Answer:
$20,500
Explanation:
Economic profit is the difference between the total revenue generated and the total explicit (direct) and implicit (Indirect cost ) incurred
Total revenue - (explicit cost + implicit cost )
Revenue 80,000
Explicit cost
Labor 5000
maintenance 2000
Electricity 1000
Total (8000)
Implicit cost
loan revenue forgone 1500
Previous earning 50000
Total (51,500)
Economic profit 20,500
Final answer:
The economic profits for Boston Batting Cages are calculated by subtracting both explicit and implicit costs from the revenues. The business earned an economic profit of $20,500 after accounting for all costs.
Explanation:
To calculate the economic profits for Babak's business, Boston Batting Cages, we need to consider both explicit and implicit costs against the revenues. Explicit costs are the direct, out-of-pocket expenses for the business operation, whereas implicit costs represent the opportunity costs of using resources that could be employed elsewhere.
Explicit Costs: Labor ($5,000) + Maintenance ($2,000) + Electricity ($1,000) = $8,000Implicit Costs: Foregone salary ($50,000) + Foregone interest on loan ($1,500) = $51,500Total Costs: $8,000 (explicit) + $51,500 (implicit) = $59,500Revenues: $80,000Economic Profit: Revenues - Total Costs = $80,000 - $59,500 = $20,500Economic profits consider both the tangible costs of running the business and the opportunity costs, providing a comprehensive picture of the business's true profitability.
Analyzing Balance Sheet Accounts A review of the balance sheet of Dixon Company revealed the following changes in the account balances: Required: 1. Classify each change in the balance sheet account as a cash flow from operating activities, a cash flow from investing activities, a cash flow from financing activities, or a noncash investing and financing activity. a. Increase in retained earnings b. Increase in equipment c. Increase in interest receivable d. Decrease in bonds payable e. Increase in unearned rent revenue f. Decrease in prepaid insurance g. Decrease in long-term investment h. Increase in accounts payable 2. Indicate whether each of the changes in the balance sheet accounts produces an increase in cash, produces a decrease in cash, or is a noncash activity. a. Increase in retained earnings b. Increase in equipment c. Increase in interest receivable d. Decrease in bonds payable e. Increase in unearned rent revenue f. Decrease in prepaid insurance g. Decrease in long-term investment h. Increase in accounts payable
Answer:
Dixon Company Requirement 1: a. Increase in Retained Earnings b. Increase in Equipment c. Increase in interest receivable d. Decrease in Bonds Payable e. Increase in Unearned Rent Revenue f. Decrease in Prepaid Insurance g. Decrease in Long Term Investment h. Increase in Accounts Payable Non Cash Activity Investing Activity Operating Activity Financing Activity Operating Activity Operating Activity Financing Activity Operating Activity Requirement 2: a. Increase in Retained Earnings b. Increase in Equipment on Cash Activity Decrease in Cash
Explanation:
See attached image for the table
Calla Company produces skateboards that sell for $69 per unit. The company currently has the capacity to produce 95,000 skateboards per year, but is selling 80,100 skateboards per year. Annual costs for 80,100 skateboards follow. Direct materials $ 937,170 Direct labor 680,850 Overhead 959,000 Selling expenses 549,000 Administrative expenses 475,000 Total costs and expenses $ 3,601,020 A new retail store has offered to buy 14,900 of its skateboards for $64 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following: Direct materials and direct labor are 100% variable. 40 percent of overhead is fixed at any production level from 80,100 units to 95,000 units; the remaining 60% of annual overhead costs are variable with respect to volume. Selling expenses are 60% variable with respect to number of units sold, and the other 40% of selling expenses are fixed. There will be an additional $2.90 per unit selling expense for this order. Administrative expenses would increase by a $810 fixed amount. Required: 1. Prepare a three-column comparative income statement that reports the following: a. Annual income without the special order. b. Annual income from the special order. c. Combined annual income from normal business and the new business. 2. Should Calla accept this order?
Answer:
I do not have the necessary space to prepare the three column analysis, but the answers to the questions are:
since the special order does not affect current normal sales, its analysis should only consider relevant expenses, not regular expenses:
A) Income statement without the special order
total revenue = $69 x 80,100 = $5,526,900
- COGS = ($2,577,020)
Direct materials $937,170Direct labor $680,850Overhead $959,000gross profit = $2,949,880
- SG&A = ($1,024,000)
Selling exp. $549,000
Administrative exp. $475,000
net income = $1,925,880
B) relevant revenue from special order = 14,900 x $64 = $953,600
- relevant costs:
direct materials = ($937,170 / 80,100 units) x 14,900 = $174,330direct labor = ($680,850 / 80,100 units) x 14,900 = $126,650overhead = ($575,400 / 80,100 units) x 14,900 = $107,034selling expenses = [($329,400 / 80,100 units) x 14,900] + ($2.90 x 14,900) = $74,952 + $48,330 = $104,484administrative expenses = $810total relevant costs = $513,308gain from special order = $953,600 - $513,308 = $440,292
C) Income statement with the special order
total revenue = $6,480,500
- COGS = ($2,985,034)
Direct materials $1,111,500Direct labor $807,500Overhead $1,066,034gross profit = $3,495,466
- SG&A = ($1,129,294)
Selling exp. $653,484Administrative exp. $475,810net income = $2,366,172
Answer:
Calla Company:
1. Comparative Income Statement:
This is attached.
