Answer :
Break even units = 10,500
Break even amount = $2,100,000
Explanation :
As per the data given in the question,
a) Break even units = Fixed expense ÷ CM per unit b ÷ (a - c)
= ($466,000 + $269,000) ÷ ($200 - $110 - $20)
= 10,500 units
b) Break even amount = b ÷ (a ÷ c)
= ($466,000 + $269,000) ÷ ($70 ÷ $200)
= $2,100,000
Contribution margin ratio = Contribution margin ÷ Selling price per unit × 100
where,
Contribution margin = Selling price per unit - variable expenses per unit
c) CM per unit Break even units = Fixed expense ÷ Cm per unit
= $735,000 ÷ $70
= 10,500 units
Break even dollars = Fixed expense ÷ Contribution margin ratio
= $735,000 ÷ 0.35
= $2,100,000
d) Contribution margin income statement:
Sales = 10,500 × $200 = $2,100,000
Less Variable expenses 10,500 × ($110+$20) = $1,365,000
Contribution margin $735,000
Less Fixed Expense $735,000
Net Operating Income = $0
Final answer:
The break-even point for Ritchie Manufacturing Company is 10,500 units or $2,100,000 in revenue. This can be calculated using the equation method, contribution margin per unit, or contribution margin ratio approaches. A contribution margin income statement at the break-even level would show $2,100,000 in sales, with total costs also amounting to $2,100,000, resulting in $0 operating income.
Explanation:
To determine the break-even point in units and dollars for Ritchie Manufacturing Company, we can use the following information: selling price per unit is $200, variable costs per unit are $110 (manufacturing) + $20 (selling), fixed manufacturing costs are $466,000, and fixed selling and administrative costs are $269,000.
a. Equation method: The break-even point in units (Q) is found by solving the equation for Q in $200Q = $110Q + $20Q + $466,000 + $269,000. Simplifying this, we get $200Q = $130Q + $735,000, which gives us Q = $735,000 / ($200 - $130) = $735,000 / $70 = 10,500 units. The break-even point in dollars is therefore 10,500 units * $200/unit = $2,100,000.
b. Contribution margin per unit approach: The contribution margin per unit is $200 (selling price) - $110 (variable manufacturing cost) - $20 (variable selling expense) = $70. Therefore, the break-even point in units is the total fixed costs divided by the contribution margin per unit, which is ($466,000 + $269,000) / $70 = $735,000 / $70 = 10,500 units. To find the break-even point in dollars, multiply the units by the selling price: 10,500 units * $200 = $2,100,000.
c. Contribution margin ratio approach: The contribution margin ratio is the contribution margin per unit divided by the selling price per unit, which is $70 / $200 = 0.35, or 35%. The break-even point in dollars can be found by dividing the total fixed costs by the contribution margin ratio $735,000 / 0.35 = $2,100,000.
d. Contribution margin income statement: At the break-even sales volume of 10,500 units, the contribution margin income statement would show $2,100,000 in sales, $1,155,000 in variable costs ($110 manufacturing + $20 selling, multiplied by 10,500 units), resulting in a contribution margin of $945,000, which exactly covers the fixed costs of $735,000 ($466,000 manufacturing + $269,000 administrative), leading to an operating income of $0.
Consider the following production and cost data for two products, L and C: The contribution margin per unit for Product L is $120 while the contribution margin for Product C is $112. The machine minutes needed per unit for Product L is 10 minutes while for Product C it is 8 minutes. A total of 60,000 machine minutes are available each period and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period?
Answer:
The largest possible total contribution margin that can be realized each period is that of product C ($840,000).
Explanation:
Product L has a contribution margin of $120 but it requires 10 minutes per unit. Therefore, 120/10 = 12. This means its contribution margin is $12.
Product C has a contribution margin of $112 but it requires 8 minutes per unit. Therefore, 112/8 = 14. This means its contribution margin is $14 per minute.
Since we have 60,000 machine minutes, we would want to spend them in the most efficient way possible.
So,
If we produce only product L:
60,000 min * $12 per min = $720,000 total contribution margin
If we produce only product C:
60,000 min * $14 per min = $840,000 total contribution margin
To find the largest possible total contribution margin, we need to calculate the maximum number of units for each product and then multiply it by the contribution margin per unit. Product C has the highest total contribution margin of $840,000.
Explanation:To determine the largest possible total contribution margin for each period, we need to calculate the maximum number of units that can be produced for each product given the available machine minutes. We divide the total machine minutes by the machine minutes needed per unit to get the maximum number of units that can be produced. For Product L, 60,000 machine minutes / 10 minutes per unit = 6,000 units. For Product C, 60,000 machine minutes / 8 minutes per unit = 7,500 units.
Next, we calculate the total contribution margin for each product by multiplying the contribution margin per unit by the number of units produced. For Product L, the total contribution margin = $120 × 6,000 units = $720,000. For Product C, the total contribution margin = $112 × 7,500 units = $840,000.
