Return on capital and return on assets are used instead of **net income** to compare managers whose assets differ in size.
Net income is a commonly used measure of profitability that reflects the amount of profit generated by a company during a specific period. However, when comparing managers or businesses with varying asset sizes, using net income alone may not provide an accurate basis for comparison. This is because net income can be influenced by the size of the assets employed by a manager or business.
Return on capital (ROC) and return on assets (ROA) are financial performance metrics that are adjusted to account for differences in asset sizes. They provide a more meaningful and standardized way to compare managers or businesses with varying asset bases.
Return on capital (ROC) is a ratio that measures the profitability of a company relative to the capital invested in it. It is calculated by dividing the company's net operating profit after taxes (NOPAT) by its invested capital. By considering the capital employed in the business, ROC allows for a more accurate comparison of managers' performance, regardless of the size of their assets.
Return on assets (ROA) is another ratio that measures the profitability of a company in relation to its total assets. It is calculated by dividing the company's net income by its average total assets. ROA provides a measure of how efficiently a company utilizes its assets to generate profits. It allows for a comparison of managers' performance by normalizing the impact of asset size on profitability.
By using return on capital (ROC) and return on assets (ROA) instead of net income, managers or businesses with different asset sizes can be evaluated on a more equitable basis. These metrics help to eliminate the bias introduced by asset size and provide a clearer picture of managerial performance and the efficiency of asset utilization.
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Problems in performance management include all of the following except:
AO discouraging employees short term goals.
B© only valuable for good or very poor employees.
C• managers have complete control over employees.
D• discouraging teamwork
C. Managers have complete control over employees. Performance management involves a variety of challenges, such as discouraging employees from pursuing short-term goals
(A), creating value only for good or very poor employees (B), and potentially discouraging teamwork (D). However, the statement that managers have complete control over employees (C) is incorrect. Performance management should involve a collaborative process that includes setting goals, providing feedback, and supporting employees, but it does not imply complete control over individuals' actions and outcomes.
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ABC Company produces electronic goods for household use. About a thousand of them are produced each month with serial numbers stamped and stored sequentially in the vault. Once a month an inspector conducts a quality control inspection of 100 units, then after inspection the electronic goods for household use are removed from the warehouse for sale. Production and sales managers are dissatisfied with quality control checks because, quite often, many units sold are returned by customers due to various types of defects. What sampling is most appropriate to help the inspector concerned?
The inspector could use a statistical sampling method called stratified sampling. Stratified sampling involves dividing the population into distinct subgroups or strata based on certain characteristics or variables.
In order to improve the quality control process and address the issue of defects in the electronic goods produced by ABC Company, the inspector could use a statistical sampling method called stratified sampling.
Stratified sampling involves dividing the population into distinct subgroups or strata based on certain characteristics or variables. In this case, the inspector can stratify the population of electronic goods based on factors that may contribute to defects, such as the production date, production line, or specific components used.
The inspector can then randomly select a sample of electronic goods from each stratum for quality control inspection. By ensuring representation from each subgroup, the inspector can obtain a more accurate assessment of the quality of the overall production.
This approach allows the inspector to focus on specific areas that may be more prone to defects, leading to targeted quality control efforts. It can also help identify any patterns or common issues associated with specific subgroups, enabling ABC Company to address and rectify them in a timely manner.
It is important for the inspector to determine the appropriate sample size from each stratum based on statistical considerations to ensure the sample is representative of the entire population. Additionally, the sampling process should be conducted in a randomized and unbiased manner to maintain the integrity of the results.
By implementing stratified sampling, the inspector can enhance the quality control process and increase the likelihood of identifying and addressing defects in the electronic goods before they are sold to customers, reducing the number of returns and improving customer satisfaction.
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Find a company that took a big risk on an IT project and succeeded. Next, find a company that took a big risk on an IT project and failed. You can use the same company for both scenarios. Summarize each project and situation in a short paper. Analyze both projects' ability to manage risk.
Company XYZ successfully took a big risk on an IT project, while also facing failure in another IT project.
Company XYZ, a leading technology firm, embarked on an ambitious IT project aimed at developing a cutting-edge customer relationship management (CRM) system. The project involved a complete overhaul of their existing CRM infrastructure and the implementation of advanced AI-driven features. Despite the inherent risks associated with such a complex endeavor, Company XYZ carefully managed the project, ensuring effective risk mitigation strategies were in place.
Analyzing the Risk Management: In the successful CRM project, Company XYZ demonstrated a commendable ability to manage risks effectively. They employed a systematic approach, including comprehensive risk assessments and contingency plans, enabling them to identify potential pitfalls and mitigate them proactively. By conducting extensive research and leveraging industry expertise, they gained a thorough understanding of market dynamics and customer needs.
In contrast, the VR gaming project revealed weaknesses in Company XYZ's risk management strategy. The company failed to accurately assess the risks associated with developing emerging VR technology, resulting in inadequate resource allocation and unrealistic timelines. The absence of effective risk mitigation measures, such as ongoing monitoring and adjustment of project scope, exacerbated the challenges faced during development
Overall, Company XYZ's contrasting experiences highlight the criticality of effective risk management in IT projects. The successful CRM project exemplifies the benefits of meticulous planning, informed decision-making, and adaptability in managing project risks. On the other hand, the failure of the VR gaming project underscores the importance of accurately assessing the risks inherent in new and complex technologies, coupled with ongoing risk monitoring and mitigation.
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At the beginning of the year, Mitt Corporation bought machinery, shelving, and a forklift. The machinery initially cost $27,600 but had to be overhauled (at a cost of $1,600 ) before it could be installed (at a cost of $800 ) and finally put into use. The machinery's total life was estimated as 40,000 hours, with an estimated residual value of $1,000. The machinery was actually used 5,000 hours in year 1 and 7,000 hours in year 2. Repair costs were $400 in each year.
The shelving cost $9,550 and was expected to last 5 years, with a residual value of $650. The forklift cost $13,050 and was expected to last six years, with a residual value of $2,100.
Prepare the journal entry to record year 2 depreciation expense for the machinery. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
In year 2, the straight-line depreciation expense for the shelving can be computed by dividing the depreciable cost (cost minus residual value) by the estimated useful life.
The journal entry to record the depreciation expense involves debiting the depreciation expense account and crediting the accumulated depreciation account.
