To empower managers in a complex environment, a flat organizational structure with decentralized decision-making is preferred. Subordinate needs for direction influence whether a Theory X hierarchical or Theory Y flat structure is used. In stable environments, bureaucratic or hierarchical structures are typically chosen.
Explanation:If an organization performs nonroutine tasks in a complex environment and wishes to empower managers to make decisions quickly and implement them, a flat organizational structure would likely be chosen. Flat structures are characterized by fewer hierarchical levels, a broader span of control, and typically encourage decentralized decision-making which is essential for managers to respond with agility to the complexities of their environment. This approach aligns with the contemporary trend of breaking down traditional hierarchies in favor of promoting teamwork and collegial relationships within the workplace.
When subordinates' need for direction and supervision significantly influences an aspect of organizational structure, it is a reflection of whether an organization should be more aligned with Theory X, which suggests a more hierarchical, directive approach, or Theory Y, which supports employee autonomy within a flat structure. The relationship between leadership and subordinates varies with individual autonomy; those requiring more structure benefit from a well-defined work environment, while autonomous employees thrive under leaders who offer flexibility and empowerment.
For firms operating in a stable environment, a more traditional and structured organizational format, such as a bureaucratic or hierarchical structure, may be suitable. Such structures tend to have clear, defined roles and responsibilities, with established procedures that lend themselves to stability and consistency in operations.
Odessa Corporation had 20,000 shares of $2 par value common stock outstanding on July 1. On that day, the board of directors declared a 10% stock dividend when the market value of each share was $9. The stock dividend is to be distributed on July 20 to stockholders of record on July 10. The entry to record the issuance of the shares on July 20 is
Answer:
Debit Retained earnings $18,000
Credit Common stock $4,000
Credit paid in capital in excess of par value common stock $14,000
(To record declaration of 10% stock dividend)
Explanation:
The overall effect this declaration would has on the retained earnings would be determined using the current market value, meanwhile the effect on common stock would determined using the par value.
The appropriate entries above were determined by:
Stock dividend declared = 10% x 20,000 units x $9 = $18,000
The effect on common stock will be = 10% x 20,000 unit x $2 = $4,000
So, paid in capital in excess of par value common stock is $18,000 - $4,000 = $14,000.
Sandhill Company purchased $1280000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1329096 at an effective interest rate of 7%. Using the effective interest method, Sandhill Company decreased the Available-for-Sale Debt Securities account for the Carlin, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $5048 and $5192, respectively. At February 1, 2022, Sandhill Company sold the Carlin bonds for $1316800. After accruing for interest, the carrying value of the Carlin bonds on February 1, 2022 was $1320500. Assuming Sandhill Company has a portfolio of available-for-sale debt investments, what should Sandhill Company report as a gain (or loss) on the bonds
Answer:
-$3,700
Explanation:
Data provided as per the requirement of gain or loss on the bonds
Sale Price = $1,316,800
Book value of investment = $1,320,500
The computation of gain (or loss) on the bonds is shown below:-
Gain (Loss) on the bonds = Sale Price - Book value of investment
= $1,316,800 - $1,320,500
= -$3,700
Therefore, for computing the gain (or loss) on the bonds we simply applied the above formula and there is a loss on the bonds of -$3,700
Contract for Labor and Materials Galen, a purchasing agent for Ziff Construction Company, agreed orally with Houk Lumber to purchase 800 double- hung vinyl windows. The agreed price was $40,000. When Ziff Construction lost its financial backing, it had to cancel its plans for the houses it had planned to build. Houk sued to collect the purchase price.a. Was this a contract for sale?b. Was this a contract for labor and materials?c. Did the contract meet the Uniform Commercial Code requirement of writing?d. Is it likely that Houk would win the lawsuit?
Answer:
a. Was this a contract for sale?
If this contract had been written and signed by both parties, then it would have been a valid contract for sale. It included the purchase of a specific amount of goods at a specific price.
b. Was this a contract for labor and materials?
No, because it was specific about the price of the windows.
c. Did the contract meet the Uniform Commercial Code requirement of writing?
No it doesn't. UCC requires that all contracts above $500 are written. In the case of merchants that carry out regular operations, they must be able to provide some type of written proof, e.g. an email requesting materials.
d. Is it likely that Houk would win the lawsuit?
No, they will probably lose because they do not have a valid contract.
Answer:
Explanation:
a) It is not a contract for sale
Contract for sale is a legally binding agreement between a buyer and a seller where a buyer decides to buy an item at an agreed price. There is no enough evidence to justify a legal binding in the transaction.
b) It is not a contract for labor and materials.
In contract for labor and materials , there is a legally binding agreement between two parties where the buyer agrees to provide some services and the contractor provides the materials and labor,
C) It does not conform with the Uniform Commercial Code requirement of writing. For a contract to be binding , it must be written with all conditions stated and duly signed by two parties.
