Answer:
normal price $9.60 per unit
special order price $7.20 per unit
variable production costs = $5.00 per unit
additional export tariff = $7.20 x 15% = $1.08
Differential analysis (March 16)Not sell Sell Effect on income (sell)
Revenue per unit $0.00 $7.20 $7.20
- variable prod. costs ($0.00) ($5.00) ($5.00)
- variable export tariff ($0.00) ($1.08) ($1.08)
Income per unit $0.00 $1.12 $1.12
A differential analysis only considers additional revenues or costs generated by a specific project or special order.
Really Great Corporation manufactures industrialminussized landscaping trailers and uses budgeted machineminushours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:Budgeted output units42 comma 400 unitsBudgeted machineminushours10 comma 600 hoursBudgeted variable manufacturing overhead costs for 42 comma 400 units$ 349 comma 800Actual output units produced28 comma 800 unitsActual machineminushours used14 comma 400 hoursActual variable manufacturing overhead costs$ 403 comma 200What is the budgeted variable overhead cost rate per output unit?
Answer:
Allocated overhead per unit= $132 per unit
Explanation:
Giving the following information:
Budgeted machine-hours= 10,600 hours
Budgeted variable manufacturing overhead costs for 42,400 units $349,800
We need to calculate the estimated overhead rate, then allocate overhead to each unit:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 349,800/10,600
Estimated manufacturing overhead rate= $33 per machine hour
Each unit requires:
Machine hour per unit= 42,400/10,600= 4 machine hour
Allocated overhead per unit= 33*4= $132 per unit
Seaside Developments Inc. has $200,000 of no par value 4% cumulative preferred shares, and 12,000 shares of no par value common shares outstanding. In its first three years of operation, the company paid cash dividends as follows: Year 1: $8,000; Year 2: $18,000; and Year 3: $24,000.
The amount of dividends received by the preferred shareholders in year 2 was ____.
Answer:
$8,000
Explanation:
The computation of the amount of dividend received by the preferred shareholders in year 2 is shown below:
Annual preferred dividend = Par value of preferred stock × Dividend rate on preferred stock
= 200,000 × 4%
= $8,000
By multiplying the par value with the dividend rate we can get the amount of dividend received and the same is shown above
Use the information given below to answer the questions that follow.
True Nutri Inc. sells performance enhancing foods and beverages for athletes and health-conscious people. In a recent product development meeting, Mike suggested that True Nutri Inc. should acquire a new technology developed by One Health Corp. for infusing vitamin and mineral blends into food. He believed it would be easier to acquire the technology directly from One Health Corp. Justin felt that the method of infusing blends into food should be developed within True Nutri Inc. itself. He knows it may take longer but feels that the competitive advantage it would provide was worth the wait. Lara suggested that True Nutri Inc. should use its resources and work jointly with One Health Corp. to develop an entirely new product.
Based on the scenario, which method of acquiring technology does Justin favor?Question 1 options:
1-internal development
2-licensing
3-contracted development
4-franchising
5-research partnership
Answer:
1. Internal development.
Explanation:
From the write up, Justin felt that the method of infusing blends into food should be developed within True Nutri Inc. itself. He knows it may take longer but feels that the competitive advantage it would provide was worth the wait.
Based on the scenario, Justin favors internal development as a method of acquiring technology.
Internal development describes a growth strategy that focuses on developing an organization by making use of its own resources and capabilities.
Basically, internal development helps to expand businesses, boost productivity and sales, increase efficiency etc.
The project will require an initial investment of $20,000, but the project will also be using a company-owned truck that is not currently being used. This truck could be sold for $14,000, after taxes, if the project is rejected. What should Black Sheep Broadcasting do to take this information into account
Answer and Explanation:
Given that
Initial investment = $20,000
Sale value of the truck = $14,000
Based on the information given, the amount of initial investment should be increased by sale value of the truck i.e $14,000 as it denotes the opportunity cost i.e to be lost not the sunk cost
Therefore, in this case the amount of the initial investment should be increased by $14,000
On September 1, Tacht Company lent $ 82,000 to L. Kalra on a 90-day, 2% note.
1. Journalize for Tacht Company the lending of the money on September 1.
2. Journalize the collection of the principal and interest at maturity. Specify the date. Round interest to the nearest dollar.
Answer and Explanation:
The journal entries are shown below:
On Sep 1
Note receivable Dr $82,000
To Cash $82,000
(Being the lending of the money is recorded)
On Sep 1 to 90 days it is December 1
29 days in September + 31 days in October + 30 days in November
On December 1
Cash $82,410
To Interest revenue $410
To Note receivable $82,000
(Being the collection of the principal and interest at maturity is recorded)
The computation is shown below:
= $82,000 × 2% × 90 days ÷ 360 days
= $410
An employee earns $5,950 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The employee has $200 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $168 and contributes $84 to a retirement plan each month. What is the amount the employer should record as payroll taxes expense for the employee for the month of January?