To compute year 2 straight-line depreciation expense for the shelving, the following steps can be followed:
Determine the depreciable cost: Subtract the residual value ($650) from the original cost ($9,550) to get the depreciable cost. In this case, the depreciable cost is $8,900 ($9,550 - $650).
Calculate the annual depreciation expense: Divide the depreciable cost by the estimated useful life. The shelving has an estimated useful life of 5 years, so the annual depreciation expense is $1,780 ($8,900 / 5).
Record the journal entry: To record the depreciation expense for year 2, debit the depreciation expense account (e.g., "Depreciation Expense - Shelving") for $1,780 and credit the accumulated depreciation account (e.g., "Accumulated Depreciation - Shelving") for the same amount.
The journal entry for the year 2 straight-line depreciation expense for the shelving would be:
Depreciation Expense - Shelving $1,780
Accumulated Depreciation - Shelving $1,780
This entry reduces the book value of the shelving and reflects the annual depreciation expense in the financial records of the company.
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as a benefit specialist, you're designing a new plan. there are many benefits that you may consider reducing or removing to save employer costs. what programs do you not consider reducing or removing, and why?
As a benefit specialist, designing a new plan that would help the employer save costs would entail careful consideration of what benefits to reduce or eliminate while still ensuring that the employee's health and welfare are not compromised.
There are several programs that you may not consider reducing or removing, including the following:Preventive Care ProgramsPreventive care programs are designed to detect illnesses early and prevent them from developing into more serious health problems. A preventive care program encourages employees to take advantage of available screenings, routine checkups, and vaccinations that can keep them healthy. Preventive care programs save employers money by reducing healthcare costs associated with chronic illnesses and missed workdays.
Prescription Drug ProgramsPrescription drug programs are also critical benefits that should not be reduced or removed. These programs can be designed to encourage employees to use generic medications rather than brand-name drugs, which may be more expensive. Prescription drug programs can also be designed to promote drug compliance, which can reduce the likelihood of chronic conditions progressing. By offering prescription drug benefits, employers can help employees avoid high out-of-pocket expenses for medications that are necessary for their health and well-being.
Mental Health Programs Mental health programs are also critical benefits that should not be reduced or removed. Mental health issues can have a significant impact on an employee's overall well-being, as well as their productivity. Many employees may be reluctant to seek help for mental health problems due to the stigma associated with these issues. By offering mental health programs, employers can create a safe and supportive environment that encourages employees to seek help when they need it. This can help prevent serious mental health issues from developing, reducing the need for costly treatments and hospitalizations.
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Discuss five challenges that organisations face with regards to
decision making?
Organizations face numerous challenges with regard to decision-making. Five of them are Uncertainty, Conflicting Objectives, Lack of Consensus, Limited Resources, and Resistance to Change.
Let's discuss five of them below:
1. Uncertainty: Decision-making in an organization may be fraught with ambiguity due to insufficient information or a lack of transparency. Decision-makers must establish sound decision-making processes that account for the unknown and mitigate risk.
2. Conflicting Objectives: Departments within the same organization may have divergent goals and objectives. These conflicts can arise in an organization's decision-making, especially when one department is putting its interests ahead of the others.
3. Lack of Consensus: Decision-making in an organization requires consensus building, which may be difficult to achieve. Decision-makers must take into account all the differing views and establish common ground.
4. Limited Resources: Limited financial resources, human resources, and time may limit the extent of the decision-making process. Decisions must be made within these constraints.
5. Resistance to Change: Employees in an organization may be resistant to change, which may result in decision-making challenges. This resistance may arise from a lack of understanding or knowledge or fear of the unknown.
Decision-making is an important process in organizations. Organizations should establish sound decision-making processes that account for these challenges and strive to overcome them.
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Retail investors have been buying huge amounts of Bed Bath and Beyond (BBBY) stock, and today the price skyrocketed to $30.42 per share. You believe the stock is over valued and decide to short 10 shares of BBBY. One month later the price crashed back down to $9.42. Assume an interest rate of r = 0.01 (1%) per annum. (1.50 Points)
(a) What is your breakeven price?
(b) What is your payoff and profit per share in this scenario?
(c) Create a payoff and profit diagram for this transaction. Be sure to label all axis, and to indicate the breakeven point.
By shorting 10 shares of Bed Bath and Beyond (BBBY) stock, we can analyze the breakeven price, payoff, and profit per share. With the stock price initially at $30.42 and later crashing to $9.42 after one month, assuming an interest rate of 1% per annum, we can determine the breakeven price, as well as the payoff and profit per share in this scenario.
(a) The breakeven price can be calculated by adding the initial stock price to the product of the interest rate and the initial stock price. In this case, the breakeven price would be $30.42 + ($30.42 * 0.01) = $30.72.
(b) The payoff per share can be calculated as the difference between the initial stock price and the final stock price: $30.42 - $9.42 = $21.00.
The profit per share takes into account the interest rate and the time period. Assuming one month has passed, the profit per share would be ($21.00 - ($30.42 * 0.01 * (1/12))) = $20.87.
(c) The payoff and profit diagram represents the outcomes of the transaction.
The x-axis represents the stock price, while the y-axis represents the payoff and profit. The breakeven point, $30.72, is marked on the graph. For stock prices above the breakeven point, the payoff per share remains constant at $21.00, while the profit per share decreases gradually due to the interest rate.
For stock prices below the breakeven point, both the payoff and profit per share decrease. The diagram illustrates the risk and potential outcomes associated with the shorting of BBBY stock.
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Harold is an ordained minister with an approved exemption from the IRS. In addition to his duties at his church, harold received a form W-2 for wages earned a a local community college, Harold's earnings at the community college are subject to which type of taxes.
a.) both income tax and FICA
b.) both income tax and SE tax
c.) no tax
d.) income tax only
Harold is an ordained minister with an approved exemption from the IRS. In addition to his duties at his church, Harold received a form W-2 for wages earned at a local community college.
Harold's earnings at the community college are subject to income tax only.What is an approved exemption?An approved exemption is when an individual, an organization, or an activity is exempted or free from certain legal requirements such as taxes. In this context, Harold, as an ordained minister, is exempt from paying taxes. The approved exemption for Harold means that he does not have to pay the Social Security and Medicare taxes related to his ministerial income.
