Answer:
D.
Explanation:
A Product Life Cycle is a cycle of growth or decline that a product goes through in a market. The cycle defines the business and sales measures of the product. The cycle is divided into four stages: Introduction, Growth, Maturity, and Decline.
The stage at which Merissa's company InstaCup Coffee is the Maturity Stage.
In the stage, the growth of the sales reaches its highest peak while the product reaches its maximum. At this stage, while the product reaches it peak the competition also begins to increase. The profits of Marissa's InstaCup coffee maker are increasing as well as the number of competitors.
So, from the given options the correct one is D.
In the growth stage of the product life cycle, the profits for the InstaCup coffee maker are increasing, and the number of competitors is growing.
Explanation:Considering that Marissa, a product manager, believes her company's InstaCup coffee maker is currently in the growth stage of the product life cycle, the profits for the InstaCup coffee maker should be increasing, and the number of competitors in the market is likely growing. During the growth stage, a product typically experiences rapid sales growth, increasing market acceptance, and expanding profits as more consumers are aware of and are willing to purchase the product. Additionally, seeing the success of the product, more competitors are enticed to enter the market with similar offerings. Hence, the correct answer to her statement is 'd. are increasing; is growing'.
On April 1, 2020,, Austere Corporation issued $300,000 of 10% bonds at 105. Each $1,000 bond was sold with 25 detachable stock warrants, each permitting the investor to purchase one share of common stock for $17. On that date, the market value of the common stock was $15 per share and the market value of each warrant was $2. Austere should record what amount of the proceeds from the bond issue as an increase in liabilities
Answer:
$300,000
Explanation:
Austere Corporation
Austere Corporation issued $300,000÷ $1,000 bond = $300
$300 x 25 detachable stock warrants = $7,500
7,500 x market value of each warrant was $2= $15,000
$300,000 x bond of 1.05 = $315,000
Hence;
$315,000 – $15,000
= $300,000
Therefore Austere should record $300,000 of the proceeds from the bond issue as an increase in liabilities
. Amanda Reiss had completed her residency in ophthalmology in Portland, Oregon, and was moving to Phoenix, Arizona, to start her practice. She began looking for office space and met with a leasing agent who showed her several complexes of medical suites. Dr. Reiss was ready to sign for one of them when the leasing agent turned to her and said, "Oh, by the way, you’re not one of those advertising doctors, are you? Because they don’t want that kind in any of my complexes." Has there been a violation of the antitrust laws?
Answer:
Ms. Amanda Reiss finalized her medical education and stirred to Phoenix, Arizona town and began searching for place to begin her clinic. She met agent who exhibited her many places appropriate for her clinic and once she was near to finalize the place in a complex, the rental representative turned to her and spoken that he expects that Amanda Reiss isn't of these publicizing doctors as the place she is going to rent out doesn’t favor such doctors.
Sherman just Act stances for the performance that forestalls prevalence of domination within the market; refusing of specific or cluster of vendors by different recognized vendors in the market; rejections of vendors to create a handle clients; price-fixing; preservation of selling values; separations of markets etc.
In the higher than stated case, there's a desecration of regulations of Sherman Action if the complex in which Ms. Amanda Reiss is near to book an area for starting her medical competence avoids doctors who promote for his or her medical competences. this can be conjointly as per Sherman regulations, prohibiting people or cluster of individuals from endeavor bound actions or establishing their mercantilism apply within the market could be a the violation of this regulation.
Answer:
Check the explanation
Explanation:
Yes. There have surely been some violations of the antitrust laws. For the purpose of regulating the trade and commerce, the antitrust law was passed which offers an economic freedom to ensure a competition that is free from any kind of restrictions that hinders the same.
However, the law certainly prohibits any malpractices and unfair trade methods during the process. Accordingly, if Amanda wished to start the practice of her own then such a leasing agent’s statement that the complex cannot entertain advertising doctors, is an indirect way of preventing Amanda from advertising her profession thereby interfering in the pursuance of her economic freedom. Hence a violation of the antitrust laws.
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 13,200Susan 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
Wolfpack Company uses job-order costing. At the end of the month, the following data was gathered: Job # Total Cost Complete? Sold? 803 $611 yes yes 804 423 yes no 805 805 no no 806 682 yes yes 807 525 yes no 808 250 no no 809 440 yes yes 810 773 yes no 811 267 no no 812 341 no no Wolfpack’s selling price is cost plus 50% for each of its jobs. What is the selling price of Job 806?
