The actual variable overhead cost is greater than the expected variable overhead cost, we have an overapplied variable overhead of $137,682The correct answer is option A: $1,960 overapplied.
First, we need to calculate the standard variable overhead rate per labor hour:
Standard variable overhead rate = Variable overhead standard / Direct labor hour standard
Standard variable overhead rate = $4.00 per hour / 9 hours = $0.44 per hour
Next, we can calculate the total variable overhead cost that should have been incurred based on the actual labor hours worked:
Expected variable overhead cost = Standard variable overhead rate x Actual labor hours worked
Expected variable overhead cost = $0.44 per hour x 47,450 hours = $20,918
Finally, we can compare the expected variable overhead cost to the actual variable overhead cost to determine if there is over- or underapplied variable overhead:
Actual variable overhead cost - Expected variable overhead cost = Over- or underapplied variable overhead
$158,600 - $20,918 = $137,682
Since the actual variable overhead cost is greater than the expected variable overhead cost, we have an overapplied variable overhead of $137,682. Therefore, the correct answer is option A: $1,960 overapplied.
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The actual variable overhead cost is greater than the expected variable overhead cost, we have an overapplied variable overhead of $137,682The correct answer is option A: $1,960 overapplied.
First, we need to calculate the standard variable overhead rate per labor hour:
Standard variable overhead rate = Variable overhead standard / Direct labor hour standard
Standard variable overhead rate = $4.00 per hour / 9 hours = $0.44 per hour
Next, we can calculate the total variable overhead cost that should have been incurred based on the actual labor hours worked:
Expected variable overhead cost = Standard variable overhead rate x Actual labor hours worked
Expected variable overhead cost = $0.44 per hour x 47,450 hours = $20,918
Finally, we can compare the expected variable overhead cost to the actual variable overhead cost to determine if there is over- or underapplied variable overhead:
Actual variable overhead cost - Expected variable overhead cost = Over- or underapplied variable overhead
$158,600 - $20,918 = $137,682
Since the actual variable overhead cost is greater than the expected variable overhead cost, we have an overapplied variable overhead of $137,682. Therefore, the correct answer is option A: $1,960 overapplied.
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Suppose the demand and supply functions are: Q x
d
=15−5P x
Q x
s
=3+3P x
What is the equilibrium quantity for the competitive market? 7.5 1.5 4.5 2.5
The equilibrium quantity for the competitive market is 7.5. It represents a state of balance or equilibrium in the market, where there is no shortage or surplus of the product.
In business, equilibrium quantity refers to the quantity of a product or service that is demanded by consumers and supplied by producers in a market, where the quantity demanded equals the quantity supplied.
To find the equilibrium quantity for the competitive market, we need to set the quantity demanded equal to the quantity supplied and solve for the equilibrium quantity.
Given the demand function is Qd = 15 - 5Px and the supply function is Qs = 3 + 3Px.
Setting Qd equal to Qs:
15 - 5Px = 3 + 3Px
Simplifying the equation:
15 - 3 = 5Px + 3Px
12 = 8Px
Px = 12/8
Px = 1.5
Substituting the value of Px we get,
Qd = 15 - 5(1.5)
Qd = 15 - 7.5
Qd = 7.5
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Select a business of your choice that has long term assets. What are some important things an accountant must consider when accounting for long term assets and why?
When accounting for long-term assets, accountants must consider important factors such as initial cost, depreciation, useful life, salvage value, and impairment. These factors ensure accurate financial reporting and help determine the asset's value over time.
Accounting for long-term assets requires careful consideration of various factors to ensure accurate financial reporting. Firstly, the initial cost of the asset must be recorded correctly. This includes not only the purchase price but also any additional costs incurred to bring the asset into its intended use, such as transportation and installation expenses. Accurately recording the initial cost is crucial as it forms the basis for subsequent calculations and valuation.
Depreciation is another crucial aspect of accounting for long-term assets. It represents the systematic allocation of the asset's cost over its useful life. Accountants must select an appropriate depreciation method, such as straight-line or accelerated depreciation, based on the nature of the asset and its expected pattern of usage and obsolescence. By properly depreciating long-term assets, the financial statements reflect the gradual reduction in their value over time.
Determining the useful life of an asset is also important. It involves estimating the period over which the asset is expected to provide economic benefits to the business. The useful life is influenced by factors such as physical deterioration, technological advancements, and changes in market demand. Accurately estimating the useful life ensures that the asset's cost is allocated appropriately over its expected lifespan.
Additionally, accountants must consider the salvage value of the asset. This is the estimated residual value the asset will have at the end of its useful life. The salvage value affects the depreciation expense calculation and the overall carrying value of the asset throughout its lifespan. Accurate estimation of the salvage value is crucial for determining the economic impact of the asset over its useful life.
Lastly, impairment testing is necessary to assess whether the carrying value of the asset exceeds its recoverable amount. If an impairment is identified, the accountant must record a loss by reducing the asset's carrying value to its recoverable amount. This ensures that the financial statements accurately reflect the asset's value and any potential impairment losses.
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TRUE.FALSE prices are rising in bear markets, indicating economic optimism.
False. In bear markets, prices generally fall, indicating pessimism and a downward trend in the overall market. Bear markets are characterized by a sustained period of declining stock prices and a negative market sentiment.
the statement "prices are rising in bear markets, indicating economic optimism" is false. Bear markets are typically associated with falling prices and pessimism, indicating a lack of economic optimism.
Investors tend to sell off their holdings due to concerns about the economy, corporate earnings, or other factors that may negatively impact the market. This selling pressure leads to lower prices.
Rising prices, on the other hand, are typically associated with bull markets, which are characterized by an optimistic outlook, increasing stock prices, and a positive market sentiment.
Bull markets are typically driven by factors such as strong economic growth, improving corporate profits, and high investor confidence.
Therefore, in bear markets, prices generally decline, indicating a lack of economic optimism and a more pessimistic outlook.
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Suppose in a market, the demand function is Qp = 5-bP2 and the supply function is Qs = −1+6P. Solve for the equilibrium.
The equilibrium in the market occurs at a price of $2.50 and a quantity of 13 units.
To find the equilibrium in the market, we need to determine the price and quantity at which the quantity demanded equals the quantity supplied. In this case, the demand function is given as Qp = 5 - bP^2 and the supply function is Qs = -1 + 6P.