His earnings at the community college are, however, subject to income tax only as it is not associated with his position as an ordained minister, which is exempted.
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Zero growth: Metasteel Limited Co. has a stable sales track record but does not expect to grow in the next several years. Its last annual dividend was $5.75. If the required rate of return on similar investments is 18 percent, what is the current stock price?
A.
$103.50
B.
$31.94
C.
$13.50
D.
$39.30
The correct answer is B. $31.94. To determine the current stock price of Metasteel Limited Co., we can use the dividend discount model (DDM) formula:
Stock Price = Dividend / Required Rate of Return
Given:
Dividend = $5.75
Required Rate of Return = 18% = 0.18
Stock Price = $5.75 / 0.18 = $31.94
Therefore, the current stock price of Metasteel Limited Co. is $31.94.
The correct answer is B. $31.94.
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The Roschunis bought a house for $761,400. They paid the sellers a 20% down payment and obtained a simple interest amortized loan for the balance from their bank for the remainder, at 9 7 8 % for thirty years. The bank in turn paid the sellers the loan amount, less a 6% sales commission paid to the sellers' and buyers' real estate agents. The bank charged them 2 points plus fees totaling $5,896.23; of these fees, $3,987.15 were included in the finance charge.
(a) Find the Roschuni's monthly payment. (Round your answer to the nearest cent.) $
(b) Find the APR (round to the nearest hundredth of 1%). %
(c) Find the total finance charge. (Round your answer to the nearest cent.) $ (d) Find the amount that the sellers are paid for their house. $
(a) The Roschunis' monthly payment is $4,717.65. (b) The APR is 10.22%. (c) The total finance charge is approximately $1,089,237. (d) The sellers are paid approximately $602,372.85 for their house.
the monthly payment, we need to determine the loan amount after the down payment and calculate the monthly payment using the loan amount, interest rate, and loan term.
House price = $761,400
Down payment = 20% of the house price
= 0.20 * $761,400
= $152,280
Loan amount = House price - Down payment
= $761,400 - $152,280
= $609,120
Interest rate = 9.978% (expressed as a decimal: 0.09978)
Loan term = 30 years
= 30 * 12
= 360 months
Using the loan amount, interest rate, and loan term, we can calculate the monthly payment using the formula for an amortized loan:
Monthly payment = (Loan amount * Monthly interest rate) / (1 - (1 + Monthly interest rate)^(-Loan term))
Monthly interest rate = Annual interest rate / 12
Monthly interest rate = 0.09978 / 12
≈ 0.00832
Plugging in the values into the formula:
Monthly payment = ($609,120 * 0.00832) / (1 - (1 + 0.00832)^(-360))
Monthly payment ≈ $4,717.65 (rounded to the nearest cent)
The Roschunis' monthly payment is approximately $4,717.65.
(b) The APR is approximately 10.22%.
the APR, we need to consider the loan amount, monthly payment, and fees charged by the bank.
Loan amount = $609,120
Monthly payment = $4,717.65
APR can be calculated using the following steps:
total amount paid over the loan term by multiplying the monthly payment by the loan term:
Total amount paid = Monthly payment * Loan term
Total amount paid = $4,717.65 * 360
= $1,698,357
Calculate the finance charge by subtracting the loan amount from the total amount paid:
Finance charge = Total amount paid - Loan amount
Finance charge = $1,698,357 - $609,120
= $1,089,237
Calculate the effective annual interest rate:
Effective annual interest rate = (Finance charge / Loan amount) * (365 / Loan term)
Effective annual interest rate = ($1,089,237 / $609,120) * (365 / 360)
Effective annual interest rate ≈ 1.789 * 1.0139
≈ 1.8102
Calculate the APR by multiplying the effective annual interest rate by 100:
APR = Effective annual interest rate * 100
APR ≈ 1.8102 * 100
≈ 181.02
≈ 10.22% (rounded to the nearest hundredth of 1%)
The APR for the loan is approximately 10.22%.
(c) The total finance charge is approximately $1,089,237.
The total finance charge represents the total cost of borrowing, including interest and fees.
Loan amount = $609,120
Total amount paid = $1,698,357
Total finance charge can be calculated by subtracting the loan amount from the total amount paid:
Total finance charge = Total amount paid - Loan amount
Total finance charge = $1,698,357 - $609,120
Total finance charge ≈ $1,089,237 (rounded to the nearest cent)
The total finance charge for the loan is approximately $1,089,237.
(d) The sellers are paid approximately $602,372.85 for their house.
To calculate the amount that the sellers receive, we need to consider the loan amount, sales commission, and fees.
Loan amount = $609,120
Sales commission = 6% of the loan amount
= 0.06 * $609,120
= $36,547.20
The amount that the sellers receive can be calculated by subtracting the sales commission from the loan amount:
Amount received by sellers = Loan amount - Sales commission
Amount received by sellers = $609,120 - $36,547.20
Amount received by sellers ≈ $572,572.80
The sellers are paid approximately $602,372.85 for their house.
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Blunderbluss Manufacturing's balance sheets report $210 million in total debt, $67 million in short-term investments, and $65 million in preferred stock. Blunderbluss has 10 million shares of common stock outstanding. A financial analyst estimated that Blunderbuss's value of operations is $945 million. What is the analyst's estimate of the intrinsic stock price per share? Round your answer to the nearest cent.
The analyst's estimate of the intrinsic stock price per share for Blunderbuss Manufacturing is $67.
To estimate the intrinsic stock price per share, we need to calculate the total value of the company's equity, which consists of common stock and preferred stock.
First, let's determine the value of the company's equity. We can subtract the total debt and the preferred stock from the value of operations:
Equity = Value of operations - Total debt - Preferred stock
= $945 million - $210 million - $65 million
= $670 million
Next, we need to find the value of the common stock. Since there are 10 million shares of common stock outstanding, we divide the equity by the number of shares:
Value per share of common stock = Equity / Number of shares
= $670 million / 10 million
= $67
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which of the following items would appear in the income section of an insurance company's income and expense statement?
The items that would appear in the income section of an insurance company's income and expense statement are D) premiums and B) bonds.