a) Sales:
i) Normal = $69 * 80,100 = $5,526,900
ii) Special order = $64 * 14,900 = $953,600
iii) Combined = $6,480,500
b) Direct Materials Cost:
i) Normal = $937,170
ii) Special order = $174,330 ($937170/80,100 x 14,900)
iii) Combined = $1,111,500
c) Direct Labour Cost:
i) Normal = $680,850
ii) Special = $126,650 ($680,850/80,100 x 14,900)
iii) Combined = $807,500
d) Overhead Costs:
i) Normal - $959,000
ii) Special = $107,034 ((60% of $959,000)/80,100 x 14,900)
iii) Combined = $1,066,034
e) Selling Expenses:
i) Normal = $549,000
ii) Special = $61,274 (60% of $549,000)/80,100 x 14,900)
iii) Combined = $610,274
f) Administrative:
i) Normal = $475,000
ii) Special = $810
iii) Combined = $475,810
2. Advise:
Calla should accept this order. Income would increase by more than $400,000.
Explanation:
This is "an accept or reject" special order type of decision. To compute costs, only relevant costs, which will vary with the special order, are considered. Sunk costs, which do not make a difference, are not taken into account in arriving at the income for the special order.
This analysis is also called Incremental Analysis or Differential Analysis. It helps management to make a decision of whether to accept the special order or not. It is an important technique in managerial accounting.
Novak Corp. reported net income of $1.20 million in 2022. Depreciation for the year was $192,000, accounts receivable decreased $420,000, and accounts payable decreased $336,000. Compute net cash provided by operating activities using the indirect approach. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Answer:
$1,476,000
Explanation:
According to the scenario, computation of the given data are as follows:-
Statement of The Cash Flow 31 December,2022
Particular Amount Total Amount
Net Income $1,200,000
Depreciation $192,000
Accounts receivable Decrease $420,000
Accounts payable Decrease ($336,000)
$276,000
Net cash provided by operating activities $1,476,000
Purchases Budget Rest Inn provides four-star accommodations for the vacation traveler. It is located just off a major interstate freeway. There are three other competing motels at the same exit. Hotel management is preparing its budget for the busiest three-month period of the year, June through August. To differentiate themselves from the competition, Rest Inn provides a complimentary spa package for each guest stay that includes specialty shampoo, conditioner, soap, lotion, toothpaste, lavender essential oil, slippers, earplugs, and a sleep mask. Rest Inn purchases the spa package from a local vendor that puts the Rest Inn private label on the products. The hotel follows a policy of purchasing enough spa packages to ensure that 40% of next month’s bookings are in the current month’s ending inventory. Rest Inn’s sales budget for guest stays for the next quarter is as follows:
June 2,300 guest stays
July 2,500 guest stays
August 2,100 guest stays
How many spa packages should Rest Inn budget for purchase in July?
Answer:
2,340
Explanation:
The computation of purchase to be made on July is shown below:-
Particulars June July August
Sales 2,300 2,500 2,100
Add: Closing Inventory 1,000 840
(40% of next month)
Less: Opening Inventory 1,000 840
(Closing of previous month)
Purchases to be made 3,300 2,340 1,260
Therefore the purchase to be made on July is 2,340
Consider the assembly line of a laptop computer. The line consists of 12 stations and operates at a cycle time of 1.50 minutes/unit. Their most error-prone operation is step 1. There is no inventory between the stations, because this is a machine-paced line. Final inspection happens at station 12. What would be the information turnaround time for a defect made at station 1
Answer :
Information turnaround time = 16.50 minutes
Explanation :
As per the data given in the question,
Cycle time of whole line = 1.50 minutes/unit
which means 1 unit is made in 1.50 minutes. In the line of 12 stations 1st step is the most error prone.
Error made at step 1 means that unit must be processed by 11 other stations in order to be made and inspected at 12th station.
The information turnaround time = cycle time × number of stations after error is made
=1.50 × 11
= 16.50 minutes
The information turnaround time for a defect made at station 1 on an assembly line with a cycle time of 1.50 minutes/unit and final inspection at station 12 would be 16.5 minutes.
The information turnaround time for a defect made at station 1 on an assembly line producing laptop computers with the cycle time of 1.50 minutes/unit would be the time taken for the product to reach the final inspection stage at station 12. Since it's stated that this is a machine-paced line with no inventory between stations, we can calculate the turnaround time by multiplying the cycle time with the number of stations up to the inspection point. With 12 stations, including the station where the defect occurs and the final inspection station, the calculation would be:
Turnaround time = Cycle time x (Number of stations from the defective station to the inspection station)Turnaround time = 1.50 minutes/unit x (12 - 1)Turnaround time = 1.50 minutes/unit x 11Turnaround time = 16.5 minutesTherefore, the information turnaround time for a defect produced at station 1 and detected at station 12 would be 16.5 minutes.
