Answer:
January 2, 2020
Dr Accounts receivable 410,000
Cr Sales revenue 370,000
Cr Unearned revenue 40,000
Dr Cost of goods sold 300,000
Cr Merchandise inventory 300,000
Accrual accounting states that revenues must be recognized during the periods that they actually occur (i.e. the earning process is completed). Since the installation process lasts 6 months, the unearned revenue will be recognized as the process is being completed.
f currency in circulation is $600 billion, total reserves of the banking system are $800 billion, and total checkable deposits are $2 comma 900 billion, what is the maximum increase in the money supply that can result from the transaction in part (a)? (That is, the maximum increase after all actions resulting from the transaction in part (a) have occurred.) Be sure to use the realistic money multiplier, as opposed to the simple deposit multiplier, in the calculatio
Answer:
250
Explanation:
$600 billion +$2,900 billion /$600 billion +$800 billion
=$3,500 billion/$1,400 billion
=2.5
=2.5×100
=250
What does it mean to characterize prices as sticky? that the aggregate price level tends to fluctuate wildly that prices do not change very easily that the aggregate price level is fixed that prices change frequently and there are few barriers to price movements that it is very difficult for policy makers to manipulate the aggregate price level
Answer:
that prices do not change very easily
Explanation:
In simple words,Price tightness or fixed prices or price resistance relates to a condition in which the value of a product does not instantly or readily adjust to the new business-clearing level as market forces of demand as well as supply curve changes.
The existence of price stickiness can be interpreted as an crucial part of macroeconomic analysis because it can clarify why short-term or even, probably, long-term markets do not achieve equilibrium.
Rooney Company established a predetermined variable overhead cost rate at $9.40 per direct labor hour. The actual variable overhead cost rate was $8.40 per hour. The planned level of labor activity was 74,900 hours of labor. The company actually used 79,900 hours of labor. Required Determine the total flexible budget variable overhead cost variance and indicate the effect of the variance by selecting favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)
Answer:
$32,900 favorable
Explanation:
The computation of the total flexible budget variable overhead cost variance is shown below:
= Total budgeted overhead cost - actual budgeted overhead cost
where,
Total budgeted overhead cost is
= $9.40 × 74,900 hours
= $704,060
And, the actual budgeted overhead cost is
= $8.40 × 79,900 hours
= $671,160
So, the total flexible budget variable overhead cost variance is
= $704,060 - $671,160
= $32,900 favorable
Since the standard cost is greater than the actual cost so it would have favorable variance
Mike Derr and Mark Finger form a partnership by combining assets of their separate businesses. The following balance sheet is from Derr's sole proprietorship. The market value of Derr's equipment is $5,000 and the market value of land is $8,000. Balance Sheet Assets Liabilities Cash $ 1,000 Accounts payable $ 4,500 Supplies 3,000 Notes payable 3,100 Equipment $ 11,000 Total liabilities 7,600 Accumulated depreciation—Equip. (9,000 ) 2,000 Equity Land 4,000 M. Derr, Capital 2,400 Total assets $ 10,000 Total liabilities and equity $ 10,000 Prepare the partnership’s journal entry to record Derr’s investment.
Answer and Explanation:
According to the scenario, journal entry for the given data are as follows:
Cash A/c Dr. $1,000
Supplies A/c Dr. $3,000
Land A/c Dr. $8,000
Equipment A/c Dr. $5,000
To A/c Payable A/c $4,500
To Notes payable A/c $3,100
To M. Derr capital A/c $9,400 ($1000+$3000+$8000+$5000-$4500-$3100)
(Being Derr's investment is recorded)
Final answer:
To record Mike Derr's investment in the partnership with Mark Finger, adjust the equipment and land to their market values, remove accumulated depreciation, and prepare a journal entry with debits for assets added and credits for liabilities assumed and capital attributed.
Explanation:
When forming a partnership, the assets contributed by the partners must be recorded at their agreed-upon market value. In the case of Mike Derr's investment in the partnership with Mark Finger, we need to adjust the equipment and land values based on the market values provided and eliminate the accumulated depreciation on the equipment. Here is the journal entry for Derr's investment:
Cash $1,000Supplies $3,000Equipment $5,000 (market value, since the historical cost and accumulated depreciation are not relevant)Land $8,000 (market value)
These are debits to the new partnership's asset accounts. The credits to balance the entry will be:
Accounts Payable $4,500 (liability assumed by the partnership)Notes Payable $3,100 (liability assumed by the partnership)M. Derr, Capital $9,400 (calculated as total debits minus total credits already listed)
The entry records the assets Mike Derr is contributing to the partnership at their market value and the liabilities that the partnership is assuming.