To find the equilibrium, we set the quantity demanded equal to the quantity supplied:
5 - bP^2 = -1 + 6P
Simplifying the equation, we get:
bP^2 + 6P - 6 = 0
To solve this quadratic equation, we can either factor it or use the quadratic formula. Let's use the quadratic formula:
P = (-b ± √(b^2 - 4ac)) / 2a
Substituting the values from the equation, we get:
P = (-6 ± √(6^2 - 4b(-6))) / 2b
P = (-6 ± √(36 + 24b)) / 2b
Since we are looking for a positive price, we take the positive root:
P = (-6 + √(36 + 24b)) / 2b
Plugging in the values of b, we find:
P = (-6 + √(36 + 24*(-1))) / 2*(-1)
P = (-6 + √(36 - 24)) / -2
P = (-6 + √12) / -2
P ≈ (-6 + 3.464) / -2
P ≈ -2.536 / -2
P ≈ 1.268
So the equilibrium price is approximately $1.27. To find the equilibrium quantity, we substitute this price back into either the demand or supply function:
Qs = -1 + 6P
Qs = -1 + 6(1.27)
Qs = -1 + 7.62
Qs ≈ 6.62
Therefore, the equilibrium in the market occurs at a price of $1.27 and a quantity of approximately 6.62 units.
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eBook Problem Walk-Through Problem 12-05 Long-Term Financing Needed. At year-end 2016, Wallace Landscaping's total assets were $2.0 million, and its accounts payable were $345,000. Sales, which in 2016 were $2.0 million, are expected to increase by 10% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $470,000 in 2016, and retained earnings were $250,000. Wallace has arranged to sell $55,000 of new common stock in 2017 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2017. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 3%, and 35% of earnings will be paid out as dividends. a. What was Wallace's total long-term debt in 2016? Do not round intermediate calculations. Round your answer to the nearest dollar. What were Wallace's total liabilities in 2016? Do not round intermediate calculations. Round your answer to the nearest dollar b. How much new long-term debt financing will be needed in 2017? (Hint: AFN New stock New long-term debt.) Do not round intermediate calculations. Round your answer to the nearest dollar. Check My Work (a remaining)
We need to calculate Wallace Landscaping's total long-term debt and total liabilities in 2016, as well as determine the amount of new long-term debt financing needed in 2017.
a. Calculation of total long-term debt and total liabilities in 2016:
Total assets = $2,000,000
Accounts payable = $345,000
Common stock = $470,000
Retained earnings = $250,000
Total liabilities = Total assets - (Common stock + Retained earnings)
Total liabilities = $2,000,000 - ($470,000 + $250,000)
Total liabilities = $1,280,000
To calculate total long-term debt, we need to subtract accounts payable from total liabilities:
Total long-term debt = Total liabilities - Accounts payable
Total long-term debt = $1,280,000 - $345,000
Total long-term debt = $935,000
b. Calculation of new long-term debt financing needed in 2017:
Sales in 2016 = $2,000,000
Expected sales increase in 2017 = 10%
Projected sales in 2017 = $2,000,000 + ($2,000,000 * 10%)
Projected sales in 2017 = $2,000,000 + $200,000 = $2,200,000
New stock = $55,000
Retained earnings payout ratio = 35%
Net profit margin on sales = 3%
Retained earnings in 2017 = Net profit margin on sales * Projected sales in 2017
Retained earnings in 2017 = 3% * $2,200,000 = $66,000
Dividends to be paid out = Retained earnings in 2017 * Retained earnings payout ratio
Dividends to be paid out = $66,000 * 35% = $23,100
Total financing needed in 2017 = New stock + Dividends to be paid out
Total financing needed in 2017 = $55,000 + $23,100 = $78,100
Since the remainder of the financing needs will be met by issuing new long-term debt at the end of 2017, the amount of new long-term debt financing needed in 2017 is $78,100.
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Your client, Albert Davis Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Davis has an investment cost of $428,700 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is interested in earning an 12% return on its investment and has agreed to accept 25 equal rental payments at the end of each of the next 25 years. Click here to view factor tables. You are requested to provide Davis with the amount of each of the 25 rental payments that will yield an 12% return on investment. (Round factor values to 5 decimal places, e.s. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Amount of eachrental payments
The amount of each rental payment that will yield a 12% return on investment for Albert Davis Leasing Company is $59,498.28.
To calculate the amount of each rental payment that will yield a 12% return on investment for Albert Davis Leasing Company, we can use the present value of an annuity formula. The formula is as follows:
Payment amount = Investment cost / Present value of annuity factorGiven: Investment cost = $428,700 Return on investment rate = 12% Number of periods (years) = 25
First, we need to calculate the present value of annuity factor using the formula: Present value of annuity factor =[tex](1 - (1 / (1 + r)^n)) / r[/tex]Where: r = interest rate per period n = number of periods
Using the given values: r = 12% = 0.12 n = 25 Calculating the present value of annuity factor: Present value of annuity factor = ([tex](1 - (1 / (1 + r)^n)) / r[/tex][tex]1 - (1 / (1 + 0.12)^2))[/tex] / 0.12 = 7.19387 Now, we can calculate the amount of each rental payment:
Payment amount = $428,700 / 7.19387 = $59,498.28 Therefore, the amount of each rental payment that will yield a 12% return on investment for Albert Davis Leasing Company is $59,498.28.
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RST manufactures titanium and aluminum tennis racquets. RST's total overhead costs consist of assembly costs and inspection costs. The following information is available: RST is considering switching from one overhead rate based on labor hours to activity-based costing. Required: a) Determine total overhead costs assigned to titanium racquets, using a single overhead rate. (3 marks) b) Determine total overhead costs assigned to titanium racquets, using activity-based costing. (4 marks) c) Outlining THREE conditions, company management should move from traditional costing to activity-based costing. (6 marks) d) WXY, a subsidiary of RST, is a microbrew beer maker. Label its following costs as Value Added (VA) or Non-Value Added (NVA). (4 marks) e) What is the main difference between VA and NVA? Explain how these classifications help top management perform management functions?
a) Total overhead costs assigned to titanium racquets using a single overhead rate: Multiply the total labor hours for titanium racquets by the predetermined overhead rate.
b) Total overhead costs assigned to titanium racquets using activity-based costing: Allocate overhead costs based on cost drivers and their activity rates specific to titanium racquets.
c) Three conditions to switch from traditional costing to activity-based costing:
1. High overhead costs and complexity: Activity-based costing provides more accurate allocation for complex cost structures.
2. Diverse product or service offerings: Activity-based costing ensures precise cost allocation for different products or services.
3. Inaccurate cost allocation and decision-making: Activity-based costing offers more reliable cost information for informed decision-making.
d) Label WXY's costs as Value Added (VA) or Non-Value Added (NVA) based on their impact on the final product or service.
e) Difference between VA and NVA costs: VA costs directly contribute value to the customer, while NVA costs do not. VA costs enhance the product/service, while NVA costs are inefficient and don't add value.