The Doodad Company purchases a machine for $440,000. The machine has an estimated residual value of $40,000. The company expects the machine to produce eight million units. The machine is used to make 700,000 units during the current period.If the units-of-production method is used, the depreciation expense for this period is:___________.A. $38,500.B. $700,000.
C. $660,000.D. $35,000.
Answer:
Annual depreciation= $35,000
Explanation:
Giving the following information:
The Doodad Company purchases a machine for $440,000.
The machine has an estimated residual value of $40,000.
The company expects the machine to produce eight million units.
The machine is used to make 700,000 units during the current period.
To calculate the depreciation expense under the units-of production method, we need to use the following formula.
Annual depreciation= [(original cost - salvage value)/useful life of production in units]*units produced
Annual depreciation= [(440,000 - 40,000)/8,000,000]*700,000
Annual depreciation= 0.05*700,000
Annual depreciation= $35,000
Mills Corporation acquired as an investment $300 million of 7% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 5% for bonds of similar risk and maturity. Mills paid $340 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $325 million.Prepare the journal entry to record Mills’ investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate.
Answer and Explanation:
As per the data given in the question,
Journal entries on July 1 and Dec. 31,2021
July-01 Investment in bonds A/C Dr. $300 million
Premium on bonds A/c Dr. $40 million
To Cash A/c $340 million
Dec-31 Cash A/c Dr. $10.5 million
($300 × 3.5%)
To Premium on bonds A/c $2.00 million
To Interest Revenue A/c $8.5 million
($340 × 2.5%)
Runaround Corporation sells running shoes and during January they ran production machines for 29 comma 000 hours total and incurred $ 10 comma 500 in maintenance costs. During July they ran production machines for 15 comma 000 hours total and incurred $ 8 comma 600 in maintenance costs. Based on this data, what will total maintenance costs be if the machines are run for 18 comma 500 hours? (Round intermediary calculations to the nearest cent.)
Answer:
$9,075
Explanation:
As we know that:
Variable cost per hour = Cost Difference / Units Difference
Variable cost per hour = ($10,500- $8,600) / (29,000 - 15,000)
= $00.1357142857142857 per hour
Which means:
Fixed Cost = $10,500 - (29,000 * $0.0.1357142857142857 per hour)
= $6,564
The total variable cost for 18,500 hours is calculated as under:
Total Variable Cost = 18,500 Unit * $0.1357142857142857 per hour
= $2,511
Total Maintenance Costs = $6,564 + $2,511 = $9,075
Oriole Sportswear manufactures a line of specialty T-shirts using a job order costing system. In March the company incurred the following costs to complete Job ICU2: direct materials, $14,000, and direct labor, $4,400. The company also incurred $1,580 of administrative costs and $5,400 of selling costs to complete this job. Job ICU2 required 800 machine hours. Factory overhead was applied to the job at a rate of $25 per machine hour. If Job ICU2 resulted in 6,000 good shirts, what was the cost of goods sold per shirt
Answer:
6.4
Explanation:
The computation of cost of goods sold per shirt is shown below:-
For computing the cost of goods sold per shirt first we need to find out the factory overhead applied and total production cost which is here below:-
Factory overhead applied = 800 × $25
= $20,000
Total Production cost = Direct material + Direct labor + Factory overhead applied
= $14,000 + $4,400 + $20,000
= $38,400
Per Unit Cost of Goods Sold = Total Production cost ÷ Number of Units Per JOB ICU 2
= $38,400 ÷ 6,000
= 6.4
The articles of partnership stipulate that profits and losses be assigned in the following manner: ∙ Each partner is allocated interest equal to 5 percent of the beginning capital balance. ∙ Bernard is allocated compensation of $18,000 per year. ∙ Any remaining profits and losses are allocated on a 3:3:4 basis, respectively. ∙ Each partner is allowed to withdraw up to $5,000 cash per year. Assuming that the net income is $60,000 and that each partner withdraws the maximum amount allowed, what is the balance in Collins capital account at the end of that year?
