Answer: D. 15%
Explanation:
Beta is given as 1.6 but is calculable by the formula;
Beta = Correlation Coefficient of stock with market returns * [tex]\frac{Standard Deviation of stock returns}{Standard Deviation of market returns}[/tex]
1.6 = 0.8 * 30%/Sdm
30% /Sdm = 1.6/0.8
30% / Sdm = 2
Sdm * 2 =30%
Sdm = 30%/2
Sdm = 15%
Maxwell Feed & Seed is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected.
Answer:
13.31%
Explanation:
some information is missing:
Year Cash flows
0 −$1,100
1 $450
2 $470
3 $490
the easiest way to calculate the IRR is by using a financial calculator, IRR = 13.31%
but if we don't have one at hand, the IRR is the discount rate at which a project's NPV = 0
1,100 = 450/(1 + r) + 470/(1 + r)² + 490/(1 + r)³
to simplify the formula we must use trial and error:
since we already know the real IRR, I will start with a close number like 10%
1,100 = 450/(1 + 0.1) + 470/(1 + 0.1)² + 490/(1 + 0.1)³
1,100 = 409.09 + 388.43 + 368.14
1,100 ≠ 1,165.66
since the NPV is still positive, we must increase the discount rate. following the example we can use 12%
1,100 = 450/(1 + 0.12) + 470/(1 + 0.12)² + 490/(1 + 0.12)³
1,100 = 401.79 + 374.68 + 348.77
1,100 ≠ 1,125.24
we must increase the discount rate even more to 13%
1,100 = 450/(1 + 0.13) + 470/(1 + 0.13)² + 490/(1 + 0.13)³
1,100 = 398.23 + 368.08 + 339.59
1,100 ≠ 1,105.90
we keep increasing the discount rate to 14%
1,100 = 450/(1 + 0.14) + 470/(1 + 0.14)² + 490/(1 + 0.14)³
1,100 = 394.74 + 361.65 + 330.74
1,100 ≠ 1,087.13
since now the NPV is negative, the discount rate must be between 13-14%
we continue this way until we finally reach 13.31%
Unable to borrow from other banks, University Bank is forced to turn to the Federal Reserve for needed funds. The interest rate that the Federal Reserve will charge University Bank is called the
Answer:
Discount rate
Explanation:
The discount rate is the rate of interest i.e. charged by the Fed for extending the loan to the commercial bank
In order to apply the expansionary monetary policy, Fed redcued the discount rate and apply the contractionary monetary policy so that the Fed could raise the interest rate
Therefore in the given case, the charge we called as a discount rate
Cash Payback Method Lily Products Company is considering an investment in one of two new product lines. The investment required for either product line is $540,000. The net cash flows associated with each product are as follows:
Year Liquid Soap Body Lotion
1 $170,000 $90,000
2 150,000 90,000
3 120,000 90,000
4 100,000 90,000
5 70,000 90,000
6 40,000 90,000
7 40,000 90,000
8 30,000 90,000
Total $720,000 $720,000
A. Recommend a product offering to Lily Products Company, based on the cash payback period for each product line.
Payback period for liquid soap
Payback period for body lotion
B. The project with the_____net cash flows in the early years of the project life will be favored over the one with the______net cash flows in the initial years.
Answer:
1a. Payback period for LIQUID SOAP =4 years
Payback period for BODY LOTION =6 years
1b. GREATEST; LESS
Explanation:
1a.Calculation for the Payback period for liquid soap
LIQUID SOAP
Year Cash flow Cumulative Cash flow
1 $170,000 $170,000
2 (150,000+170,000) =320,000
3 (120,000+320,000)=440,000
4 (100,000+440,000)=540,000
5 (70,000+540,000)= 610,000
6 (40,000+610,000)= 650,000
7 (40,000+650,000)= 690,000
8 (30,000+690,000)= 720,000
The Payback period for LIQUID SOAP will be 4 years
Calculation for the Payback period of body lotion
BODY LOTIO
Year Cash flow Cumulative Cash flow
1 $90,000 $90,000
2 (90,000+90,000)=180,000
3 (90,000+180,000)=270,000
4 (90,000+270,000)=360,000
5 (90,000+360,000)=450,000
6 (90,000+450,000)=540,000
7 (90,000+540,000)=630,000
8 (90,000+630,000)=720,000
The Payback period for BODY LOTION will be 6 years
Based on the calculation above for both liquid soap and body lotion the product offering i will recommend to Lily Products Company, based on the cash payback period for each product line will be LIQUID SOAP because it has a 4 years payback period.