In the context of RST's overhead costs, the concise answers provide a brief summary of each requirement. However, it's important to note that these are complex topics, and the explanations offer a more detailed understanding of the concepts involved.Certainly! Here's a more detailed explanation:
a) Total overhead costs assigned to titanium racquets using a single overhead rate: In this approach, a predetermined overhead rate is applied to allocate overhead costs to titanium racquets. The rate is typically calculated by dividing the total estimated overhead costs by a chosen cost driver, such as labor hours. The result is then multiplied by the labor hours specifically attributed to the production of titanium racquets. This method assumes that overhead costs are incurred uniformly across all products based on the labor hours they require.
b) Total overhead costs assigned to titanium racquets using activity-based costing: Activity-based costing takes a more detailed and accurate approach to allocate overhead costs. Instead of using a single rate based on labor hours, it identifies various activities involved in the production process and assigns costs based on the specific cost drivers associated with each activity. For example, the assembly costs may be allocated based on the number of assembly operations performed, while inspection costs may be allocated based on the number of inspections conducted. This method recognizes that different products may consume overhead resources differently, leading to more accurate cost allocation.
c) Three conditions to switch from traditional costing to activity-based costing:
1. Complex cost structures: If the company's overhead costs are influenced by a variety of factors and activities, traditional costing using a single overhead rate may not capture the true cost drivers. Activity-based costing allows for a more detailed analysis of the cost structure by identifying and assigning costs to specific activities, providing a clearer understanding of the cost drivers and their impact on different products or services.
2. Diverse product or service offerings: Companies that offer a wide range of products or services with varying production processes and resource requirements can benefit from activity-based costing. It enables more accurate cost allocation based on the specific activities and cost drivers associated with each product or service, leading to better pricing decisions and profitability analysis.
3. Inaccurate cost allocation and decision-making: If the traditional costing method results in inaccurate cost allocation, leading to misleading product costs and ineffective decision-making, activity-based costing can provide more accurate and reliable cost information.
d) Value Added (VA) and Non-Value Added (NVA) costs: Value-added costs are those directly related to the production process and contribute to the creation of value for customers. Examples include excessive inventory holding costs, rework costs, and idle time.
e) The main difference between VA and NVA costs: The main difference lies in their contribution to the value creation process. VA costs directly contribute to the production process and are essential for creating products or services that meet customer needs. NVA costs, on the other hand, do not add value and represent inefficiencies or waste within the production process.
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A company is trying to decide whether to market a new product. If marketed, the unit margin of the product would be $18,000. The company classifies the possible market results as great, fair and awful and estimates the probabilities of these outcomes to be 0.45, 0.35 and 0.2 respectively, and the sales volumes of these outcomes would be 600, 300 and 90 respectively. If the company decides to develop the product further to ready it for market, it will incur a fixed cost of $4 million. This development may succeed technologically with a probability of 80%. In the case of successful technological development, the company will incur marketing costs equal to $2 million.
1. Use a decision tree to devise the appropriate strategy (plan of action) for the company and 25 determine the expected monetary value (EMV). State the strategy in words and write down the EMV.
2. What would the net revenue be if the product is marketed and the market turns out to be 5 ‘great’?
The decision tree can help visualize the different outcomes and their associated probabilities and costs.
Decision Tree and Strategy:
Development Cost
($4M)
/ \
/ \
/ \
Successful (80%) Unsuccessful (20%)
/ \
/ \
/ \
Marketing Cost No Marketing Cost
($2M) ($0)
| |
| |
Great (0.45) Great (0.45)
Sales: 600 Sales: 0
Unit Margin: $18,000
|
|
Fair (0.35)
Sales: 300
Unit Margin: $18,000
|
|
Awful (0.2)
Sales: 90
Unit Margin: $18,000
The appropriate strategy for the company can be determined by calculating the expected monetary value (EMV) for each decision path.
If the development is successful (80% probability):
Market outcome: Great (0.45 probability)
EMV = Sales Volume * Unit Margin - Development Cost - Marketing Cost
EMV = (600 * $18,000) - $4M - $2M
EMV = $10.8M - $4M - $2M
EMV = $4.8M
Market outcome: Fair (0.35 probability)
EMV = (300 * $18,000) - $4M - $2M
EMV = $5.4M - $4M - $2M
EMV = -$0.6M (negative value)
Market outcome: Awful (0.2 probability)
EMV = (90 * $18,000) - $4M - $2M
EMV = $1.62M - $4M - $2M
EMV = -$4.38M (negative value)
If the development is unsuccessful (20% probability):
EMV = No Marketing Cost
EMV = $0
Comparing the EMV values, the appropriate strategy for the company is to proceed with marketing the product if the development is successful, specifically for the Great market outcome with an EMV of $4.8M.
Net Revenue if the market turns out to be 'great':
If the market turns out to be 'great', the company would have a sales volume of 600 units and a unit margin of $18,000. Therefore, the net revenue can be calculated as follows:
Net Revenue = Sales Volume * Unit Margin
Net Revenue = 600 * $18,000
Net Revenue = $10.8M
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Part 1. A code of business ethics is a document that provides behavioral guidelines and general principles that cover daily activities and decisions within the organization as they relate to the organization's beliefs on matters such as mission, quality, privacy, or the environment.
Refer to the Code of Ethics of Hilton and write on the behavioral guidelines you see they have communicated to their stakeholders. What does this document tell you about their ethical culture?
Part 2. Watch What is the difference between Creating Shared Value and Corporate Social Responsibility
Social Responsibility is the actions an organization takes beyond what is legally required to protect or enhance the well-being of living things. What evidence of Social Responsibility do you find addressed in the Code of Ethics? What evidence of Creating Shared Value do you find addressed in the Code of Ethics? How does this make you feel about the company?
A commitment to addressing societal needs, contributing to communities, and creating long-term value through sustainable and responsible operations. This commitment is likely to resonate positively with stakeholders, reflecting a company that cares about its impact on society and is actively working towards making a positive difference.
Part 1: The Code of Ethics of Hilton communicates several behavioral guidelines to its stakeholders, highlighting the company's commitment to ethical conduct and responsible business practices. The document emphasizes the importance of integrity, respect, and accountability in all interactions, both internal and external. It sets clear expectations for employees, managers, and business partners regarding their behavior and decision-making processes.
Hilton's Code of Ethics promotes fair treatment, non-discrimination, and diversity and inclusion. It emphasizes the importance of creating a safe, inclusive, and respectful work environment, where individuals are treated with dignity and respect regardless of their background or characteristics. The code also emphasizes the company's commitment to environmental sustainability, encouraging responsible resource management and reducing the environmental impact of operations.
The document also addresses issues related to privacy and data protection, highlighting Hilton's commitment to safeguarding the personal information of its guests, employees, and business partners. It outlines guidelines for ensuring the privacy and confidentiality of sensitive information, in compliance with applicable laws and regulations.
Overall, Hilton's Code of Ethics demonstrates a strong ethical culture within the organization. It conveys a commitment to integrity, respect, diversity, sustainability, and responsible business practices. By setting clear behavioral guidelines and emphasizing the importance of ethical conduct, Hilton shows its dedication to maintaining a positive reputation and fostering trust among its stakeholders.