Answer:
$80,700
Explanation:
A partnership begins its first year with the following capital balances:
Alfred, Capital $50,000 Bernard, Capital $60,000 Collins, Capital $70,000the partnership's net profits should be allocated the following way (drawings made by the partners should decrease their basis, but since the company made a profit they can be included in this distribution)
net income $60,000
partners' drawings plus salaries:
Alfred ⇒ $5,000 Bernard ⇒ $18,000 + $5,000 = $23,000Collins ⇒ $5,000interests owed to partners:
Alfred ⇒ $50,000 x 5% = $2,500Bernard ⇒ $60,000 x 5% = $3,000Collins ⇒ $70,000 x 5% = $3,500the remaining $18,000 should be distributed:
Alfred ⇒ $18,000 x 30% = $5,400Bernard ⇒ $18,000 + 30% = $5,400Collins ⇒ $18,000 x 40% = $7,200Collins's basis should increase by $3,500 + $7,200 = $10,700, ending balance = $70,000 + $10,700 = $80,700
Today's settlement price on a Chicago Mercantile Exchange (CME) yen futures contract is $0.8011/¥100. Your margin account currently has a balance of $2,000. The next three days' settlement prices are $0.8057/¥100, $0.7996/¥100, and $0.7985/¥100. (The contractual size of one CME yen contract is ¥12,500,000). If you have a long position in one futures contract, the changes in the margin account from daily marking-to-market, will result in the balance of the margin account after the third day to be?
Answer:
$2,325
Explanation:
$2,325 = $2,000 +¥12,500,000 *[(0.008011 - 0.008057) + (0.008057 - 0.007996) + (0.007996 - 0.007985)]
=$2,000 + ¥12,500,000 *)[(0.008011 - 0.007985)]
$0.8011/¥100 = $0.008011/¥
Hence:
$0.8057/¥100 = $0.008057/¥
Skydiver Question. Several of your friends have offered to take you on a tandem skydiving adventure: Strapped together with a single set of parachutes (main and emergency), you will all jump out of an airplane and then either float to earth or crash. All your skydiving friends are equally skillful, and none of them has the thrill-seeker gene. You can ask each of them a single question.
a. Whats your question?
b. Provide the answer you re looking for in a skydiving mate.
Answer:
a. My question will be to ask them "do you have life insurance?"
Life insurance is defined as a form of indemnity against a future occurrence on the life of an individual . In any case of death, the insurance policy pays a sum of money to the beneficiary.
b. The answer i will be looking for in a skydiving mate will be an individual that has life insurance. This is because an individual with life insurance will be more careful.
Cornett Company reported the following information: cash received from the issuance of common stock, $150,000; cash received from the sale of equipment, $14,800; cash paid to purchase an investment, $20,000; cash paid to retire a note payable, $50,000; and cash collected from sales to customers, $225,000. What amount should Cornett report on its statement of cash flows as net cash flows provided/used by investing activities
Answer:
The correct option is B,-$5,200 as found in the attached.
Explanation:
The net cash flows provided/used by investing activities are cash flows(both inflows and outflows) on assets that are capable of generating earnings directly or indirectly for the business.
By direct ,I mean assets that are used directly in the business to enhance the business earnings while indirect relates those that are not used in core business operations.
Cash flow from investing activities is computed:
Cash received from sale of equipment $14,800
cash paid to purchase investment ($20,000)
Cash flow used in investing activities ($5,200)
The correct option is B as found in the attached .
A personal computer is used for office work at home, research, communication, personal finances, education, entertainment, social networking, and a myriad of other things. Suppose that the average number of hours a household personal computer is used is 4.4 hours per day, across the population of households in the United States. Assume the the population of household usage times is normally distributed and the standard deviation for the times is 2 hours.
You are told that a given household (Household A) from the population has the following two qualities
1. It uses its computer an above-average number of hours per day.
2. The probability of randomly drawing a household with a computer-usage at least as extreme (i.e., combining across extremely high and low usage rates) as Household A is 0.02.
What is the minimum number of hours per day that Household A must use its computer? Round your answer to the second decimal place. If you can't find the exact table entry you're looking for, use the table entry that's closest. If there's a tie, use the smaller of the two options.
**please explain each step to get the correct answer. Answer is 9.06
Answer:
Check the explanation
Explanation:
There are also many alternatives ways to solve this problem, but i think that you can understand the below concept which i have provided in the attached image.
Given that the probability of randomly drawing a household with a computer usage at least as extreme as Household A is 0.02, the minimum number of hours per day that Household A must use its computer is 9.06 hours.
Explanation:In this question, we're essentially being asked to find the Z score (the number of standard deviations from the mean) for a given probability. Here the average daily household use of a computer is given as 4.4 hours, and we're told the standard deviation (SD) is 2 hours.
We know from the information given that the household's usage is above average and their combined extreme usage rate, either high or low, is equivalent to a two-sided probability of 0.02. Since the distribution is normal, we find the corresponding Z score for one tail which equals to 0.02/2 = 0.01. Looking up in a standard Z score table, we find that the Z score corresponding to the 0.01 tail probability is about 2.33.
Now we can figure out the household's usage in comparison to the mean. Each Z score represents one SD from the mean. Using the formula X = μ + Zσ, X is the raw score we want to find, μ is the mean (4.4), Z is the Z score (2.33), and σ is the standard deviation (2). So, X = 4.4 + 2.33 * 2 = 9.06 (rounded to the second decimal place). So the household we're looking at must be using its computer at least 9.06 hours per day.