Answer:
$1,023
Explanation:
The computation of the selling price of Job 806 is given below:-
Total cost of JOB 806 = $682
Selling price of the cost = 100 + 50
= 150%
Selling price = Total cost of JOB 806 × Selling price of the cost Percentage
= $682 × 150%
= $1,023
Therefore for computing the selling price we simply multiply the total cost of JOB 806 with selling price of the cost percentage.
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.
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.
In 2020, Sandhill Co. reported a discontinued operations loss of $1160000, net of tax. It declared and paid preferred stock dividends of $120000 and common stock dividends of $355000. During 2020, Sandhill had a weighted average of 500000 common shares outstanding. As a result of the discontinued operations loss, net of tax, the earnings per share would decrease by
Answer:
$2.32
Explanation:
Data provided
Discontinued operations loss = $1,160,000
Common shares outstanding = 500,000
The computation of earnings per share is shown below:-
Decrease in earning per share due to loss in discontinued operations = Discontinued operations loss ÷ common shares outstanding
= $1,160,000 ÷ 500,000
= $2.32
Therefore for computing the decrease earning per share we simply appplied the above formula.
Answer:
The correct answer is 2.32.
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the decrease in earning per share due to loss in disconnected operations by using following formula:-
Decrease in Earning Per Share Due to Loss in Disconnected Operations = Discontinued Operation Loss ÷ Weighted Average Common Share Outstanding
By putting the value, we get
=$1,160,000 ÷ $500,000
= 2.32
YZ Corporation, located in the United States, has an account payable of 750-million yen payable in one year to a bank in Tokyo. The current spot rate is yen 116 per $ and the one year forward rate is yen 109 per $. The annual interest rate is 3 percent in Japan and 6 percent in the United States (assume the same lending and borrowing rates). The future (in one year) dollar cost of meeting this obligation using the money market hedge is:
Answer:
Dollar cost of the foreign payable = $ 6,653,833.28
Explanation:
The money market hedge would be set up as follows:
Step 1: Deposit in Yen (Tokyo)
Deposit an amount in Yen equal to
Amount to be deposited= Payable/(1+deposit rate)
= 750,000,000/(1.03)
= Yen 728,155,339.8
Step 2 : Convert the sum
Convert Yen 728,155,339.8 at the spot rate of yen 116 per $
Dollar amount = 728,155,339.8 / 116
= $ 6,277,201.205
Step 3: Borrow at home (US)
Borrow $ 6,277,201.205 for one year at an interest rate of 6%
Amount due (inclusive of interest) = Amount borrowed × 1.06
=$ 6,277,201.205 × 1.06
= $ 6,653,833.28
Dollar cost of the foreign payable = $ 6,653,833.28
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
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.
Suppose you purchase a 8-year AAA-rated Swiss bond for par that is paying an annual coupon of 8 percent and has a face value of 2,200 Swiss francs (SF). The spot rate is U.S. $0.66667 for SF1. At the end of the year, the bond is downgraded to AA and the yield increases to 10 percent. In addition, the SF depreciates to U.S. $0.74074 for SF1. a. What is the loss or gain to a Swiss investor who holds this bond for a year
Answer:
97.37 SF
Explanation:
Swiss bond purchase price = 1,000 SF
Swiss bond current value = PV at maturity + PV of coupon payments = (1000 / (1 + 0.10)^7) + (80 * (1 - (1 + 0.1)^-7) / 10% = 513.16 + 389.47 = 902.63 SF
Loss to investor who holds Swiss bond for a year = 1,000 - 902.53 = 97.37 SF
To determine the loss or gain for a Swiss investor when holding a bond that downgrades and undergoes currency depreciation, both interest payments and capital gains or losses must be considered. The investor will likely experience a loss due to the downgrade causing an increase in yield (and decrease in bond market value) and the currency depreciation. Calculating the exact loss requires additional information about the bond's market value after the downgrade.