B. The project with the GREATEST net cash flows in the early years of the project life will be favored over the one with the LESS net cash flows in the initial years.
Blaster, Inc., manufactures portable radios. Each radio requires 3 units of Part XBEZ52, which has a standard cost of $1.75 per unit. During May, the company purchased 24,120 units of the part for a total of $43,416. Also during May, the company manufactured 6,240 radios, using 20,620 units of part XBEZ52. The direct materials purchases variance is computed when the materials are purchased. During May, the materials price variance for part XBEZ52 was:
Answer:
$1,206 unfavorable
Explanation:
materials price variance = (AP – SP) x AQ
SP = $1.75
AQ = 24,120 units (units purchased)
AP = $43,416 / 24,120 = $1.80
materials price variance = ($1.80 - $1.75) x 24,120 = $1,206 unfavorable
Since the price paid for each part is higher than the standard price, the variance is unfavorable.
A company purchased money market funds with cash during the current year. Which of the following statements is correct?
A. This transaction will result in a decrease in cash from investing activities.B. This transaction will result in a decrease in cash from operating activities.C. This transaction will result in a decrease in cash from financing activities.D. This transaction will not cause a change in cash from operating, investing, or financing activities.
Answer: This transaction will not cause a change in cash from operating, investing, or financing activities.
Explanation:
When a company purchased money market funds with cash during the current year, it should be noted that this will transaction will not cause a change in cash from operating, investing, or financing activities. This is because the purchase was made with cash during the current year.
Charger Company's most recent balance sheet reports total assets of $28,413,000, total liabilities of $16,113,000 and total equity of $12,300,000. The debt to equity ratio for the period is (rounded to two decimals):
Answer:
Debt to equity ratio is 1.31
Explanation:
Given the above inflation, the formula for debt to equity ratio is
= Total debt / Total equity
= $16,113,000 / $12,300,000
= 1.31
Therefore, debt to equity ratio is 1.31
Disturbed Corp. needs to raise $57 million to fund a new project. The company will sell shares at a price of $23.70 in a general cash offer and the company's underwriters will charge a spread of 7.5 percent. The direct flotation costs associated with the issue are $725,000 and the indirect costs are $445,000. How many shares need to be sold?
Answer: 2653438 shares
Explanation:
From the information given in the question, the following can be deduced:
The share price will be:
= $23.70 × (1 - 7.5%)
= $23.70 × (1 - 0.075)
= $23.70 × 0.925
= $21.9225
The money that will be raised will be:
= 57,000,000 + 725,000 + 445,000
= $58,170,000
The number of shares that are needed to be sold will be:
= $58,170,000/$21.9225
= 2653438 shares
The Restaurant Group manufactures the bags of frozen French fries used at its franchised restaurants. Last week, purchased and used pounds of potatoes at a price of per pound. During the week, 2,100 direct labor hours were incurred in the plant at a rate of $12.45 per hour. The standard price per pound of potatoes is $1.00, and the standard direct labor rate is $12.15 per hour. Standards indicate that for the number of bags of frozen fries produced, the factory should have used 95,000 pounds of potatoes and 2,000 hours of direct labor.
1. Determine the direct material price and quantity variances. 2. Think of a plausible explanation for the variances found in Requirement 1.3. Determine the direct labor rate and efficiency variances. 4. Could the explanation for the labor variances be tied to the material's variances? Explain.
Answer:
Explanation:
The question was missing the actual amount of potatoes used and their actual price = 98,000 pounds at $0.85 per pound:
1. Determine the direct material price and quantity variances.
direct materials price variance = AQ x (AP - SP) = 98,000 x ($0.85 - $1) = $14,700 favorable
direct material quantity variance = SP x (AQ - SQ) = $1 x (98,000 - 95,000) = $3,000 unfavorable
2. Think of a plausible explanation for the variances found in Requirement 1
Since the actual price of potatoes was less than the standard price, the price variance was favorable. But since the actual quantity used was more than the standard quantity, the quantity variance was unfavorable.