D)Houk would not win the law suit as oral contracts are not legally enforceable unless it meets various contact formation standards , which are missing in the scenario .
On March 1, Pimlico Corporation (a U.S.-based company) expects to order merchandise from a supplier in Sweden in three months. On March 1, when the spot rate is $0.44 per Swedish krona, Pimlico enters into a forward contract to purchase 695,000 Swedish kroner at a three-month forward rate of $0.460. At the end of three months, when the spot rate is $0.455 per Swedish krona, Pimlico orders and receives the merchandise, paying 695,000 kroner. What amount does Pimlico report in net income as a result of this cash flow hedge of a forecasted transaction
Answer and Explanation:
The computation is shown below:
a. As a premium expense
= ($0.460 - $0.44) × 695,000
= $13,900
b. As a difference of 3 months spot rate and spot rate
= ($0.455 - $0.44) × 695,000
= $10,425
The first one represents the premium expense for $13,900 and the second part represents the adjustment to the net income in a positive way
Pimlico Corporation will report a loss in net income amounting to $3,475. This is the additional cost incurred due to the forward rate being higher than the spot rate at the time of the merchandise transaction.
Explanation:On March 1, Pimlico Corporation entered into a forward contract to purchase 695,000 Swedish kroner at a three-month forward rate of $0.460 per Swedish krona to prepare for an expected merchandise order. The contract was aimed at hedging against potential currency fluctuations. When Pimlico Corporation completed the transaction after three months, the spot rate was $0.455 per Swedish krona. They paid 695,000 kroner as per the forward contract rate instead of the spot rate. To determine the amount to report in net income as a result of this cash flow hedge of a forecasted transaction, we compare the contracted rate with the spot rate at the time of the transaction.
The forward contract rate was $0.460, and the company would have paid 695,000 x $0.460 = $319,700 if it was settling at that rate. However, with the spot rate being $0.455, the merchandise would have cost 695,000 x $0.455 = $316,225 if paid at the spot rate. Therefore, the company paid an extra $319,700 - $316,225 = $3,475 due to the forward contract. This extra cost is what Pimlico Corporation must report as a loss in net income from the cash flow hedge.
Barrus Corporation makes 36,000 motors to be used in the productions of its power lawn mowers. The average cost per motor at this level of activity is as follows: Direct materials $9.50 Direct labor $8.50 Variable manufacturing overhead $3.45 Fixed manufacturing overhead $4.40 This motor has recently become available from an outside supplier for $23.95 per motor. If Barrus decides not to make the motors, none of the fixed manufacturing overhead would be avoidable and there would be no other use for the facilities. If Barrus decides to continue making the motor, how much higher or lower will the company's net operating income be than if the motors are purchased from the outside supplier? Assume that direct labor is a variable cost in this company.
Answer:
It is cheaper to make the product.
Explanation:
Giving the following information:
Barrus Corporation makes 36,000 motors to be used in the productions of its power lawnmowers. The average cost per motor at this level of activity is as follows: Direct materials $9.50 Direct labor $8.50 Variable manufacturing overhead $3.45
This motor has recently become available from an outside supplier for $23.95 per motor.
The fixed costs remain the same in both options, therefore, we will not take it into account for the decision making process.
We need to determine which option is the cheapest.
Produce in-house:
Total cost= 36,000*(9.5 + 8.5 + 3.45)= $772,200
Buy:
Total cost= 36,000*23.95= $862,200
It is cheaper to make the product.
If a corporation issued 25,000 shares of $1.00 par common stock for $2.85 per share. The appropriate journal entry for the IPO is:
a) Date Account
1-Jan Cash $25,000
Common Stock $25,000
b) Date Account
1-Jan Cash $71,250
Common Stock $71,250
c) Date Account
1-Jan Cash $25,000
Additional Paid in Capital $46,250
Common Stock $71,250
d) Date Account
1-Jan Cash $71,250
Additional Paid in Capital $46,250
Common Stock $25,000
Answer:
The correct answer is Option D.
Explanation:
Common stock is a share issued by a company to the public. The public enjoy dividend on their common stock when the company pays dividends.
Based on the question, the par value of the common stock is 25,000 shares x $1.00 = $25,000 while the total cash collected by the company would be 25,000 shares x $2.85 = $71,250 and the appropriate entries will be:
Debit Cash $71,250
Credit Additional Paid in Capital $46,250
Credit Common Stock $25,000
(Issuance of common stock)
The correct option is c) Date Account 1-Jan Cash $71,250 Common Stock $25,000 Additional Paid in Capital $46,250
To understand why option c) is correct, let's break down the transaction and the corresponding journal entry for the initial public offering (IPO) of the corporation's common stock.
The corporation issued 25,000 shares of common stock with a par value of $1.00 per share. The shares were sold at $2.85 per share. The total amount received from the issuance of the stock is calculated as:
Total amount received = Number of shares issued × Price per share
Total amount received = 25,000 shares × $2.85 per share
Total amount received = $71,250
This total amount received ($71,250) is the debit to the Cash account.