Final answer:
The employer's payroll taxes expense for an employee earning $5,950 per month is $812.18 for January, which includes the employer's contributions to Social Security, Medicare, FUTA, and SUTA.
Explanation:
To calculate the payroll taxes expense the employer should record for the employee for the month of January, we must consider the employer's portion of the FICA taxes, federal unemployment tax (FUTA), and state unemployment tax (SUTA). The employee earns $5,950 per month, and based on the FICA tax rates provided, the employer must pay the same rates for Social Security (6.2%) and Medicare (1.45%) as the employee. For FUTA and SUTA, the rates are 0.6% and 5.4%, respectively, but only on the first $7,000 of an employee’s earnings. Therefore, the employer's payroll tax expense for January can be calculated as follows:
Social Security = 6.2% of $5,950 = $368.90Medicare = 1.45% of $5,950 = $86.28FUTA = 0.6% of $5,950 (Note: FUTA applies to the first $7,000 each year, so if this is the first month, we compute it on the full monthly earnings) = $35.70SUTA = 5.4% of $5,950 (Note: Same condition as for FUTA) = $321.30Adding these values together gives us the total payroll taxes expense for January:
$368.90 (Social Security) + $86.28 (Medicare) + $35.70 (FUTA) + $321.30 (SUTA) = $812.18
The employer should record a payroll taxes expense of $812.18 for the employee for the month of January.
The Heather Honey Company purchases honeycombs from beekeepers for $2.00 a pound. The company produces two main products from the honeycombs%u2014honey and beeswax. Honey is drained from the honeycombs, and then the honeycombs are melted down to form cubes of beeswax. The beeswax is sold for $1.50 a pound.
The honey can be sold in raw form for $3.00 a pound. However, some of the raw honey is used by the company to make honey drop candies. The candies are packed in a decorative container and are sold in gift and specialty shops. A container of honey drop candies sells for $4.40.
Each container of honey drop candies contains three quarters of a pound of honey. The other variable costs associated with making the candies are as follows:
Decorative container $0.40
Other ingredients 0.25
Direct labor 0.20
Variable manufacturing overhead 0.10
Total variable manufacturing cost $0.95
The monthly fixed manufacturing overhead costs associated with making the candies follow:
Master candy maker%u2019s salary $3,880
Depreciation of candy making equipment 400
Total fixed manufacturing cost $4,280
The master candy maker has no duties other than to oversee production of the honey drop candies. The candy making equipment is special-purpose equipment that was constructed specifically to make this particular candy. The equipment has no resale value and does not wear out through use.
A salesperson is paid $2,000 per month plus a commission of 5% of sales to market the honey drop candies.
The company had enjoyed robust sales of the candies for several years, but the recent entrance of a competing product into the marketplace has depressed sales of the candies. The management of the company is now wondering whether it would be more profitable to sell all of the honey rather than converting some of it into candies.
Required:
1.What is the incremental contribution margin per container from further processing the honey into candies?
2.What is the minimum number of containers of candy that must be sold each month to justify the continued processing of honey into candies?
The incremental contribution margin per container from further processing the honey into candies is $0.98.
The incremental contribution margin per container will be calculated thus:
= $4.40 - $0.95 - $4.4 × 5% - 3 × 3 / 4
= $0.98
On the other hand, the minimum number of containers of candy sold each month will be:
=($2,000 + $3,880) / $0.98
= 6,000 containers
Therefore, the minimum number of containers of candy that must be sold each month is 6000.
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Final answer:
To continue producing honey drop candies profitably, the Heather Honey Company needs an incremental contribution margin of $1.20 per container and must sell at least 8,467 containers monthly to cover fixed and variable costs.
Explanation:
The financial viability of continuing to produce honey drop candies in the face of competition, considering the incremental contribution margin per container and the minimum number of containers that must be sold to justify production. First, to calculate the incremental contribution margin per container of candy, we consider the selling price of the candies ($4.40) minus the cost of honey ($3.00 × 0.75 = $2.25) and the total variable manufacturing costs ($0.95) linked to the production of candies. This results in an incremental contribution margin of $1.20 per container. To determine the break-even point for candy production, considering both fixed and variable costs, we include the fixed manufacturing overhead ($4,280), the salary of the master candy maker ($3,880), and the salesperson's fixed compensation ($2,000). Knowing the fixed costs ($10,160) and the incremental contribution margin per container ($1.20), the Heather Honey Company must sell a minimum of 8,467 containers per month (rounded up from 8466.6667) to cover these costs and justify the continued processing of honey into candies.