3. Determine the direct labor rate and efficiency variances.
direct labor rate variance = AH x (AR - SR) = 2,100 x ($12.45 - $12.15) = $630 unfavorable
direct labor efficiency variance = SR x (AH - SH) = $14.15 x (2,100 - 2,000) = $1,415 unfavorable
4. Could the explanation for the labor variances be tied to the material's variances?
Probably the labor efficiency variance since more materials had to be processed, but the labor rate variance is completely independent from the materials variances.
You haven't been able to spend much time talking with your team lately, but your workload should be back to normal soon. When you checked in with your team today, several associates joked about being surprised to see you.
Assuming all option are possible, what would you be most and least likely to do?
Answer and Explanation:
I would most likely do this:
Explain the issue to the team and praise them for their work in my absence. I would let them know there would be more time soon. It is very essential to praise and appreciate these efforts by the associates since I have been absent for a while and do not know what efforts they have been putting in.
I would be least likely to:
Talk to the manager to explain this situation or propose that my some of my commitments are eased for me to have more time with my team
a stock split increases the number of authorized issued and outstanding shares of stock coupled with a proportionate reduction in the
Answer:
stock price
earning per share
dividends per share
Explanation:
A stock split is when a company increases the number of its shares outstanding.
for example if a company has 4 million shares outstanding at a price of $20, earning per share is $1 and dividend per share is $0.50. this company announces a 2 for 1 split :
the number of outstanding shares becomes 2 x 4 million = 8 million
stock price becomes = $40 / 2 =$20
earning per share = $1 / 2 = $0.50
dividend per share = $0.5 / 2 = $0.25
A mortgage is paid off in 30 years with a total of $124,000. It had a 2% interest rate that compounded monthly. What was the principal
Answer:
the Principle, PV on the mortgage was $68,086.64.
Explanation:
The Principle on the mortgage, PV is determined as follows :
FV = $124,000
N = 30 × 12 = 360
P/ yr = 12
PMT = $0
R = 2%
PV = ?
Using a Financial Calculator, the Principle, PV on the mortgage was $68,086.6399 or $68,086.64.
For an automobile company, the total overhead applied was $48,000,000 at the end of the year. Actual overhead was $52,850,000. Closing over/under applied overhead into cost of goods sold would cause net income to:
Answer:
Net income decreased by $4,850,000.
Explanation:
Given total overhead applied = $48000000
The actual overhead = $52850000
Over/under Applied overhead = total overhead applied - Actual overhead at the end of the year.
Over / under Applied overhead = 48000000-52850000
Over / under Applied overhead = -$4850000
From the calculation, it can be seen that the overhead is underapplied therefore when under applied overhead allocated to cost of goods sold then cost of goods sold decreased by $4850000.
Which of the following is an example of an oligopolistic market with a standardized product?
A) The market for breakfast cereal.
B) The market for aluminum.
C) The market for jewelry.
D) The market for automobiles.
Answer:
B) The market for aluminum.
Explanation:
An oligopoly is a market form in which the market or industry is dominated by a small group of large sellers. Oligopolies can result from various forms of collusion that reduce market competition which then majorly leads to higher prices for consumers. They have their own market structure.
Oligopolistic market with standardised product is an homogeneous oligopoly that is an oligopoly in which firm produce a standardised product. And a good example of that is the Aluminum market.