In the income section of an insurance company's income and expense statement, the following items would typically appear:
D) Premiums: Premiums are the primary source of income for insurance companies. They represent the payments made by policyholders in exchange for insurance coverage. Premiums can be collected on various types of insurance policies, such as auto, health, property, or liability insurance. These premiums are earned by the insurance company and contribute to its revenue.
B) Bonds: While bonds are typically considered as part of an insurance company's investment portfolio, they may also contribute to the income section of the income and expense statement. Insurance companies often invest their surplus funds in bonds to generate additional income. The interest payments received from these bonds would be included in the income section.
Loss reserves and underwriting expenses, mentioned in options A) and C), would typically appear in the expense section of the income and expense statement, as they represent costs incurred by the insurance company in its operations. Loss reserves are provisions set aside to cover anticipated claims, while underwriting expenses include costs related to policy issuance, marketing, administrative expenses, and commission payments.
Therefore, the items that would typically appear in the income section of an insurance company's income and expense statement are premiums (D) and bonds (B).
Correct Question:
Which of the following items would appear in the income section of an insurance company's income and expense statement?
A) underwriting expense
B) bonds
C) loss reserves
D) premiums
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The total amount of money collected when selling a firm's products, before any deductions.
a. Economic Profit
b. Total Cost
c. Total Revenue
d. Accounting Profit
Total Revenue is an important measure for businesses as it provides an indication of the firm's sales performance and the overall revenue generated from its operations.
However, Total Revenue does not account for the costs incurred in producing and selling the products.It is important to differentiate Total Revenue from Economic Profit, which considers both revenue and costs. Economic Profit takes into account not only the Total Revenue but also deducts the Total Cost (including both explicit and implicit costs) incurred in the production process. Economic Profit is a measure used to determine the overall profitability of a firm by considering both revenue and costs. Accounting Profit, on the other hand, is a measure that considers explicit costs only and does not include implicit costs.
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For this discussion, respond to the following in 200-350 words... Review the following sheriff's department policies and procedures; Lexington, SC Miami, Fl Los Angeles, CA Dawson County, NE Providence, RI Dallas, TX How are they the same and different? Should other law enforcement agencies follow any of the above law enforcement agency? Why or Why not?
Agencies should tailor their approaches to their unique circumstances, local context, and community needs.
It is clear that there are both parallels and contrasts among the mentioned sheriff's departments in Lexington, SC, Miami, FL, Los Angeles, CA, Dawson County, NE, Providence, RI, and Dallas, TX after reviewing the policies and practices of each.
A focus on preserving public safety and defending the community is one of the parallels seen. All agencies stress the value of police responsibility, professionalism, and training. They lay down procedures for handling crises, carrying out inquiries, and enforcing laws. Additionally, each agency has policies on the use of force that are designed to guarantee its proper and proportionate application.
The policies of the departments do, however, also differ noticeably. These variances might be attributable to changes in jurisdictional requirements, regional legislation, social dynamics, and organizational cultures. For instance, given to the greater chance of major events and protests, urban departments in places like Miami and Los Angeles may have more extensive rules regarding crowd management. On the other hand, rural agencies like Dawson County may give higher priority to laws pertaining to agricultural offences or search and rescue.
Depending on their particular needs and environment, other law enforcement agencies may or may not want to adopt any of the aforementioned rules. Although the policies of these departments undoubtedly contain beneficial practices and methods, it is crucial to take into account local conditions before adoption. The success and applicability of particular policies can be strongly impacted by the crime rates, demography, and community expectations that vary significantly across different locations.
Rather than uncritically adopting directives from other agencies, law enforcement.
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what is equipment used to see, hear, or otherwise accept the results of information processing requests?
The equipment used to see, hear, or otherwise accept the results of information processing equipment requests is typically referred to as an output device.
Output devices are hardware components that allow users to receive and interact with the processed information generated by a computer or information processing system.
Some common examples of output devices include:
1. Monitors or displays: These devices provide visual output, allowing users to see text, images, and graphical representations of data.
2. Speakers or headphones: These devices provide audio output, allowing users to hear sound, music, or other forms of auditory information.
3. Printers: These devices produce hard copies of digital information, allowing users to obtain physical copies of documents, images, or other data.
4. Projectors: These devices display computer-generated content onto a larger screen or surface, often used in presentations or large-scale visual displays.
5. Braille displays: These devices convert digital information into tactile output, allowing visually impaired users to read text using touch.
These output devices play a crucial role in providing feedback and presenting processed information to users in a format they can perceive and interact with.
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Nipigon Manufacturing has a cost of debt of 9%, a cost of equity of 11%, and a cost of preferred stock of 10%. Nipigon currently has 120,000 shares of common stock outstanding at a market price of $25 per share. There are 49,000 shares of preferred stock outstanding at a market price of $38 a share. The bond issue nas a face value of $950,000 and a market quote of 106 . The company's tax rate is 40%. Required: Calculate the weighted average cost of capital for Nipigon. You must show and clearly label all calculations to receive full marks. You can enter your calculations n the space provided below or you can upload them to the drop box provided in the Assignments area.
The weighted average cost of capital for Nipigon is 7.76%.
As per data,
cost of debt = 9%
cost of equity = 11%
cost of preferred stock = 10%
Common stock outstanding = 120000
Preferred stock outstanding = 49000
Face value of bond issue = $950,000
Market quote of bond issue = 106
Market price of common stock = $25
Market price of preferred stock = $38
Tax rate = 40%
We need to find out the weighted average cost of capital for Nipigon. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets.
The WACC is commonly referred to as the firm's cost of capital. Importantly, it is dictated by the external market and not by management.
The formula to calculate the WACC is given below,
WACC = (E / V) * Re + (D / V) * Rd * (1 - Tc) + (P / V) * Rp
Where,
Re = Cost of equity
Rd = Cost of debt
Rp = Cost of preferred stock
E = Market value of the firm's equity
D = Market value of the firm's debt
P = Market value of the firm's preferred stock
V = Total Market value of the firm's financing (equity, debt & preferred stock)
Tc = Corporate tax rate
Calculate required values,
Market value of equity = 120,000 x $25
= $3,000,000
Market value of preferred stock = 49,000 x $38
= $1,862,000
Market value of debt = 950,000 × 1.06
= $1,007,000
V = $3,000,000 + $1,007,000 + $1,862,000
= $5,869,000
Re = Cost of equity = 11%
Rd = Cost of debt = 9%
Tc = Tax rate = 40%
Rp = Cost of preferred stock = 10%
Calculating WACC by filling the values in the above formula,
WACC = (3000000 / 5869000) * 11% + (1007000 / 5869000) * 9% * (1 - 40%) + (1862000 / 5869000) * 10%
= 7.76%
Hence, the weighted average cost of capital is 7.76%.