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There is a raging debate at the IT consulting firm where you work. Some staff members believe that it is harder for experienced analysts to learn object-modeling techniques, because the analysts are accustomed to thinking about data and processes as separate entities. Others believe that solid analytical skills are easily transferable and do not see a problem in crossing over to the newer approach. What do you think, and why?
Answer:
I think that solid analytical skills are easily transferable. So, there is no problem in crossing over to the newer approach.
Explanation:
An experienced analyst possesses core analytical skills such as researching, critical thinking, adaptability, eye for detail and strategy.
Now, the introduction of object modelling which differs from their current procedure will require a general orientation and if need be a thorough training on their part to get used to.
A skilled analysts, they can easily cross over to the new approach of object modeling which involves designing and developing object oriented software modeled from objects in the real world.
Final answer:
Experienced analysts can transition to object-modeling techniques by refining analytical skills and embracing new perspectives through continuous learning and adaptation in the technology and business sectors.
Explanation:
Object-modeling techniques can pose a challenge for experienced analysts who are used to separating data and processes, as this new approach requires a different mindset. However, solid analytical skills are indeed transferable, and individuals skilled in analysis can adapt to object-modeling techniques by honing their critical thinking abilities and by embracing the shift in perspective.
By learning new skills through observation, practice, and adaptation, workers in various industries can navigate changes in technology and management styles. It is crucial to continuously refine both job-specific and transferable skills to stay relevant and adaptable in the evolving landscape of technology and business.
MangiareBuono, a supermarket chain, has asked Fiorello to supply it with 30,000 gallons of Top Quality Oil at a price of $8 per gallon. MangiareBuono plans to have the oil bottled in 16-ounce bottles with its own MangiareBuono label. If Fiorello accepts the order, it will save $0.23 per gallon in the packaging of Top Quality Oil. There is sufficient excess capacity for the order. However, the market for Refined Oil is saturated, and any additional sales of Refined Oil would take place at a price of $3.10 per gallon. Assume that no significant non-unit-level activity costs are incurred.
a. What is the profit normally earned on one production run of Refined Oil and Top Quality Oil?
b. Should Fiorello accept the special order?
Answer:
The complete question and solution is given in the box below
Explanation:
Special Order, Traditional Analysis Fiorello Company manufactures two types of cold-pressed olive oil, Refined Oil and Top Quality Oil, out of a joint process. The joint (common) costs incurred are $92,500 for a standard production run that generates 30,000 gallons of Refined Oil and 15,000 gallons of Top Quality Oil. Additional processing costs beyond the split-off point are $2.40 per gallon for Refined Oil and $1.95 per gallon for Top Quality Oil. Refined Oil sells for $4.25 per gallon, while Top Quality Oil sells for $8.30 per gallon. MangiareBuono, a supermarket chain, has asked Fiorello to supply it with 30,000 gallons of Top Quality Oil at a price of $8 per gallon. MangiareBuono plans to have the oil bottled in 16-ounce bottles with its own MangiareBuono label. If Fiorello accepts the order, it will save $0.23 per gallon in packaging of Top Quality Oil. There is sufficient excess capacity for the order. However, the market for Refined Oil is saturated, and any additional sales of Refined Oil would take place at a price of $3.10 per gallon. Assume that no significant non-unit-level activity costs are incurred. Required: 1. What is the profit normally earned on one production run of Refined Oil and Top Quality Oil? $ 2. Should Fiorello accept the special order?
solution
a) normal profit = (30,000 gallons x $4.25) + (15,000 gallons x $8.3) - $193,750 = $58,250
b) Do determine whether to accept the special order
cost per gallon = $92500 x 15000
45000
$30833
= 15000
$2.1 per gallon
$2.1 + $1.95 = $4.05
profit margin per gallon = $8 - $4.05 - $0.23
= $3.72
In this manner, special order ought to be acknowledged as we can see the net revenue is adequate to recover the related expenses and friends has the entrance limit also.
A firm commitment arrangement with an investment banker occurs when the: issue is solidly accepted in the market as evidenced by a large price increase. investment banker buys the securities for less than the offering price and accepts the risk of not being able to sell them. spread between the buying and selling price is less than one percent. investment banker sells as much of the security as the market can bear without a price decrease. syndicate is in place to handle the issue.
Answer:
A firm commitment arrangement with an investment banker occurs when an investment banker buys the securities for less than the offering price and accepts the risk of not being able to sell them.
The correct option is B.
Explanation:
A firm commitment arrangement happens when an investment banker buys the securities for less than the offering price and accepts the risk of not being able to sell them.
However, the issuer receives a little less money than the offering price but he gets a specific amount for all the security being issued. The risk rests completely on the investment banker.
Therefore, the correct option is B.