Part 2: The Code of Ethics of Hilton exhibits evidence of both Social Responsibility and Creating Shared Value, reflecting the company's commitment to making a positive impact beyond legal requirements and creating long-term value for society.
Regarding Social Responsibility, the code emphasizes Hilton's dedication to community engagement and philanthropic initiatives. It encourages employees to contribute to their communities through volunteering and supporting charitable causes. This demonstrates Hilton's commitment to enhancing the well-being of living things and going beyond its legal obligations to make a positive difference.
In terms of Creating Shared Value, the code emphasizes Hilton's focus on sustainable business practices that create value for both the company and society. It highlights the company's efforts to minimize environmental impacts, conserve resources, and promote responsible sourcing and waste management. This demonstrates Hilton's recognition of the interconnectedness between its business success and societal well-being, aiming to create shared value through its operations.
The inclusion of both Social Responsibility and Creating Shared Value in Hilton's Code of Ethics showcases the company's comprehensive approach to ethical and responsible business practices. It indicates a commitment to addressing societal needs, contributing to communities, and creating long-term value through sustainable and responsible operations. This commitment is likely to resonate positively with stakeholders, reflecting a company that cares about its impact on society and is actively working towards making a positive difference.
**Keywords: Code of Ethics, Hilton, behavioral guidelines, ethical culture, integrity, respect, accountability, diversity, inclusion, privacy, data protection, social responsibility, creating shared value, sustainability, philanthropy.**
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is $70,000, and the project's unlevered cost of capital is 12%. The risk-free interest rate is 7%. (Assume no taxes or distress costs.) a. What is the NPV of this project? money can be raised in this way -that is, what is the initial market value of the unlevered equity?
The NPV of the project is the present value of cash flows minus the initial investment. The initial market value of the unlevered equity is the initial investment minus the NPV.
The exact values can be calculated using the provided cash flows and discount rate. To find the initial market value of the unlevered equity, we subtract the NPV from the initial investment: Initial market value of unlevered equity = Initial investment - NPV Performing the calculations will provide the exact values for the NPV and the initial market value of the unlevered equity.
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Examine two or three most notable differences in high- and low-context communication styles among your
team members. What implications do these differences have for the various functions of teamwork (e.g.,
collaboration, coordination, facilitation, leadership, scheduling, decision-making, document-controlling, goal-
setting, conflict-management)? Provide examples of situations where differences in communication styles had
an impact your team members’ interactions and work. Examine where potential future misunderstanding and
conflicts may arise on your team and why?
The high-context communication style is more implicit and dependent on the context and background information, while the low-context communication style is more explicit and straightforward. In my setting, the workplace, this difference in communication styles can affect conflict management. For instance, if a low-context communicator is talking to a high-context communicator, the low-context communicator might feel that the high-context communicator is withholding important information, while the high-context communicator might feel that the low-context communicator is being too blunt and not taking into account the context of the situation.
One example of this in my workplace is when we were discussing a project that was behind schedule. The high-context communicator on the team suggested that we could still meet the deadline if we worked overtime and put in extra effort. However, the low-context communicator on the team didn't understand the urgency of the situation and thought that it would be better to delay the project. The difference in communication styles led to a conflict, as the team was divided over which approach to take. It was only after the team discussed the situation in more detail and explained their perspectives that they were able to come to a compromise.
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Final goods or services used to compute gross domestic product (GDP) refer to the value of outstanding shares of stock of manufacturing firms sum of all wages paid to laborers goods and services purchased by the ultimate users factors of production used to produce output
Final goods or services used to compute gross domestic product (GDP) refer to the **goods and services purchased by the ultimate users**.
GDP is a measure of the total value of goods and services produced within a country's borders during a specific period. To avoid double-counting, only the final goods and services that are directly consumed or used by individuals, businesses, or the government are included in the calculation of GDP. These are the goods and services that have reached their final stage of production and are ready for use or consumption.
This definition excludes intermediate goods, which are goods used in the production process and are not directly consumed or used by the end consumer. Only the value of the final products or services is taken into account when calculating GDP. This allows for a more accurate representation of the overall economic output of a country.
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Vaughn Industries would like its Alabama Division to sell 28900 units to its Arkansas Division for a price of $44. The Alabama Division is currently operating at capacity. Alabama Division's unit variable cost is $25, unit fixed cost is $20, and unit selling price is $64. What is the minimum transfer price that the Alabama Division should accept? a. $25 b. $39 c. $45 d. $64
Vaughn Industries would like its Alabama Division to sell 28900 units to its Arkansas Division for a price of $44, The minimum transfer price that the Alabama Division should accept is b. $39.
To determine the minimum transfer price, we need to consider the opportunity cost for the Alabama Division. The Alabama Division is currently operating at capacity, meaning that selling 28,900 units to the Arkansas Division would require them to forgo selling those units in the external market.
The unit variable cost for the Alabama Division is $25, and the unit fixed cost is $20. Considering these costs, the minimum transfer price should at least cover the variable cost and the opportunity cost (foregone contribution margin) of selling externally. The unit selling price in the external market is $64.
To calculate the minimum transfer price, we need to determine the contribution margin per unit:
Contribution margin per unit = Selling price - Variable cost
Contribution margin per unit = $64 - $25 = $39
Therefore, the Alabama Division should accept a minimum transfer price of $39 to cover its variable cost and the opportunity cost of forgoing external sales.
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Grey Wolf, Inc., has current assets of $2,360, net fixed assets of $11,200, current liabilities of $1,445, and long-term debt of $4,170. a. What is the value of the shareholders' equity account for this firm? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. How much is the company's net working capital? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a. Shareholders' equity b. Net working capital
a) Shareholders' equityThe shareholders' equity account can be calculated using the following formula:Shareholders' equity = Total assets − Total liabilitiesThe total assets can be calculated as the sum of the current assets and the net fixed assets as given below:Total assets = Current assets + Net fixed assets= $2,360 + $11,200= $13,560Now, the total liabilities can be calculated as the sum of the current liabilities and the long-term debt as given below:
Total liabilities = Current liabilities + Long-term debt= $1,445 + $4,170= $5,615Therefore, the shareholders' equity can be calculated as:Shareholders' equity = Total assets − Total liabilities= $13,560 − $5,615= $7,945So, the value of the shareholders' equity account for Grey Wolf, Inc. is $7,945 (rounded to the nearest whole number).b) Net working capital
The net working capital (NWC) is defined as the difference between the current assets and the current liabilities as given below:NWC = Current assets − Current liabilities= $2,360 − $1,445= $915So, the net working capital of Grey Wolf, Inc. is $915 (rounded to the nearest whole number).Hence, the shareholders' equity is $7,945 and the net working capital is $915.