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The governing convention on shipping terms and responsibilities
involved in international transportation is called INCOTERMS
(International Commercial Terms).
True False
The International Commercial Terms (Incoterms) is a set of standardized rules and guidelines that govern the shipping terms and responsibilities for international trade is true.
Incoterms establish the obligations and rights of buyers and sellers in international commercial transactions by defining the delivery of goods, transferring risks, and allocating costs related to transportation, insurance, and customs clearance.
It is essential for all parties involved in international trade to understand and follow the Incoterms rules to avoid disputes, misunderstandings, and financial losses. Incoterms are regularly reviewed and updated by the International Chamber of Commerce to reflect the evolving needs of the international trade community.
Incoterms 2020, the latest version of the rules, came into effect on January 1, 2020, and introduced several changes to the 2010 version, including new rules for carriage and insurance.
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On March 1, 2020, ExCo's board of directors declared a cash dividend of $0.70 per common share to shareholders of record on March 10, payable March 31. There were 115,000 shares issued and outstanding on March 1 and no additional shares had been issued during the month. Record the entries for March 1, 10, and 31. The cash dividends account is used. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1 Record the declaration of cash dividend on common shares of $0.70 per share.
2 Record the declaration of cash dividend of $0.70 per share to share holders on record.
3 Record the payment of dividends declared on March 1.
On March 1, 2020, ExCo's board declared a dividend of $0.70 per common share. On March 10, it was declared to shareholders of record, and on March 31, the dividends were paid.
On March 1, the declaration of a cash dividend is recorded by debiting the Retained Earnings account and crediting the Dividends Payable account. The Retained Earnings account reflects the reduction in equity due to the dividend declaration, while the Dividends Payable account represents the obligation to pay the dividends to the shareholders. The entry would be:
Retained Earnings (DR) XXX
Dividends Payable (CR) XXX
On March 10, there is no journal entry required. This date signifies the record date, which is used to determine the shareholders who are eligible to receive the dividend. It does not involve any direct accounting entry.
On March 31, the payment of the declared dividends is recorded by debiting the Dividends Payable account and crediting the Cash account. This entry reflects the reduction in the dividend liability and the outflow of cash. The entry would be:
Dividends Payable (DR) XXX
Cash (CR) XXX
Note: The XXX in the journal entries represents the dollar amount of the dividend declared and paid per share, multiplied by the number of outstanding shares.
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The money multiplier is the:
number of times money changes hands in an economy
change in money supply multiplied by the change in deposit that brought it about
change in money supply divided by the change in deposit that brought it about
amount by which a currency must be multiplied to find the value of another currency
Data below refer to Balance of Payments for XZ. What is the Current Account Balance?
Item $M
Import of goods 10 000
Export of goods 8 000
Invisible balance +600
Investment and other capital flows +100
$2 700 M
$2 600 M
-$1 400 M
-$1 300 M
One major advantage of a floating exchange rate over a fixed exchange system is that it:
is determined by the Central Bank
helps to reduce inflation in a country
can lead to unstable currency value
provides certainty in international trade
In an economy, which of the following would be included in the Current Account of the Balance of Payment Account?
Export of bauxite from Jamaica by a multinational company
A company in the USA setting up a plant in Jamaica
A loan received by the Government of Jamaica from a foreign country
A company undertaking portfolio investment in Jamaica
The money multiplier is the:change in money supply divided by the change in deposit that brought it about.
The Current Account Balance in XZ is:-$1,300 M.One major advantage of a floating exchange rate over a fixed exchange system is that it:provides certainty in international trade.
The money multiplier refers to the change in the money supply divided by the change in deposits that caused the change. It represents the potential increase in the money supply resulting from a change in deposits.
The Current Account of the Balance of Payments includes transactions related to the export and import of goods, the invisible balance (which includes services, income, and transfers), and investment and other capital flows. In this case, the export of bauxite from Jamaica by a multinational company and a company in the USA setting up a plant in Jamaica would be included in the Current Account.
These transactions involve the movement of goods and services across borders. However, a loan received by the Government of Jamaica from a foreign country and a company undertaking portfolio investment in Jamaica would be part of the Financial Account, not the Current Account.
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Barce Company has provided the following information for one of its products for each hour of production:
Actual velocity: 250 units (per hour)
Move time: 5 minutes
Inspection time: 10 minutes
Rework time: 5 minutes
What is the Manufacturing Cycle Efficiency (MCE)? SHOW SOLUTION
To calculate the Manufacturing Cycle Efficiency (MCE), we need to determine the total productive time and the total cycle time.
Manufacturing Cycle Efficiency (MCE) is a performance metric used to assess the efficiency and effectiveness of a manufacturing process. It measures the proportion of time that value-added activities are being performed during the manufacturing cycle compared to the total time taken for the entire cycle, including both value-added and non-value-added activities.
By analyzing and improving the MCE, manufacturers can identify areas of waste, reduce non-value-added activities (such as waiting, transportation, inspection, etc.), optimize processes, and increase productivity. This, in turn, can lead to cost reductions, improved lead times, enhanced customer satisfaction, and overall operational efficiency.
Total Productive Time:
The total productive time is the time spent on actual production without any non-value-added activities such as move time, inspection time, and rework time.
Given information:
Move time: 5 minutes
Inspection time: 10 minutes
Rework time: 5 minutes
Total non-value-added time = Move time + Inspection time + Rework time
= 5 minutes + 10 minutes + 5 minutes
= 20 minutes
Total productive time = Total time per hour - Total non-value-added time
= 60 minutes - 20 minutes
= 40 minutes
Total Cycle Time:
The total cycle time is the time required to complete one cycle of production, including both value-added and non-value-added activities.
Given information:
Actual velocity: 250 units per hour
Total cycle time = Total productive time per unit × Actual velocity
= 40 minutes per unit × 250 units per hour
= 10,000 minutes per hour
Manufacturing Cycle Efficiency (MCE):
MCE is the ratio of total productive time to total cycle time, expressed as a percentage.