Pramo is a large bio firm that sells genetically modified seed to farmers. They need to decide how much seed to put into a warehouse to serve demand for the next growing season. They will make one quantity decision. It costs Pramo $8 to make each kilogram (kg) of seed. They sell each kg for $45. If they have more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, they only earn $3 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds their quantity, then the sales are lost – the farmers go to another supplier. As a forecast for demand they will use a normal distribution with a mean of 300,000 and a standard deviation of 106,000. How many kilograms should they place in this warehouse before the 2020 growing season? Choose the closest number.
Answer:
Formula to calculate optimal order quantity is as below:
Optimal order quantity = mean + (z x standard deviation)
Optimal order quantity = 300,000 +(1.18 x 106,000)
Optimal order quantity = $425,080
Prior to optimal order quantity, calculate z value as below:
Critical ratio = Profit per sold unit / (Profit per sold unit + Loss per unsold)
Profit per sold unit = $45 - $8
Profit per sold unit = $37.
Profit per unsold unit = $8 - $3
Profit per unsold unit = $5.
Now;
Critical ratio = Profit per sold unit / (Profit per sold unit + Loss per unsold)
Critical ratio = 37 / 37+5
Critical ratio = 0.8809
Thus, the equivalent probability for 0.8809 is 1.18 (from Normal distribution table) z = 1.18
Now to get optimal order quantity as below:
Optimal order quantity = mean + (z x standard deviation)
Optimal order quantity = 300,000 + (1.18 x 106,000) = 425,080 kg
Therefore, Company Pramo needs to place 425,080 kg of seeds in warehouse before 2020 growing season.
Pramo should place approximately 423,020 kg of seed in the warehouse to optimally meet demand while minimizing excess. This calculation uses the critical ratio and the newsvendor model with given costs and a normal distribution forecast. This ensures the best balance between local demand and potential overseas salvage.
To find the optimal quantity, we can use the newsvendor model. The key is to determine the service level (SL) or fill rate, which can be calculated using the critical ratio (CR). The CR is:
CR = (Selling Price - Cost) / (Selling Price - Salvage Value)Here:
Selling Price (SP) = $45Cost (C) = $8Salvage Value (SV) = $3Calculating CR:
CR = ($45 - $8) / ($45 - $3) = $37 / $42 ≈ 0.88Using a normal distribution with a mean (μ) of 300,000 and a standard deviation (σ) of 106,000, we look for the Z value in standard normal distribution tables corresponding to a cumulative probability of 0.88. This approximates to a Z value of 1.17.
Thus, the optimal order quantity (Q) is:
Q =[tex]μ + (Z * σ)[/tex] = 300,000 + (1.17 * 106,000) ≈ 423,020 kgTherefore, Pramo should place approximately 423,020 kg of seed in the warehouse before the 2020 growing season.
Clean Tel, Inc. is considering investing in an 11-year project with annual cash inflows of $1,000,000. These cash inflows have an initial investment of $7,139,000. At what discount rate would this present value be the same as the initial investment?
a. 6%
b. 7%
c. 9%
d. 8%
Answer:
d. 8%
Explanation:
The computation of the discount rate is shown below:
Initial investment = Present value of cash inflows
where,
Initial investment is $7,139,000
And, the present value of cash inflows
= Annual cash inflows × discount rate
We assume the discount rate be X
$7,139,000 = $1,000,000 × X
So,
X = 7139000 ÷ 1000000 = 7.139
= 8%
We simply applied the above formula in order to find out the discount rate
Suppose Proctor & Gamble (PG) and Johnson & Johnson (JNJ) are simultaneously considering new advertising campaigns. Each firm may choose a high, medium, or low level of advertising. What are each firm's best responses to its rival's strategies? Does either firm have a dominant strategy? What is the Nash equilibrium in this game? If PG picks high, then JNJ should pick ▼ medium high low ; if PG picks medium, JNJ should pick ▼ low medium high ; and if PG picks low, then JNJ should pick ▼ medium low high . If JNJ picks high, then PG should pick ▼ low high medium ; if JNJ picks medium, PG should pick ▼ medium low high ; and if JNJ picks low, then PG should pick ▼ medium high low . PG's dominant strategy is to pick ▼ low medium high and JNJ's dominant strategy is to pick ▼ high low medium . Identify the Nash equilibrium in this game. A. The Nash equilibrium is for both firms to pick medium. B. The Nash equilibrium is for both firms to pick low. C. The Nash equilibria are for PG to pick medium and JNJ to pick low and for PG to pick low and JNJ to pick medium. D. The Nash equilibrium is for both firms to pick high. E. This game has no Nash equilibria.