Explanation:To determine the loss or gain to a Swiss investor who holds an 8-year AAA-rated Swiss bond over one year when there's a downgrade and currency depreciation involved, we need to calculate the total return on the bond by considering both the interest payments and the capital gain or loss. In this scenario, the bond has a face value of 2,200 Swiss francs (SF) and pays an annual coupon of 8 percent.
Initially, the bond is purchased for par and is later downgraded which causes the yield to increase to 10 percent. This results in the market value of the bond falling below its initial purchase price, as newer bonds with higher interest rates are more attractive to investors. Additionally, the depreciation of the SF versus the U.S. dollar, from $0.66667 to $0.74074 per SF1, affects the value of the coupon payments and redemption value when converted back to U.S. dollars.
Let's consider the investor's scenario:
At the start of the year, the investor receives a coupon payment which, when converted at the initial spot rate, amounts to SF(2,200 * 0.08) * $0.66667.At the end of the year, due to the bond's downgrade, its price falls to reflect the new yield of 10 percent, decreasing the market value of the bond.The investor incurs a capital loss on the bond due to the increased yield, and a currency exchange loss due to the depreciation of SF against USD.To calculate the exact figures, an investor would take into account the current market price of the bond (reflecting a 10% yield), the coupon payment received, the depreciation of the SF, and then summing these amounts to find the total return. However, without the exact market price of the bond post-downgrade, an accurate calculation is not possible in this case.
Overall, it is evident that the investor has likely experienced a loss, but the specific amount cannot be determined without additional information.
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Portions of the financial statements for Parnell Company are provided below. PARNELL COMPANY Income Statement For the Year Ended December 31, 2021 ($ in thousands) Revenues and gains: Sales $ 840 Gain on sale of building 12 $ 852 Expenses and loss: Cost of goods sold $ 320 Salaries 124 Insurance 44 Depreciation 127 Interest expense 54 Loss on sale of equipment 11 680 Income before tax 172 Income tax expense 86 Net income $ 86 PARNELL COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2021 and 2020 ($ in thousands) Year 2021 2020 Change Cash $ 142 $ 96 $ 46 Accounts receivable 332 212 120 Inventory 317 433 (116 ) Prepaid insurance 62 96 (34 ) Accounts payable 218 113 105 Salaries payable 110 89 21 Deferred tax liability 68 56 12 Bond discount 186 208 (22 ) Required: 2. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the indirect method.
Answer:
Prepare the cash flows from operating activities section as follows :
Cash Flows from Operating Activities
Income before tax 172,000
Adjustments of Non- Cash Items :
Gain on sale of building ( 12,000)
Depreciation 127,000
Loss on sale of equipment 11,000
Adjustments of Changes in Working Capital :
Increase in Accounts Receivables (120,000)
Decrease in Inventory 116,000
Decrease in Prepaid insurance 34,000
Increase in Accounts payable 105,000
Increase in Salaries Payable 21,000
Increase in Deferred tax liability 12,000
Decrease in Bond discount (22,000)
Net Cash flow from Operating Activities 444,000
Explanation:
Indirect Method Adjust the Net Income before tax with movements in working capital items and non-cash items included in income statements.
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
The mythical Hacker Microbrewery in Rosenheim, Germany, makes a brand of beer called Golden Eagle, which bottles and sells in cases to adjoining pubs and stores in Rosenheim. The setup cost of brewing and bottling a batch of beer is the US $1,800 per setup. The annual demand for the Golden Eagle brand of beer is 20,000 bottles. Hacker Microbrewery brews and bottles beer at a rate of 655 bottles per day. The brewery operates 250 days per year.
a. What is the economic production quantity (EPQ)?
b. What is the average inventory level for this optimum pro quantity? c. How many production setups would there be in a year?
d. What is the optimal length of the production run in days?
e. What would be the savings in annual inventory co can be reduced to $1,500 per setup?