Budgeted production 1,092 units Actual production 905 units Materials: Standard price per ounce $1.767 Standard ounces per completed unit 12 Actual ounces purchased and used in production 11,186 Actual price paid for materials $22,931 Labor: Standard hourly labor rate $14.92 per hour Standard hours allowed per completed unit 4.0 Actual labor hours worked 4,661 Actual total labor costs $75,741 Overhead: Actual and budgeted fixed overhead $1,189,000 Standard variable overhead rate $28.00 per standard labor hour Actual variable overhead costs $130,508 Overhead is applied on standard labor hours. (Round interim calculations to the nearest cent.) The direct labor rate variance is a.$21,730.60 favorable b.$6,199.13 unfavorable c.$21,730.60 unfavorable d.$6,199.13 favorable
Answer:
Direct labor rate variance= $6,199.13 unfavorable
Explanation:
Giving the following information:
Labor:
Standard hourly labor rate $14.92 per hour
Actual labor hours worked 4,661
Actual total labor costs $75,741
To calculate the direct labor rate variance, we need to use the following formula:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 75,741/4,661= $16.25
Direct labor rate variance= (14.92 - 16.25)*4,661
Direct labor rate variance= $6,199.13 unfavorable
A benevolent social planner would prefer that the output of good x be decreased from its current level if, at the current level of output of good x_________
a. social cost = private cost = private value < social value.
b. private cost < social cost = private value = social value.
c. social value = private value = private cost < social cost.
d. social cost = private cost = private value = social value.
Answer:
c
Explanation:
social value = private value = private cost < social cost.
A benevolent social planner would prefer that the output of good x be decreased from its current level if, at the current level of output of good x social value = private value = private cost < social cost. Thus, option (c) is correct.
What is the cost?
The term cost refers to the actual money are spent on the manufacturing of the product. The product are manufacture to spend on money are raw material, transportation, wages, salary, and other expenses add. The all expenses are added to identify the cost.
According to the system composed, the primary impact of the output of goods are the multiplied by the reduced from its present state are the primary effect of the output of products are the calculation where the social value equals the societal value. The private cost is lower than the societal cost.
As a result, the significance of the social cost are the aforementioned. Therefore, option (c) is correct.
Learn more about on cost, here:
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Board Company has a foreign subsidiary that began operations at the start of 2017 with assets of 155,000 kites (the local currency unit) and liabilities of 100,000. During this initial year of operation, the subsidiary reported a profit of 49,000 kites. It distributed two dividends, each for 7,300 kites with one dividend declared on March 1 and the other on October 1. Applicable exchange rates for 1 kite follow:
January 1, 2017 (start of business) $0.80
March 1,2017 0.78
Weighted average rate for 2017 0.77
October 1,2017 0.76
December 31, 2017 0.75
Required:
a. Assume that the kite is this subsidiary's functional currency. What transfation adjustment would Board report for the year 2017?
b. Assume that on October 1,2017, Board entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, Board agreed to sell 200,000 kites in three months at a forward exchange rate of $0.76/1 kite. Prepare the journal entries required by this forward contract.
c. Compute the net translation adjustment for Board to report in Accumulated Other Comprehensive Income for the year 2017 under this second set of circumstances.
Answer:
a. The Board would report translation adjustment of -$3,138.
b. See the journal entries and explanation below.
c. Net translation adjustment is -$1,138.
Explanation:
a. Assume that the kite is this subsidiary's functional currency. What translation adjustment would Board report for the year 2017?
Note: See the attached file for the calculation of translation adjustment.
The board would report a negative (debit) translation adjustment of $3,138. That is,
Translation adjustment = -$3,138
b. Assume that on October 1,2017, Board entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, Board agreed to sell 200,000 kites in three months at a forward exchange rate of $0.76/1 kite. Prepare the journal entries required by this forward contract.
Board Company
Journal Entries
Date Account titles and Explanation Debit ($) Credit ($)
01 Oct 17 (No entry)
12 Dec 17 Forward contract 2,000
Translation adjustment (positive) (w.1) 2,000
(To record forward contract change in the value to adjust translation adjustment.)
12 Dec 17 Foreign currency (kites) (w.2) 152,000
Cash 152,000
(To record 200,000 kites purchased at the spot rate of $0.76)
12 Dec 17 Cash 154,000
Foreign Currency (kites) 152,000
Forward contract 2,000
(To record 200,000 kites delivered, $154,000 received, and close the forward contract account.)