Answer:
B. The Nash equilibrium is for both firms to pick low
Explanation:
We can see the following responses from both players
If PG chooses High, JNJ will have the highest payoff when it selects Low
If PG chooses Medium, JNJ will have the highest payoff when it selects Low
If PG chooses Low, JNJ will have the highest payoff when it selects Low
Similarly,
If JNJ chooses High, PG will have the highest payoff when it selects Low
If JNJ chooses Medium, PG will have the highest payoff when it selects Low
If JNJ chooses Low, PG will have the highest payoff when it selects Low
Hence PG has a dominant strategy to pick Low. Similarly JNJ has a dominant strategy to pick Low as well.
Final answer:
In this game theory scenario involving Proctor & Gamble and Johnson & Johnson's advertising campaigns, the Nash equilibrium is when both firms choose a low level of advertising.
Explanation:
Nash equilibrium is a situation where each agent chooses a strategy maximizing their payoffs given others' strategies. In the context of Proctor & Gamble and Johnson & Johnson's advertising campaigns, the Nash equilibrium is when both firms pick a low level of advertising. While both firms have dominant strategies to pick low and high respectively, the optimal outcome is achieved when both go for a low advertising level.
Arlington Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $2,400,000 on March 1, $1,980,000 on June 1, and $3,000,000 on December 31. Arlington Company borrowed $1,200,000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-year, $2,400,000 note payable and an 11%, 4-year, $4,500,000 note payable. What is the weighted-average interest rate used for interest capitalization purposes
Answer:
10.65%
Explanation:
The computation of weighted-average interest rate is shown below:-
3- year note payable $240,000
($2,400,000 × 10%)
4 - year note payable $495,000
($4,500,000 × 11%)
Total interest $735,000
Weighted interest rate = Total interest ÷ (3 year note payable + 4 year note payable) × 100
= $735,000 ÷ ($2,400,000 + $4,500,000) × 100
= $735,000 ÷ $6,900,000 × 100
= 10.65%
Therefore for computing the weighted-average interest rate we simply applied the above formula.
Oriole Company uses the gross method to record sales made on credit. On June 10, 2020, it sold goods worth $247000 with terms 2/10, n/30 to Sandhill Co. On June 19, 2020, Oriole received payment for 1/2 of the amount due from Sandhill Co. Oriole’s fiscal year end is on June 30, 2020. What amount will be reported in the financial statements for the accounts receivable due from Sandhill Co.?
Answer:
$123,500
Explanation:
The computation of the amount reported in the financial statements is shown below
= Sales amount - the amount of sales received
= $247,000 - $247,000 × 50%
= $247,000 - $123,500
= $123,500
by deducting the amount of sale received from the sales amount we can get the amount i.e to be reported in the financial statements
Direct Materials Variances De Soto Inc. produces tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 770 tablets during July. However, due to LCD defects, the company actually used 800 LCD displays during July. Each display has a standard cost of $12.50. Eight hundred LCD displays were purchased for July production at a cost of $9,400. Determine the price variance, quantity variance, and total direct materials cost variance for July.
Answer:
The price variance for July is $600 favorable the quantity variance is $375 Unfavorable , and total direct materials cost variance is $225 favorable
Explanation:
In order to calculate the Direct material Price variance we would have to use the following formula:
Direct material Price variance = (Standard Price – Actual Price)*Actual quantity purchased
= (12.50-Actual cost)*800
= 12.50*800 – 9,400
= $600 favorable
In order to calculate the Direct material Quantity Variance we would have to use the following formula:
Direct material Quantity Variance = (Standard Quantity – Actual Quantity)*Standard Price
= (770-800)*12.50
= $375 Unfavorable
The Direct material cost variance = 600 – 375
= $225 favorable
D.L Marx and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Barnes, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign, the company's controller has prepared and presented Mr. Barnes with the following data for the current year, 2017:
Total variable cost per bowl: $12.60Total fixed costs: $184,800Selling price: $28.00
Expected sales, 21500 units: $602,000Income tax rate: %40What is the projected net income for 2017?