Answer:
Explanation:
Annual demand (D) = 20000 units
Number of days per year = 250
Demand rate(d) = D/number of days per year = 20000/250 = 80 units
Production rate(p) = 655 units
Set up cost(S) = $1800
Holding cost (H) = $1.50
A) Optimum run size(Q) = sqrt of {2DS / H [1-(d/p)]}
= sqrt of {(2x20000x1800) /1.50[1-(80/655)]}
= Sqrt of [7200000/1.50(1-0.1221) ]
= sqrt of [72000000/(1.50 x 0.8779)]
= sqrt of (7200000/1.31685)
= Sqrt of 5467593.1199
= 2338 units
b) Maximum inventory ( I - max) = (Q/p) (p-d) = (2338/655)(655-80) = 3.5695 x 575 = 2052.46 or rounded off to 2052 units
Average inventory = I-max/2 = 2052/2 = 1026 units
C) Number of production setups per year = D/Q = 20000/2338 = 8.55 or rounded up to 6
d) optimal length of production run = optimal run size /production rate = 2338/655 = 3.56 or rounded up to 4 days
The final answers are:
a. EPQ = 2,047 bottles
b. Average inventory level = 1,024 bottles
c. Number of setups per year = 10
d. Optimal run length = 4 days
e. New EPQ = 1,868 bottles, and the savings in annual inventory holding costs are proportional to the reduction in the average inventory level.
To solve the problem, we will follow the steps outlined in the Economic Order Quantity (EOQ) model, which is closely related to the Economic Production Quantity (EPQ) model. The EOQ model is used to determine the optimal number of units to order per order that minimizes total inventory costs. The EPQ model extends this to production runs.
Given:
- Setup cost per batch, S = $1,800
- Annual demand for beer, D = 20,000 bottles
- Production rate, P = 655 bottles per day
- Number of operating days per year, T = 250 days
- Reduced setup cost, S' = $1,500 (for part e)
a. To find the Economic Production Quantity (EPQ), we use the formula:
[tex]\[ EPQ = \sqrt{\frac{2DS}{H}} \][/tex]
where H is the holding cost per bottle per year. However, we do not have the holding cost directly given. Instead, we can use the annual demand and the production rate to find the number of production runs needed per year and then calculate the EPQ.
First, we calculate the number of bottles produced per year:
[tex]\[ \text{Bottles produced per year} = P \times T \] \[ \text{Bottles produced per year} = 655 \times 250 \] \[ \text{Bottles produced per year} = 163,750 \][/tex]
Since the annual demand is 20,000 bottles, we can find the number of production runs needed per year:
[tex]\[ \text{Number of runs per year} = \frac{D}{P \times T} \] \[ \text{Number of runs per year} = \frac{20,000}{163,750} \] \[ \text{Number of runs per year} = \frac{20,000}{250} \] \[ \text{Number of runs per year} = 80 \][/tex]
Now, we can calculate the EPQ by finding out how many bottles are produced per setup:
[tex]\[ \text{Bottles per setup} = \frac{P \times T}{80} \] \[ \text{Bottles per setup} = \frac{163,750}{80} \] \[ \text{Bottles per setup} = 2,046.875 \][/tex]
Since we cannot produce a fraction of a bottle, we round this to 2,047 bottles per setup.
b. The average inventory level for this optimum production quantity is half of the EPQ:
[tex]\[ \text{Average inventory level} = \frac{EPQ}{2} \] \[ \text{Average inventory level} = \frac{2,047}{2} \] \[ \text{Average inventory level} = 1,023.5 \][/tex]
Again, rounding to the nearest whole number, we get 1,024 bottles.
c. The number of production setups in a year is the annual demand divided by the EPQ:
[tex]\[ \text{Number of setups per year} = \frac{D}{EPQ} \] \[ \text{Number of setups per year} = \frac{20,000}{2,047} \] \[ \text{Number of setups per year} \approx 9.77 \][/tex]
Since we cannot have a fraction of a setup, we round this to 10 setups per year.
d. The optimal length of the production run in days is the EPQ divided by the daily production rate:
[tex]\[ \text{Optimal run length} = \frac{EPQ}{P} \] \[ \text{Optimal run length} = \frac{2,047}{655} \] \[ \text{Optimal run length} \approx 3.12 \text{ days} \][/tex]
Since we cannot operate for a fraction of a day, we round this to 4 days.
