Answer:
Hind Petrochemicals Company
The reason that the NPV method is the most suitable method in evaluating the proposed investment is that
the NPV reduces all the cash outflows and inflows to their present value to assess their relative values vis-a-vis the time value of money.
Explanation:
NPV, therefore, creates a common denominator for project evaluation. If the cash outflows in their present values are more than the cash inflows in their present values, then Hind may need to reconsider its decision to buy the refineries from the government. Using NPV enables Hind Petrochemicals to compute the revenues and costs in their present values and cash flow forms.
An analyst prepares the following common-size income statements for Perez Company: 20X1 20X2 20X3 Sales 100% 100% 100% Cost of goods sold 50% 52% 53% Selling and administrative expense 16% 12% 9% Interest income 4% 4% 4% Pretax income 30% 32% 34% Income tax expense 15% 16% 17% Net income 15% 16% 17% Based only on this information, Perez's improving net profit margin is most likely a result of:
Answer:
Perez Company
Based only on this information, Perez's improving net profit margin is most likely a result of:
Decreasing Selling and Administrative Expenses over the years.
Explanation:
a) Data and Calculations:
Perez Company
Common-size Income Statements for three years:
20X1 20X2 20X3
Sales 100% 100% 100%
Cost of goods sold 50% 52% 53%
Selling and administrative expense 16% 12% 9%
Interest income 4% 4% 4%
Pretax income 30% 32% 34%
Income tax expense 15% 16% 17%
Net income 15% 16% 17%
b) A review of the common-size income statement of Perez Company shows that its selling and administrative expenses continued to reduce an average of 300 percentage points year on year. This reduction can be clearly seen in its improved net income, which also continued to improve year on year. However, the improvement was hampered by increasing income tax expense, which witnessed the same increase.
Edwards Manufacturing Company purchases two component parts from three different suppliers. The suppliers have limited capacity and no one supplier can meet all the company's needs. In addition, the suppliers charge different prices for the components. Component price data (in price per unit) are as follows:Supplier Component 1 2 31 $10 $12 $142 $10 $10 $11Each supplier has a limited capacity in terms of total number of components it can supply. However, as long as Edwards provides sufficient advance orders, each supplier can devote its capacity to component 1, component 2, or any combination of the two components, if the total number of units ordered is within its capacity. Supplier capacities are as followsSupplier 1 2 3Capacity 600 1050 775If the Edwards production plan for the next period includes 1050 units of component 1 and 800 units of component 2, what purchases do you recommend? The is, how many units of each component should be ordered from each supplier?Supplier 1 2 3Component 1 Component 2 What is the total purchase cost for the components?
Answer:
Edwards Manufacturing Company
1. Number of units to order from each supplier:
Suppliers 1 2 3 Total
Component 1 600 450 0 1,050
Component 2 0 600 200 800
Total ordered 600 1,050 200 1,850
2. The total purchase cost for the components is:
= $19,600.
Explanation:
a) Data and Calculations:
Component price
Supplier 1 2 3
Component 1 $10 $12 $14
Component 2 $10 $10 $11
Suppliers' Capacities
Supplier 1 2 3
Component 1
Component 2
Total capacity 600 1,050 775
Edwards Production Plan
Component 1 = 1,050 units
Component 2 = 800 units
Objective:
Minimize Total Cost = $19,600
Constraints:
Total Supplier 1 <= 600
Total Supplier 2, <= 1,050
Total Supplier 3, <= 775
Total Component 1, = 1,050
Total Component 2, = 800
Component 1 Component 2
Suppliers 1 2 3 1 2 3
Numbers of units to
order from supplier 600 450 0 0 600 200
Total units 1,050 + 800
Component 1 Component 2
Suppliers 1 2 3 1 2 3
Numbers of units to
order from supplier 600 450 0 0 600 200
Price of units $10 $12 $14 $10 $10 $11
Total costs $6,000 $5,400 $0 $0 $6,000 2,200
= $19,600
Number of units to order from each supplier:
Suppliers 1 2 3 Total
Component 1 600 450 0 1,050
Component 2 0 600 200 800
Total ordered 600 1,050 200 1,850
Capacity of suppliers 600 1,050 775
A firm's year-end price on its common stock is $55. The firm has a profit margin of 6 percent, total assets of $75 million, a total asset turnover ratio of 0.9, no preferred stock, and 2.5 million shares of common stock outstanding. Calculate the PE ratio for the firm.