To find the largest possible total contribution margin, we choose the product with the highest total contribution margin, which is Product C with $840,000.
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Victor's Detailing customers would be willing to pay $57 per detail. The company requires a 40% profit on each job. The average job would cost $30. Victor's uses target costing. Victor's Detailing should: a.find a way to reduce costs. b.sell their services at the price customers are willing to pay. c.sell their business. d.ask their customers to pay more. e.reduce their required percentage to stay in business.
Answer: b.sell their services at the price customers are willing to pay
Explanation:
Target Costing involves the proper research of a product's cost before going into production. It focuses on how to reduce costs and maintain a profitable margin that the company can benefit from both initially as well as over the long run.
In using Target Costing, the company assumes an Anticipated price, this is the price of the market or the price that consumers are willing to pay. This is a KEY assumption with Target Costing and so a company using Target Costing will sell at this Anticipated Price. For this reason option B is correct as Victor's Detailing will charge at the rate the customers will be willing to pay.
On January 1, 2021, the Allegheny Corporation purchased equipment for $162,000. The estimated service life of the equipment is 10 years and the estimated residual value is $8,000. The equipment is expected to produce 350,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. 3. Units of production (units produced in 2021, 47,000; units produced in 2022, 42,000). (Round "Depreciation per unit rate" answers to 2 decimal places.)
Answer:
a. Depreciation expenses in 2021 is 15,400 and depreciation expenses in 2022 is also $15,400.
b. depreciation expenses in 2021 is 20,680, while depreciation expenses in 2022 is also $18,480.
Explanation:
Depreciable amount = Purchase price - Residual value = $162,000 - $8,000 = $154,000
a. Using a straight line method
Annual deprecation expense = $154,000 / 10 = $15,400
Therefore, depreciation expenses in 2021 is 15,400 and depreciation expenses in 2022 is also $15,400.
b. Using unit of production method
2021 depreciation expenses = (47,000 / 350,000) * $154,000 = $20,680
2022 depreciation expenses = (42,000 / 350,000) * $154,000 = $18,480.
A company must decide between scrapping or reworking units that do not pass inspection. The company has 13,000 defective units that cost $5.20 per unit to manufacture. The units can be sold as is for $3.00 each, or they can be reworked for $5.00 each and then sold for the full price of $8.20 each. If the units are sold as is, the company will be able to build 13,000 replacement units at a cost of $5.20 each, and sell them at the full price of $8.20 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.)
Answer:
A.Incremental income(loss)
Sales as scrap $39,000
Rework $41,600
B.The company should REWORK
Explanation:
A. Sales as Scrap Rework
Sales of scrap units ($13,000×3.00)
$39,000
Sales of rework units ($13,000×8.20)
$106,600
Cost to rework units($13,000×5.00) $65,000
Incremental income(loss)
$39,000 $41,600
B.Therefore the company should REWORK
($106,600-$65,000)
=$41,600
On May 15, Helena Carpet Inc., a carpet wholesaler, issued for cash 750,000 shares of no-par common stock (with a stated value of $1.50) at $4, and on June 30, it issued for cash 17,500 shares of preferred stock, $50 par at $60. a. Journalize the entries for May 15 and June 30, assuming that the common stock is to be credited with the stated value. If an amount box does not require an entry, leave it blank.
Answer: Please refer to Explanation
Explanation:
First calculate the amount made from Issuing the common stock
Value of Common Stock = 17,500 shares * 1.50
= $1,125,000
Additional Paid In capital (excess that was paid for common stock)
= 4 (price sold at) - 1.5 ( stated price)
= $2.5
= 2.5 * 750,000
= $1,875,000
Tota cash received for Common Stock is therefore,
= $1,875,000 + $1,125,000
= $3,000,000
Then calculate amount made from Issuing Preferred stock
Preferred Stock = 17,500 * 50
= $875,000
Additional Paid In capital (excess that was paid for preferred stock)
=60 (price sold at) - 50 ( par value)
= $10
= 10 * 17,500
= $175,000
The Total cash realised from Issuing Preferred stock is therefore,
= 875,000 + 175,000
= $1,050,000
Transactions can then be Journalized as follows,
Date
May 15
DR Cash $3,000,000
CR Common Stock $1,125,000
CR Additional Paid In Capital in excess of stated value $1,875,000
( To record issuance of Common Stock)
Date
June 30
DR Cash $ 1,050,000
CR Preferred Stock $ 875,000
CR Additional Paid In Capital in excess of Par value $175,000
(To record issuance of Preferred Stock)
Boris Jasper is the manager of an auto parts division for a large auto parts supplier. The division makes dampers and oil pumps.
Identify three things Boris could do to increase the division’s ROI in the coming year. (You may select more than one answer.)
a) Raise the sales revenue.
b) Decrease the cost of raw materials.
c) Decrease discretionary fixed cost.
d) Reduce the selling price per unit.
e) Borrow funds at a higher rate of interest.