e. To calculate the savings in annual inventory holding costs when the setup cost is reduced to $1,500, we first need to find the new EPQ with the reduced setup cost:
[tex]\[ \text{New EPQ} = \sqrt{\frac{2DS'}{H}} \][/tex]
Since we do not have the holding cost H, we will use the relationship between the setup costs and the EPQs to find the new EPQ. Let's denote the original EPQ as EPQ_old and the new EPQ as EPQ_new:
[tex]\[ EPQ_{old} = \sqrt{\frac{2DS}{H}} \] \[ EPQ_{new} = \sqrt{\frac{2DS'}{H}} \] \[ \frac{EPQ_{new}}{EPQ_{old}} = \sqrt{\frac{S'}{S}} \] \[ EPQ_{new} = EPQ_{old} \times \sqrt{\frac{S'}{S}} \] \[ EPQ_{new} = 2,047 \times \sqrt{\frac{1,500}{1,800}} \] \[ EPQ_{new} = 2,047 \times \sqrt{\frac{5}{6}} \] \[ EPQ_{new} = 2,047 \times 0.9129 \] \[ EPQ_{new} \approx 1,867.5 \][/tex]
Rounding to the nearest whole number, we get 1,868 bottles.
Now, we calculate the new average inventory level:
[tex]\[ \text{New average inventory level} = \frac{EPQ_{new}}{2} \] \[ \text{New average inventory level} = \frac{1,868}{2} \] \[ \text{New average inventory level} = 934 \][/tex]
The savings in annual inventory holding costs can be approximated by the difference in the average inventory levels times the holding cost per bottle per year. However, since we do not have the holding cost H, we cannot calculate the exact savings. We can only state that the savings will be proportional to the reduction in the average inventory level.
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
Kocher Steel typically achieves one of three production levels in any given year: 8 million pounds of steel, 10 million pounds of steel, or 16 million pounds of steel. In tracking some of its costs, Kocher Steel's controller discovered one cost that was $10 per pound no matter what the production level for the year. This is an example of a a. variable cost. b. fixed cost. c. semivariable cost. d. semifixed cost.
Answer:
Fixed cost
Explanation:
Variable costs are costs that change with change in the quantity of the goods or services produced by the business. For example the cost of raw materials.
Fixed costs are costs that do not change with change in the quantity of the goods or services produced by the business. For example interest payments.
In the given question, payment of $10 per pound has to be made no matter what the production level for the year, so this is an example of fixed cost
Delaware Company incurred the following research and development costs during 2021: Salaries and wages for lab research $ 400,000 Materials used in R&D projects 200,000 Purchase of equipment 900,000 Fees paid to third parties for R&D projects 320,000 Patent filing and legal costs for a developed product 65,000 Salaries, wages, and supplies for R&D work performed for another company under a contract 350,000 Total $ 2,235,000 The equipment has a seven-year life and will be used for a number of research projects. Depreciation for 2021 is $120,000. Required: Calculate the amount of research and development expense that Delaware should report in its 2021 income statement.
Answer:
Total R&D Expense = 1040000 USD to be reported in 2021 income statement.
Explanation:
First of all, let me arrange this data in a quite presentable way to facilitate you.
1. Salaries and wages for lab research = 400,000 USD
2. Materials Used in R&D projects = 200,000 USD
3. Purchase of equipment = 900,000 USD
4. Fees paid to third parties for R&D projects = 320,000 USD
5. Patent filing and legal costs for a developed product = 65,000 USD
6. Salaries, wages, and supplies for R&D work performed for another company under a contract = 350,000 USD
Total Cost = 2,235,000 USD
Note: Depreciation for 2021 is 120,000 USD.
Now, we have to list out different costs included in Research and Development Expenses to be included in the income statement.
For R&D expenses, we need to look for costs that are directly related to R&D and add up those costs to calculate the R&D Expense that Delaware should report in its 2021 income statement.
Following cost components will be added together for the Research and Development Expenses:
1. Depreciation For 2021 = 120,000 USD
2. Materials Used in R&D projects = 200,000 USD
3. Fees paid to third parties for R&D projects = 320,000 USD
4. Salaries and wages for lab research = 400,000 USD
Total R&D Expense = 120,000 + 200,000 + 320,000 USD + 400,000 USD
Total R&D Expense = 1040000 USD to be reported in 2021 income statement.
The Delaware Company should report $1,040,000 as research and development expense in its 2021 income statement.
Data and Calculations:
Salaries and wages for lab research = $400,000
Materials used in R&D projects = 200,000
Fees to third parties 320,000
Depreciation of Equipment for 2021 120,000
Total expenses for income statement $1,040,000
Thus, the amount of research and development expense that Delaware should report in 2021 is $1,040,000.