Sepulvada Manufacturing Corporation produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $4 per pound, but a 2% discount is usually taken. Freight costs are $.15 per pound, and receiving and handling costs are $.10 per pound. The hourly wage rate is $9.00 per hour, but a raise which will average $.25 will go into effect soon. Payroll taxes are $1.00 per hour, and fringe benefits average $2.00 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct labor rate per hour is:
Answer:
$12
Explanation:
The standard direct labor rate is the budgeted direct labor cost per hour incurred in the manufacturing process. It is used to calculate the budgeted production costs:
the current hourly wage is $9.00 and we must add the payroll taxes per hour ($1.00) and the fringe benefits per hour ($2.00) = $9 + $1 + $2 = $12
Even though a pay raise will occur soon, until it does actually happen, it cannot be considered in the calculation of the standard labor rate.
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost.
Last year, the company sold 36,000 of these balls, with the following results:
Sales (36,000 balls) $ 900,000
Variable expenses 540,000
Contribution margin 360,000
Fixed expenses 263,000
Net operating income $ 97,000
Required:
1. Compute the CM ratio and the break-even point in balls.
2. Compute the the degree of operating leverage at last year.
Answer: 15$ per ball and 60% is direct label cost! Ur answer’s are 15$ and 60% dlc!
Explanation:
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost.
Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and unit contribution margin are as follows. Sales Mix Unit Contribution Margin Lawnmowers 20 % $30 Weed-trimmers 50 % $21 Chainsaws 30 % $39 Yard Tools has fixed costs of $4,342,800. Compute the number of units of each product that Yard Tools must sell in order to break even under this product mix. Lawnmowers Enter a number of units units Weed-trimmers Enter a number of units units Chainsaws Enter a number of units units
Answer:
Total Break even sales = 154,000 units
Lawnmowers ($154,000 × 20%) = 30,800 Units
Weed-trimmers ($154,000 × 50%) = 77,000 units
Chainsaws ($154,000 × 30%) = 46,200 Units
Explanation:
As per the data given in the question, the computation is shown below:
Weighted contribution margin = Contribution margin × Sales mix
= (0.2 × 30) + (0.5 × $21) + (0.3 × $39)
= $28.2
Now, Total break even sales = Fixed cost ÷ Weighted contribution margin
= $4,342,800 ÷ $28.2
= 154,000 units
So classifications are as follows
Lawnmowers ($154,000 × 20%) = 30,800 Units
Weed-trimmers ($154,000 × 50%) = 77,000 units
Chainsaws ($154,000 × 30%) = 46,200 Units
We simply multiplied the total break even sales with each sales mix
Mayfield Company sells two products, Blue models and Plaid models. Blue models sell for $45 per unit with variable costs of $30 per unit. Plaid models sell for $50 per unit with variable costs of $25 per unit. Total fixed costs for the company are $19,950. Mayfield Company typically sells two Blue models for every three Plaid models. Required: What is the breakeven point in total units
Answer:
Break even point in total units is 950 units
Explanation:
The break even point in total units is the composite break even point considering both the products. This will give us one overall break even point for the company. The break even point in units is the number of units that must be sold in order for the total revenue to be equal to total costs.
To calculate the over all break even in units, we need to divide the fixed costs by the weighted average contribution per unit.
Weighted average contribution per unit = weight of product A in sales mix * contribution of product A + weight of product B in sales mix * contribution of product B
Sales mix = 2 + 3 = 5
Blue = 2 / 5 = 0.4
Plaid = 3 / 5 = 0.6
Weighted average contribution per unit = 2/5 * (45 - 30) + 3/5 * (50 - 25)
Weighted average contribution per unit = $21 per unit
Break even point in units = 19950 / 21 = 950 units
On January 1, 2018, M Company granted 99,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2020, and expire on January 1, 2024. Each option can be exercised to acquire one share of $1 par common stock for $11. An option-pricing model estimates the fair value of the options to be $3 on the date of grant.
If unexpected turnover in 2019 caused the company to estimate that 10% of the options would be forfeited, what amount should M recognize as compensation expense for 2019?
Multiple Choice
$99,000
$33,000
$79,200
$49,500
Answer:
$79,200
Explanation:
The computation of the compensation expense for 2019 is shown below:
= Number of stock options × fair value of the options × remaining percentage × basis of share - Number of stock options
= [(99,000 × $3) × 90% × 2 ÷ 3] - 99,000
= $79,200
We simply applied the above formula so that the compensation expense for 2019 could come
Fifteen years ago, you deposited $12,500 into an investment fund. Five years ago, you added an additional $20,000 to that account. You earned 8%, compounded semi-annually, for the first ten years, and 6.5%, compounded annually, for the last five years.
Required:
a)
What is the effective annual interest rate (EAR) you would get for your investment in the first 10
years?
b)
How much money do you have in your account today?
c)
If you wish to have $85000 now, how much should you have invested 15 years ago?
Answer:
Part A: 8.16%
Part B: $56,577.5
Part C: $39,700
Explanation:
Part A:
EAR = (1 + r / n )^ n - 1
Here
r is the nominal interest rate, which is 8%
n is the number of compounding periods in a year and here, for semiannual requirement it is 2.