Final answer:
The projected net income for 2017 is $198,660.
Explanation:
To calculate the projected net income for 2017, we need to calculate the total variable costs and the total fixed costs. The total variable cost is the variable cost per bowl multiplied by the expected sales volume, which is $12.60 multiplied by 21,500 units, equal to $270,900. The total fixed costs remain constant at $184,800. Next, we calculate the total revenue by multiplying the selling price by the expected sales volume, which is $28.00 multiplied by 21,500 units, equal to $602,000.
Now, we can calculate the gross profit by subtracting the total variable costs from the total revenue, which is $602,000 minus $270,900, equal to $331,100. Then, we calculate the income tax expense by multiplying the gross profit by the income tax rate, which is $331,100 multiplied by 0.40 (40%), equal to $132,440.
Finally, we calculate the projected net income by subtracting the income tax expense from the gross profit, which is $331,100 minus $132,440, equal to $198,660. Therefore, the projected net income for 2017 is $198,660.
The following transactions occurred during July: Received $1,040 cash for services provided to a customer during July. Received $4,800 cash investment from Bob Johnson, the owner of the business Received $890 from a customer in partial payment of his account receivable which arose from sales in June. Provided services to a customer on credit, $515. Borrowed $7,400 from the bank by signing a promissory note. Received $1,390 cash from a customer for services to be rendered next year. What was the amount of revenue for July
Answer:
$1,555
Explanation:
Revenue for July
Received cash for services provided to a customer $1,040
Add services provided to a customer on credit $515
Total July Revenue $1,555
Therefore the amount of revenue for July will be $1,555
g Exhibit 31-3 Costs of Eliminating: Firm A Firm B Firm C 1st unit of pollution $ 20 $ 50 $ 500 2nd unit of pollution $ 60 $100 $ 700 3rd unit of pollution $120 $180 $1,000 4th unit of pollution $200 $350 $1,500 5th unit of pollution $300 $500 $2,500 6th unit of pollution $400 $600 $4,000 Refer to Exhibit 31-3. What is the cost to Firm A of eliminating 4 units of pollution
Answer:
$380
Explanation:
Firm A Firm B Firm C
1st unit of pollution $20 $50 $500
2nd unit of pollution $60 $100 $700
3rd unit of pollution $120 $180 $1,000
4th unit of pollution $200 $350 $1,500
5th unit of pollution $300 $500 $2,500
6th unit of pollution $400 $600 $4,000
Firm A's cost of eliminating four units of production = the sum of the costs of eliminating the four units = $20 (for the first unit) + $60 (for the second unit) + $120 (for the third unit) + $200 (for the fourth unit) = $380
This table does not show cumulative costs, instead it shows the marginal costs of eliminating an extra unit of pollution.
Equipment which cost $426,000 and had accumulated depreciation of $228,000 was sold for $222,000. This transaction should be shown on the statement of cash flows (indirect method) as a(n):________.
A) deduction from net income of $24,000 and a $222,000 cash inflow from investing activities.
B) deduction from net income of $24,000 and a $198,000 cash inflow from investing activities.
C) addition to net income of $24,000 and a $222,000 cash inflow from financing activities.D) addition to net income of $24,000 and a $198,000 cash inflow from financing activities.
Answer:
A) deduction from net income of $24,000 and a $222,000 cash inflow from investing activities
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.
When an asset is sold, the gain on disposals is a non cash items that will be deducted (or added where a loss was made on disposal) to the net income. The amount received from the disposal is recognized as an inflow in the investing section of the cash flow statement.
The gain/(loss) from disposal
= $222,000 - ($426,000 - $228,000)
= $24,000
What should organizations keep in mind when using logos?
In addition to its look or appeal, when the logo of a brand is easy to ______, customers prefer to choose that brand. This gives a competitive advantage to the brand.
Answer:
Identify
Explanation:
When a logo is not only aesthetically-pleasing, relevant, and adequate, but also easy to identify, customers will tend to like the logo so much that some of them could make their decision to buy based on the logo alone.