Workings:
w.1: Translation adjustment = Number of kites agreed to sell in three months * (Agreed exchange rate on October 1, 2017 per kite - Exchange rate on December 1, 2017) = 200,000 * (0.76 - 0.75) = $2,000
w.2: Foreign Currency (kites) = Number of kites agreed to sell in three months * Agreed exchange rate on October 1, 2017 per kite = 200,000 * 0.76 = $152,000
c. Compute the net translation adjustment for Board to report in Accumulated Other Comprehensive Income for the year 2017 under this second set of circumstances.
This can be calculated as follows:
Net translation adjustment = Negative translation adjustment in part a + Positive translation adjustment in part b (i.e. w.1) = -$3,138 + 2,000 = -$1,138
Therefore, net translation adjustment is -$1,138.
Additional short-term borrowings $ 20,000
Purchase of short-term investments 5,000
Cash dividends paid 16,000
Interest paid 8,000
Compute cash flows from financing activities using the above company information. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
Cash flow from from financing activities = $(4,000)
Explanation:
The cash flow from financing activities includes that entails any or a combination of the following; issuance and redemption of stocks , issuance and redemption of debts and payment of interest and/or dividend, and receipt of dividend and or interest.
Kindly note that the purchase of short term investment is not a financing activity but rather an investing activity
Cash flow $
Short term borrowing 20,000
Cash dividend paid (16,000)
Interest paid (8,000)
Total Cash flow (4000)
Cash flow from from financing activities = $(4,000)
A company stocks an SKU with a weekly demand of 600 units and a lead time of 4 weeks. There are 52 weeks in a year. Management will tolerate 1 stock out per year. If sigma for the lead time is 100 and the order quantity is 2500 units, what is:
A company stocks an SKU with a weekly demand of 600 units and a lead time of 4 weeks. There are 52 weeks in a year. Management will tolerate 1 stock out per year. If sigma for the lead time is 100 and the order quantity is 2500 units, what is: the safety stock, the average inventory, and the order point?
Answer:
The safety stock = 142 units
The average inventory = 1392 units
The order point = 2542 units
Explanation:
Given that:
the weekly demand = 600 units
lead time = 4 weeks
sigma for the lead time (i.e the standard deviation [tex]\sigma[/tex] ) = 100 units
Order quantity = 2500 units
The objective is to calculate :
the safety stock, the average inventory, and the order point?
To start with the number of order per year.
The number of order per year = Annual demand/Order quantity
The number of order per year = (Weekly demand × 52)/ Order quantity
The number of order per year = (600 × 52)/2500
The number of order per year = 31200/2500
The number of order per year = 12.48 times /year
Also, the service level for the safety factor = (Number of order per year - 1)/ number of order per year
the service level for the safety factor = ( 12.48 - 1)/12.48
the service level for the safety factor = 11.48/12.48
the service level for the safety factor = 0.9199
the service level for the safety factor = 91.99%
∴ the safety factor at 91.99% service level = (safety factor at (90% +94%))÷2
the safety factor at 91.99% service level = (1.28 +1.56) ÷2
the safety factor at 91.99% service level = 2.84 ÷2
the safety factor at 91.99% service level = 1.42
Now,
the safety stock = 100 × safety factor at 91.99% service level
the safety stock = 100 × 1.42
the safety stock = 142 units
The order point = safety factor + demand during lead time
where;
The demand during lead time = weekly demand × 4
The demand during lead time = 600 × 4
The demand during lead time = 2400 units
The order point = safety factor + demand during lead time
The order point = 142 + 2400
The order point = 2542 units
Finally,
The average inventory = (order quantity ÷ 2) + safety stock
The average inventory = (2500 ÷ 2) + 142
The average inventory =1250 +142
The average inventory = 1392 units
How many years will it take for your money to double if fees are 1.5% per year (not uncommon in the mutual fund industry)?
Answer:
Doubling time: 20 years.
Explanation:
In the United States, many agricultural products (such as corn, wheat, and rice) are subsidized. What are the benefits of subsidizing these products? Instructions: You may select more than one answer. .
a) higher prices for consumers and producers
b) lower prices for consumers and producers
c) higher prices for consumers and lower prices for producers
d) lower prices for consumers and higher prices for producers
Answer:
Correct answer:
b) lower prices for consumers and producers
Explanation:
In United States of America, food is one of the fundamental things which the government guarantee its citizens. Most agricultural products are subsidized by the government both for the farmers (producer) and the citizens (consumers).