The credit side of the entry requires two accounts because the issue price per share ($2.85) is greater than the par value ($1.00). The accounts affected are Common Stock and Additional Paid in Capital.
The Common Stock account is credited for the par value of the shares issued:
Common Stock credit = Number of shares issued × Par value per share
Common Stock credit = 25,000 shares × $1.00 per share
Common Stock credit = $25,000
The excess amount received over the par value is credited to Additional Paid in Capital:
Additional Paid in Capital credit = Total amount received - Common Stock credit
Additional Paid in Capital credit = $71,250 - $25,000
Additional Paid in Capital credit = $46,250
Therefore, the correct journal entry to record the IPO transaction is:
Date Account 1-Jan Cash $71,250 Common Stock $25,000 Additional Paid in Capital $46,250
This entry reflects the receipt of cash, the issuance of common stock at par, and the recognition of the additional paid-in capital representing the excess of the issue price over the par value of the stock. Options a), b), and d) are incorrect because they either misstate the amounts credited to Cash, Common Stock, or Additional Paid in Capital, or they omit the Additional Paid in Capital account entirely.
Comfort Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 14 8 265 Deluxe 27 15 200 Overhead costs $ 73 comma 800 $ 82 comma 800 Assume a traditional costing system applies the overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)
Answer:
Overhead assigned to standard mode = $89,245.16
Explanation:
Under the traditional absorption costing system, overhead is assigned to units produced using the direct labour hours basis.
Overhead absorption rate = Budgeted overhead for the period/Budgeted labour hours
OAR = $(73,800 + 82,800) /(265 + 200) hours
= $156,600 /465
= $336.77 per hour
Overhead assigned to standard model= OAR × labour hours used
= $336.77 × 265
=$89,245.16
Final answer:
The total overhead costs assigned to the Standard model of office chairs are calculated to be $89,244.05, using the traditional costing system based on direct labor hours.
Explanation:
The total overhead costs assigned to the Standard model of office chairs by Comfort Corporation, when using a traditional costing system based on direct labor hours, requires the calculation of the overhead rate.
Since the total overhead costs are $73,800 + $82,800 = $156,600 and the total direct labor hours for both models are 265 (Standard) + 200 (Deluxe) = 465 hours, the overhead rate per direct labor hour is $156,600 / 465 = $336.77 per hour.
Hence, the total overhead costs assigned to the Standard model, which has 265 direct labor hours, would be 265 hours * $336.77/hour = $89,244.05, rounded to the nearest whole dollar.
Self-imposed budgets typically are:
A. not critical to the success of a budgeting program.
B. not subject to review by higher levels of management since to do so would contradict the participative aspect of the budgeting processing.
C. subject to review by higher levels of management in order to prevent the budgets from becoming too loose.
D. not subject to review by higher levels of management except in specific cases where the input of higher management is required.
Answer:
C. subject to review by higher levels of management in order to prevent the budgets from becoming too loose.
Explanation:
Self-imposed budgets typically are subject to review by higher levels of management in order to prevent the budgets from becoming too loose.
Self-imposed budget also known as the participative budget is a type of budget where individuals having responsibility for controlling costs, prepares their own budget estimates and present them to the top level of management for review.
If the government removes a tax on sellers of a good and imposes the same tax on buyers of the good, then the price paid by buyers will:A) increase and the price received by sellers will increase. B) increase and the price received by sellers will not change. C) not change and the price received by sellers will increase. D) not change and the price received by sellers will not change.
Answer:
D) not change and the price received by sellers will not change
Explanation:
If the government removes a tax on sellers of a good and imposes the same tax on buyers of the good, the net amount sellers receive doesn't change. The quantity of goods that are sold also remains the same.
So, price paid by buyers will not change and the price received by sellers will also not change
Cash Flows From Operating Activities Add to Net Income Deduct from Net Income Cash Flows From Investing Activities Cash Flows From Financing Activities Category 1. Common stock is issued for cash at an amount above par value Select an option 2. Inventory increased during the period Select an option 3. Depreciation expense recorded for the period Select an option 4. Building was purchased for cash Select an option 5. Bonds payable were acquired and retired at their carrying value Select an option 6. Accounts payable decreased during the period Select an option 7. Prepaid expenses decreased during the period Select an option 8. Treasury stock was acquired for cash Select an option 9. Land is sold for cash at an amount equal to book value Select an option 10. Patent amortization expense recorded for a period
Answer:
1. Common stock is issued for cash at an amount above par value - From Financing Activities
2. Inventory increased during the period - From Operating Activities
3. Depreciation expense recorded for the period - Add to Net Income
4. Building was purchased for cash - From Investing Activities
5. Bonds payable were acquired and retired at their carrying value - From Financing Activities
6. Accounts payable decreased during the period - From Operating Activities
7. Prepaid expenses decreased during the period - From Operating Activities
8. Treasury stock was acquired for cash - From Financing Activities
9. Land is sold for cash at an amount equal to book value - From Investing Activities
10. Patent amortization expense recorded for a period - Add to Net Income
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. Depreciation and other non-cash expenses deducted in the income statements are added back while the non-cash income such gain on asset are deducted from net income.