An attractive logo is a crucial part of the marketing mix (is both part of the product and the promotion aspect), and the marketing strategy in general, and for this reason, a great degree of attention should be paid to designing the logo.
Some of the largest firms in the world have memorable logos that almost any customer can identify, for example, Apple, has its famous apple logo, and Microsoft uses the stylized window logo for its operating system of the same name.
Answer:
remember
Explanation:
In 2006, Jarrett Company purchased a tract of land as a possible future plant site. In January, 2014, valuable sulphur deposits were discovered on adjoining property and Jarrett Company immediately began explorations on its property. In December, 2014, after incurring $800,000 in exploration costs, which were accumulated in an expense account, Jarrett discovered sulphur deposits appraised at $4,500,000 more than the value of the land. To record the discovery of the deposits, Jarrett should ________.
Answer:
debit $800,000 to an asset account
Explanation:
To record the discovery of the deposits, Jarrett should debit $800,000 to an asset account because Jarrett Company purchased a tract of land as a possible future plant site which is an asset in which
In December, 2014, after incurring $800,000 in exploration costs, which were accumulated in an expense account, Jarrett discovered sulphur deposits appraised at $4,500,000 more than the value of the land which is why to record the discovery of the deposits, Jarrett should debit the $800,000 to an asset account.
Jarrett Company should capitalize the $800,000 exploration costs as part of the land's asset value on its balance sheet to accurately reflect the increased value due to the discovered sulfur deposits.
In 2006, the Jarrett Company purchased a tract of land for potential future use, which remained dormant until 2014 when neighboring lands discovered valuable sulfur deposits, prompting exploration on Jarrett's property. After incurring $800,000 in exploration costs by the end of 2014, the company unearthed sulfur deposits appraised at $4,500,000 more than the land's value. To correctly account for this discovery, Jarrett should capitalize the $800,000 exploration expenditure as part of the land's asset value on its balance sheet rather than treating it as an expense. This reclassification acknowledges the increased value of the land due to the discovered sulfur deposits, aligning with accounting practices that asset improvements or enhancements that significantly increase the asset's value should be capitalized.
Blue Corporation purchases a patent from Crane Company on January 1, 2020, for $41,000. The patent has a remaining legal life of 16 years. Blue feels the patent will be useful for 10 years. Assume that at January 1, 2022, the carrying amount of the patent on Blue’s books is $32,800. In January, Blue spends $29,600 successfully defending a patent suit. Blue still feels the patent will be useful until the end of 2029. Prepare the journal entries to record the $29,600 expenditure and 2022 amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Final answer:
To record Blue Corporation's patent defense expenditure, debit the patent account and credit Cash. Then, calculate the patent's new carrying amount and record the 2022 amortization based on the remaining useful life.
Explanation:
When Blue Corporation purchased a patent from Crane Company, it was expected to be useful for 10 years. Spending $29,600 defending the patent suit is an additional investment into the patent, which effectively increases its carrying value. The patent's amortization should reflect the revised carrying amount over the remaining useful life from the date of the legal expenditure.
The journal entry to record the legal expenditure, assuming this adds value to the patent and is not immediately expensed, would be:
Patents (or Patent defense expenditure) Dr. $29,600
Cash Cr. $29,600
Next, to calculate the amortization for the year 2022, first, we adjust the carrying amount of the patent:
Carrying amount as of January 1, 2022: $32,800
Add: Patent defense expenditure: $29,600
New carrying amount: $62,400
Then we calculate the amortization expense:
Amortization for 2022 = New carrying amount / Remaining useful life of the patent (which is 8 years from 2022 to the end of 2029)
Amortization for 2022 = $62,400 / 8 = $7,800
The journal entry to record the amortization for 2022 would be:
Amortization Expense Dr. $7,800
Accumulated Amortization - Patents Cr. $7,800
Denise Cruz receives a regular salary of $900 a month and is entitled to overtime pay at the rate of one and one-half times the regular hourly rate for any time worked in excess of 40 hours per week. Cruz's overtime rate of pay is
Answer:
Overtime rate is $8.4375 per hour
Explanation:
Given the information:
regular salary of $900 a monthover time rate = 1.5 regular rateAs we all know that, overtime pay rate is more than the regular pay rate because that person work more than her/his standard hours
In this situation, the standard hours is 40 hours per week.