Monty Corp. receives $180,000 when it issues a $180,000, 10%, mortgage note payable to finance the construction of a building at December 31, 2019. The terms provide for annual installment payments of $30,000 on December 31. Prepare the journal entries to record the mortgage loan and the first two payments. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
December 31, 2019
Dr. Cash $180,000
Cr. Mortgage Payable $180,000
December 31, 2020
Dr. Mortgage Payable $12,000
Dr. Interest Expense $18,000
Cr. Cash $30,000
December 31, 2021
Dr. Mortgage Payable $13,200
Dr. Interest Expense $16,800
Cr. Cash $30,000
Explanation:
Mortgage Loan
Installment of Mortgage loan includes the interest expense and principal value. As Cash of $180,000 received, so we need to debit the cash with this value. On the other hand there is a liability arise from this event. A mortgage payable account will be credited because it has credit nature.
First Loan Payment
Installment Payment = $30,000
Interest portion of Installment = $180,000 x 10% = $18,000
Interest portion of Installment = $30,000 - $18,000 = $12,000
First Loan Payment
Installment Payment = $30,000
Interest portion of Installment = ($180,000-12,000) x 10% = $16,800
Interest portion of Installment = $30,000 - $16,800 = $13,200
First Loan Payment
Installment Payment = $30,000
Interest portion of Installment = $180,000 x 10%
Interest portion of Installment = $18,000
Interest portion of Installment = $30,000 - $18,000
Interest portion of Installment = $12,000
Second Loan Payment
Installment Payment = $30,000
Interest portion of Installment = ($180,000-12,000) x 10%
Interest portion of Installment = $16,800
Interest portion of Installment = $30,000 - $16,800
Interest portion of Installment = $13,200
Date Account titles Debit Credit
Dec 31, 2019 Cash $180,000
Mortgage Payable $180,000
Dec 31, 2020 Mortgage Payable $12,000
Interest Expense $18,000
Cash $30,000
Dec 31, 2021 Mortgage Payable $13,200
Interest Expense $16,800
Cash $30,000
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Assume the following data for Jones Company for the current fiscal year: Beginning Inventory 10 units at $ 7 each March 18 purchase 15 units at $ 9 each June 10 purchase 20 units at $10 each October 30 purchase 12 units at $11 each On December 31, a physical count reveals 18 units in ending inventory. Under the weighted average method, the cost of ending inventory as reported on the balance sheet would be (rounded answer to the nearest dollar): Select one: a. $170 b. $167 c. $192 d. $142 e. $179
Answer:
a. $170
Explanation:
For computing the ending inventory first we have to determine the average cost per unit which is shown below:
= (Beginning inventory units × price per unit + purchase inventory units × price per unit + purchase inventory units × price per unit + purchase inventory units × price per unit) ÷ (Beginning inventory units + purchase inventory units + purchase inventory units + purchase inventory units)
= (10 units × $7 + 15 units × $9 + 20 units × $10 + 12 units × $11) ÷ (10 units + 15 units + 20 units + 12 units)
= ($70 + $135 + $200 + $132) ÷ (57 units)
= ($537) ÷ (57 units)
= $9.42 per unit
Now the ending inventory is
= $9.42 × 18 units
= $169.56 i.e $170
Many proposers in the ultimatum game offer half to the responder with whom they are paired. This behavior could be motivated by: Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. a. Fear that an unequal split might be rejected by a fair-minded responder.b. A desire to induce the responder to reject the offer.c. A strong sense of fairness on the part of the proposers.d.Unrestrained greed on the part of the proposers.
Answer: option C is the most correct answer. A strong sense of fairness on the part of the proposers.
Explanation: The ultimatum game is a type of game that is used to experiment the economy, which comprise of two players, which are the proposers and the responder. In this game, the proposer is given a sum of money, which he has to decide the amount which the responder will receive. The proposer will only want to share the amount in equal part, just to be fair to the responder in the game. It's either the responder accepts the money or rejects it.
In the textbook by Kathleen Allen, she describes a sample protection net for an integrated circuit by describing 15 different items that firms can use to protect its intellectual property. Three of these 15 items include product trademark, circuit patents, and software copyrights. Please list three other items that the semiconductor firm can use to further protect its intellectual property.