So by putting values in the above equation, we have:
EAR = (1 + 8% /2) ^2 - 1
= 8.16 %
Part B:
Amount invested is $12500 which must be compounded for 10 years semi annually at the EAR. This means
The future value = Initial Investment + Interest Income for 10 year
Future Value after 10 years = $12500 + ( $12500 * 8.160%*10 years)
= $22,700
Similarly,
Amount invested for next 5 years is $42,700 ($22,700 and the additional $20,000 which was added to the account). This amount must be compounded for next 5 years at 6.5%. This means
Value Today = Initial Investment + Interest Income for 5 year
The Future Value = $42,700 + (42,700 * 6.5% * 5 years) = $56,577.5
Part C:
Let the initial amount that was deposited be "x".
As per the guidelines given in the question, for first 10 years the interest is EAR which is 8.16%.
Interest Earned = (x * 8.16% * 10 Years) = 0.816x
The same initial investment "x" would be investment for the next 5 years at 6.5% rate.
For next 5 years:
Interest Earned = (x * 6.5% * 5) = 0.325x
Future value of the investment at the end of the year 15 = $85,000
0.816x + 0.325x + x = $85,000
2.141x = $85,000
x = $85,000 / 2.141 = $39,700
1) You are indecisive about which stock to buy Microsoft, which is selling for $173 a share; or Apple, which is selling for $285 a share. Microsoft stock promises to pay annual dividends of $4.00, $5.00, and $5.50 over the next three years respectively, and you estimate it can be sold for $190 at the end of the third year. You expect Apple to pay a dividend of $5.50 the first year, $8.50, and $10.50 over the next two years, respectively. You also expect Apple’s stock to be trading at $330 in three years. Which stock would you buy if stocks from computer manufacturers typically yield 10%?
Answer:
I would buy the APPLE stock
Explanation:
Microsoft stock price = $173
dividends earned = $4, $5 and $5.5
value after 3 years = $190
Apple stock price = $285
Dividends earned = $5.5, $8.5 and $10.5
value after 3 years = $330
Applying the dividend discount model
IVO = present value of dividend + present value of terminal price
for Microsoft
IVO = ( 4/1.1 + (5/(1.1/2)) + ( 5.5/(1.1/3)) + ( 190/(1.1/3))
= $154.65
for Apple
IVO = ( 5.5/1.1 + ( 8.5/( 1.1/2)) + (10.5/(1.1/3)) + ( 330/(1.1/3))
= $267.8
Note: the IVO's are less than the current price of the stocks ( IVO = the intrinsic value of the shares ) but Microsoft shares are overpriced compared to apple
Answer:
If decided to purchase, Apple will yield better
Explanation:
we solve for the present value of the future cashflow discounted at 10%
we will then compare against the current market price and pick with the better NPV
Microsoft:
[tex]\left[\begin{array}{ccc}#&Cashflow&Discounted\\1&4&3.64\\2&5&4.13\\3&195.5&146.88\\TOTAL&&154.65\\\end{array}\right][/tex]
154.65 - 173 = -18.36
Apple:
[tex]\left[\begin{array}{ccc}#&$Cashflow&$Discounted\\1&5.5&5\\2&8.5&7.02\\3&340.5&255.82\\&TOTAL&267.84\\\end{array}\right][/tex]
267.84 - 285 = -17.16
Now, as both are negative we must decide if we accep to receive less than 10% in which case, we will purchase stock as their net present alue is higher than microsoft.
Corporations often distribute profits to their shareholders in the form of dividends, which are simply checks mailed out to shareholders. Suppose that you have the chance to buy a share in a fashion company called Rogue Designs for $35 and that the company will pay dividends of $2 per year on that share every year. What is the annual percentage rate of return?
Answer:
5.71%
Explanation:
Corporations annual percentage rate of return
Dividends of $2 per year ÷ Designs for $35
=0.0571
=0.0571×100
=5.71%
Therefore a yearly dividend of $2 on a $35 share of stock equals a 5.71% annual rate of return
The annual percentage rate of return for the $35 share in Rogue Designs, which pays a $2 dividend per year, is approximately 5.71%.
Explanation:In this scenario, we're asked to determine the annual percentage rate of return for an investment in a share of a company called Rogue Designs. This concept is a term from financial mathematics that refers to the annual percent change in an investment's value. The formula to calculate the annual return rate is: Annual Return Rate = (Annual dividend / Price of share) x 100%.
In the case you presented, Rogue Designs' share costs $35 and it pays a $2 dividend per year. Substituting these given values into the formula, we find the annual return rate equals: (2 / 35) x 100%. So, the annual return rate is approximately 5.71%.
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With a required reserve ratio of 20%, explain in detail how an Open Market Purchase of $100,000 from an individual leads to an expansion in the money supply. I would like you to describe (at least) four different "rounds" in this process. By how much does the money supply increase during each round? What is the maximum the money supply can increase from this Open Market Purchase? What can lead to the actual increase being much lower than the above number?
Answer:
the answer is 500000
Explanation:
Solution
When bank gives out loan they don't reimburse them in cash rather they pit in amount into their demand deposit and deposit is also part of supply of money.