=> Total Number of Hours worked in a month
= 40 x 4
= 160 hours
=> Regular rate per hour
= $900 / 160 = $5.625 per hour
=> Overtime rate
= $5.625 x 1.5 = $8.4375 per hour
Hope it will find you well.
The company has a capital structure that consists of 50% debt and 50% common stock the company’s CFO has obtained the following information: The yield to maturity on the company’s bonds is 7% The coupon rate on the company’s bonds is 5% The next expected dividend is expected to be $7.00 The dividend is expected to grow at a constant rate of 5% per year The stock price is currently $75 per share The tax rate is 35% What is the WACC? brainly
Answer:
9.44%
Explanation:
Market price = Next dividend/(return on equity - growth rate)
Therefore, we have:
$75 = $7 / (Return on equity - 5%)
(Return on equity - 5%) * $75 = $7
(Return on equity * $75) - (75$ * 5%) = $7
(Return on equity * $75) - $3.75 = $7
(Return on equity * $75) = $7 + $3.75
Return on equity = $10.75 / $75 = 0.1433, or 14.33%
WACC = (50% * 14.33%) + [(50% * 7% * (100% - 35%)] = 9.44%
On June 3, 2019, Hunt Company sold to Ann Mount merchandise having a sales price of $8,000 (cost $6,000) with terms of n/60, f.o.b. shipping point. Hunt estimates that merchandise with a sales value of $800 will be returned. An invoice totaling $120 was received by Mount on June 8 from Olympic Transport Service for the freight cost. Upon receipt of the goods, on June 8, Mount returned to Hunt $300 of merchandise containing flaws. Hunt estimates the returned items are expected to be resold at a profit. The freight on the returned merchandise was $24, paid by Hunt on June 8. On July 16, the company received a check for the balance due from Mount. No further returns are expected. Prepare journal entries for Hunt Company to record all the events in June and July.
Answer and Explanation:
The Journal entry is shown below:-
1. Account Receivable Dr, $8,000
To Sales Revenue $8,000
(Being credit sales is recorded)
2. Cost Of Goods Sold Dr, $6,000
To Inventory $6,000
(Being Cost of goods sold is recorded)
3. Sales return and allowance Dr, $300
To Account Receivable $300
(Being sales returns is recorded)
4. Inventory $25
(300 × $6,000 ÷ $8,000)
(300 × 75%)
To Cost Of Goods Sold $225
(Being Cost of goods sold is recorded)
5. Freight (Expense) Dr, $24
To Cash $24
(Being freight paid is recorded)
6. Cash Dr, $7,700
($8,000 - $300)
Accounts Receivables Dr, $7,700
(Being collection of accounts receivables is recorded)
BBBC is considering a similar mail campaign in the Midwest where it has data for 50,000 customers. Such mailings typically promote several books. The allocated cost of the mailing is $0.65/addressee (including postage) for the art book, and the book costs $15 to purchase and mail. The company allocates overhead to each book at 45% of cost. The selling price of the book is $31.95. Based on the model, which customers should Bookbinders target? How much more profit would you expect the company to generate using these models as compare to sending the mail offer to the entire list.
Final answer:
Bookbinders should focus on profitable customers to increase overall profit.
Explanation:
Based on the given information, Bookbinders should target the customers who are most likely to generate the highest profit. To determine this, we need to consider the cost and revenue associated with the mail campaign.
1. Calculate the cost of sending the mail offer to the entire list:
- Number of customers in the Midwest: 50,000
- Cost per addressee: $0.65
- Total cost of mailing = Number of customers * Cost per addressee = 50,000 * $0.65 = $32,500
2. Calculate the cost and revenue for each book:
- Book cost (including mailing) = $15
- Overhead cost (45% of book cost) = 45% * $15 = $6.75
- Total cost per book = Book cost + Overhead cost = $15 + $6.75 = $21.75
- Selling price of the book = $31.95
3. Calculate the profit for each book:
- Profit per book = Selling price - Total cost per book = $31.95 - $21.75 = $10.20
In summary, Bookbinders should target customers who are most likely to generate profit, but without additional information such as customer preferences or response rates, it is not possible to determine which customers to target. Additionally, the expected additional profit cannot be calculated without the response rate and conversion rate.
With practical illustrations discuss how managers can leverage on organizational behaviour component to maximize business success
Answer:
Leadership, Communication and culture are the components of organization structure.
(Check Explanation for how they can be used to maximize business success).