Answer:
a) Raise the sales revenue.
b) Decrease the cost of raw materials.
c) Decrease discretionary fixed cost
Explanation:
Return on Investment (ROI) = Divisional Profit Contribution / Assets Employed in the Division
ROI increases when the Divisional Profit Contribution increased and Assets Employed in the Division are reduced.
A licensing agreement: a. is the best way to protect proprietary technology from future competitors. b. can be greatly impacted by currency exchange rate fluctuations. c. allows a foreign firm to purchase the right to manufacture and sell a firm's products within a host country. d. results in two firms agreeing to share the risks and the resources of a new venture
Answer:
c. allows a foreign firm to purchase the right to manufacture and sell a firm's products within a host country.
Explanation:
The licensing agreement is a legal contract between the parties knows as licensor and the licensee, where the licensor allows for the sales of the goods and to apply the brand name of the product or use the patent technology. As it usually refers to a written contract and the payment s termed as loyalty. Any failure to follow the agreement may lead to the termination of the license and the payments.Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $330,000 and would have a twelve-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $56,000 per year to operate and maintain, but would save $97,000 per year in labor and other costs. The old machine can be sold now for scrap for $33,000. The simple rate of return on the new machine is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.)
Answer:
The simple rate of return of 4.54%
Explanation:
The simple rate of return of 8.75%
($97,000 - $56,000 - $27,500) ÷$297,000
=$13,500÷$297,000
=0.0454×100
=4.54%
The new machine $330,000 ÷ 12 years useful life
=$27,500
The new machine $330,000
Les old machine scrap $33,000
=$297,000
Therefore the simple rate of return is 4.54%
Juhasz Corporation makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Direct labor 0.50 hours $ 21.00 per hour Variable overhead 0.50 hours $ 4.10 per hour In August the company produced 8,000 units using 4,190 direct labor-hours. The actual variable overhead cost was $15,922. The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for August is:
Answer:
variable overhead efficiency variance= $779 unfavorable
Explanation:
Giving the following information:
Variable overhead 0.50 hours $ 4.10 per hour
The company produced 8,000 units using 4,190 direct labor-hours. The actual variable overhead cost was $15,922.
To calculate the variable overhead efficiency variance, we need to use the following formula:
variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Standard quantity= 0.5*8,000= 4,000
variable overhead efficiency variance= (4,000 - 4,190)*4.1
variable overhead efficiency variance= $779 unfavorable
Answer:
Efficiency variance in $779 unfavorable
Explanation:
Variable overhead efficiency variance: Variable overhead efficiency variance aims to determine whether or not their exist savings or extra cost incurred on variable overhead as a result of workers being faster or slower that expected.
Since the variable overhead is charged using labour hours, any amount by which the actual labour hours differ from the standard allowable hours would result in a variance
$
8,000 units should have taken (8,000 × 0.50) 4,000
but did take 4,190
Efficiency variance in (hours) 1,90 unfavorable
Standard rate per hour × $4.10
Efficiency variance in ($) $779 unfavorable
Efficiency variance in $779 unfavorable
Sandhill Company purchased $1280000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1329096 at an effective interest rate of 7%. Using the effective interest method, Sandhill Company decreased the Available-for-Sale Debt Securities account for the Carlin, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $5048 and $5192, respectively. At February 1, 2022, Sandhill Company sold the Carlin bonds for $1316800. After accruing for interest, the carrying value of the Carlin bonds on February 1, 2022 was $1320500. Assuming Sandhill Company has a portfolio of available-for-sale debt investments, what should Sandhill Company report as a gain (or loss) on the bonds
Answer:
-$3,700
Explanation:
Data provided as per the requirement of gain or loss on the bonds
Sale Price = $1,316,800
Book value of investment = $1,320,500
The computation of gain (or loss) on the bonds is shown below:-
Gain (Loss) on the bonds = Sale Price - Book value of investment
= $1,316,800 - $1,320,500
= -$3,700
Therefore, for computing the gain (or loss) on the bonds we simply applied the above formula and there is a loss on the bonds of -$3,700
During the month of May, Lucas Clothing transferred 140,000 shirts to Finished Goods Inventory. There was no beginning work-in-process inventory. The company had 40,000 shirts in process at May 31 and the shirts were 75 percent complete with respect to conversion costs. All direct materials are added at the beginning of the production process.
Required:
a. The equivalent units for conversion costs for May ____________.
Answer:
180,000 Units
Explanation:
The equivalent units for can be calculated using the following formula:
Equivalent units for Conversion Cost = Completed + (Ending work in process * Materials %age)
Here
Completed units of shirts are 140,000
Ending work in process is 40,000 Units
The percentage of input is 100% as all the direct materials are added at the beginning of the production process.