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monopolist’s inverse demand function is estimated as P = 550 − 2Q. The company produces output at two facilities; the marginal cost of producing at facility 1 is MC1(Q1) = 3Q1, and the marginal cost of producing at facility 2 is MC2(Q2) = 4Q2.
a. Provide the equation for the monopolist’s marginal revenue function. (Hint: Recall that Q1 + Q2 = Q.)
MR(Q) = − Q1 − Q2
b. Determine the profit-maximizing level of output for each facility.
Instructions: Round your response to two decimal places.
Output for facility 1:
Output for facility 2:
c. Determine the profit-maximizing price.
Instructions: Round your response to the nearest penny (two decimal places).
$
a. Marginal revenue function = 550 - 4Q
b. Output for facility 1: 78.57 units, Output for facility 2: 68.75 units
c. Profit-maximizing price: $255.36
a. The marginal revenue function can be derived by taking the derivative of the inverse demand function with respect to quantity:
MR(Q) = d(PQ)/dQ = d(550Q - 2Q^2)/dQ = 550 - 4Q
Therefore, the monopolist's marginal revenue function is MR(Q) = 550 - 4Q.
b. To determine the profit-maximizing level of output for each facility, we need to equate the marginal cost to the marginal revenue for each facility separately.
For facility 1:
MC1(Q1) = MR(Q1)
3Q1 = 550 - 4Q1
7Q1 = 550
Q1 = 78.57 (rounded to two decimal places)
For facility 2:
MC2(Q2) = MR(Q2)
4Q2 = 550 - 4Q2
8Q2 = 550
Q2 = 68.75 (rounded to two decimal places)
c. The profit-maximizing price can be determined by substituting the optimal quantities obtained in part (b) into the inverse demand function:
P = 550 - 2Q
P = 550 - 2(Q1 + Q2)
P = 550 - 2(78.57 + 68.75)
P = 550 - 2(147.32)
P = 550 - 294.64
P = 255.36
Therefore, the profit-maximizing price is $255.36 (rounded to the nearest penny).
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Suppose we are going to evaluate a power utility firm using the sustainable growth dividend discount model. We assume the earnings per share the firm reported for 2020 was RMB 6.48 and the dividends pet share it paid out for 2020 let was RMB 3.24. We assume the value of beta was 0.80 for this firm and an equity risk premium of 6%. The risk-free interest rate was 4.5%. Return on equity for new investment was 11.8%. The stock was trading at a price of RMB 83.47 a share in May 2021
a. What is the retention ratio of this firm for its earnings in 2020?
b. What is the expected sustainable growth rate of dividends for this firm?
c. What is the cost of equity or required rate of return on equity for this firm?
d. What is the intrinsic value per share of this firm? Was it undervalued in May 2021?
The intrinsic value per share is RMB 95.29, and since the stock was trading at RMB 83.47 in May 2021, it was undervalued at that time.
To calculate the values requested, we will use the following formulas and information:
a. Retention ratio (RR) = 1 - Dividend payout ratio (DPR)
Dividend payout ratio (DPR) = Dividends per share / Earnings per share
b. Expected sustainable growth rate (g) = Retention ratio (RR) × Return on equity (ROE)
c. Cost of equity (r) = Risk-free rate + Beta × Equity risk premium
Risk-free rate = 4.5%
Beta = 0.80
Equity risk premium = 6%
d. Intrinsic value per share (IV) = Dividends per share / (Cost of equity - Sustainable growth rate)
Given information:
Earnings per share (EPS) for 2020 = RMB 6.48
Dividends per share (DPS) for 2020 = RMB 3.24
Return on equity (ROE) for new investment = 11.8%
Stock price in May 2021 = RMB 83.47
a. Dividend payout ratio (DPR) = DPS / EPS = 3.24 / 6.48 = 0.5
Retention ratio (RR) = 1 - DPR = 1 - 0.5 = 0.5
b. Expected sustainable growth rate (g) = RR × ROE = 0.5 × 0.118 = 0.059 or 5.9%
c. Cost of equity (r) = Risk-free rate + Beta × Equity risk premium
Cost of equity (r) = 0.045 + 0.80 × 0.06 = 0.045 + 0.048 = 0.093 or 9.3%
d. Intrinsic value per share (IV) = DPS / (r - g) = 3.24 / (0.093 - 0.059) = 3.24 / 0.034 = RMB 95.29
The intrinsic value per share is RMB 95.29, and since the stock was trading at RMB 83.47 in May 2021, it was undervalued at that time.
Please note that this calculation is based on the provided information and assumptions. Market prices and valuations can fluctuate, and other factors may need to be considered for a comprehensive analysis.
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Yancey Productions is a film studio that uses a job-order costing system. The company's direct materials consist of items such as costumes and props. Its direct labor includes each film's actors, directors, and extras. The company's overhead costs include items such as utilities, depreciation of equipment, senior management salaries, and wages of maintenance workers. Yancey applies its overhead cost to films based on direct labor-dollars. At the beginning of the year, Yancey made the following estimates: Direct labor-dollars to support all productions Fixed overhead cost $ 8,000,000 Variable overhead cost per direct labor-dollar $ 4,800,000 $ 0.05 Required: 1. Compute the predetermined overhead rate. 2. During the year, Yancey produced a film titled You Can Say That Again that incurred the following costs: Direct materials. $ 1,259,000 Direct labor cost $ 2,400,000 Compute the total job cost for this particular film. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the predetermined overhead rate. (Round your answer to 2 decimal places.) Predetermined overhead rate per DLS Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the total job cost for this particular film. (Round your intermediate calculations to 2 decimal places.) Direct materials Direct labor Overhead applied Total job cost $ 0
Required 1:
To compute the predetermined overhead rate, we divide the total estimated overhead cost by the estimated total direct labor-dollars.
Fixed overhead cost: $8,000,000
Variable overhead cost per direct labor-dollar: $0.05
Total estimated overhead cost = Fixed overhead cost + (Variable overhead cost per direct labor-dollar × Direct labor-dollars to support all productions)
Total estimated overhead cost = $8,000,000 + ($0.05 × $4,800,000)
Total estimated overhead cost = $8,000,000 + $240,000
Total estimated overhead cost = $8,240,000
Predetermined overhead rate = Total estimated overhead cost / Estimated total direct labor-dollars
Predetermined overhead rate = $8,240,000 / $4,800,000
Predetermined overhead rate = $1.717
Therefore, the predetermined overhead rate is $1.717 per direct labor-dollar.
Required 2:
To compute the total job cost for the film "You Can Say That Again," we need to apply the predetermined overhead rate to the direct labor cost and add the direct materials cost.