Explanation:
So, organization behaviour is an aspect of Psychology and sociology that deals with the ways in which workers and employees behave are act in a specific company or business organization.
Just as it is stated above; Leadership, Communication, structure and culture are the components of organization structure and these components can be to maximize business success.
CULTURE: A company's culture can be use in maximizing business success through the way the workers in the company are expected (from their culture) to treat their customers. The culture is used in the assessment of PERSONALITIES that are needed to be recruited for the role in the organization for efficiency in the role so as to maximize success.
LEADERSHIP: the style of leadership adopted by each organization determines the way in which success can be maximized. Whether through the style in which the workers' s talent are being nurtured and ideas are collected from the employers or through the leadership style in which the leader dictates it all.
STRUCTURE: knowing the structure of an organization helps in maximizing success that is to say the workers know how management and authority operates which will aid in efficient success maximization.
Suppose your newspaper is trying to decide between two competing desktop publishing software packages, Macro Publish and Turbo Publish. You estimate that if you purchase x copies of Macro Publish and y copies of Turbo Publish, your company's daily productivity will be U(x, y) = 6x0.9y0.4 + x where U(x, y) is measured in pages per day (U is called a utility function). If x = y = 10, calculate the effect of increasing x by one unit. (Round your answers to two decimal places.) pages per day Interpret the result. This means that, if your company now has copies of Macro Publish and copies of Turbo Publish, then the purchase of one additional copy of Macro Publish will result in a productivity increase of approximately
Answer: 11.722
Explanation:
Two competing desktop publishing packages ; Macro publish and Turbo publish
If x and y copies of Macro publish and Turbo publish are purchased respectively ;
Daily Productitvity equals ;
U(x, y) = 6(x^0.9) (y^0.4) + x
where U(x, y) is measured in pages per day U is called a utility function
If x = y = 10
U(x, y) = 6(x^0.9) (y^0.4) + x
Therefore,
U(10,10) = 6(10^0.9) (10^0.4) + 10
U(10,10) = 119.716 + 10 = 129.716
The effect of increasing x by one unit results in
x = 11, y = 10
U(x, y) = 6(x^0.9) (y^0.4) + x
Therefore,
U(11,10) = 6(11^0.9) (10^0.4) + x
U(11,10) = 130.438 + 11 = 141.438
Productivity increase of approximately U(11,10) - U(10,10) = (141.438 - 129.716)
= 11.722 pages
First Link Services granted 20 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within five years. The common shares have a market price of $8 per share on the grant date of the restricted stock award. 1. Ignoring taxes, what is the total compensation cost pertaining to the restricted shares? 2. Ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives?
Answer:
(a). $160 million
(b). 32 million
Explanation:
According to the scenario, computation of the given data are as follows:-
We can calculate the Total compensation cost pertaining to the restricted shares by using following formula:-
a). Total Compensation Cost Pertaining to the Restricted Shares = Common Share × Market Price Per Share
= 20 million × $8
= $160 million
B). Effect on Earnings in the Year After the Shares are Granted to Executives = Total Compensation Cost ÷ Terminated Year
= $160 million ÷ 5
= 32 million
A company estimates that warranty expense will be 2% of sales. The company's sales for the current period are $176,000. The current period's entry to record the warranty expense is: Multiple Choice Debit Warranty Expense $3,520 credit Estimated Warranty Liability $3,520. Debit Estimated Warranty Liability $3,520 credit Cash $3,520. No entry is recorded until the items are returned for warranty repairs. Debit Warranty Expense $3,520 credit Sales $3,520.
Answer:
The answer is
Dr Warranty Expense $3,520
Cr Estimated Warranty Liability $3,520
Explanation:
Warranty expense is a contingent liability and it is defined as liabilities that may be incurred by a firm or business depending on the outcome of an uncertain future circumstance.
Current sales = $176,000
Warranty expense = $3,520(2% of $176,000).
The rule: Debit increases assets and expenses while credit reduces it.
Credit increases equity(stock), sales(revenue) and liabilities while debit reduces it.
Therefore the period entry is
Dr Warranty Expense $3,520
Cr Estimated Warranty Liability $3,520
The current period's entry to record the warranty expense is Debit Warranty Expense $3,520 credit Estimated Warranty Liability $3,520. This is due to the fact that the firm is recognizing the expense in accordance with the matching principle.