Henry Industries sells two products, Basic models and Deluxe models. Basic models sell for $42 per unit with variable costs of $30 per unit. Deluxe models sell for $50 per unit with variable costs of $40 per unit. Total fixed costs for the company are $75,400. Henry Industries typically sells four Basic models for every Deluxe model. What is the breakeven point in total units
Answer:
Break-even point= 6,500 units
Explanation:
The break-even point (BEP) is the quantity of each product to be sold such that the business makes no profit or loss.
The beak-even point can be determined as follows:
Break-even point = total fixed cost / average contribution per unit
Contribution per unit = selling price - variable cost
Contribution per unit:
Basic model = 42-30 = 12
Deluxe model = 50-40 = 10
Average contribution = ( 12×4) + (10×1)/(4+1)= 11.6
Break-even point = 75,400/11.6=6500
Break-even point =6,500 units
During 2012, Alvarez Manufacturing expected Job No. 26 to cost $336,000 in overhead, $400,000 in direct materials, and $240,000 in direct labor. Alvarez used direct labor cost as the activity base. Actual production required $840,000 of overhead, $825,000 of direct materials, and $330,000 of direct labor. Upon completion of the job, the amount transferred to Finished Goods is Select one: a. $1,617,000. b. $1,491,000. c. $ 976,000. d. $1,206,000. e. not able to be determined from the provided information.
Answer:
Amount transfer to finished goods is $1617000
So option (a) is correct answer
Explanation:
We have given expected values of cost.
Overhead cost = $336000
Direct material cost = $400000
Direct labor cost = $240000
And actual value of cost
Over head cost = $840000
Direct material cost = $825000
Direct labor cost = $330000
Overhead is equal to [tex]=\frac{336000}{240000}\times 330000=462000[/tex]
Therefore amount transfer to finished goods = $825000+$330000+$462000 = $1617000
So option (a) is correct
Assume that you purchased shares of High Flying mutual fund at a net asset value of $12.50 per share. During the year, you received dividend income distributions of $0.78 per share and capital gains distributions of $1.67 per share. At the end of the year, the shares had a net asset value of $13.87 per share. What was your after-"tax" rate of return on this investment
Answer:
30.56%
Explanation:
Net asset value of $13.87 per share
Flying mutual fund at a net asset value of $12.50
Dividend income distributions of $0.78 per share
Capital gains distributions of $1.67 per share
Hence;
R = ($13.87 - $12.50 + 0.78 + 1.67)/$ 12.50
R= 30.56%
Therefore your after-"tax" rate of return on this investment will be 30.56%
On December 1, 2020, Coronado Industries acquired new equipment in exchange for old equipment that it had acquired in 2017. The old equipment was purchased for $219000 and had a book value of $84600. On the date of the exchange, the old equipment had a fair value of $94000. In addition, Coronado paid $289000 cash for the new equipment, which had a list price of $389000. The exchange lacked commercial substance. At what amount should Coronado record the new equipment for financial accounting purposes? $383000. $289000. $373600. $389000
Answer:
The amount Coronado would record the new equipment for financial accounting purposes is $383,000
Explanation:
The new equipment would be recorded at fair value when purchased.The fair of the new equipment comprises of two components ,the fair value of old equipment exchanged plus the cash paid as the balance.
New equipment=$94,000+$289,000=$383,000
The correct option is the first of the options provided.
The list price is irrelevant as to reference was made to it by the seller when making the sale.
The dividend payout ratio measures the proportion of net income paid out in dividends. A company that pays out more than its earnings as dividends has a payout ratio greater than 100%. Under which of the following scenarios might this occur? a. A firm that is shrinking its asset base (by selling businesses) b. A cyclical firm during a recession year c. A company paying a special dividend (a one time dividend) d. All are correct
Final answer:
Under scenarios including a firm shrinking its asset base, a cyclical firm during a recession, or a company paying a special dividend, the dividend payout ratio can exceed 100%. These situations reflect strategic choices or economic conditions that prompt firms to distribute more to shareholders in dividends than they earned in net income.
Explanation:
The dividend payout ratio is a financial metric used to assess the proportion of a company's net income that is distributed to its shareholders as dividends. A payout ratio greater than 100% indicates that a company is paying out more in dividends than it earns. This could occur under several scenarios:
A company that is strategically downsizing may choose to return capital to shareholders through dividends, possibly resulting in a payout ratio above 100%. This scenario pertains to a firm that is shrinking its asset base by selling off parts of its business.