The subsidy for the producer could be inform of payment of incentive, giving out agricultural implements and grants. On the other-hand, the subsidy to the consumer could be inform of reduced price of the agricultural food crops.
You consider undertaking the research project. It will increase sales by $100K per year starting next year and its life is 10 years. The maintenance cost is $50K and the depreciation of the equipment is 20K per year. The tax rate is 40% and there are no changes in net operating working capital. What is the annual operating cash flow from the project? A. $10,000 B. $18,000 C. $38,000 D. $30.000
Answer: C. $38,000
Explanation:
The Operating cashflow for a project will be the net income earned from it less any taxes but including depreciation.
In formula form;
Operating cash flow = EBIT - tax paid + depreciation
Earnings Before Interest and Tax
= Sales - Expenses
= 100,000 - 50,000 - 20,000
= $30,000
Tax paid
= EBT * 40%
= 30,000 * 40%
= $12,000
Operating cash flow = EBIT - tax paid + depreciation
= 30,000 - 12,000 + 20,000
= $38,000
Note; Depreciation is added back because it is a non-cash expense.
"In the long-run, monopolistically competitive firms: have excess capacity. produce at the minimum of average total cost. charge prices equal to marginal cost. both B and C are true."
Answer:
The correct answer is the option D: Both B and C are true.
Explanation:
To begin with, a monopolistically competitive firms is the one that produces in a market in where the other companies sell a pretty similar but different product and there are a lot of buyers so the most important way to difference themself is by the publicity or the identification of the brand in the mind of the consumers. Moreover, in this type of market in the long-run equilibrium the price if equal to the marginal cost and also to the minimun of the average total cost so therefore that it is said that there are zero economic profit
The owner of a large machine shop has just finished its financial analysis from the prior fiscal year. Following is an excerpt from the final report: Net revenue $ 375,000 Cost of goods sold 322,000 Value of production materials on hand 42,500 Value of work-in-process inventory 37,000 Value of finished goods on hand 12,500 What is the inventory turnover ratio (ITR) ?
Answer:
The answer is 3.5
Explanation:
Inventory turnover ratio is:
Cost of goods sold / Total or average inventory
Cost of goods sold is $322,000
Total Inventory in this question comprises work-in- process, finished goods and even raw materials.
So total inventory equals:
Production materials on hand $42,500 Work-in-process inventory $37,000
Finished goods on hand $12,500
Total inventory. $92,000
Therefore, inventory turnover ratio is
$322,000 / $92,000
= 3.5
Mullineaux Corporation has a target capital structure of 70 percent common stock, 5 percent preferred stock, and 25 percent debt. Its cost of equity is 11 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 7 percent. The relevant tax rate is 35 percent. What is Mullineaux WACC
Answer:
Mullineaux Corporation
WACC (Weighted Average Cost of Capital):
WACC = (11% of 70%) + (5% of 5%) + (7% of 25%) (1 - 35%)
= 0.077 + 0.0025 + 0.0175(65%)
= 0.09087
= 9.1%
Explanation:
Target Capital Structure:
Common stock = 70%
Preferred stock = 5%
Debt = 25%
Total = 100%
Cost of:
Equity = 11%
Preferred stock = 5%
Debt (pretax) = 7%
Tax rate = 35%
Mullineaux's WACC is the weighted average cost of its capital sources, including equity and debt. It means that Mullineaux Corporation has to weigh each class of capital based on their capital structure weights in order to calculate the average. This WACC therefore represents the hurdle rate which a project must meet for Mullineaux Corporation to accept or reject the project.
As flextime, consulting, telecommuting, and downsizing make it more difficult for
people to donate blood at the workplace, Canadian Blood Services has launched a
CRM marketing campaign in Toronto to boost awareness and repeat donations.
Early in the campaign, it went to its listings of previous donors and pulled out
those with birthdays in February, March, and April. These donors were sent a
birthday card with the greeting, "On the anniversary of your life, would you
consider saving another's life?"
Refer to the scenario.
What technique did the organization use to analyze its donor information?
