finding the level of output where total revenue exceeds total costs by the greatest amount, as demonstrated by the provided example of a raspberry farm with revenue and costs data.
What is a common workflow error that can cause duplicate expenses in QuickBooks Online?
Answer:
A common workflow error that can cause duplicate expenses in QuickBooks Online is:
Duplicating any transaction.
Explanation:
The reason behind this is that duplicating transactions is very common because it might originate before the accounting process is made. It can be executed by any manager or someone in the resources acquisitions department. That is why the books have to be reviewed at two different moments from two different departments. Accounting first and then finance. To check that everything is correct.
Answer:
Create a bill to record a vendor expense, and create a check to the vendor for the same expense
Explanation:
Cool Logos buys logo-imprinted merchandise and then sells it to university bookstores. Sales are expected to be $ 2 comma 003 comma 000 in September, $ 2 comma 240 comma 000 in October, $ 2 comma 378 comma 000 in November, and $ 2 comma 520 comma 000 in December. Cool Logos sets its prices to earn an average 30% gross profit on sales revenue. The company does not want inventory to fall below $ 420 comma 000 plus 20% of the next month's cost of goods sold. Prepare a cost of goods sold, inventory, and purchases budget for the months of October and November. Cool Logos Cost of Goods Sold, Inventory, and Purchases Budget For the Months of October and November October November Cost of goods sold Plus: Desired ending inventory Total inventory required Less: Beginning inventory Purchases
To calculate the COGS, inventory, and purchases budget for Cool Logos, subtract the 30% gross profit margin from projected sales to determine COGS, then compute the desired ending inventory based on a fixed amount plus a percentage of the next month's COGS. Finally, adjust for beginning inventory to find the purchases needed.
To prepare the cost of goods sold (COGS), inventory, and purchases budget for Cool Logos for the months of October and November, we need to follow several steps. Initially, we ascertain the cost of goods sold by deducting the desired gross profit margin from the sales revenue. Cool Logos aims for a 30% gross profit, so the cost of goods sold would be 70% of the sales revenue. Then we calculate the desired ending inventory, which should not fall below $420,000 plus 20% of the following month's COGS. We use these figures to determine the total inventory required and the purchases needed for each month after considering the beginning inventory.
For example, in October, the cost of goods sold would be 70% of $2,240,000, which amounts to $1,568,000. The desired ending inventory for October would be $420,000 plus 20% of November's COGS (which is 70% of $2,378,000). We compute the total inventory required by adding the COGS to the desired ending inventory. The purchases for October are then the difference between the total inventory required and the beginning inventory, which is September's ending inventory. The same process is used to calculate the figures for November.
At December 31, 2020 Marigold Corp. had 305000 shares of common stock and 9600 shares of 6%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2020 or 2021. On January 30, 2022, prior to the issuance of its financial statements for the year ended December 31, 2021, Marigold declared a 100% stock dividend on its common stock. Net income for 2021 was $1135000. In its 2021 financial statements, Marigold's 2021 earnings per common share should be
Answer:
Marigold Corp.
2021 Earnings per common share:
Common Stock:
Dec 31, 2020 Balance = 305,000 shares
Jan 30, 2022 Stock dividend = 305,000 shares
Balance on Jan 30 = 610,000 shares
Net Income for 2021 = $1,135,000
6% Cumulative preferred dividend for 2020 & 2021 = $115,200 ($57,600 x2)
2021 Earnings per share = ($1,135,000 - $115,200)/305,000 = $3.34
Explanation:
Earnings per share is the net income dividend by the number of outstanding stock.
As at December 31, 2021, the common stock outstanding equals 305,000 shares.
The preferred stock is cumulative. This means that whether dividend is declared or not in a year, it continues to be accumulated year on year until when the company is able to pay.
Since 2020 dividend for preferred stock was not declared, in 2021 when the common stock dividend was declared, the previous year's and the present would be accumulated and deducted from earnings to arrive at earnings for common stockholders.
Answer:
Marigold's 2021 earnings per common share should be $1.77
Explanation:
Given:
Net income for 2021: $1,135,000
Num. of common stck shares: 305,000
Cumulative preferred stock outstanding: 9600 shares of 6%, $100 par value.
The dividend to be accrued on preference shares=
9,600 * $100 * 6% = $57,600
Share outstanding will be:
305,000 * 2 = 610,000
Earnings available to common share-holders =
(Net income-Preferred dividend) =
$1,135,000 - $57,600 = $1,077,400
Earnings per share is calculated as:
$1,077,400 / 610,000 = $1.77
Therefore, Marigold's 2021 earnings per common share should be $1.77