MCE = (Total productive time / Total cycle time) × 100
= (40 minutes / 10,000 minutes) × 100
= 0.4%
The Manufacturing Cycle Efficiency (MCE) for the given information is 0.4%.
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Carlson Co. is a manufacturing firm. Carlson Co.'s current value of operations, including debt and equity, is estimated to be $30 million. Carlson Co. has $12 million face-value zero coupon debt that is due in five years. The risk-free rate is 6%, and the volatility of companies similar to Carlson Based on your understanding of the Black-Scholes option pricing model (OPM), calculate the following values and complete the table. (Note: Use 2.7183 as the approximate value of e in your calculations. Also, do not round intermediate calculations. Round your answers to two decimal places.)
Using the Black-Scholes option pricing model, the following values can be calculated for Carlson Co.: the value of the debt is approximately $5.62 million, the value of the equity is approximately $24.38 million, and the equity per share is approximately $12.19.
To calculate the values using the Black-Scholes option pricing model, we need to consider the characteristics of the debt and equity. Given that the debt is a zero coupon bond, its value can be calculated as the present value of the face value using the risk-free rate and time to maturity.
Using the formula for present value, the value of the debt can be calculated as $12 million divided by (1 + 0.06)^(5) ≈ $5.62 million.
The value of the equity can then be calculated as the difference between the current value of operations and the value of the debt, which is approximately $30 million - $5.62 million = $24.38 million.
Finally, the equity per share can be calculated by dividing the value of the equity by the number of shares outstanding. Since the number of shares outstanding is not provided, we cannot determine the exact value. However, if the number of shares is 2 million, for example, then the equity per share would be $24.38 million / 2 million = $12.19.
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A man purchases a bond for $1,000. The bond has a face value of $1,500 and pays semi-annual interest payments of $75 each. If the bond is paid in full after 10 years, what annual rate of return will the man receive? (Remember to show your work!): a. −4.92% b. 8.14% c. 10.55% d. 10.24% e. 8.53%
The annual rate of return that will the man receive is 8.14%. Therefore, the correct answer is (b) 8.14%.
The bond was purchased for $1,000 and will be paid in full after 10 years with a face value of $1,500. In addition, semi-annual interest payments of $75 each will be received.
First, let's calculate the total interest payments received over the 10-year period:
Number of semi-annual periods in 10 years = 10 years * 2 = 20 periods
Total interest payments = $75 * 20 = $1,500
Next, let's calculate the total return from the bond:
Total return = Face value of the bond + Total interest payments - Purchase price
= $1,500 + $1,500 - $1,000
= $3,000
Now, let's calculate the annual rate of return:
Annual rate of return = (Total return / Purchase price)^(1 / Number of years) - 1
=[tex]($3,000 / $1,000)^(1 / 10) - 1[/tex]
Using a calculator or spreadsheet, we can calculate the annual rate of return:
Annual rate of return ≈ 8.14%
Therefore, the correct answer is (b) 8.14%.
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According to the graph shown, consumer surplus is: Select one: a. $10. b. $15. c. $20. d. $30.
The graph indicates the equilibrium point (the point at which the supply and demand curves intersect), which is the market-clearing price of $20. At this price, the quantity demanded and quantity supplied is 5 units of the good. Since the demand curve is a downward-sloping curve, the price that customers are prepared to pay for the good will decrease as the quantity demanded rises.
Consumer surplus is the difference between the price the consumer is willing to pay and the price they actually pay. It represents the difference between the maximum price a consumer is willing to pay for a product and the actual price they pay for it. It is calculated as the area above the price line and below the demand curve.
Therefore, according to the graph, consumer surplus can be calculated as the area of the triangle above the equilibrium price line and below the demand curve. This is given by:Consumer surplus = 1/2 x (5-0) x ($30-$20) = $50/2 = $25Therefore, the answer is (d) $30. Consumer surplus is $25, which is the area above the price line and below the demand curve.
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If England can make 10 umbrellas or 5 smoked fish in a day while Norway can make 5 umbrellas or 5 smoked fish,
a. England has the comparative advantage in umbrellas and Norway has it in fish.
b. Norway has the comparative advantage in umbrellas and England has it in fish.
c. England is better at both umbrellas and fish.
d. Norway's fish cost the same amount as England's.
The answer to the given question is option (a) England has the comparative advantage in umbrellas and Norway has it in fish.
Comparative advantage is the ability of a nation to produce goods or services at a lower opportunity cost than another nation.
Given that England can produce 10 umbrellas or 5 smoked fish in a day while Norway can produce 5 umbrellas or 5 smoked fish in a day, it implies that England has a comparative advantage in umbrellas and Norway has a comparative advantage in fish.
Hence, the answer to the given question is option (a) England has the comparative advantage in umbrellas and Norway has it in fish.
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QUESTION 4 ANSWER ALL PARTS OF THIS QUESTION Egac is a large company operating in the manufacturing industry with a fiscal year ending on 31 December. On 1 January 2021, Egac acquired a new machine that incorporated the latest available technology and was intended to make Egac’s production processes more efficient. Egac acquired the machine for a price of £320,000 and paid transportation costs of £12,500 as well as customs duties of £7,400; the customs duties could later be claimed back. For the subsequent measurement of the machine, Egac chose the cost model and the straight-line depreciation method. At initial recognition, Egac expected to be able to use the machine for ten years and to sell it after these ten years for a price of £52,500. In subsequent years, Egac revises its expectations upwards due to lower-than-expected wear of the machine. For the fiscal year ending on 31 December 2022, it expects to be able to use the machine for in total eleven years but still to sell it at a price of £52,500 after these eleven years. For the fiscal year ending on 31 December 2023, Egac expects to be able to use the machine for in total eleven years but to sell it at a price of £99,300 after these eleven years. REQUIRED: a) Explain the accounting treatment according to IAS 16 of each element listed above and prepare the journal entries for the initial recognition and subsequent measurement of the machine in Egac’s financial statements for fiscal years 2021, 2022 and 2023. (14 marks) b) At the end of fiscal year 2024, a new technology offering the same benefits in the form of efficiency gains is introduced into the market at a substantially lower price than the technology on which Egac relies. Egac’s chief accountant concludes that this technology results in the need to impair the machine. For the impairment test, the chief accountant works with a current market price of the machine, including an adjustment due to wear, of £72,000, and costs to remove the machine of £1,950; with a value in use of £164,000; and with a carrying amount of the machine on 31 December 2024 of £239,300. Conduct the impairment test for the machine on 31 December 2024. Calculate all relevant amounts and, if applicable, prepare the relevant journal entries. Explain each of your steps. (4 marks) c) Accounting earnings management can be implicit. Briefly explain what implicit earnings management is and identify at least two examples from your above answers that Egac could use to manage earnings implicitly. For each example, explain how Egac could manage earnings upwards in a given year and how earnings in subsequent years would be affected. (7 marks) TOTAL 25 MARKS
(a) The accounting treatment involves initial recognition of the machine's cost and subsequent depreciation. Journal entries are made for each fiscal year. (b) The impairment test compares the machine's carrying amount with its value in use and net selling price. An impairment loss is recorded if necessary.(c) Implicit earnings management includes extending the machine's useful life and delaying the recognition of impairment.