1. ________
2. ________
3. ________
Answer:
The answer to this question can be defined as follows:
Explanation:
In option 1, Design safety for IP- It is the enrollment of design gives its designer to its exclusive privilege to use and enable others to be using the layout, which includes the right to produce, offer, market, import, use, or store for such reasons, an item where the design is implemented. Its design wind safety results vary between 5 and 25 years from region to region. In option 2, Trade protection- A trade secret is a kind of industrial assets in the form of a non-publicly recognized and reasonably analyzable system, process, method, layout, tool, pattern, collection. It ensures a competitive edge because of its holders. Its proprietor should keep it private if a company's mystery is to be efficient. In option 3, Its technology License for making a production comes which other rivals can not use to produce a semi-driver of this kind.8. A company increased the selling price of its product from $1.00 to $1.10 a unit when total fixed costs increased from $400,000 to $480,000 and variable cost per unit remained unchanged. How will these changes affect the breakeven point? A. These changes will increase the breakeven point B. These changes will decrease the breakeven point C. These changes will not affect the breakeven point D. The effect cannot be determined
Answer:
C. These changes will not affect the breakeven point
Explanation:
The BEP which is the break even point is the point where the company's sales or revenue generated is equal to the cost incurred. As such, the BEP is the number of units that must be sold for the company to make neither a profit nor a loss.
Both sales and variable cost are dependent on the number of units sold.
The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.
As such, the net operating income/loss is the difference between the sales and the total costs
Let the number of units to break even be u, the variable cost per units be v
then before the increase,
u(1 - v) = 400,000
u = 400,000/(1 - v)
After the increase
u(1.1 - v) = 480,000
u = 480,000/(1.1 - v)
Assuming a random figure of $0.50 for the variable cost per unit, the units required to breakeven before the changes made
= 400000/(1-0.5)
= 800,000 units
After the changes made the units required to breakeven
= 480,000/(1.1 - 0.5)
= 480,000/0.6
= 800,000 units
Why should a time allotment for each topic be included on an agenda? a.Setting time allotments ensures that meeting participants can take a break after dealing with each agenda item. b.Restricting the time spent on each issue will prevent participants from getting sidetracked. c.Limiting the amount of time for each topic will result in all topics being covered within the meeting's timeframe.
Answer:
Limiting the amount of time for each topic will result in all topics being covered within the meeting's timeframe.
Explanation:
Time allocation when undertaking a project or a program is one of they key preliminary steps when preparing for an undertaking.
Proper time allocation ensures project success by ensuring all activities are carried out in a timely manner and within the scheduled project time.
In this scenario proper time allocation will result in all topics being covered within the meeting's timeframe.
This saves time used to cover all relevant topics, and also frees up time for the meeting participants to implement resolutions made from the meeting.
Renaissance Technologies (RenTech) is a good example of a hedge fund that has benefited from the ________________ to the financial sector. Select one: a. migration of low-level talent b. migration of high-level talent c. migration of entry-level MBA talent d. migration of large amount of cash
Answer:
The correct option is D) migration of high level talent
Explanation:
Renaissance Technologies (RenTech) is a good example of a hedge fund that has benefited from the migration of high level talent to the financial sector.
Known for their continued success and almost impenetrable fortress, Renaissance Technologies (RenTech) continues to thrive with a net worth of US$ 110 billion as of June 30, 2019.
Their mode of operation is uncommon and their human resource was drawn from a bunch of mathematicians and very skilled scientists.
This hedge fund specializes in systematic trading using quantitative models derived from mathematical and statistical analyses.
Their success is not unconnected with the migration of high level talent into the financial sector.
As applied to mortgage loans, which of the following statements is FALSE? By increasing the number of payments per year you increase your effective borrowing rate. Advertised rates are annual percentage rates. A spreadsheet uses the periodic interest rate, not the annual percentage rate. You can find a monthly payment by dividing the annual payment by 12.
Answer:
The statement that is false about mortgage loans is Advertised rates are annual percentage rates.
Explanation:
Mortgage loan refers to a loan that uses real estate as collateral to receive cash upfront to be redeemed after the loan repayment is completed. if the loan is not remitted as at when due , the lender lays claim to the real estate property.
By increasing the number of payments per year you increase your effective borrowing rate.
When you use a spreadsheet to calculate your interest rates, it uses the periodic interest rate, not the annual percentage rate.
You can find a monthly payment by dividing the annual payment by 12.
However, advertised interest rate are not the same as your loan's annual percentage rate (APR) because other charges like mortgage insurance, closing costs, discount points and loan origination fees apply.
The payroll register of Heritage Co. indicates $3,900 of social security withheld and $975 of Medicare tax withheld on total salaries of $65,000 for the period. Earnings of $10,000 are subject to state and federal unemployment compensation taxes at the federal rate of 0.8% and the state rate of 5.4%.