So by putting values, we have:
Equivalent units for Conversion Cost = 140,000 Units + 40,000 * 100%
= 180,000 Units
Salisbury Corporation has been producing and selling 30,000 caps a year. The company has the capacity to produce 50,000 caps with its present facilities. The following information is also available: Selling price per unit: $35 Variable costs per unit: Manufacturing $14 Selling and Administrative $6 Fixed costs in total: Manufacturing $128,000 Selling and Administrative $56,000 Gilbert Company has contacted Salisbury about purchasing 10,000 units at $24 each. A new customer who wants 20,000 units (all or nothing) right now also contacted Salisbury. Salisbury is wondering if they should sell to Gilbert Company or should take the offer by the new customer. Unfortunately, Salisbury cannot take both offers. For the new customer, variable selling and administrative costs would not be incurred. What is Salisbury's minimum price in order for them to accept the offer from the new customer (instead of Gilbert Company)
Answer:
Minimum price = $16
Explanation:
As per the data given in the question,
Selling price per unit = $35
Variable cost for manufacturing = $14
Variable cost for selling and administrative = $6
Fixed cost in manufacturing = $128,000
Fixed cost in selling and administrative = $56,000
For Gilbert = 10,000 × ($24 - $14 - $6)
= $40,000
For New customer = 20,000 × (P - $14) = $40,000
= 20,000P - $280,000 = $40,000
P = $16
Jackie is the CEO of a struggling company. She has listened to her employees' concerns about where the corporation is going and has developed a new vision that she feels will help foster a common bond throughout the organization. Jackie then hosted a company-wide picnic where she delivered an inspiring speech about the new plans for the business, including her plans for more open communication between management and employees. After her speech, management and employees all participated in trust-building exercises, and then each employee had a one-on-one conversation with Jackie. Which perspective of leadership most closely resembles Jackie's actions
Answer:
Transformational
Explanation:
Transformational leadership is defined as leadership style that aims to cause a change in a social systems or individuals. It results in a positive change that turns followers into leaders.
Needs are identified, a vision is created to inspire change, this change is then executed together with committed followers.
In this scenario Jackie's had a vision of building a better bond between employees and management. Her actions resulted in management and employees all participating in trust-building exercises, and then each employee had a one-on-one conversation with Jackie.
On October 1, 2021, Ca Corporation declared and issued a 10% stock dividend. Before this date, Ca had 80,000 shares of $5 par common stock outstanding. The market value of Ca Corporation on the date of declaration was $10 per share.
Required:
1. As a result of this dividend, Chief's retained earnings will ___________.
MULTIPLE CHOICE
a. decrease by $80,000
b. not change
c. decrease by $40,000
d. increase by $80,000
Answer:
The correct answer is Option A.
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.
Stock dividend declared = 10% x 80,000 shares x $10 = $80,000
The effect on common stock will be = 10% x 80,000 shares x $5 = $40,000
So, paid in capital in excess of par value common stock is $80,000 - $40,000 = $40,000.
Necessary accounting entries
Debit Retained earnings $80,000
Credit Common stock $40,000
Credit paid in capital in excess of par value common stock $40,000
(To record declaration of 10% stock dividend)
Tandoor Inc. financial statements included the following amounts for the current year: Retired bonds $73,000 Proceeds from collection of note receivable 37 comma 000 Dividends received 45,000 Acquired production machinery with cash 52 comma 000 Sold treasury stock 31 comma 000 Based on this information, what is the amount of net cash provided (used) by investing activities?
Answer:
-$15,000
Explanation:
The computation of the net cash provided or used by investing activities is shown below:
= Proceeds from collection of note receivable - Acquired production machinery with cash
= $37,000 - $52,000
= -$15,000
This negative amount represents the cash used by investing activities
Plus the collection show the inflow of cash and the acquired production represents the outflow of cash
The following information was extracted from the 2020 financial statements of Sheridan Company:
Income from continuing operations before income tax $703500
Selling and administrative expenses 478000
Income from continuing operations 502000
Gross profit 1343000
Required:
a. Assuming that there are no other revenues and gains, amount reported for other expenses and losses is ________.
O $24000.
O $201500.
O $225500.
O $161500.
Answer:
$161500.
Explanation:
a normal income statement should be:
total revenue x
- COGS (y)
gross profit = $1,343,000
- selling and administrative expenses = ($478,000)
EBIT = $865,000
- interests paid, other expenses & losses = ?????
income before taxes $703,500
- taxes (t)
net income
other expenses and losses = $865,000 - $703,500 = $161,500
Andrea earns $8 per hour and works 20 hours per week. She receives her paycheck for her hours worked during the week every Friday afternoon.
What is her gross pay?
$80.00
$131.76
$144.00
$160.00
Answer:
$160.00
Explanation:
8x2 is 16 and add another 0 you get 160
Final answer:
Andrea's gross pay is calculated by multiplying her hourly wage of $8 by the 20 hours she works per week, resulting in a total of $160.00.
Explanation:
ndrea's gross pay is calculated by multiplying her hourly wage by the number of hours she works per week. Here's a breakdown of the calculation:
Hourly wage: Andrea earns $8 per hour.
Hours worked per week: Andrea works 20 hours per week.