Answer:
34
Explanation:
Price/Earning ratio (PE) = Price per Share ÷ Earnings per share
where,
Earnings per share = Net Income ÷ Number of Common Stock Outstanding
= (0.9 x $75 million x 0.06) ÷ 2.5 million shares
= 1.62
therefore,
Price/Earning ratio (PE) = $55 ÷ $1.62 = 33.95 or 34
If budgeted beginning inventory is $8,300, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted purchases should be: Group of answer choices $9,160 $11,360 $1,960 $860 $1,100
Answer: $11,360
Explanation:
Budgeted cost of goods sold = Budgeted beginning inventory + Budgeted purchases - Budgeted ending inventory
10,260 = 8,300 + Budgeted purchases - 9,400
Budgeted purchases = 10,260 - 8,300 + 9,400
= $11,360
A cash register tape shows cash sales of $3180 and sales taxes of $210. The journal entry to record this information is
Answer:
Debit cash $3,390
Credit sales revenue $210
Cales tax payable $3,180
Explanation:
Preparation of the journal entry to record the information given.
Journal entry
Debit cash $3,390
($3,180+$210)
Credit sales revenue $210
Cales tax payable $3,180
In the following MRP planning schedule for Item J, indicate the correct net requirements, planned order receipts, and planned order releases to meet the gross requirements. Lead time is one week.
WEEK NUMBER
ITEM J 0 1 2 3 4 5
Gross requirements 67 43 63
On-hand 46
Net requirements
Planned order receipt
Planned order release
Answer:
Planned order receipts
Item 3 - 55
Item 4 - 74
Planned order releases
Item 2 - 55
Item 3 - 74
Explanation:
Planned order receipts are the requirement for each item based on demand. Planned order releases is the finished goods processing time. When finished goods are ready, they are placed at warehouse for order dispatch.
Service Pro Corp (SPC) is preparing adjustments for its September 30 year- end. For the following transactions and events, show the September 30 adjusting entries that SPC would make
a. Prepaid Insurance shows a balance of zero at September 30, but Insurance Expense shows a debit balance of $2,340, representing the cost of a three-year fire insurance policy purchased on September 1 of the current year.
b. On August 31 of this year, Cash was debited and Service Revenue was credited for $ 1,500. The $ 1,500 related to fees for a three- month period beginning September 1 of the current year.
c. The company’s income tax rate is 20%. After making the above adjustments, SPC’s net income before tax is $ 10,000. No income tax has been paid or recorded.
Answer:
1 . Dr Prepaid Insurance $2,275
Cr Insurance Expense $2,275
2. Dr Service Revenue $1,000
Cr Deferred Revenue $1,000
3. Dr Income Tax Expense $2,000
Cr Income Tax Payable $2,000
Explanation:
Preparation of the journal entries
1 . Dr Prepaid Insurance $2,275
Cr Insurance Expense $2,275
($2,340 - $2,340 × 1 months ÷ 36 months
= $2,340 - $65
= $2,275)
2. Dr Service Revenue $1,000
Cr Deferred Revenue $1,000
($ 1,500 × 2 months ÷ 3 months
= $1,000)
3. Dr Income Tax Expense $2,000
Cr Income Tax Payable $2,000
(.20*$10,000)
Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $420,000 and total machine hours at 60,000. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Job 101 Job 102 Job 103 TotalDirect materials used 19,200 14,400 9,600 43,200 Direct labor 28,800 11,200 9,600 49,600 Machine hours 1,000 hours 4,000 hours 2,000 hours 7,000 hoursJob 101 was completed and sold for $60,000.Job 102 was completed but not sold.Job 103 is still in process.Actual overhead costs recorded during the first month of operations totaled $45,000.Required: 1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.)2. Compute the total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations. (Round your intermediate calculations to 2 decimal places.)3. Compute the balance in the Work in Process Inventory account at the end of the first month. (Round your intermediate calculations to 2 decimal places.)4. How much gross profit would the company report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead? (Round your intermediate calculations to 2 decimal places.)5-a. Determine the balance in the Manufacturing Overhead account at the end of the first month. (Round your intermediate calculations to 2 decimal places.)