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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
What is the ending inventory for period 8 when the MPS is 0 units?
The ending inventory for period 7 was 89 units. The forecasted demand for period 7 was 120 units while, for period 8, it is 20 units. The customer order for period 8 is 25 units. Select one:
a. 54 units
b. 64 units
c. 89 units
d. 69 units
Answer:
Ending inventory = 64 units
Explanation:
Given:
Ending inventory for period 7 = 89 units
Forecast demand for period 7 = 120 units
Forecast demand for period 8 = 20 units
Customer order for period 8 = 25 units
MPS = 0 units
Computation:
Ending inventory = Ending inventory for last period + MPS - maximum from (Forecast demand for Current period ,Customer order for current period)
Ending inventory = 89 units + 0 - maximum from (20 , 25)
Ending inventory = 89 units -25 units
Ending inventory = 64 units
A taxicab company maintain accurate records of the expenses for one of its automobiles from January 1, 1996 through January 1, 2002. It is found from the records, the annual operating expense is $4,000. The maintenance and repair costs are $500 for 1996, $1,000 for year 1997, $1,500 for year 1998, and so on. What is the net present cost of owning and operating the automobile; the initial price was $35,000 and the interest rate is 9%
Answer:
$60,233
Explanation:
the net present cost of operating and owning a taxi:
purchase price = $35,000
1996 = ($4,000 + $500) / 1.09 = $4,128
1997 = ($4,000 + $1,000) / 1.09² = $4,208
1998 = ($4,000 + $1,500) / 1.09³ = $4,247
1999 = ($4,000 + $2,000) / 1.09⁴ = $4,251
2000 = ($4,000 + $2,500) / 1.09⁵ = $4,225
2001 = ($4,000 + $3,000) / 1.09⁶ = $4,174
total = $60,233
The net present cost is the present value of all the costs related to a project or investment. In this case, we must discount all the annual operating costs of the taxi by 9%.
Tasty Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Des Moines Cedar Rapids Total present value of net cash flow $712,500 $848,000 Amount to be invested (750,000) (800,000) Net present value $(37,500) $ 48,000 a. Determine the present value index for each proposal. Round your answers for the present value index to two decimal places. Des Moines Cedar Rapids Total present value of net cash flow $ $ Amount to be invested Present value index b. Which location does your analysis support
Answer:
First location 0.95
Second location is 1.06
My analysis is in support of the second location with a present value index
Explanation:
Present value index compares the present value of cash inflows a project with the actual amount invested initially on the project.
A present value in of greater than one suggest that the net present value outweighs the initial capital outlay.
First location:
initial investment was $750,000
present value of cash inflows is $712,500
present value index= $712,500/750,000=0.95
Second location:
initial investment was $800,000
present value of cash inflows is $848,000
present value index= $848,000/$800,000=1.06
Vaughn Manufacturing sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $75 and a selling price of $135. Q-Drive Plus has variable costs per unit of $90 and a selling price of $180. The weighted-average unit contribution margin for Vaughn is
1.$68.
2.$81.
3.$69.
4.$135.
Answer:
2. $81
Explanation:
According to the situation the computation of weighted-average unit contribution margin is here below:-
Q Drive Q Drive Plus
Selling price $135 $180
Variable cost $75 $90
Contribution margin
per unit $60 $90
Sales mix 30% 70%
$18 $63
The weighted-average unit contribution margin = Q Drive + Q Drive Plus
= $18 + $63
= $81
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%
Gabriella and Juanita form Luster Corporation. Gabriella transfers cash of $50,000 for 50 shares of stock, and Juanita transfers information concerning a proprietary process copyright (basis of zero and fair market value of $50,000) for 50 shares of stock. Group of answer choices Neither Gabriella nor Juanita will recognize gain on the transfer. Because Juanita is required to recognize gain on the transfer, Gabriella also must recognize gain. Juanita must recognize gain of $50,000. The transfers to Luster are fully taxable to both Gabriella and Juanita.
Answer: Neither Gabriella nor Juanita will recognize gain on the transfer.
Explanation:
Gabriella made no gain on the transfer as she transferred the same amount of cash the stock was worth and received no benefits.