To find her gross pay, we multiply her hourly wage by the number of hours she works per week:
Gross pay = Hourly wage × Hours worked per week
Substituting the values we have:
Gross pay = $8 × 20
Gross pay = $160.00
So, Andrea's gross pay for the week is $160.00. This is the total amount she earns before any deductions are made. Therefore, the correct answer is $160.00.
A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 22,000 defective units that cost $6 per unit to manufacture. The units can be a) sold as is for $2.00 each, or b) reworked for $4.50 each and then sold for the full price of $8.50 each. What is the incremental income from selling the units as scrap and reworking and selling the units
In comparing scrapping or reworking defective units, the company sees an incremental income of $44,000 in favor of reworking and selling the units, notwithstanding both options resulting in a loss.
Explanation:When deciding between scrapping or reworking defective units, a company with excess capacity should consider the incremental income from both options. Given the costs to manufacture are $6 per unit, and there are 22,000 units, we have two scenarios:
Option A: Selling as scrap - The defective units can be sold as is for $2.00 each, resulting in a total revenue of $44,000 (22,000 units x $2/unit).Option B: Reworking and selling - The defective units can be reworked for $4.50 each and sold for $8.50 each. Reworking costs are $99,000 (22,000 units x $4.50/unit), and total revenue after rework is $187,000 (22,000 units x $8.50/unit).To calculate the incremental income, we consider the net gain from both options:
Net gain from Option A (scrapping): $44,000 (total revenue) - $132,000 (manufacturing cost) = -$88,000 (loss).Net gain from Option B (reworking and selling): $187,000 (total revenue after rework) - $132,000 (manufacturing cost) - $99,000 (reworking cost) = -$44,000 (loss).The incremental income is the difference in losses between the two options, which is -$44,000 - (-$88,000) = $44,000 favoring Option B (reworking and selling).
inventory Turnover and Days' Sales in Inventory The following financial statement data for years ending December 31 for Holland Company are shown below. 20Y4 20Y3 Cost of merchandise sold $1,489,200 $945,934 Inventories: Beginning of year 359,160 251,120 End of year 516,840 359,160 a. Determine the inventory turnover for 20Y4 and 20Y3. Round to one decimal place. Inventory Turnover 20Y4 20Y3 b. Determine the days' sales in inventory for 20Y4 and 20Y3. Assume 365 days a year. Round interim calculations and final answers to one decimal place. Days' Sales in Inventory 20Y4 days 20Y3 days
Answer:
Year 2014 Year 2013
a) Inventory Turnover ratio 3.4 times and 3.1 times
b) Number of days' sales in inventory 107.3 days and 117.7 days
Explanation:
As per the data given in the question,
As we know that
Inventory turnover ratio = Cost of goods sold ÷ Average inventory
where,
Average inventory
= (Beginning inventory + ending inventory) ÷ 2
For Year 20Y4 :
Average inventory = ($359,160 + $516,840 ) ÷2
= $438,000
And, the cost of goods sold is $1,489,200
So,
Inventory Turnover ratio
= $1,489,200 ÷ $438,000
= 3.4 times
For Year 20Y3 :
Average inventory = ($251,120 + $359,160) ÷ 2
= $305,140
And, the cost of goods sold is $945,934
So,
Inventory Turnover ratio
= $945,934 ÷ $305,140
= 3.1 times
Now
Number of days' sales in inventory = Number of days in a year ÷ Inventory Turnover ratio
For 20Y4
= 365 days ÷ 3.4
= 107.3 days
For 20Y3
= 365 days ÷ 3.1
= 117.7 days
Basically we applied the above formulas
The inventory turnover for Holland Company in 20Y4 is 3.4 times and for 20Y3 is 3.1 times. The days' sales in inventory are 107.4 days for 20Y4 and 117.7 days for 20Y3.
To calculate the inventory turnover for Holland Company for the years 20Y4 and 20Y3, we use the formula: Inventory Turnover = Cost of Goods Sold / Average Inventory. For 20Y4, the Cost of Goods Sold is $1,489,200, and the Average Inventory is (Beginning Inventory + Ending Inventory) / 2, which equals ($359,160 + $516,840) / 2 = $438,000. Therefore, the Inventory Turnover for 20Y4 is $1,489,200 / $438,000 = 3.4 times.
For 20Y3, the Cost of Goods Sold is $945,934 and the Average Inventory is ($251,120 + $359,160) / 2 = $305,140. Consequently, the Inventory Turnover for 20Y3 is $945,934 / $305,140 = 3.1 times.
To calculate days' sales in inventory, we divide the number of days in a year by the inventory turnover ratio. For 20Y4, this equals 365 / 3.4 = 107.4 days. For 20Y3, it equates to 365 / 3.1 = 117.7 days.
Hemingway Corporation has 100,000 shares of common stock issued and outstanding. At the meeting of the board of directors on December 1, 2015, the board voted to declare a cash dividend of $5 per share to be paid on December 31, 2015, to shareholders of record as of December 16, 2015. Complete the necessary journal entry for the declaration of the dividend by selecting the account names and dollar amounts from the drop-down menus.