Answer:
Tyler Tooling Company
1. The predetermined overhead rate is:
= $7
2. The total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations is:
= $49,000
3. The balance in the Work in Process Inventory account at the end of the first month is:
= $86,800
4. The gross profit that the company would report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead is:
= $5,000
5a. The balance in the Manufacturing Overhead account at the end of the first month is:
= $4,000 overapplied
Explanation:
a) Data and Calculations:
Estimated total manufacturing overhead for the coming year = $420,000
Estimated total machine hours for the coming year = 60,000 mh
Actual jobs data: Job 101 Job 102 Job 103 Total
Direct materials cost $19,200 $14,400 $9,600 $43,200
Direct labor cost 28,800 11,200 9,600 49,600
Machine hours cost 1,000 4,000 2,000 7,000
Sale of Job 101 = $60,000
Actual overhead for the first month = $45,000
1. Predetermined overhead rate = Estimated overhead/estimated machine hours
= $420,000/60,000
= $7
2. The total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations is:
= total machine hours used * $7
= $49,000 (7,000 * $7)
3. The balance in the Work in Process Inventory account at the end of the first month is:
Work in Process
Account Titles Debit Credit
Direct materials $43,200
Direct labor 49,600
Overhead applied 49,000
Cost of Job 1 sold $55,000 ($19,200+$28,800+$7,000)
Ending balance $86,800 (= costs of Job 102 and 103)
4. The gross profit that the company would report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead is:
= Gross profit for Job 101 = $5,000 ($60,000 - $55,000)
5a. The balance in the Manufacturing Overhead account at the end of the first month is:
= Actual overhead incurred - overhead applied
= $45,000 - $49,000
= $4,000 overapplied
Calculate the geometric average return earned by an investor over three years if she earned 6% in the first year of an investment, 12% in the second year and 10% in the third year.
Answer:
8.96%
Explanation:
[tex]\sqrt[\frac{1}{n} ]{x1. x2.x3...}[/tex] = geometric average return
n = number of observations
x1 = observations
(0.06 x 0.12 x 0.1)^(1/3) = 0.0896 = 8.96%
The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system. April 30 May 31 Inventories Raw materials$35,000 $60,000 Work in process 9,000 20,900 Finished goods 67,000 34,300 Activities and information for May Raw materials purchases (paid with cash) 171,000 Factory payroll (paid with cash) 200,000 Factory overhead Indirect materials 8,000 Indirect labor 46,000 Other overhead costs 108,000 Sales (received in cash) 1,300,000 Predetermined overhead rate based on direct labor cost 55% Compute the following amounts for the month of May using T-accounts. Cost of direct materials used. Cost of direct labor used. Cost of goods manufactured. Cost of goods sold\.\* Gross profit. Overapplied or underapplied overhead. *Do not consider any underapplied or overapplied overhead.