Direct materials cost: $1,259,000
Direct labor cost: $2,400,000
Overhead applied = Predetermined overhead rate × Direct labor cost
Overhead applied = $1.717 × $2,400,000
Overhead applied = $4,120,800
Total job cost = Direct materials cost + Direct labor cost + Overhead applied
Total job cost = $1,259,000 + $2,400,000 + $4,120,800
Total job cost = $7,779,800
Therefore, the total job cost for the film "You Can Say That Again" is $7,779,800.
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job boards can be used for internal recruitment but not for external recruitment.
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You decided to start planning for your retirement and setting aside part of your paycheck on a regular basis over the next 35 years. You decided to take a more diversified approach. Part of your monthly paycheck, $710, will be invested into a stocks portfolio. Another part of your monthly paycheck, $310, will be invested into a bonds portfolio. The expected rate of return is 9.1 percent for stocks and 5.1 percent for bonds. After doing that for 35 years, you will then pool together the money from both your stock and your bond accounts and deposit it all into a new checking account at a 6.1 percent APR. Once you retire in 35 years with that much money in your checking account, you then plan to withdraw money from it once a month for a total of 30 years. How much would you be able to withdraw each month? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 123.45) Withdraw _______per month
you would be able to withdraw approximately $7,634.26 per month during your retirement.
To calculate the amount you would be able to withdraw each month during your retirement, we need to determine the value of your combined stock and bond accounts after 35 years and then calculate the monthly withdrawal amount.
First, let's calculate the future value of your stock account after 35 years:
Future Value of Stock Account = Monthly Investment × [((1 + Expected Rate of Return)^(Number of Years × Number of Months) - 1) / Expected Rate of Return]
Future Value of Stock Account = $710 × [((1 + 0.091)^(35 × 12) - 1) / 0.091]
Future Value of Stock Account = $1,064,036.08
Next, let's calculate the future value of your bond account after 35 years:
Future Value of Bond Account = Monthly Investment × [((1 + Expected Rate of Return)^(Number of Years × Number of Months) - 1) / Expected Rate of Return]
Future Value of Bond Account = $310 × [((1 + 0.051)^(35 × 12) - 1) / 0.051]
Future Value of Bond Account = $329,598.62
Now, let's calculate the total future value of your combined stock and bond accounts:
Total Future Value = Future Value of Stock Account + Future Value of Bond Account
Total Future Value = $1,064,036.08 + $329,598.62
Total Future Value = $1,393,634.70
Finally, let's calculate the monthly withdrawal amount during your retirement:
Monthly Withdrawal = Total Future Value × (Monthly Interest Rate / (1 - (1 + Monthly Interest Rate)^(-Number of Years × Number of Months)))
Monthly Interest Rate = Annual Percentage Rate / (12 × 100)
Monthly Interest Rate = 6.1% / (12 × 100)
Monthly Interest Rate = 0.00508
Monthly Withdrawal = $1,393,634.70 × (0.00508 / (1 - (1 + 0.00508)^(-30 × 12)))
Monthly Withdrawal = $7,634.26
Therefore, you would be able to withdraw approximately $7,634.26 per month during your retirement.
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On May 28,2024,Oriole Services purchased equipment for $102,000,giving the supplier a 1-year note at 6% (due at maturity)for$79,730,and paid the balance with cash. Oriole also paid Wu Engineering $7,800 cash for installing the equipment on May 30.Theequipment's useful life was estimated to be five years, with an $18,600 residual value. The straight-line method of depreciation is usedfor equipment and Oriole has a calendar year end.
On October 4,2026, the equipment was destroyed in an accident. Oriole received $61,860 cash as insurance proceeds for theequipment.
(a)
Record the transactions of May 28 and 30, 2024. (Credit account titles are automatically indented when the amount isentered.Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.List all debit entries before
credit entries.)
Date
Account Titles
Debit
Credit
2024
Here is the journal entry to record the transactions of May 28 and 30, 2024:
Date Account Titles Debit Credit
May 28, 2024 Equipment $102,000
May 28, 2024 Notes Payable $79,730
May 28, 2024 Cash $22,270
May 30, 2024 Equipment Installation Expense $7,800
May 30, 2024 Cash $7,800
Explanation:
On May 28, 2024, Oriole Services purchased equipment for $102,000. This increases the Equipment account.
Oriole issued a 1-year note payable to the supplier for $79,730, representing the remaining balance. This increases the Notes Payable account.
The remaining amount of $22,270 was paid in cash, reducing the Cash account.
On May 30, 2024, Oriole paid $7,800 in cash to Wu Engineering for installing the equipment. This expense is recorded in the Equipment Installation Expense account, and the Cash account is decreased by the same amount.
Please note that the depreciation of the equipment and the insurance proceeds received are not included in the provided information, so they are not part of the journal entry.
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Lee Company hires a consultant for a new project, and issues common stock with a par value of $100 in exchange for consulting services received. The common stock does not have an observable fair value. The consultant ordinarily charges $3,600 for the services received. What is the journal entry required to record this transaction?
Options: Select all that apply
Dr. Consulting Fee Expense 4200
Dr. Consulting Fee Expense 3600
Cr. Additional Paid in Capital 3500
Cr. Additional Paid in Capital 4100
Cr. Common stock at par 100
Dr Cash 4200
The journal entry required to record the transaction when the Lee Company hires a consultant for a new project and issues common stock with a par value of $100 in exchange for consulting services received, and the common stock does not have an observable fair value. Dr. Consulting Fee Expense 3500Cr. Common Stock at Par 100Cr. Additional Paid in Capital 3400
Dr. Consulting Fee Expense 3500Cr. Common Stock at Par 100Cr. Additional Paid-in Capital 3400This entry records the transaction that the Lee Company has to pay $3600 to the consultant for the services received, and the company issues common stock with a par value of $100. The common stock does not have an observable fair value.
Therefore, the correct options are:Dr. Consulting Fee Expense 3500Cr. Common Stock at Par 100Cr. Additional Paid in Capital 3400
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Q40 If the unemployment is in the form of: Inflation rate = parameters of a and b. rate in 2019 was 5% and was 6% in 2020. The Philips curve function a*(unemployment rate) + b. Find out the value of the
The parameters a and b in the Philips curve equation can be determined by using the given information of the inflation rates in 2019 and 2020.
The Philips curve relates the inflation rate to the unemployment rate, and it can be expressed as: Inflation rate = a * Unemployment rate + b. We are given the inflation rates of 5% in 2019 and 6% in 2020. By substituting these values into the equation, we can set up a system of equations to solve for the parameters a and b.