During an economic downturn, cyclical firms—those whose performance is closely linked to the economic cycle—might see reduced earnings. Nevertheless, these companies might maintain their dividend payments to keep investor confidence, possibly resulting in a payout ratio that exceeds earnings.
A company might issue a special dividend, oftentimes a one-time distribution, which could lead to a temporary payout ratio above 100%. This is often done to distribute excess cash to shareholders or signal confidence in the company's financial health.
In conclusion, all of the provided options (a. shrinking asset base, b. cyclical firm in recession, c. special dividend) are correct situations where a company might have a dividend payout ratio greater than 100%.
Variable costs of production $50 per unit Variable costs of sales and administration $25 per unit Fixed costs of production $100,000 per year Fixed costs of sales and administration $50,000 per year Assuming that the product is sold for $100 per unit, how many units must be produced and sold if the operating income is to be $25,000?
Answer:
Number of units to be produced and sold= 7,000 units
Explanation:
Giving the following information:
Variable costs of production $50 per unit
Variable costs of sales and administration $25 per unit
Fixed costs of production $100,000 per year
Fixed costs of sales and administration $50,000 per year
Selling price= $100 per unit
Desired profit= $25,000
To calculate the number of units to be produced and sold, we need to use the break-even point formula:
Break-even point in units= (fixed costs + desired profit)/ contribution margin per unit
Fixed costs= (100,000 + 50,000)= 150,000
Unitary variable cost= (50 + 25)= $75
Break-even point in units= (150,000 + 25,000) / (100 - 75)
Break-even point in units= 7,000 units
Answer:
7,000 units
Explanation:
An external auditor, such as a CPA firm’s accountant, may suspect some irregularities in a client firm’s accounting practices. In what ways might a CFE be of assistance?
A Certified Fraud Examiner (CFE) assists in detecting and investigating suspected irregularities in accounting practices that an external auditor may uncover. They specialize in forensic accounting, fraud investigation, and strengthening internal controls as well as ensuring compliance with regulatory requirements in industries like those regulated by the FDA.
An external auditor may suspect irregularities in a client firm's accounting practices. In such cases, a Certified Fraud Examiner (CFE) could be extremely valuable. CFEs specialize in fraud prevention, detection, and deterrence. They possess the skills to investigate and uncover fraudulent activities within financial statements and accounting practices. The CFE's expertise in forensic accounting enables them to conduct detailed fraud investigations, analyze financial records for signs of manipulation, and gather evidence of wrongdoing.
External auditors are tasked with assessing whether an organization's financial statements are a fair presentation of its financial position and they rely on internal controls and systems to prevent fraud and abuse. However, if fraud is suspected, a CFE can step in to perform a more in-depth analysis. CFEs can work with management to reinforce the company's internal controls and propose corrective actions to remediate any found weaknesses.
Moreover, in regulated industries, such as those overseen by the U.S. Food and Drug Administration (FDA), CFEs can ensure that audit procedures comply with regulatory requirements and assist in demonstrating a functioning and well-documented audit program to regulatory agencies.
Phillip is a real estate investor. He flips homes: He buys undervalued homes and sells them at a higher price later to make a profit out of the price difference (these kind of people are called flippers). He does not do any repairs to the houses he buys. In May 2020 he bought a house built in 1997 for $1,300,000 and sold it two months later for $1,500,000. Not bad.! The real estate agent got 6% of the sale price as her commission. As a result of these transactions, the 2020 GDP increased by
Answer:
$90,000
Explanation:
When we calculate GDP, its not included the value of the resale product because the value of the original product(house) already included in the year. Reselling item and commission added in GDP. Because Dealer gets commission for his service and this is like his income.
Included Amount in GDP = Sale Price × Agent Commission
= $1,500,000 × 6%
= $90,000
2020, GDP will increase by = $90,000
Veronica was recently diagnosed with a heart condition. Her doctor's bill was $4,200 for the diagnostics Her policy has a $250 deductible and a 80/20 coinsurance provision up to $10,000 and then the insurance pays 100% thereafter. In total, how much will Veronica pay for her diagnosis?
A) $10,000
B) $1,040
C) $4,200
D) $250
Answer:
Option (B).
Explanation:
According to the scenario, computation of the given data are as follows:
Doctor's bill = $4,200
Deductible amount = $250
Insurance company pays = 80%
Veronica pays = 20%
So, we can calculate the total amount veronica pay by using following formula:
Veronica Pay amount = [( Doctor's bill - Deductible amount ) × Veronica pays%] + Deductible amount
= [($4,200 - $250) × 20%] + $250
= $790 + $250
= $1,040
Coronado Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,836,000 on March 1, $1,236,000 on June 1, and $3,058,160 on December 31. Compute Coronado’s weighted-average accumulated expenditures for interest capitalization purposes.