Answer:
Lock-Tite Company
Cost of direct materials used = $138,000
Cost of direct labor used = $154,000
Cost of goods manufactured = $364,800
Cost of goods sold = $397,500
Gross profit = $902,500
Overapplied or underapplied overhead = $77,300
Explanation:
a) Data and Calculations:
April 30 May 31
Inventories
Raw materials $35,000 $60,000
Work in process 9,000 20,900
Finished goods 67,000 34,300
Activities and information for May
Raw materials purchases (paid with cash) 171,000
Factory payroll (paid with cash) 200,000
Factory overhead
Indirect materials 8,000
Indirect labor 46,000
Other overhead costs 108,000
Sales (received in cash) 1,300,000
Predetermined overhead rate based on direct labor cost 55%
T-accounts:
Raw materials
Date Account Titles Debit Credit
April 30 Beginning balance $35,000
May Cash 171,000
May Work in Process $138,000
May Manufacturing overhead 8,000
May 31 Closing balance $60,000
Payroll Expenses
Date Account Titles Debit Credit
May Cash $200,000
May Manufacturing overhead $46,000
May Work in Process $154,000
Work in process
Date Account Titles Debit Credit
April 30 Beginning balance $9,000
May Raw materials 138,000
May Payroll expenses 154,000
May Overhead 84,700
May Finished goods $364,800
May 31 Closing balance $20,900
Finished goods
Date Account Titles Debit Credit
April 30 Beginning balance $67,000
May Work in process 364,800
May Cost of goods sold $397,500
May 31 Closing balance $34,300
Income Summary
Date Account Titles Debit Credit
May 31 Sales revenue $1,300,000
May 31 Cost of goods sold $397,500
May 31 Gross profit $902,500
Manufacturing Overhead
Date Account Titles Debit Credit
May Raw materials $8,000
May Payroll expenses 46,000
May Other overhead 108,000
May Work in Process $84,700 ($154,000 * 55%)
May Underapplied overhead 77,300
The forecasted sales pertain to Arrow Corporation: Month Sales September $400,000 October 320,000 Finished Goods Inventory (August 31): 28,000 Arrow Corporation has a selling price of $5 on all units and expects to maintain ending inventories equal to 25 percent of the next month's sales. How many units does Arrow expect to produce in September
Answer:
68,000 units
Explanation:
The computation of the number of units that produced in september is given below;
The sales units at September is
= $400,000 ÷ 5
= 80,000 units
And, the october sales units is
= $320,000 ÷ 5
= 64,000 units
So, the production should be
= Ending finished units + sales units - beginning finished units
= (25% of 64,000 units) + 80,000 units - 28,000 units
= 16,000 units + 80,000 units - 28,000 units
= 68,000 units
On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2019. The company borrowed $2,350,000 at 9% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2018: $7,000,000, 14% bonds $3,000,000, 9% long-term note Construction expenditures incurred during 2018 were as follows: January 1 $ 960,000 March 31 1,560,000 June 30 1,232,000 September 30 960,000 December 31 760,000 Required: Calculate the amount of interest capitalized for 2018 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
Answer:
Highlands Company
The interest capitalized for 2018 using the specific interest method is:
= $268,740.
Explanation:
a) Data and Calculations:
Amount borrowed on January 1, 2018 = $2,350,000
Rate of interest for the construction loan = 9%
Outstanding debts throughout 2018:
$7,000,000, 14% bonds
$3,000,000, 9% long-term note
Construction Expenditures incurred during 2018:
Date Expenditure Weight Weighted Average
January 1 $ 960,000 12/12 $960,000
March 31 1,560,000 9/12 1,170,000
June 30 1,232,000 6/12 616,000
September 30 960,000 3/12 240,000
December 31 760,000 0/12 0
Total accumulated weighted-average expenditure = $2,986,000
Interest capitalized for 2018 using the specific interest method:
= $268,740 ($2,986,000 * 9%)
Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the company's competitive advantages.
A. True
B. False
Answer:
A. True
Explanation:
In Business management, a strategy can be defined as a set of guiding principles, actions and decisions that an organization combines so as to achieve its business goals, attract customers and possess a competitive advantage over its rivals in the industry.
Business strategy sets the overall direction for the business because it focuses on defining how a business would achieve its goals, objectives, and mission; as well as the funds and material resources required to implement or execute the business plan. The components of a business strategy includes the following;
I. Value.
II. Vision.
III. Mission.
Basically, strategic controls are subjective criteria that are developed by a business firm so as to verify and ensure that the business firm has implemented the appropriate strategies for the conditions in the external environment and the competitive advantages of the business firm.
A company issues $60,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $62,000 for the bonds, the premium on bonds payable will (increase/decrease) total interest expense recognized over the life of the bond by $ .
Answer:
Decrease, $2,000
Explanation:
The premium on bonds payable will decrease total interest expense recognized over the life of the bond by $2,000. The difference between the face value & the issue value $2,000 ($62,000 - $60,000) should be amortize over a period of time and of which is reduced from interest expense.
Pearson Electric Company uses the high-low method to analyze mixed costs. The following information relates to the production data for the first six months of the year.