Provide the journal entry to record the payroll tax expense for the period. If an amount box does not require an entry, leave it blank.
a. Payroll Tax Expense
b. Social Security Tax Payable
c. Medicare Tax Payable
d. State Unemployment Tax Payable
e. Federal Unemployment Tax Payable
Cullumber, Inc. produces three types of balloons—small, medium, and large—with the following characteristics: Small Medium Large Selling price per unit $6 $8 $10 Variable cost per unit 3 5 6 Contribution margin per unit $3 $3 $4 Machine hours per unit 1 2.4 3 Demand in units 600 1,190 880 The company has only 2,000 machine hours available each month. How many units of each type of balloon should the company make to maximize its total contribution margin? (Round answers to 0 decimal places, e.g. 5,275.)
Answer: Small Balloons - 600 units
Medium Balloons - 0 units
Large Balloons - 467 units
Explanation:
To solve this question, the Contribution margin per hour must be ascertained to find out which product is manufactured more efficiently in relation to machine hours.
Small Balloon.
= Contribution margin per unit/ Machine hours per unit
= 3/1
= 3
Medium Balloon.
= Contribution margin per unit/ Machine hours per unit
= 3/2.4
= 1.25
Large Balloon
= Contribution margin per unit/ Machine hours per unit
= 4/3
= 1.33
From the above we can rank the most efficient.
Efficiency Ranking
Small Balloon - 1
Large Balloon - 2
Medium - Balloon 3
As a rule, it is better that a company produces goods it is more efficient at first,
Small Balloons will be produced first and have a demand of 600 units.
With a cost of 1 unit therefore, producing 600 would be,
= 600 * 1
= 600 machine hours.
With Small Balloons taking 600 hours and with a limit of 2,000 hours we are left with,
= 2,000 - 600
= 1,400 hours.
Next in production is Large Balloons at a demand of 880 units with each unit costing $3,
= 880 * 3
= 2,640 machine hours
Seeing as we only have 1,400 machine hours left all these hours will be converted to used for Large Balloons which means the following number of units will be produced,
= 1,400/3
= 466.67
= 467 units.
The Company should produce in the following order to maximise its total contribution margin.
Small Balloons - 600 units
Medium Balloons - 0 units
Large Balloons - 467 units
All of the following are the primary goals of research ethics committees, EXCEPT:
A) Protect the 'human subjects' who will participate in observational or experimental studies or whose personal information will be examined by researchers
B) Oversee research carried out on animals
C) Legally protect the researcher's institution from the liability that could occur as a result of research activities
D) Protect researchers by preventing them from engaging in activities that could cause harm
Answer: Oversee research carried out on animals
Explanation: Research ethics committees is a body responsible for the critical evaluation of research proposals to ensure that they meet the highest ethical standard.
One of their primary goals is to protect the 'human subjects' who will participate in observational studies. Their primary goal is not to look after research carried out on animals.
On January 1, 2021, Harrington, Inc. signed a 10-year noncancelable lease for a heavy duty drill press from Jones Equipment Inc. The lease stipulated annual payments of $260,000 starting at the beginning of the first year, with title passing to Harrington at the expiration of the lease. Harrington treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Harrington uses straight-line amortization for all of its plant assets. Aggregate lease payments were determined to have a present value of $1,668,591, based on implicit interest of 9%. In its 2021 income statement, what amount of amortization expense should Harrington report from this lease transaction
Answer: $126,773.19
Explanation:
First the $260,000 must be subtracted from the present value.
= 1,668,591 - 260,000
= $1,408,591
This was done because the $260,000 was paid in the beginning of the year and has thus reduced the liability.
The amortization expense will therefore be,
= 1,408,591 * 0.09
= $126,773.19
In its 2021 income statement, Harrington should report $126,773.19 as amortization expenses.
In 2018, borland semiconductors entered into the transactions described below. In 2015, borland had issued 215 million shares of its $1 par common stock at $47 per share.
Required: Assuming that Borland retires shares it reacquires, record the appropriate journal entry for each of the following transactions:
a. On january 2, 2018, borland reacquired 11 million shares at $45.00 per share.
b. On march 3, 2018, borland reacquired 11 million shares at $50 per share.
c. On august 13, 2018, borland sold 1 million shares at $55 per share.
d. On december 15, 2018, borland sold 2 million shares at $50 per share.
Answer:
Kindly check attached picture
Explanation:
In 2018, borland semiconductors entered into the transactions described below. In 2015, borland had issued 215 million shares of its $1 par common stock at $47 per share.
Required: Assuming that Borland retires shares it reacquires, record the appropriate journal entry for each of the following transactions:
a. On january 2, 2018, borland reacquired 11 million shares at $45.00 per share.
b. On march 3, 2018, borland reacquired 11 million shares at $50 per share.
c. On august 13, 2018, borland sold 1 million shares at $55 per share.
d. On december 15, 2018, borland sold 2 million shares at $50 per share.