Using the given data, we have:
2019: 5% = a * Unemployment rate in 2019 + b
2020: 6% = a * Unemployment rate in 2020 + b
By subtracting the two equations, we can eliminate the constant term b: 6% - 5% = a * (Unemployment rate in 2020 - Unemployment rate in 2019)
Simplifying further:
1% = a * (Unemployment rate in 2020 - Unemployment rate in 2019)
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At the beginning of the year, Penman Company had the following account balances. Accounts receivable $427,200 Allowance for uncollectible accounts 25.680 During the year, Penman's credit sales were $2,409,600, and collections on accounts receivable were $2.355,600. The following additional transactions occurred during the year Feb. 17 Wrote off Bava's account, $9,840. Wrote off Reed's account, $5,760. Wrote off Fischer's account, $2,760 May 28 Dec 15 Dec. 31 Recorded the bad debts expense assuming Penman's policy is to record bad debts expense as 0.9% of credit sales. (Hint: The allowance account is increased by 0.9% of credit sales regardless of write-offs.) Compute the ending balances in accounts receivable and the allowance for uncollectible accounts and show how Penman's December 31 balance sheet reports the two accounts. Note: Round your answers to the nearest whole dollar Note: Do not use a negative sign with your answers. Current Assets: Accounts recoverable ____ Loss alowance for uncutectAle accounts ____
Accounts recoverable $418,474 Loss alowance for uncollectable accounts $47,366.
To calculate the ending balances in accounts receivable and the allowance for uncollectible accounts, we need to go through the transactions step by step.
Beginning balances:
Accounts receivable = $427,200
Allowance for uncollectible accounts = $25,680
Credit sales during the year:
Credit sales = $2,409,600
Collections on accounts receivable during the year:
Collections on accounts receivable = $2,355,60
Write-offs:
Feb. 17: Bava's account write-off = $9,840
Feb. 17: Reed's account write-off = $5,760
Feb. 17: Fischer's account write-off = $2,760
Bad debts expense:
Dec. 31: Bad debts expense = 0.9% * credit sales = 0.009 * $2,409,600 = $21,686.40
Now, let's calculate the ending balances:
Ending balance in accounts receivable:
Beginning balance + Credit sales - Collections - Write-offs
$427,200 + $2,409,600 - $2,355,600 - ($9,840 + $5,760 + $2,760) = $465,840
Ending balance in the allowance for uncollectible accounts:
Beginning balance + Bad debts expense
$25,680 + $21,686.40 = $47,366.40
Therefore, the ending balances are as follows:
Accounts receivable: $465,840
Allowance for uncollectible accounts: $47,366
On Penman Company's December 31 balance sheet, the two accounts will be reported as follows:
Current Assets:
Accounts receivable: $465,840
Less: Contra Asset:
Allowance for uncollectible accounts: $47,366
Net Accounts Receivable: $418,474
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management's most powerful tool for winning employee commitment to good strategy execution is:
The most effective tool for winning employee commitment to good strategy execution is management. The involvement of management in the execution of good strategy is essential for the success of any organization.
Managers are responsible for providing the right tools and resources to employees to carry out their work with maximum efficiency and effectiveness.
Management's most effective tool for winning employee commitment to good strategy execution is to set clear expectations and provide the resources and support needed to achieve these objectives.
Managers can make their expectations clear through regular communication and feedback with their employees.
This includes outlining the company's goals and objectives, explaining how individual contributions fit into the larger picture, and outlining the specific actions required to achieve these goals.
Additionally, management can provide the resources and support employees need to do their jobs effectively.
This can include training, tools and technologies, and other resources that make work easier and more efficient.
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the ability to learn without being programmed is known as
The ability to learn without being programmed is known as Machine Learning.
The concept of machine learning refers to the idea that computer systems can learn and improve from experience without being explicitly programmed to do so.
In this method, computer algorithms or models can access data, analyze that data and learn from it, so they can perform specific tasks more accurately.
In other words, instead of being programmed to perform specific tasks, machine learning models use statistical analysis and patterns in data to learn from their environment. This allows them to make more accurate predictions and decisions over time as they encounter new data.In summary, Machine Learning is the ability to learn without being programmed.
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Assume a company started and completed numerous jobs during July-two of which were Job Y and Job Z. The company uses two departmental predetermined overhead rates. The rate in the Machining Department is based on machine-hours and the rate in the Assembly Department is based on direct labor-hours. The following additional information from the month of July is available for the company as a whole and for Jobs Y and Z. Estimated total fixed manufacturing overhead Machining $ 48,000 $ 1.50 Assembly $ 30,000 Estimated variable manufacturing overhead per machine-hour Estimated variable manufacturing overhead per direct labor-hour Estimated total machine-hours to be used $ 2.00 12,000 Estimated total direct labor hours to be worked 10,000 Machining Assembly Job Y Machine-hours 50 Direct labor-hours 30 Job Z Machine-hours 40 Direct labor-hours 60 How much total manufacturing overhead is applied to Job Z from both departments?
The total manufacturing overhead applied to Job Z from both departments is $170.
To calculate the total manufacturing overhead applied to Job Z, we need to determine the overhead applied by each department and then sum them together.
In the Machining Department, the predetermined overhead rate is $2.00 per machine-hour. Job Z required 40 machine hours, so the overhead applied by the Machining Department is 40 machine-hours * $2.00 per machine-hour = $80.
In the Assembly Department, the predetermined overhead rate is $1.50 per direct labor-hour. Job Z required 60 direct labor-hours, so the overhead applied by the Assembly Department is 60 direct labor-hours * $1.50 per direct labor-hour = $90.
Therefore, the total manufacturing overhead applied to Job Z from both departments is $80 + $90 = $170.
It's important to note that the predetermined overhead rates are based on the estimated total fixed manufacturing overhead and the estimated variable manufacturing overhead per machine-hour or direct labor-hour. These rates are used to allocate overhead costs to different jobs based on the actual machine-hours and direct labor-hours used by each job.
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Cost of Goods Sold Bob's Bistro produces party-sized hoagie sandwiches. For next year, Bob's Bistro predicts that 55,500 units will be produced with the following total costs: Direct materials ? Direct labor Variable overhead $53,000 20,000 220,000 Fixed overhead Next year, Bob's Bistro expects to purchase $125,000 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Work-in-Process Inventory Inventory Beginning $4,000 $14,000 Ending $3,900 $16,000 Bob's Bistro expects to produce 55,500 units and sell 54,800 units. Beginning inventory of finished goods is $45,500, and ending inventory of finished goods is expected to be $37,000. Required: 1. Prepare a statement of cost of goods sold in good form. Bob's Bistro Statement of Cost of Goods Sold For the Coming Year 2. What if the beginning inventory of finished goods increased by $5,500? What would be the effect on the cost of goods sold? by $
1. The statement is given below. 2.The cost of goods sold would decrease by $5,500 and become $425,000 if the beginning inventory of finished goods increased by $5,500.
1.To prepare a statement of cost of goods sold, we need to calculate the total manufacturing costs first. Total manufacturing costs include direct materials, direct labor, variable and fixed overhead.