Answer:
Retained earnings A/c Dr $500,000 (100,000 shares × $5)
To Dividend payable A/c $500,000
(Being the dividend is declared)
Explanation:
The journal entry is shown below:
Retained earnings A/c Dr $500,000 (100,000 shares × $5)
To Dividend payable A/c $500,000
(Being the dividend is declared)
For recording this we debited the retained earning as it reduced the stockholder equity and at the same time it increased the liabilities so dividend payable is credited
Romeo Construction enters into a contract with a customer to build a warehouse for $800,000 on March 30, 2014, with an additional performance bonus of $50,000 if the building is completed by July 31, 2014. The bonus is reduced by $10,000 each week that completion is delayed.
Romeo commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
Completed by Probability
July 31, 2014 65%
August 7, 2014 25%
August 14, 2014 5%
August 21, 2014 5%
The transaction price for this transaction is ______.
Answer:
$845,000
Explanation:
The computation of transaction price for this transaction is shown below:-
Transaction price = (Performance bonus on July 31, 2014 × Probability percentage on July 31, 2014) + (Performance bonus on July 7, 2014 × Probability percentage on July 7, 2014) + (Performance bonus on July 14, 2014 × Probability percentage on July 14, 2014) + (Performance bonus on July 21, 2014 × Probability percentage on July 21, 2014)
= ($50,000 × 65%) + (($50,000 - $10,000) × 25%) + (($50,000 - $10,000 - $10,000) × 5%) + ((($50,000 - $10,000 - $10,000 - $10,000) × 5%)
= $32,500 + $10,000 + $1,500 + $1,000
= $45,000
Transaction Price = Warehouse + Transaction price
= $800,000 + $45,000
= $845,000
We simply applied the above formula
Carlson's general business credit (before limitations) for the current year is $158,150. His net income tax is $347,930, tentative minimum tax is $313,137, and net regular tax liability is $330,534. He reports no other Federal income tax credits for the year. Compute Carlson's general business credit allowed for the year, and any amounts that can be carried back and forward
Answer:
Carlson's general business credit allowed for the year = 123,357 USD
Explanation:
Let's first arrange the data given:
Business Credit for the current year = 158,150 USD
Net Income Tax = 347,930 USD
TMT = Tentative Maximum Tax = 313,137 USD
Net Regular Tax liability = 330,534 USD
Solution:
330,534 - 25000 = 305,534
305,534 x 25% = 76,383.5
TMT 313,137 > 76,383.3
So,
Net income tax - TMT = 347,930 - 313,137
Net income tax - TMT = 34,793
Now, the current Carlson's general business credit allowed for the year will be :
Current Business Credit - 34,793
158,150 - 34,793 = 123,357 USD
Carlson's general business credit allowed for the year = 123,357 USD
Cash Flows From Operating Activities Add to Net Income Deduct from Net Income Cash Flows From Investing Activities Cash Flows From Financing Activities Category 1. Common stock is issued for cash at an amount above par value Select an option 2. Inventory increased during the period Select an option 3. Depreciation expense recorded for the period Select an option 4. Building was purchased for cash Select an option 5. Bonds payable were acquired and retired at their carrying value Select an option 6. Accounts payable decreased during the period Select an option 7. Prepaid expenses decreased during the period Select an option 8. Treasury stock was acquired for cash Select an option 9. Land is sold for cash at an amount equal to book value Select an option 10. Patent amortization expense recorded for a period
Answer:
1. Common stock is issued for cash at an amount above par value - From Financing Activities
2. Inventory increased during the period - From Operating Activities
3. Depreciation expense recorded for the period - Add to Net Income
4. Building was purchased for cash - From Investing Activities
5. Bonds payable were acquired and retired at their carrying value - From Financing Activities
6. Accounts payable decreased during the period - From Operating Activities
7. Prepaid expenses decreased during the period - From Operating Activities
8. Treasury stock was acquired for cash - From Financing Activities
9. Land is sold for cash at an amount equal to book value - From Investing Activities
10. Patent amortization expense recorded for a period - Add to Net Income
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. Depreciation and other non-cash expenses deducted in the income statements are added back while the non-cash income such gain on asset are deducted from net income.
Comfort Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 14 8 265 Deluxe 27 15 200 Overhead costs $ 73 comma 800 $ 82 comma 800 Assume a traditional costing system applies the overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)
Answer:
Overhead assigned to standard mode = $89,245.16
Explanation:
Under the traditional absorption costing system, overhead is assigned to units produced using the direct labour hours basis.
Overhead absorption rate = Budgeted overhead for the period/Budgeted labour hours
OAR = $(73,800 + 82,800) /(265 + 200) hours
= $156,600 /465
= $336.77 per hour
Overhead assigned to standard model= OAR × labour hours used
= $336.77 × 265
=$89,245.16
Final answer:
The total overhead costs assigned to the Standard model of office chairs are calculated to be $89,244.05, using the traditional costing system based on direct labor hours.