Answer:
$2,251,000
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the Weighted Average Accumulated Expenditure by using following formula:-
Weighted Average Accumulated Expenditure = Expenditure × capitalization period
1 March to 31 December = 10 months
1 March = $1,836,000 × 10÷12 = $1,530,000
1 June to 31 December = 7 months
1 June = $1,236,000 × 7÷12 = $721,000
31 Dec. to 31 Dec. = 0 months
31 Dec. = $3,058,160 × 0 = 0
So, Total weighted-average accumulated expenditures = $1,530,000 + $721,000 + 0
= $2,251,000
Tunnel Incorporated provided the following information regarding its single product: Direct materials used $ 250 comma 000 Direct labor incurred $ 470 comma 000 Variable manufacturing overhead $ 120 comma 000 Fixed manufacturing overhead $100,000 Variable selling and administrative expenses $ 65 comma 000 Fixed selling and administrative expenses $20,000 The regular selling price for the product is $80. The annual quantity of units produced and sold is 43 comma 000 units (the costs above relate to the 43 comma 000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory. What would be the effect on operating income of accepting a special order for 9 comma 500 units at a sale price of $ 52 per product assuming additional fixed manufacturing overhead costs of $ 11 comma 000 are incurred? (Round any intermediary calculations to the nearest cent.)
Answer:
increase of $283,058
Explanation:
Consider the incremental Costs and Revenues arising from accepting a special order.
The company has excess capacity therefore, the current fixed overheads would be irrelevant (will have been incurred whether or not the special order is accepted. Also fixed expenses are irrelevant since regular sales will not be affected by this special order.
Sales (9,500× 52) 494,000
Direct materials (250,000/43,000×9,500) (55,233)
Direct labor (470,000/43,000×9,500) (103,837)
Variable manufacturing overhead (120,000/43,000×9,500) (26,512)
Variable selling and administrative (65,000/43,000×9,500) (14,360)
Additional fixed manufacturing overhead costs (11,000)
Net Income 283,058
Therefore an increase of $283,058 would be expected from accepting a special order.
3. Operating cash flow is often referred to as the lifeblood of a firm. The vaccine makers received cash up-front from the government for the stockpiled vaccines. Such cash would be reported to stakeholders (financial analysts, stockholders, lenders, etc.) in the operating cash flow section of the Statement of Cash Flows in the fiscal period of receipt. Given this, why would these pharmaceutical companies be so concerned about when the revenue related to this cash is recognized for income statement purposes? In your response, consider how recognized revenues are used by firm stakeholders.
Answer:
Explanation:
Advanced cash payment is treated as liabilities in the financial statements until they are earned.
The accrual method of accounting states that income are recorded when they are earned and expenses recorded when incurred.
In furtherance to this , income are earned when the risks and rewards are transferred to the seller.
This means that until the revenue for this advanced payment is earned , it can not be recorded as a sales revenue in the books of the Vaccine makers , and the profit for the period will be affected , even though it was a boost to the cash flow.
B) Recognized revenue depicts the sales turnover of a company which in turn tells a stakeholder how well a business is doing ,even though it not a sole measure of performance. We need to know that most stake holders may not have a good understanding of other measures of financial performance , however , majority understand sales figure.
It gives the stake holder an insight to the profitability of the business in a period.
Pharmaceutical companies are concerned about when revenue related to up-front cash is recognized for income statement purposes because recognized revenues impact financial performance and stakeholders' perception of the company's financial health and profitability.
Explanation:The pharmaceutical companies would be concerned about when the revenue related to the cash received up-front is recognized for income statement purposes because recognized revenues impact the financial performance of the company and can influence the perception of stakeholders. When revenue is recognized, it indicates that the company has earned income from its core operations, which is an important indicator of a company's financial health and profitability.
Timely recognition of revenue is crucial in assessing a company's ability to generate future cash flows, make investments, and repay obligations. For instance, if the revenue is recognized in a specific fiscal period, stakeholders can evaluate the company's operating cash flow and assess its ability to cover expenses, reinvest in the business, or distribute dividends to shareholders.
Furthermore, stakeholders, such as financial analysts or stockholders, rely on the income statement to understand a company's financial performance and make decisions regarding buying or selling the company's stock. If revenue recognition is delayed, it can affect the accuracy of financial analysis and can create uncertainties that impact stakeholders' perception of the company's financial position.
19. Fortuna Co. reports the following in its 2016 annual report: 2016 2015 2014 Sales $10,597,336 $10,265,536 $9,893,432 Accounts receivable 900,516 1,052,112 1,141,906 Required: Calculate the accounts receivable turnover and average collection period for 2016 and 2015. Comment on the findings. 20. On January 1 of the current year, Saturn, Inc. had the following accounts on its books: Accounts Receivable $240,000 (debit) Allowance for Doubtful Accounts 8,000 (credit) During this year, credit sales were $1,200,000 and collections on account were $1,160,000.
Answer:
For Fortuna Co.