Juanita also transferred an Intangible Asset that was worth the same amount of money as the shares that she bought for them meaning no benefits accrue either and therefore no gain is recognized.
Final answer:
Neither Gabriella nor Juanita will recognize gain on the transfer to Luster Corporation for stock since it is non-taxable under IRC Section 351, assuming they meet the control requirement after the exchange.
Explanation:
When Gabriella and Juanita form Luster Corporation and transfer assets for the corporation's stock, we need to consider tax implications. Under typical Internal Revenue Code provisions regarding contributions of property to a corporation in exchange for stock (IRC Section 351), if a person contributes property to a corporation and immediately afterward is in control of the corporation, they will not recognize a gain or loss on the transfer. In this case, both Gabriella and Juanita should not recognize any gain as long as Luster Corporation is considered a controlled corporation where they have control immediately following the exchange.
Gabriella's cash transfer of $50,000 for 50 shares and Juanita's transfer of information concerning a proprietary process with a fair market value of $50,000 for 50 shares would both not be taxable events, provided that the control requirement is met and both parties receive only stock of the corporation in return. Juanita's basis of zero in the copyright should not trigger a gain recognition as long as Section 351 applies. Therefore, the correct answer is that neither Gabriella nor Juanita will recognize gain on the transfer.
Happy Helpers Maid Service is calculating its standard direct labor rate. The direct labor rate is $12 per hour. Happy Helpers incurs payroll tax expense of 15% of the direct labor rate and incurs costs for sick-days and vacation days of $3 per hour. What is the standard rate per direct labor hour?
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.
Consider the following comments about absorption- and variable-costing income statements: I. A variable-costing income statement discloses a firm's contribution margin. II. Cost of goods sold on an absorption-costing income statement includes fixed costs. III. The amount of variable selling and administrative cost is the same on absorption- and variable-costing income statements. Which of the above statements is (are) true?
Statement I, II, and III about absorption-costing and variable-costing income statements are all true. Absorption costing includes fixed costs in COGS, variable costing shows contribution margin, and variable selling and administrative costs are the same under both methods.
Explanation:The student's question refers to the validity of statements concerning absorption-costing and variable-costing income statements and their components. To answer the question:
Statement I is true because a variable-costing income statement does indeed disclose a firm's contribution margin, which is sales revenue minus variable costs.Statement II is also true as the cost of goods sold (COGS) on an absorption-costing income statement includes both variable and fixed costs.Statement III is true because the amount of variable selling and administrative costs remains the same whether using absorption-costing or variable-costing since these costs are not affected by the method used to handle fixed manufacturing overhead.The short-run analysis of total costs breaks them down into fixed costs and variable costs, providing insights into a firm's cost behavior and pricing decisions. This breakdown is key in understanding the differences between absorption and variable costing methods on income statements.
Problem 11-3 Blair & Rosen, Inc. (B&R) is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients. A client who contacted B&R this past week has a maximum of $55,000 to invest. B&R's investment advisor decides to recommend a portfolio consisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund has a projected annual return of 12%, while the Blue Chip fund has a projected annual return of 9%. The investment advisor requires that at most $25,000 of the client's funds should be invested in the Internet fund. B&R services include a risk rating for each investment alternative. The Internet fund, which is the more risky of the two investment alternatives, has a risk rating of 5 per thousand dollars invested. The Blue Chip fund has a risk rating of 4 per thousand dollars invested. For example, if $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 5(10) + 5(10) = 100. Finally, B&R developed a questionnaire to measure each client's risk tolerance. Based on the responses, each client is classified as a conservative, moderate, or aggressive investor. Suppose that the questionnaire results classified the current client as a moderate investor. B&R recommends that a client who is a moderate investor limit his or her portfolio to a maximum risk rating of 250.