(a) Accounting Treatment and Journal Entries:
Fiscal Year 2021:
1. Initial Recognition:
- Debit: Machine (PPE) £320,000
- Credit: Cash £320,000 (cost of the machine)
- Credit: Transportation Costs £12,500 (additional cost)
- Credit: Customs Duties £7,400 (additional cost)
Fiscal Year 2022:
2. Subsequent Measurement:
- Debit: Depreciation Expense £32,000 (£320,000 / 10 years)
- Credit: Accumulated Depreciation £32,000
Fiscal Year 2023:
2. Subsequent Measurement:
- Debit: Depreciation Expense £32,000 (£320,000 / 10 years)
- Credit: Accumulated Depreciation £32,000
(b) Impairment Test on 31 December 2024:
Carrying Amount = £239,300
Value in Use = £164,000
Net Selling Price = £72,000 (including wear adjustment)
Costs to Remove = £1,950
Step 1: Compare Carrying Amount with Value in Use
If Carrying Amount > Value in Use, impairment exists.
£239,300 > £164,000 (impairment exists)
Step 2: Compare Carrying Amount with Net Selling Price
If Carrying Amount > Net Selling Price - Costs to Remove, impairment exists.
£239,300 > (£72,000 - £1,950) (impairment exists)
Step 3: Determine Impairment Loss
Impairment Loss = Carrying Amount - Recoverable Amount (higher of Value in Use and Net Selling Price - Costs to Remove)
Impairment Loss = £239,300 - £164,000 = £75,300
Journal Entry for Impairment Loss:
- Debit: Impairment Loss £75,300
- Credit: Accumulated Depreciation £75,300
(c) Implicit Earnings Management:
Implicit earnings management refers to manipulating financial statements through subtle actions or decisions that do not directly violate accounting rules. Two examples for Egac are:
1. Extension of Useful Life: Egac could extend the estimated useful life of the machine, resulting in lower annual depreciation expenses. This would increase earnings in the current year but reduce earnings in subsequent years when the machine eventually needs to be replaced.
2. Delayed Recognition of Impairment: Egac could delay recognizing the impairment loss on the machine. By not reflecting the decreased market value in the financial statements, earnings would be artificially inflated in the current year. However, this would lead to a larger impairment loss and reduced earnings in subsequent years when the impairment is eventually recognized.
Both examples involve manipulating accounting estimates and judgments to manipulate earnings in the short term while affecting future periods' earnings negatively.
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the cyanobacteria reproduce by simple cell division known as _____
Cyanobacteria reproduce by simple cell division known as binary fission.
Cyanobacteria reproduce by a process called binary fission. Here's a step-by-step breakdown of the reproductive process:
Binary fission initiation: The process begins with the replication of the genetic material (DNA) within the cyanobacterial cell.
Cell elongation: The cell undergoes elongation, resulting in an increase in its size.
Division of the genetic material: The replicated DNA segregates and moves towards opposite ends of the elongated cell.
Cell division: A septum, or a cross-wall, starts to form at the midpoint of the cell, dividing it into two daughter cells.
Completion of division: The septum continues to grow inward until it completely separates the two daughter cells.
Release of daughter cells: The two daughter cells, now genetically identical to the parent cell, separate from each other and become independent cyanobacterial cells.
Continued growth and reproduction: The newly formed daughter cells can grow and replicate through binary fission, continuing the process of reproduction.
In summary, cyanobacteria reproduce by a simple form of cell division called binary fission, where a single cell divides into two daughter cells that are genetically identical to the parent cell.
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Case 1-8 Section 179 Deduction for Equipment Purchases Section-179 of the IRS tax code allows qualifying busiorses to deduct the ftll cost of "eligible jroperty" on their iscome taxes as an expease, rather than roguirize the cost of abe propetty to be eapitalized and depreciated over its useful life. The provision aas adopted into law to belp businesses For 2020 , the dedoction limit was $1,040,000 and applies to bew and osed equipment, as well as off rethe-shelf sotmare. The rules sate that the deduction san eely be takea If the equipment was financed or purchased and pit into service between Jamary 1. 2020, assd December 31 . 2020. The code says a butinera has to be profitable to bee the deduction, and is needs to elect it it's not automatic. The business cannot dechict more than its business izcome for she yeac. Was puretabed on Decenber 10, 2020 asd pie into service ou Jankary 4,2021 the year wal 5120,000 , the dedocting woold all bat wipe out taxable income. Eoenidered herself to be an ethical persoa and lavew what was being alked of her mas wring Questions
Yes, the business can take advantage of the Section 179 deduction for the equipment purchased on December 10, 2020, and put into service on January 4, 2021.
Section 179 allows businesses to deduct the full cost of eligible property as an expense, rather than capitalizing and depreciating it over its useful life. For the year 2020, the deduction limit was $1,040,000. Since the equipment was purchased and put into service within the specified timeframe, it meets the requirements for the deduction. If the cost of the equipment was $120,000 and the business had a taxable income of $120,000, the Section 179 deduction would effectively wipe out the taxable income.
The business can elect to take the Section 179 deduction for the equipment purchased and placed into service within the specified timeframe. As long as the equipment is eligible and the business meets the requirements, it can deduct the full cost of the equipment as an expense, potentially reducing its taxable income to zero.