Answer:
The technique which the organization used in analyzing its donor is called Customer segmentation
Explanation:
Customer segmentation is the process of breaking large groups of customers into smaller, more homogeneous groups. This division are done specifically probably for marketing using attribute such as age, gender, interests and spending habits.
In the case of the CRM marketing campaign in Toronto, they inability to analyze all the data they had poses a challenge hence they reason why they segmented their customers according to their birthday. And customers are reached out according to those whose birthday falls nearby.
Moorcroft’s assistant controller suggested that Moorcroft hire a part time collector to encourage customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month following sale; 2% are uncollectible.Prepare a schedule of expected collections from customers for June. How did these changes impact cash collections?
Answer:
The budgeted sales are missing, so I looked for them. I found the following question, hopefully it will be similar:
Month Sales
April $300,000
May $320,000
June $370,000
Schedule of expected collections
For the month of June, 202x
Cash sales during June = $370,000 x 40% = $148,000
Collection from June's credit sales = $222,000 x 30% = $66,600
Collection from May's credit sales = $192,000 x 50% = $96,000
Collection from April's credit sales = $180,000 x 18% = $32,400
Total cash collections during June = $343,000
Since the cost of the part time collector is $1,000 per month, and the total uncollectible accounts reduce from 4% to 2%, which represents $7,400 for June's sales, I would recommend hiring the collector.
Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 55,000 units of RX5 follows. Direct materials $ 5.00 Direct labor 9.00 Overhead 10.00 Total costs per unit 24.00 Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 55,000 units of RX5 for $20.00 per unit. Required: 1. Calculate the incremental costs of making and buying component RX5.
Answer:
If the company makes the component, $165,000 will be saved.
Explanation:
Giving the following information:
Units production= 55,000 units
Production costs:
Direct materials $5
Direct labor $9
Avoidable Overhead= 3
Direct materials and direct labor are 100% variable.
An outside supplier has offered to supply the 55,000 units of RX5 for $20.00 per unit.
We need to determine the total cost of making in-house and buying.
We will take into account only the variable cost (avoidable cost).
Make in-house:
Total cost= 55,000*(5 + 9 + 3)= $935,000
Buy:
Total cost= 55,000*20= $1,100,000
If the company makes the component, $165,000 will be saved.
A project with an initial cost of $27,250 is expected to generate cash flows of $6,600, $8,700, $9,100, $8,000, and $7,400 over each of the next five years, respectively. What is the project's payback period?
Answer:
It will take 4 years and 130 days to recover for the initial investment.
Explanation:
Giving the following information:
A project with an initial cost of $27,250 is expected to generate cash flows of $6,600, $8,700, $9,100, $8,000, and $7,400
The payback period is the time required to recover for the initial investment:
Year 1= 6,600 - 27,250= -20,650
Year 2= 8,700 - 20,650= -11,950
Year 3= 9,100 - 11,950= -2,850
Year 4= 8,000 - 2,850= 5,150
To be more accurate:
(2,850/8,000)*365= 130
It will take 4 years and 130 days to recover for the initial investment.
A firm has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908. How many dollars' worth of sales are generated from every $1 in total assets
Answer:
So, from every $1 of total assets, $1.08 worth of sales are generated.
Explanation:
To calculate how many dollars worth of sales are generated by $1 of total assets, we use the total assets turnover ratio. It is an accounting measure that measures the efficiency of the company's assets in generating sales. It calculates the dollar values of sales generated by each $1 of total assets. The formula for total assets turnover is,
Total Assets Turnover = Sales / Average Total Assets
We already know the level of sales. We need to determine the value of total assets first.
Total Assets = Fixed assets + Current Assets
As we know that net working capital = current assets - current liabilities,
So, the current assets are,
2715 = Current assets - 3908
2715 + 3908 = Current assets
Current assets = $6623
Total assets = 6623 + 22407
Total assets = $29030
Total Assets Turnover = 31350 / 29030
Total assets turnover = 1.0799 rounded off to 1.08
So, from every $1 of total assets, $1.08 worth of sales are generated.
A market economy is regulated by the interactions between which two things?
Answer:
b is the answer
Explanation:
producers and consumers