Account receivables turnover ratio = net credit sales during the year / average accounts receivable
2015 = $10,265,536 / [($1,052,112 + $1,141,906)/2] = 9.3582016 = $10,597,336 / [($900,516 + $1,052,112)/2] = 10.854Average collection period = 365 days / accounts receivables turnover ratio
2015 = 365 days / 9.358 = 39 days2016 = 365 days / 10.854 = 33.63 daysSince the accounts receivable turnover ratio is higher for 2016, the average collection period will be shorter. This means that the company is collecting its outstanding credit faster in 2016 than 2015.
For Saturn, Inc.
Prepare general journal entries for the following transactions that occurred during the year:
(1) Wrote off N. Purcell’s account, $6,800.
Dr Allowance for doubtful accounts 6,800 Cr Accounts receivables 6,800(2) Wrote off J. Stein’s account, $2,400.
Dr Allowance for doubtful accounts 2,400 Cr Accounts receivables 2,400(3) J. Stein, who is in bankruptcy, paid $800 in final settlement of the account written off in transaction
first you must reverse the write off
Dr Accounts receivables 800 Cr Bad debt expense 800now you record the collection of the settlement amount
Dr Cash 800 Cr Accounts receivables 800(4) On December 31, estimated the year’s bad debts expense at 1% of credit sales.
balance for allowance for doubtful accounts = $8,000 - $6,800 - $2,400 = -$1,200 or $1,200 debit balance
total credit sales $1,200,000 x 1% (estimated bad debt) = $12,000 credit balance for allowance for doubtful accounts
the journal entry to record bad debt expense:
Dr Bad debt expense 13,200 Cr Allowance for doubtful accounts 13,200Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $1.45 at the end of the year. Its dividend is expected to grow at a constant rate of 9.00% per year. If Walter's stock currently trades for $21.00 per share, what is the expected rate of return
Answer:
The expected rate of return on the stock is 15.90%
Explanation:
The price of a stock that is expected to pay a dividend that grows at a constant rate forever can be calculated using the constant growth model of Dividend discount model (DDM) approach. The DDM values a stock based on the present value of the expected future dividends. The formula for price today under this model is,
P0 = D1 / r - g
Where,
D1 is the expected dividend for the next periodr is the required rate of returng is the growth rate in dividendsWe already know the D1, the price today and the growth rate. Plugging in these values in the formula, we can calculate the expected rate of return.
21 = 1.45 / (r - 0.09)
21 * (r - 0.09) = 1.45
21r - 1.89 = 1.45
21r = 1.45 + 1.89
r = 3.34 / 21
r = 0.1590 or 15.90%
Final answer:
The expected rate of return for Walter Utilities is 15.90%.
Explanation:
To calculate the expected rate of return for Walter Utilities, we need to use the Dividend Discount Model (DDM).
The DDM formula is: Expected Rate of Return = Dividend / Stock Price + Growth Rate
Using the given information, we can calculate the expected rate of return as follows:
Expected Rate of Return = $1.45 / $21.00 + 0.09 = 0.0690 + 0.09 = 0.1590 = 15.90%
Therefore, the expected rate of return for Walter Utilities is 15.90%.
Pauline Found Manufacturing, Inc., is moving to kanbans to support its telephone switching-board assembly lines. Determine the size of the kanban for subassemblies and the number of kanbans needed. Setup cost $30 Annual holding cost $125 per subassembly Daily production 25 subassemblies Annual usage 4 comma 000 (50 weeks times 5 days each timesdaily usage of 16 subassemblies) Lead time 10 days Safety stock 2 days' production Kanban container size = nothing units (round your response to the nearest whole number).
Answer:
Kanban container size = 73
Number of kanbans needed = 5
Explanation:
Kanban container size (Q):
Q = SQRT [(2 x D x S) / H x (1 - d/p)]
where,
D = Annual demand
S = Setup cost
H = Holding cost
d = Daily usage
p = Daily production
Putting the given values in the above formula,
CONTAINER SIZE = SQRT ((2 * ANNUAL DEMAND * SETUP COST) / (HOLDING COST * (1 - (DAILY USAGE / DAILY PRODUCTION))))
Q = SQRT [(2 x 4,000 x $30) / $125 x (1 - 16/25)]
Kanbans container size = 73 units (Rounding off to the nearest whole number)
NUMBER OF KANBANS = DEMAND DURING LEAD TIME + SAFETY STOCK / SIZE OF CONTAINER
K = ((16 * 16) + (4 * 25) / 73 = 5
On January 1, 2021, the Allegheny Corporation purchased equipment for $162,000. The estimated service life of the equipment is 10 years and the estimated residual value is $8,000. The equipment is expected to produce 350,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. 3. Units of production (units produced in 2021, 47,000; units produced in 2022, 42,000). (Round "Depreciation per unit rate" answers to 2 decimal places.)
Answer:
a. Depreciation expenses in 2021 is 15,400 and depreciation expenses in 2022 is also $15,400.
b. depreciation expenses in 2021 is 20,680, while depreciation expenses in 2022 is also $18,480.