Normally, let's say bank give loan of 100000 to a first person.then bank will give the person 1 with the deposit demand in his account. based on requirements reserve ratio, the bank will keep 20% with them in cash and borrow the remaining 80000 to other person.
Again, the bank will deposit in person 2 or second person and lend 64000 o third person and keep 16000 as cash.
Importantly, in the explanation above when we say bank will deposit 80000 in persons account,its only refers to as book keeping, that is, it is written only in books and the account holder balance goes higher but the actual money stays with the bank.
Now,
Total amount of money supply bank can produce = the multiplier*high money powered =1/0.2*100000
=500000
Summer Manufacturing Company uses an average of 30 gallons of cleaning fluid a day. Usage tends to be normally distributed with a standard deviation of 3 gallons per day. Lead time is normally distributed averaging 7 days with a standard deviation of 4 days. The company hopes to keep the desired service level is 90 percent. What amount of safety stock is appropriate if a fixed order size of 600 gallons is used?
Answer:
Safety Stock = 153.94 [tex]\approx[/tex] 154 gallons
Solution:
Average Demand =[tex]D_{avg} = 30 gallons/day[/tex]
Standard deviation of demand = [tex]\sigma_{d} = 3 gallons[/tex]
Average Lead Time = [tex]LT_{avg} = 7 days[/tex]
Standard deviation of Lead Time= [tex]\sigma_{LT} = 4 days[/tex]
Service Level = 90%
For Service Level 90%, Z-Score = 1.28
Z-score is called Service Factor
Calculation of Safety Stock:
Safety Stock = [tex]Z \times \sqrt{[(LT_{avg}\times \sigma_{d}^2)+(\sigma_{LT}\times D_{avg})^2]}[/tex]
Safety Stock =[tex]1.28 \times \sqrt{[(7\times 3^2)+(4\times 30)^2]}[/tex]
Safety Stock = [tex]153.94 \approx 154 gallons[/tex]
3. (1 point) Suppose a firm faces potential demand from two customer bases, H and L, with high and low valuation of the firm’s product, respectively. If the product has network externalities and all type H customers are currently purchasing the product, then the price that can be charged to L consumers ________. a. increases with the number of H consumers b. decreases with the number of H consumers c. is independent of the number of H consumers d. cannot be determined because the price charged to H is not known
Answer: A. increases with the number of H consumers.
Explanation: If all type H customers are currently purchasing the product, it means that its customer base is large and significant enough and as such the firm would prefer to sell all of its product to H, and also do to the fact that there is only so much supply that a firm can provide. But, fewer quantities of goods would remain for L if more and more goods are sold to H. Due to this lower quantity supplied to the L customer base, it then means that the firm can set the price higher for L. This is because at a higher price, quantity demanded reduces (which is expected for L) and it can therefore maintain supply to H which has more customers.
Oceanic Company has 15,000 shares of cumulative preferred 2% stock, $150 par and 50,000 shares of $15 par common stock. The following amounts were distributed as dividends: 20Y1 $67,500 20Y2 22,500 20Y3 135,000 Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'.
Final answer:
The dividends per share for the preferred and common stock for each year are as follows: Preferred stock: 20Y1 - $4.50, 20Y2 - $1.50, 20Y3 - $9.00. Common stock: 20Y1 - $1.35, 20Y2 - $0.45, 20Y3 - $2.70.
Explanation:
To determine the dividends per share for the preferred and common stock for each year, we first need to calculate the total dividends distributed for each year. The formula to calculate the dividends per share is: Dividends per share = Dividends distributed / Total number of shares.
For the preferred stock:
20Y1: Dividends per share = $67,500 / 15,000 = $4.5020Y2: Dividends per share = $22,500 / 15,000 = $1.5020Y3: Dividends per share = $135,000 / 15,000 = $9.00For the common stock:
20Y1: Dividends per share = $67,500 / 50,000 = $1.3520Y2: Dividends per share = $22,500 / 50,000 = $0.4520Y3: Dividends per share = $135,000 / 50,000 = $2.70The dividends per share for each year are as follows:
Preferred stock: 20Y1 - $4.50, 20Y2 - $1.50, 20Y3 - $9.00Common stock: 20Y1 - $1.35, 20Y2 - $0.45, 20Y3 - $2.70Eilert Construction Company had a contract starting April 2018, to construct a $42,000,000 building that is expected to be completed in September 2019, at an estimated cost of $38,500,000. At the end of 2018, the costs to date were $17,710,000 and the estimated total costs to complete had not changed. The progress billings during 2018 were $8,400,000 and the cash collected during 2018 was $5,600,000. Eilert uses the percentage-of-completion method. [ What makes-up Construction in Process
Answer:
$20,790,000
Explanation:
Since the estimated total costs to complete had not change, the Construction is Process can be estimated as follows:
Construction in Process = Estimated total completion cost - Total costs of completion to date = $38,500,000 - $17,710,000 = $20,790,000