Kindly check attached picture for detailed explanation
To record the appropriate journal entry for each transaction, Borland must understand the concept of stock retirement and follow the correct accounting entries. The entries involve debiting the Treasury Stock account and crediting the Cash account. Transactions a to d are explained with the respective journal entries.
Explanation:To record the appropriate journal entry for each transaction, we need to understand the concept of stock retirement. When a company buys back its own shares, it is considered a retirement of shares. The journal entry for the retirement of shares includes debiting the Treasury Stock account and crediting the Cash account. Let's go through each transaction:
a. On January 2, 2018, Borland reacquired 11 million shares at $45.00 per share. The journal entry would be: Debit Treasury Stock for $495 million and credit Cash for $495 million.
b. On March 3, 2018, Borland reacquired 11 million shares at $50 per share. The journal entry would be: Debit Treasury Stock for $550 million and credit Cash for $550 million.
c. On August 13, 2018, Borland sold 1 million shares at $55 per share. The journal entry would be: Debit Cash for $55 million and credit Treasury Stock for $55 million.
d. On December 15, 2018, Borland sold 2 million shares at $50 per share. The journal entry would be: Debit Cash for $100 million and credit Treasury Stock for $100 million.
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Constant growth: Moriband Corp. paid a dividend of $2.15 yesterday. The company's dividend is expected to grow at a steady rate of 5 percent for the next several years. If stocks of companies like Moriband require a rate of return of 15 percent, what should be the market price of Moribund stock?
Answer:
The market price of moribund stock is $22.58
Explanation:
Let,
Dividend = D0 = $2.15
Growth rate = g = 5%
rate of return = R = 15%
Market price = P0 = D1 ÷ (R - g)
= D0 (1 + g) ÷ (R - g)
= $2.15(1 + 0.05) ÷ 0.15 - 0.05
= $2.15(1.05) ÷ 0.1
= $2.2575 ÷ 0.1
= $22.575
Approximately $22.58
The market price for moribund stock is $22.58
Answer:
$22.6
Explanation:
Dividend Valuation method is used to value the stock price of a company based on the dividend paid, its growth rate and rate of return. The price is calculated by calculating present value of future dividend payment.
As per given data
Dividend = $2.15
Growth rate = 5%
Discount rate = 15%
Formula to calculate the value of stock
Price = Dividend ( 1 + growth rate ) / ( Rate or return - growth rate )
Price = $2.15 ( 1 + 5% ) / ( 15% - 5% )
Price = $2.15 (1.05) / (0.15 - 0.05 )
Price = $2.26 / 0.10
Price = $22.6
Robert Company sold inventory to an Australian company for 50,000 Australian dollars on April 1, 20X0 with settlement to be in 60 days. On the same date, Robert entered into a 60-day forward contract to sell 50,000 Australian dollars at a forward rate of $1.164 in order to manage its exposed foreign currency receivable. The forward contract is not designated as a hedge. The spot rates were as follows:
April 1 1 Australian dollar = $1.167
May 31 1 Australian dollar = $1.16
Based on the preceding information, had Robert not used the forward exchange contract, what would have been the foreign currency transaction gain or loss for the year?
a. Gain of $200
b. Gain of $150
c. Loss of $350
d. Loss of $200
Answer:
c. Loss of $350
Explanation:
Sales in terms of AUD 50,000.00
Spot Rate on Apr 01 per AUD 1.1670
Total Payment that is to be received on April 1 = 50,000*1.167 58,350.000
The Spot Rate on May 31 per AUD 1.1600
Total Payment to be received on May 31 = 50,000×1.16 =58,000.0000
Therefore,
Loss Suffered due to payment received after 60 Days in $ = 58,350 - 58,000 350.00
You buy a seven-year bond that has a 5.75% current yield and a 5.75% coupon (paid annually). In one year, promised yields to maturity have risen to 6.75%. What is your holding-period return? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer :
Holding period return = 0.95%
Explanation :
As per the data given in the question,
Years of maturity = 7
Coupon rate = 5.75%
Current yield = 5.75%
Per value of bond = $1000.00
Coupon payment = Par value × Coupon rate
=1,000 ×5.75%
= $57.50
Current yield = Coupon payment ÷ price of bond
0.575 = $57.50 ÷ Price per bond
Price per bond = $1,000
In 1 year the yield to maturity increases to = 6.75%
Price of bond after 1 year = $951.96
The formula is shown below:
=-PV(RATE;NPER;PMT:FV:0)
where
Rate = 6.75%
FV = $1,000
PMT = $57.5
NPER = 7 - 1 = 6 years
Please find the attachment below:
Holding period return = (Price of bond after one year - Current bond price + Coupon payment) ÷ Current bond price
= 0.95%
An outside supplier has offered to produce and sell the part to the company for $30.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition to the facts given above, assume that the space used to produce part J56 could be used to make more of one of the company's other products, generating an additional segment margin of $13,000 per year for that product. What would be the impact on the company's overall net operating income of buying part J56 from the outside supplier and using the freed space to make more of the other product
Complete question:
Rama Corporation is presently making part J56 that is used in one of its products. A total of 4,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity:
Direct materials____ $1.80 per unit
Direct labour_______$7.80 per unit
Variable overhead__ $7.90 per unit
Supervisor's salary__$2.30 per unit
Depreciation of special equipment________$6.90 per unit
Allocated general overhead_________$6.60 per unit
An outside supplier has offered to produce and sell the part to the company for $30.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition to the facts given above, assume that the space used to produce part J56 could be used to make more of one of the company's other products, generating an additional segment margin of $13,000 per year for that product.