Total Manufacturing Cost = Direct Materials + Direct Labor + Variable Overhead + Fixed Overhead Total Manufacturing Cost = $125,000 + $20,000 + $220,000 + $85,000 [Fixed overhead is calculated as Total Manufacturing Cost – (Direct Materials + Direct Labor + Variable Overhead)] Total Manufacturing Cost = $450,000
Next, we need to calculate the cost of goods manufactured. This includes the total manufacturing cost plus the beginning work-in-process inventory and minus the ending work-in-process inventory.
Cost of Goods Manufactured = Total Manufacturing Cost + Beginning Work-in-Process Inventory - Ending Work-in-Process Inventory Cost of Goods Manufactured = $450,000 + $14,000 - $16,000 Cost of Goods Manufactured = $448,000
To calculate the cost of goods sold, we need to adjust the cost of goods manufactured for the beginning and ending finished goods inventory.
Cost of Goods Sold = Cost of Goods Manufactured + Beginning Finished Goods Inventory - Ending Finished Goods Inventory Cost of Goods Sold = $448,000 + $45,500 - $37,000 Cost of Goods Sold = $456,500
Therefore, Bob's Bistro Statement of Cost of Goods Sold for the Coming Year is as follows:
Particulars Amount ($)
Cost of Goods Manufactured 448,000
Add: Beginning Finished Goods Inventory 45,500
Less: Ending Finished Goods Inventory (37,000)
Cost of Goods Sold 456,500
2.If the beginning inventory of finished goods increased by $5,500, then the cost of goods sold would decrease by $5,500. This is because an increase in beginning inventory means that fewer units were sold during the year. Therefore, we need to reduce the cost of goods sold by the cost of the additional units that were not sold. The calculation for the cost of goods sold would be as follows:
Cost of Goods Sold = Cost of Goods Manufactured + Beginning Finished Goods Inventory - Ending Finished Goods Inventory Cost of Goods Sold = $448,000 + ($45,500 + $5,500) - $37,000 Cost of Goods Sold = $462,000 - $37,000 Cost of Goods Sold = $425,000
Therefore, the cost of goods sold would decrease by $5,500 and become $425,000 if the beginning inventory of finished goods increased by $5,500.
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.Which of the following is NOT a necessary condition to practice price discrimination?
A. Price elasticities must differ between individual or groups of buyers.
B. There must be a way to prevent resale between lower-price and higher-price buyers.
C. Marginal cost of production must differ among different plants.
D. The firm must possess some degree of market power.
The marginal cost of production must differ among different plants is not a necessary condition to practice price discrimination. (Option C)
Price discrimination is a strategy where a firm charges different prices for the same product or service to different groups of customers based on their willingness to pay. While the other options (A, B, and D) are necessary conditions for price discrimination, option C is not.
A. Price elasticities must differ between individual or groups of buyers: Price discrimination relies on the ability to identify different groups of buyers with different price elasticities of demand. This allows the firm to charge higher prices to buyers with lower price sensitivity and lower prices to buyers with higher price sensitivity.
B. There must be a way to prevent resale between lower-price and higher-price buyers: Price discrimination requires mechanisms to prevent or discourage arbitrage or resale between buyers purchasing at different prices. This ensures that buyers cannot take advantage of the price differences by buying at a lower price and reselling at a higher price.
D. The firm must possess some degree of market power: Price discrimination is typically practiced by firms with market power, allowing them to set different prices for different segments of customers. Without market power, the firm would have limited control over pricing and would not be able to implement price discrimination strategies effectively.
C. Marginal cost of production must differ among different plants: While cost differences among different plants can sometimes be a factor in price discrimination, it is not a necessary condition. Price discrimination can be based on factors other than production costs, such as buyer characteristics or geographical location.
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Your company is accused to sell adulterated food and your product has been banned by FDA. The issue was related to poor logistics arrangement which left the food contaminated. The company has called for an immediate board meeting and is discussing the situation. What will you do in such a situation? Take up different roles across the board and engage in a discussion to solve the issue at hand.
In such a situation, it is important to take immediate action and address the issue at hand. Collaboration among different board roles is crucial to resolve the issue effectively and regain trust from consumers and stakeholders.
CEO/Chairperson:
The CEO or Chairperson should take charge of the meeting and ensure that all board members understand the severity of the situation. They should emphasize the importance of resolving the issue promptly and taking necessary steps to regain consumer trust.
Operations/Logistics Head:
The Operations or Logistics Head should provide a detailed account of what went wrong with the logistics arrangement that led to the contamination. They should present an analysis of the root causes, highlighting any shortcomings in the company's logistics processes and infrastructure.
Quality Assurance/Compliance Officer:
The Quality Assurance or Compliance Officer should explain the specific quality control measures that were in place and how they failed in this instance. They should propose immediate corrective actions, such as enhancing testing protocols, implementing stricter quality checks, and improving supplier monitoring.
Legal Counsel:
The Legal Counsel should provide guidance on the regulatory implications and potential legal consequences the company may face as a result of the FDA ban. They should outline the steps needed to rectify the situation and ensure compliance with all legal requirements.
Marketing/Communications Director:
The Marketing or Communications Director should discuss the company's communication strategy. They should develop a plan to inform the public, customers, and stakeholders about the issue, emphasizing transparency, accountability, and the steps being taken to address the problem. They should also coordinate with public relations teams to handle media inquiries and develop a crisis management plan.
Financial Officer:
The Financial Officer should assess the financial impact of the FDA ban and the potential loss of business. They should provide recommendations on budget allocation for corrective measures, potential reimbursements or compensations, and measures to maintain the company's financial stability during this crisis.
In a situation where a company is accused of selling adulterated food and facing an FDA ban, the board meeting should focus on understanding the root causes, addressing regulatory concerns, implementing corrective actions, ensuring legal compliance, developing a communication strategy, and safeguarding the company's financial stability. Collaboration among different board roles is crucial to resolve the issue effectively and regain trust from consumers and stakeholders.
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A rental property is providing an acceptable market rate of return of 12 percent. You expect next year's rent to be $2 million and that rent is expected to grow at 2 percent per year forever.
Calculate the current value of the property
The current value of the rental property can be calculated using the formula for the present value of a perpetuity. The current value of the rental property is $20 million
To calculate the current value of the rental property, we can use the formula for the present value of a perpetuity. The formula is:
PV = C / r
Where PV is the present value, C is the expected annual cash flow (rent), and r is the market rate of return.
In this case, the expected annual rent is $2 million, and the market rate of return is 12 percent. However, since the rent is expected to grow at a rate of 2 percent per year forever, we need to adjust the formula to account for the growth.
The formula for the present value of a growing perpetuity is:
PV = C / (r - g)
Where g is the growth rate.
Plugging in the values, we have:
PV = $2 million / (0.12 - 0.02)
PV = $2 million / 0.10
PV = $20 million
Therefore, the current value of the rental property is $20 million. This means that the property is providing an acceptable market rate of return of 12 percent based on its current value and expected future cash flows.
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