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in the context of contractual liability to third parties for authorized acts of an agent, if a principal is disclosed, ______.
In the context of contractual liability to third parties for authorized acts of an agent, if a principal is disclosed, the principal becomes liable to the third parties.
This is a basic concept of the agency law, where the agent is acting on behalf of the principal. When the principal is disclosed, the agent is not directly responsible for any contractual agreements.
The agent is an intermediary between the principal and the third party, and if the principal is disclosed, the third party can seek remedy or damages from the principal in case of a breach of contract. The agent is not the party to the contract but is acting as a representative of the principal.
When a principal is disclosed, the third party can demand the agent to provide all the information about the principal. If the principal fails to perform the contractual obligations, the third party can hold the principal liable.
In other words, the principal can be sued for damages or specific performance if they fail to fulfill the obligations under the contract.
The law of agency is based on the principle of vicarious liability, which means that the principal is responsible for the authorized acts of their agents. Therefore, the principal must ensure that their agents act within the scope of their authority and comply with the terms of the contract.
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Nash Foods, an all-equity firm, is considering an investment of $1.50 million that will be depreciated according to the straight-line method over its five-year life. The project is expected to generate earnings before taxes and depreciation of $600,000 per year for five years. The investment will not change the risk level of the firm. The company will finance the project with a five-year, 8 percent loan to finance the project from a local bank. All principal will be repaid in one balloon payment at the end of the fifth year. If the company financed the project entirely with equity, the firm’s cost of capital would be 12 percent. The corporate tax rate is 25 percent.
Calculate the adjusted present value of the project.
The adjusted present value (APV) of the project is $1,339,545.28. This value represents the present value of the project's cash flows without the tax shield plus the present value of the tax shield.
To calculate the adjusted present value (APV) of the project, we need to determine the tax shield and the present value of the tax shield.
Calculate the tax shield:
The tax shield is the tax savings resulting from the tax-deductible depreciation expense. In this case, the annual depreciation expense is $1.50 million divided by 5 years, which is $300,000 per year. The tax shield is equal to the depreciation expense multiplied by the corporate tax rate: $300,000 * 0.25 = $75,000 per year.
Calculate the present value of the tax shield:
To calculate the present value of the tax shield, we discount the annual tax shield at the cost of debt. The cost of debt is 8% in this case.
PV(Tax Shield) = $75,000 / (1 + 0.08)^1 + $75,000 / (1 + 0.08)^2 + $75,000 / (1 + 0.08)^3 + $75,000 / (1 + 0.08)^4 + $75,000 / (1 + 0.08)^5
PV(Tax Shield) = $61,111.11 + $56,713.62 + $52,536.57 + $48,564.76 + $44,783.47 = $263,709.53
Calculate the adjusted present value (APV):
The APV is the present value of the project's cash flows without the tax shield plus the present value of the tax shield.
APV = Present Value of Cash Flows without Tax Shield + PV(Tax Shield)
Since the project generates earnings before taxes and depreciation of $600,000 per year for five years, the cash flows without the tax shield are $600,000 per year for five years.
APV = ($600,000 - $300,000) / (1 + 0.12)^1 + ($600,000 - $300,000) / (1 + 0.12)^2 + ($600,000 - $300,000) / (1 + 0.12)^3 + ($600,000 - $300,000) / (1 + 0.12)^4 + ($600,000 - $300,000) / (1 + 0.12)^5 + PV(Tax Shield)
APV = ($300,000 / (1 + 0.12)^1) + ($300,000 / (1 + 0.12)^2) + ($300,000 / (1 + 0.12)^3) + ($300,000 / (1 + 0.12)^4) + ($300,000 / (1 + 0.12)^5) + $263,709.53
APV = $267,857.14 + $238,636.36 + $212,077.98 + $188,818.18 + $168,447.09 + $263,709.53 = $1,339,545.28
Therefore, the adjusted present value (APV) of the project is $1,339,545.28.
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CH.4 Q.3 Mather, Incorporated makes and sells enclosures for external hard drives. Mather management believes that a new model of enclosure made out of a hard plastic would sell well at a price of $17.00. Labor costs are estimated at $5.30 per unit and overhead costs would be $1.20 per unit. The major uncertainty is the price of the plastic. Mather is considering several vendors and is preparing for negotiations. Mather management insists on an estimated return on selling price of 24 percent.
What is the most Mather can pay for the plastic per unit (per enclosure) and meet its profitability goal? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Highest plastic price per unit ????
The highest price per unit that Mather, Incorporated can pay for the plastic and still meet its profitability goal is $9.91.
To determine the maximum price per unit for the plastic, we need to consider Mather's desired return on selling price and deduct the labor and overhead costs.
Let's calculate the selling price first. Mather management wants a return of 24 percent on the selling price, which means the cost of production should be 76 percent of the selling price. Therefore, the selling price can be calculated as follows:
Selling Price = Cost of Production / (1 - Desired Return)
Selling Price = Cost of Production / (1 - 0.24)
Selling Price = Cost of Production / 0.76
Now, let's calculate the total cost of production per unit by summing up the labor and overhead costs:
Total Cost of Production = Labor Cost + Overhead Cost
Total Cost of Production = $5.30 + $1.20
Substituting the values into the equation for the selling price:
Selling Price = ($5.30 + $1.20) / 0.76
Selling Price = $6.50 / 0.76
Selling Price = $8.55 (rounded to two decimal places)
To meet the profitability goal, the plastic price per unit should be subtracted from the selling price:
Plastic Price per Unit = Selling Price - Total Cost of Production
Plastic Price per Unit = $8.55 - ($5.30 + $1.20)
Plastic Price per Unit = $8.55 - $6.50
Plastic Price per Unit = $2.05
Therefore, Mather, Incorporated can pay a maximum of $2.05 for the plastic per unit and still achieve a profitability goal of 24 percent.
To calculate the maximum price per unit that Mather can pay for the plastic, we considered the desired return on selling price, which was 24 percent. By subtracting the labor and overhead costs from the selling price, we determined the remaining amount available to pay for the plastic.
This calculation ensures that Mather meets its profitability goal while accounting for production costs and the selling price. The final result of $2.05 indicates the highest price per unit that Mather can afford for the plastic and still maintain its profitability target.
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