What would be the impact on the company's overall net operating income of buying part J56 from the outside supplier and using the freed space to make more of the other product
Answer:
The company's net operating income will decline by $31,000 per year, if they buy part J56 from the outside supplier, despite using the freed space to make more of other product.
Explanation:
Given:
Total produced a year = 4000 units
Relevant cost if Rama corporation produces the part internally =
(Direct material) $1.80 + (Direct labour) $7.8 + (Variable overhead) $7.90 + (Supervisor's salary) $2.30 = $ 19.80 per unit.
The total cost of production will be=
$19.80 * 4000
= $79,200
If they buy from the external supplier, the total cost would be=
$30.80 * 4000
= $123,200
Since they would generate $13,000 producing another product using the freed space. The net cost of buying from the supplier will be:
$123,200 - $13,000
= $110,200
The company will make a loss of $31,000 ($79,200 - $110,200) if they buy part J56 from the outside supplier, despite using the freed space to make more of other product.
Differential Analysis for a Lease or Buy Decision Sloan Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $125,500. The freight and installation costs for the equipment are $1,600. If purchased, annual repairs and maintenance are estimated to be $2,500 per year over the five-year useful life of the equipment. Alternatively, Sloan can lease the equipment from a domestic supplier for $30,000 per year for five years, with no additional costs. Prepare a differential analysis dated December 3 to determine whether Sloan should lease (Alternative 1) or purchase (Alternative 2) the equipment. Hint: This is a "lease or buy" decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner. If an amount is zero, enter "0". Use a minus sign to indicate a loss.
Answer:
Alternative 2 (purchase equipment) should be selected because it reduces costs by $10,400.
Explanation:
Alternative 1 (lease):
less price per year $30,000 x 5 years = $150,000
Alternative 2 (purchase):
initial investment = $125,500 + $1,600 = $127,100
maintenance cost per year = $2,500 x 5 years = $12,500
Differential Analysisalternative 1 alternative 2 differential
lease purchase effect
Revenues $0 $0 $0
Costs:
Purchase price $0 -$125,500 -$125,000
Freight and installation $0 -$1,600 -$1,600
Repair and maintenance $0 -$12,500 -$12,500
(5 years)
Lease -$150,000 $0 $150,000
(5 years)
Income / loss -$150,000 -$139,600 $10,400
Alternative 2 (purchase equipment) should be selected because it reduces costs by $10,400.
Wholemark is an Internet order business that sells one popular New Year's greeting card. The cost of the paper on which the card is printed is $0.10 per card, and the cost of printing is $0.42 per card. The company receives $2.40 per card sold. Since the cards have the current year printed on them, unsold cards have no salvage value. Based on past data, the number of customers from Los Angeles is normally distributed with a mean of 2,500 and a standard deviation 600. What is the optimal production quantity for the card for Los Angeles, if Wholemark only makes a one-time production for this area?
Answer:
Optimal production quantity = 2970
Explanation:
As per the data given in the question,
Cost of card (c) = $0.10 + $0.42 = $0.52
Selling price (p) = $2.40
Salvage value (v) = 0
So,Critical ratio (Z)
= (p - c) ÷ (p - v)
= ($2.40 - $0.52) ÷ ($2.40 - 0)
=0.7833
Z(0.7833) = NORMSINV (0.7833)
Z(0.7833) = 0.783387
n = no. of city = 1
μ = n × mean demand = 1 × 2,500 = 2,500
Optimal production quantity = μ + Z (0.7833) × standard deviation
= 2,500 + 0.783387 × 600
= 2970.03
= 2970
We simply applied the above formula
Swifty Inc. has three divisions which are operated as profit centers. Actual operating data for the divisions listed alphabetically are as follows. Compute the missing amounts. Operating Data Women’s Shoes Men’s Shoes Children’s Shoes Contribution margin $304,020 $ (3) $202,680 Controllable fixed costs 112,600 (4) (5) Controllable margin (1) 101,340 106,970 Sales 675,600 506,700 (6) Variable costs (2) 360,320 281,500 Prepare a responsibility report for the Women’s Shoes Division assuming (1) the data are for the month ended June 30, 2020, and (2) all data equal budget except variable costs which are $5,630 over budget. SWIFTY INC. Women’s Shoe Division Responsibility Report For the Month Ended June 30, 2020 Difference Budget Actual Favorable Unfavorable Neither Favorable nor Unfavorable $ $ $ $ $ $
Answer:
(1) Controllable margin $ 191420
(2) Variable Costs$ 371580
(3) Contribution Margin $ 146380
(4)Controllable fixed costs $45,040
(5) Controllable fixed costs $ 95710
(6) Sales $ 484,180
Explanation:
The workings have been done to show the results.