Explanation:
Depreciable amount = Purchase price - Residual value = $162,000 - $8,000 = $154,000
a. Using a straight line method
Annual deprecation expense = $154,000 / 10 = $15,400
Therefore, depreciation expenses in 2021 is 15,400 and depreciation expenses in 2022 is also $15,400.
b. Using unit of production method
2021 depreciation expenses = (47,000 / 350,000) * $154,000 = $20,680
2022 depreciation expenses = (42,000 / 350,000) * $154,000 = $18,480.
Misty Mountain Shop is considering purchasing a new piece of equipment that would be used for 6 years. The cost savings from the equipment would result in an annual increase in cash flow of $200,000. The equipment will have an initial cost of $900,000 and a salvage value of $100,000 at the end of its useful life. If the discount rate is 8%, what is the approximate net present value of purchasing this new piece of equipment?
Answer:
NPV = $ 87,592.90
Explanation:
Net present value is calculated by taking the Present Day (discounted) value of all future Net Cash Flow based on the Business Cost of Capital and subtracting the Initial cost of the Investment.
Calculation of Net present value (Financial Calculator)
Period and Cash flow
CF0 = ($900,000)
CF1 = $200,000
CF2 = $200,000
CF3 = $200,000
CF4 = $200,000
CF5 = $200,000
CF6 = $300,000
Cost of Capital = 8%
NPV = $ 87,592.90
Jackie is the CEO of a struggling company. She has listened to her employees' concerns about where the corporation is going and has developed a new vision that she feels will help foster a common bond throughout the organization. Jackie then hosted a company-wide picnic where she delivered an inspiring speech about the new plans for the business, including her plans for more open communication between management and employees. After her speech, management and employees all participated in trust-building exercises, and then each employee had a one-on-one conversation with Jackie. Which perspective of leadership most closely resembles Jackie's actions
Answer:
Transformational
Explanation:
Transformational leadership is defined as leadership style that aims to cause a change in a social systems or individuals. It results in a positive change that turns followers into leaders.
Needs are identified, a vision is created to inspire change, this change is then executed together with committed followers.
In this scenario Jackie's had a vision of building a better bond between employees and management. Her actions resulted in management and employees all participating in trust-building exercises, and then each employee had a one-on-one conversation with Jackie.
Susan Inc. has been disappointed with the Willow Division's performance over the last few years and has decided that it would be best to sell the division. As of December 31, 2019 the Willow divison is considered to be held for sale. The division's loss from operations for 2019 was $1,800,000. The division's book value and fair value less cost to sell on December 31 were $3,080,000 and $2,320,000, respectively. What should the company report as loss on discontinued operations (before tax) on its 2019 income statement
Answer:
$2,560,000
Explanation:
impairment loss = division's book value - division's fair market value = $3,080,000 - $2,320,000 = $760,000
Assets held for sale are no longer depreciated, but they must be recorded at lower value between carrying cost and fair market value. Since the fair market value is lower than carrying value, then an impairment loss results.
loss on discontinued operations = loss from operations 2019 + impairment loss = $1,800,000 + $760,000 = $2,560,000
The ZZ Company wants to forecast their utility costs for next year (2017). There is a relationship between the number of welds and the number of applications of glue and the total cost of utilities for the business. For 20x6 the activity and utility cost for the various months are as follows:
Number of Welds Utilities Cost Number of Applications Utilities Cost
January 60 2200 January 60 1800
February 70 2600 February 70 2100
March 90 2900 March 90 2700
April 120 3300 April 120 3600
May 100 3000 May 100 3000
June 130 3600 June 130 3900
July 15 4000 July 150 4500
August 140 3600 August 140 4200
September 110 3100 September 110 3300
October 80 2500 October 80 2400
The forecasted activity for 20x7 is as follows:
Estimated Number of Welds Estimated Number of Applications
January 50 January 50
February 85 February 85
March 100 March 100
April 110 April 110
May 95 May 95
June 135 June 135
July 165 July 165
August 125 August 125
September 115 September 115
October 90 October 90
Required:
1. Calculate the total forecasted utility cost for 2017 for the following:a. The total utility cost for weldsb. The total utility cost for applicationsc. The total utility cost
Answer:
(a)Total utility cost of welds = $ 31400
(b)Total utility cost for application= $ 32100
(c) Total Utility cost = $ 63500
Explanation:
Using Hi Lo Method
Variable Cost per activity= cost at highest activity level- cost at lowest activity level/ Highest activity level- lowest activity level
Utility variable cost per weld= 4000-2200/150-60 = $20 per weld
Utility variable cost per application= 4500-1800/150-60 = $30 per application
Fixed utility cost of weld = 4000-(20*150)= $1000
Fixed utility cost of application = 4500-(30*150)= $0
From the attached table
Total utility cost of welds = $ 31400
Total utility cost for application= $ 32100
Total Utility cost = $ 63500