Explanation:
The total overhead costs assigned to the Standard model of office chairs by Comfort Corporation, when using a traditional costing system based on direct labor hours, requires the calculation of the overhead rate.
Since the total overhead costs are $73,800 + $82,800 = $156,600 and the total direct labor hours for both models are 265 (Standard) + 200 (Deluxe) = 465 hours, the overhead rate per direct labor hour is $156,600 / 465 = $336.77 per hour.
Hence, the total overhead costs assigned to the Standard model, which has 265 direct labor hours, would be 265 hours * $336.77/hour = $89,244.05, rounded to the nearest whole dollar.
Self-imposed budgets typically are:
A. not critical to the success of a budgeting program.
B. not subject to review by higher levels of management since to do so would contradict the participative aspect of the budgeting processing.
C. subject to review by higher levels of management in order to prevent the budgets from becoming too loose.
D. not subject to review by higher levels of management except in specific cases where the input of higher management is required.
Answer:
C. subject to review by higher levels of management in order to prevent the budgets from becoming too loose.
Explanation:
Self-imposed budgets typically are subject to review by higher levels of management in order to prevent the budgets from becoming too loose.
Self-imposed budget also known as the participative budget is a type of budget where individuals having responsibility for controlling costs, prepares their own budget estimates and present them to the top level of management for review.
Ellen is very good at what she does, but she is constantly stressed by internal deadlines assigned to co-workers, obligatory meetings, and time lost in un-related idle cubicle chatter. Today, after a meeting with her supervisor, she has been given more responsibility for her work, is able to set her own deadlines, decline attendance to various department meetings, and telecommute two days a week. Ellen's boss is using which of the following organizational strategies to reduce her stress?A) Job redesign.B) Organizational communication.C) Employee involvement.D) Organizational development.E) Process reengineering.
Answer:
A) Job redesign
Explanation:
-Job redesign refers to a strategy in which different parts of a job like responsabilities and tasks are modified to make it more interesting and increase the employee's motivation.
-Organizational communication refers to a strategy that allows the company to deliver a message in an effective way to accomplish the company's goals.
-Employee involvement refers to a strategy in which employees are given more authority and are allowed to give their opinion on things related to their work.
-Organizational development refers to a strategy that is used to define the changes that the company needs to make according to its need and determine an effective way to make them.
-Process reengineering refers to a strategy in which the company's processes are restructured to improve efficiency.
According to this, the answer is that Ellen's boss is using job redesign strategies to reduce her stress because her job has been modified and she has been given more responsibility, she is able to set deadlines, decline attendance to meetings and telecommute two days a week.
Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $1.45 at the end of the year. Its dividend is expected to grow at a constant rate of 9.00% per year. If Walter's stock currently trades for $21.00 per share, what is the expected rate of return
Answer:
The expected rate of return on the stock is 15.90%
Explanation:
The price of a stock that is expected to pay a dividend that grows at a constant rate forever can be calculated using the constant growth model of Dividend discount model (DDM) approach. The DDM values a stock based on the present value of the expected future dividends. The formula for price today under this model is,
P0 = D1 / r - g
Where,
D1 is the expected dividend for the next periodr is the required rate of returng is the growth rate in dividendsWe already know the D1, the price today and the growth rate. Plugging in these values in the formula, we can calculate the expected rate of return.
21 = 1.45 / (r - 0.09)
21 * (r - 0.09) = 1.45
21r - 1.89 = 1.45
21r = 1.45 + 1.89
r = 3.34 / 21
r = 0.1590 or 15.90%
Final answer:
The expected rate of return for Walter Utilities is 15.90%.
Explanation:
To calculate the expected rate of return for Walter Utilities, we need to use the Dividend Discount Model (DDM).
The DDM formula is: Expected Rate of Return = Dividend / Stock Price + Growth Rate
Using the given information, we can calculate the expected rate of return as follows:
Expected Rate of Return = $1.45 / $21.00 + 0.09 = 0.0690 + 0.09 = 0.1590 = 15.90%
Therefore, the expected rate of return for Walter Utilities is 15.90%.