Swifty Inc.
Women’s Shoes Men’s Shoes Children’s Shoes
Sales 675,600 506,700 (6) $ 484180
Variable costs (2)$ 371580 360,320 281,500
C. Margin $304,020 $ (3)146380 $202,680
(2) Variable Costs = Sales - Contribution Margin= 675600- 304020=
$ 371580
(3) Contribution Margin= Sales - Variable Costs = 506,700-360,320 = $ 146380
(6) Sales = Contribution Margin + Variable Costs= 281,500 +$202,680 = $ 484,180
Swifty Inc.
Women’s Shoes Men’s Shoes Children’s Shoes
Sales 675,600 506,700 $ 484180
Variable costs $ 371580 360,320 281,500
C. Margin $304,020 $ 146380 $202,680
Controllable
fixed costs 112,600 (4) $45,040 (5) $ 95710
Controllable margin (1) $ 191420 101,340 106,970
(1) Controllable margin=Contribution Margin-Controllable fixed costs
= $ 304,020 -112,600 =$ 191420
(4) Contribution Margin- Controllable margin=Controllable fixed costs
$ 146380 - 101,340 = $45,040
(5) Contribution Margin- Controllable margin=Controllable fixed costs
$202,680 - 106,970 = $ 95710
You are an economic consultant and have been contacted by an official from a developing country. She tells you that her country’s economy is currently growing at 2 percent per year. She asks you how long it will take for her country’s economy to double in size; you tell her it will take 35 years. She then asks you what the government can do to shorten the time necessary to double the size of the country’s economy. What should you tell her?
Answer:
Encourage the development of growth-positive institutions.
Explanation:
Base on the scenario been described in the question, when she ask you She then asks you what the government can do to shorten the time necessary to double the size of the country’s economy, the best answer you can give to her is to encourage the development of growth-positive institutions. Because this is what will shorten shorten the time necessary to double the size of the country’s economy.
Tool Manufacturing has an expected EBIT of $95,000 in perpetuity and a tax rate of 21 percent. The firm has $265,000 in outstanding debt at an interest rate of 5.8 percent, and its unlevered cost of capital is 11.7 percent. What is the value of the firm according to M&M Proposition I with taxes? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$697,102.99
Explanation:
VU = EBIT(1 - tC)/RU
EBIT =$95,000
tC=21%
RU=11.7%
Hence
VU = ($95,000)(1 - .21)/.117
VU=($95,000)(0.79)/.117
VU=$75,050/0.117
VU = $641,452.99
The value of the levered firm:
VL = VU + tCD
VU=$641,452.99
tCD=0.21($265,000)
VL = $641,452.99+ .21($265,000)
VL=$641,452.99+$55,650
VL=$697,102.99
Therefore the value of the firm according to M&M Proposition I with taxes is $697,102.99
A small nation of 10 people idolizes the TV show The Voice. All they produce and consume are karaoke machines and CDs, in the following amounts: Karaoke Machines CDs Quantity Price Quantity Price (Dollars) (Dollars) 2017 20 50 60 5 2018 21 70 80 6 Using a method similar to that used to calculate the consumer price index, the percentage change in the overall price level is . (Note: Use 2017 as the base year, and fix the basket at 2 karaoke machine and 6 CDs.)
Answer:35.38%
Explanation: Using basket at 2 karaoke machine and 6 CDS
Value of market basket o in 2017 = ($50 * 2) + ($5 * 6) = $130
Value of market basket in 2018 = ($70 * 2) + ($6 * 6) = $176
-Using 2017 as base year
Customer Price Index in 2017 = ($130 / $130) * 100 = 100
CPI in 2018 = ($176 / $130) * 100 = 135.38
% change in overall price = 135.38- 100= 35.38%
or
Percentage change in overall price=base index- new index / base index X 100
= $176 - $130/ 130= 46/130= 0.3538 x 100 = 35.38%.