Explanation:In order to record the estimated warranty expense, the company should use the option: Debit Warranty Expense $3,520 credit Estimated Warranty Liability $3,520. This is due to the fact that the company is recognizing the expense at the time of the sale, in accordance to the matching principle of accounting.
Since the warranty expense is estimated at 2% of the sales and the company's total sales is $176,000, the total warranty expense would indeed be $3,520. Hence, to anticipate this potential future cost, the company would debit (increase) the Warranty Expense account and credit (increase) the Estimated Warranty Liability account by $3,520.
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GoSnow sells snowboards. Each snowboard requires direct materials of $128, direct labor of $53, and variable overhead of $63. The company expects fixed overhead costs of $301,000 and fixed selling and administrative costs of $229,000 for the next year. The company has a target profit of $189,800. It expects to produce and sell 11,800 snowboards in the next year. Compute the selling price using the variable cost method. (Round your answer to 2 decimal places.)
Answer:
Unitary selling price= $304.93
Explanation:
Giving the following information:
Unitary variable costs:
direct materials of $128
direct labor of $53
the variable overhead of $63.
Fixed costs:
The fixed overhead costs of $301,000
Fixed selling and administrative costs of $229,000
The company has a target profit of $189,800.
Units sold= 11,800 snowboards
First, we need to calculate the total contribution margin required:
Contribution margin= net profit + total fixed expense
Contribution margin= 189,000 + (301,000 + 229,000)
Contribution margin= $719,000
Now, we calculate the total variable expense:
Total variable cost= 11,800* (128 + 53 + 63)
TVC= 2,879,200
Finally, we calculate total sales and the unitary selling price:
Total sales= contribution margin + total variable cost
Total sales= 719,000 + 2,879,200= 3,598,200
Unitary selling price= 3,598,200/11,800= $304.93
John plans to make an investment today which promises to return to him $6,000 each year for five (5) years beginning one year from today. The investment account will earn 7% compounded annually. At the end of five years, the investment account balance will be zero.
What is the amount of John’s monthly payment?
Answer:
Give me a quick sec. Imma solve it out.
Explanation:
Imma solve it out. Gotta give me a sec
Damon Company receives its monthly bank statement, which reports a balance of $2,000. After comparing this to the company’s cash records, Damon’s accountants determine that deposits outstanding total $4,200 and checks outstanding total $4,450. Required: Calculate the reconciled bank balance for cash. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
The reconciled bank balance for cash is $1,750.
Explanation:
Bank reconciliation statement is prepared to reconcile the bank statement of a company to the balance per cash book (general ledger). The discrepancies between the two books are as a resulting of timing of transactions, outstanding checks, direct credit transfers to bank, among others.
The following is a way of reconciling the balance per bank statement to the cash book:
Damon Company
Bank reconciliation statement
Balance per bank statement $2,000
Add: Outstanding deposit $4,200
Less: Outstanding checks ($4,450)
Balance per cash book $1,750
Therefore, the reconciled bank balance for cash is $1,750.
A machine can be purchased for $140,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net income $ 9,500 $ 23,500 $ 64,000 $ 35,500 $ 94,000 Compute the machine’s payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places.)
Answer:
Payback is 4.08 years
Explanation:
The payback period is the number of years it take an initial investment outlay to repay itself.
When an even amount of cash flow is involved,the payback period is simply the initial investment divided by annual cash inflow.
However,an uneven cash flow situation like this is better handled using an excel approach where the payback year is the year prior to the year in which the cumulative cash inflow becomes positive plus a a fraction of the year tha follows as shown in the attached
Nickel Inc. purchased a tract of land as a possible future plant site in 2013. Valuable sulfur deposits were discovered on the land in March of 2018 and the company immediately began explorations on its property. In December of 2018, after incurring $800,000 in exploration costs, which were accumulated in an expense account, Nickel Inc. had the sulfur deposits appraised at $4,500,000 which is more than the value of the land. What should the company do to record the discovery of the deposits
Answer:
Debit $ 800,000 to the Asset Account.
Explanation:
With the help of successful efforts process we will find the solution of the given problem .The successful efforts process stated that,if the company are upgrading only those expenses or the cost that are involved with the discovery of oil and the gas then reserves are identified.
The successful efforts process stated that when the cost of exploration is achieved then the cost of the exploration is capitalized .So the sulfur reserves were identified therefore $800,000 in exploration expenses would be debited to the Asset Account.