MONTGOMERY INC. Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 55,600 $ 55,900 Accounts receivable, net 12,500 15,400 Inventory 112,100 89,000 Total current assets 180,200 160,300 Equipment 62,100 52,700 Accum. depreciation—Equipment (28,100 ) (19,400 ) Total assets $ 214,200 $ 193,600 Liabilities and Equity Accounts payable $ 29,900 $ 32,200 Salaries payable 500 700 Total current liabilities 30,400 32,900 Equity Common stock, no par value 156,300 145,500 Retained earnings 27,500 15,200 Total liabilities and equity $ 214,200 $ 193,600 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 54,000 Cost of goods sold (22,400 ) Gross profit 31,600 Operating expenses Depreciation expense $ 8,700 Other expenses 6,700 Total operating expense 15,400 Income before taxes 16,200 Income tax expense 3,900 Net income $ 12,300 Additional Information on Current-Year Transactions No dividends are declared or paid. Issued additional stock for $10,800 cash. Purchased equipment for cash; no equipment was sold. 1. Use the above information to prepare a statement of cash flows for the current year using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)
Answer and Explanation:
Th preparation of the cash flow statement using the indirect method is presented below:
Cash flow from operating activities
Net income $12,300
Adjustments made
Add: Depreciation expense $8,700
Add: Decrease in account receivable $900 ($12,500 - $15,400)
Less: Increase in inventory -$23,100 ($112,100 - $89,000)
Less: decrease in accounts payable -$2,300 ($29,900 - $32,200)
Less: Decrease in salaries payable -$200 ($500 - $700)
Net cash used by operating activities -$1,700 (A)
Cash from investing activities
Purchase of Equipment -$9,400 ($62,100 - $52,700)
Net cash used by investing activities -$9,400 (B)
Cash from financing activities
Cash from stock issue $10,800 ($156,300 - $145,500)
Net cash provided by financing activities $10,800 (C)
Net decrease in cash -300 (A + B + C)
Add: Beginning cash balance $55,900
Ending year cash balance $55,600
The minus sign indicated the outflow of cash and positive sign indicates the inflow of cash and according to that the adjustment are made i.e shown above
Final answer:
The Statement of Cash Flows for Montgomery Inc. is constructed using the indirect method, where net income is adjusted for non-cash items and changes in working capital to calculate net cash provided by operating activities. Further adjustments are made for cash flows from investing and financing activities. The calculated ending cash balance however differs from the value in the balance sheet due to discrepancies in figures provided in the question.
Explanation:
Montgomery Inc. Statement of Cash Flows (Indirect Method)
Operating Activities:
Net income: $12,300Adjustments for non-cash items:Depreciation expense: $8,700Changes in working capital:
Decrease in accounts receivable: $2,900Increase in inventory: ($112,100 - $89,000) = ($23,100)Decrease in accounts payable: ($29,900 - $32,200) = $2,300Decrease in salaries payable: $200Net cash provided by operating activities: $12,300 + $8,700 + $2,900 - $23,100 + $2,300 + $200 = $3,300
Investing Activities:
Purchase of equipment: ($62,100 - $52,700) = ($9,400)Net cash used in investing activities: ($9,400)Financing Activities:
Issuance of common stock: $10,800Net cash provided by financing activities: $10,800Net increase (decrease) in cash: $3,300 - $9,400 + $10,800 = $4,700Cash at beginning of year: $55,900Cash at end of year: $55,900 + $4,700 = $60,600Sheridan Inc. and Pharoah Co. have an exchange with no commercial substance. The asset given up by Sheridan Inc. has a book value of $58500 and a fair value of $93500. The asset given up by Pharoah Co. has a book value of $123500 and a fair value of $108500. Boot of $28500 is received by Pharoah Co. What amount should Sheridan Inc. record for the asset received? $123500 $108500 $93500 $87000
Final answer:
Sheridan Inc. should record the asset received at the fair value of the asset given up by Pharoah Co. minus the boot received, which is $80,000.
Explanation:
The student has asked about the proper accounting treatment for an asset exchange with no commercial substance in which boot is received. When Sheridan Inc. gives up an asset with a book value of $58,500 and a fair value of $93,500, and Pharoah Co. gives up an asset with a book value of $123,500 and a fair value of $108,500, plus boot of $28,500 received by Pharoah Co., the accounting rules stipulate that the asset received should be recorded at fair value. Therefore, the correct amount that Sheridan Inc. should record for the asset received is the fair value of the asset given up by Pharoah Co., minus the boot received, which equals $108,500 - $28,500, resulting in $80,000.
Bonita Corporation’s December 31, 2018 balance sheet showed the following:
8% preferred stock, $10 par value, cumulative, 20300shares
authorized; 15300 shares issued $ 153000
Common stock, $10 par value, 2080000 shares authorized;
2030000 shares issued, 2010000 shares outstanding 20300000
Paid-in capital in excess of par—preferred stock 59000
Paid-in capital in excess of par—common stock 25000000
Retained earnings 7600000
Treasury stock (208000 shares) 655200
Bonita’s total stockholders’ equity was
$45436800.
$53112000.
$52456800.
$53716800.
Answer:
$52,456,800
Explanation:
For computation of total stockholders’ equity first we need to find out the total capital stock and total paid in capital which is shown below:-
Total Capital stock = Preferred stock + Common stock
= $153,000 + $20,300,000
= $20,453,000
Total Paid in capital = Paid in capital in excess of par of common stock + Paid in capital in excess of par of preferred stock
= $25,000,000 + $59,000
= $25,059,000
Total stockholder equity = Total Capital stock + Total Paid in capital + Retained earning - Treasury stock
= $20,453,000 + $25,059,000 + $7,600,000 - $655,200
= $52,456,800 - $655,200
= $52,456,800
Therefore for computing the total stockholder equity we applied the above formula.