(a) Formulate a linear programming model to find the best investment strategy for this client. Let I = Internet fund investment in thousands B = Blue Chip fund investment in thousands If required, round your answers to two decimal places. I + B s.t. I + B Available investment funds I + B Maximum investment in the internet fund I + B Maximum risk for a moderate investor I, B 0
(b) Build a spreadsheet model and solve the problem using Solver. What is the recommended investment portfolio for this client? Internet Fund = $ Blue Chip Fund = $ What is the annual return for the portfolio? $
(c) Suppose that a second client with $55,000 to invest has been classified as an aggressive investor. B&R recommends that the maximum portfolio risk rating for an aggressive investor is 310. What is the recommended investment portfolio for this aggressive investor? Internet Fund = $ Blue Chip Fund = $ Annual Return = $
(d) Suppose that a third client with $55,000 to invest has been classified as a conservative investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 150. Develop the recommended investment portfolio for the conservative investor. Internet Fund = $ Blue Chip Fund = $ Annual Return = $
Answer:
a) Formulate a linear programming model to find the best investment strategy for this client as shown below:
Decision variable:
Let,
I = Internet fund investment in thousands
B = Blue Chip fund investment in thousands
Objective Function:
Max Z = 0.12I + 0.09B
Subject to the following constraints:
Investment amountt: I + B [tex]\leq[/tex] 25,000
Risk Rating: [tex]\frac{5}{1000} I[/tex] + [tex]\frac{4}{1000} B[/tex] ≤ 250 or 0.005I + 0.004B ≤ 250
Non-negativity constraint: I, B ≥ 0
Explanation:
See attached images for b, c and d
To solve this problem, we need to define it as a linear programming problem with various constraints based on the different risk levels assigned to each investor type. The solution requires the use of a solver function to identify the optimal investment amounts in the Internet Fund and Blue Chip fund for each investor type.
Explanation:First, let's define the variables: I is the amount invested in the Internet fund in thousands and B is the amount invested in the Blue Chip fund in thousands. The problem can be modeled as a linear programming problem with the following constraints:
I + B ≤ 55 (Total budget of $55,000 converted to thousands) I ≤ 25 (Not more than $25,000 in internet fund)5I + 4B ≤ 250 (Maximum risk level of 250 for a moderate investor)I, B ≥ 0 (Cannot invest a negative amount)The objective is to maximize the annual return which is given by 0.12I + 0.09B.
The optimal solution requires the use of solver function which is typically available in spreadsheet tools like Excel. By running the solver, you would get the optimal investment amounts in Internet and Blue Chip funds. The same procedure would apply for the aggressive and conservative investors with a different risk level (310 and 150 respectively).
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On January 10, Andrew Farley uses his Paltrow Co. credit card to purchase merchandise from Paltrow Co. for $17,500. On February 10, Farley is billed for the amount due of $17,500. On February 12, Farley pays $8,750 on the balance due. On March 10, Farley is billed for the amount due, including interest at 4% per month on the unpaid balance as of February 12. Prepare the entries on Paltrow Co.’s books related to the transactions that occurred on January 10, February 12, and March 10.
Answer and Explanation:
As per the data given in the question,
Entries on Paltrow Co.'s books :
Jan-10 Accounts receivable A/c Dr. $17,500
To Sales revenue A/c. $17,500
(Being sales on account is recorded)
Feb-12 Cash A/c Dr. $8,750
To Accounts receivable A/c. $8,750
(Being cash receipt on credit sales is recorded)
Mar-10 Accounts receivable A/c Dr. $350
To interest revenue A/c. $350
($17,500 - $8,750 = $8,750 × 4% = 350)
( Being due amount with interest is recorded)
Final answer:
On January 10, Paltrow Co. would record a debit to accounts receivable and a credit to Andrew Farley's accounts payable. On February 12, when Farley pays, the entry would be a debit to accounts receivable and a credit to cash. On March 10, when Farley is billed for the remaining balance due plus interest, the entry would be a debit to accounts receivable and interest expense, and a credit to interest revenue and accounts payable.
Explanation:
On January 10, the transaction would be recorded as a debit to Paltrow Co.'s accounts receivable and a credit to Andrew Farley's accounts payable. The journal entry would be:
Accounts Receivable $17,500
Accounts Payable $17,500
On February 12, when Farley pays $8,750, the entry would be a debit to accounts receivable and a credit to cash. The journal entry would be:
Cash $8,750
Accounts Receivable $8,750
On March 10, when Farley is billed for the remaining balance due plus interest, the entry would be a debit to accounts receivable and interest expense, and a credit to interest revenue and accounts payable. The journal entry would be:
Accounts Receivable $8,750
Interest Expense $350
Interest Revenue $350
Accounts Payable $8,750