Month Cost(Y) Hours(H)
January $8,050 335
February $9,750 780
March $8,040 460
April $8,110 380
May $10,210 1,055
June $9,510 755
What is the estimated total cost at an operating level of 1,180 hours, using the high-low method? (Round variable cost per unit to 2 decimal places.)
Answer:
Results are below.
Explanation:
First, we need to calculate the variable and fixed costs:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (10,210 - 8,050) / (1,055 - 335)
Variable cost per unit= $3
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 10,210 - (3*1,055)
Fixed costs= $7,045
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 8,050 - (3*335)
Fixed costs= $7,045
Now, the total cost for 1,180 hours:
Total cost= 7,045 + 3*1,180
Total cost= $10,585
The Omega started the year with $650,000 in the common stock account and $1,318,407 in the additional paid-in surplus account. The end-of-year balance sheet showed $720,000 and $1,299,310 in the same two accounts, respectively. What is the cash flow to stockholders if the firm paid $68,500 in dividends
Answer:
$17,597
Explanation:
Calculation to determine the cash flow to stockholders
Using this formula
Cash flow to stockholders = Dividends paid - Common stock issued
Let plug in the formula
Cash flow to stockholders= Dividends 68,500 - (1299,310+ 720,000)- (1318407+ 650000)
Cash flow to stockholders= Dividends 68,500 - (2,019,310-1,968,407)
Cash flow to stockholders= 68,500-50,903
Cash flow to stockholders= $17,597
Therefore the cash flow to stockholders if the firm paid $68,500 in dividends is $17,597
uppose you invest, every month, in an annuity that pays 3% interest, compounded monthly. After 25 years, you have $550,000. How much money do you earn from interest
Answer: $180,046
Explanation:
First find the annuity that was invested monthly that yielded $550,000.
Interest rate = 3%/12 months = 0.25%
Period = 25 * 12 = 300 months
Future value of annuity = Annuity * ( ( 1 + rate) ^ no. of periods - 1) / rate
550,000 = Annuity * ( ( 1 + 0.25%)³⁰⁰ - 1 ) / 0.25%
550,000 = Annuity * 446
Annuity = 550,000 / 446
Annuity = $1,233.18
Without compounding, investing $1,233.18 per month would have yielded:
= 1,233.18 * 300 months
= $369,954
Money earned from interest is:
= 550,000 - 369,954
= $180,046
How does the current organizational and operational structure, including the system of corporate governance, benefit the firm
Answer:
The organizational and operational structure of a company must be aligned with the core values and objectives of the business, as it impacts and determines the relationships and culture in the organizational environment.
Therefore, when there is an organizational structure where the hierarchical positions and the decision-making system match the way the company operates in the market, it is correct to say that such organization has a culture that enables its development and the correct progress of the business. Combined with corporate governance, which is a system of inspection, control and incentive to interested parties, the company will benefit from being well structured, positioned and oriented to achieve quality and continuous process improvement.
MC Qu. 98 Peterson Company estimates that overhead... Peterson Company estimates that overhead costs for the next year will be $6,920,000 for indirect labor and $840,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 80,000 machine hours are planned for this next year, what is the company's plantwide overhead rate
Answer:
Predetermined manufacturing overhead rate= $97 per machine hour
Explanation:
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (6,920,000 + 840,000) / 80,000
Predetermined manufacturing overhead rate= $97 per machine hour
Patagonia donates at least 1% of profits to support environmental causes. There products are also produced under safe, fair, legal, and humane working conditions throughout the supply chain. What is Patagonia practicing
Answer: corporate social responsibility practice
Explanation:
Corporate social responsibility occurs when organizations contribute to societal goals by supporting practices that are ethically oriented and have a positive effect on the economy.
Since Patagonia donates at least 1% of profits to support environmental causes and is contributing positively to the economy, then Patagonia is practicing corporate social responsibility practices.
This chapter discusses many types of costs: opportunity cost, explicit costs, fixed cost, variable cost, average fixed cost, and average variable cost. Fill in the type of cost that best completes each sentence
In a pizza industry, the cost of the factory is a(n)_________ fixed cost only in the short run but not in the long run. ______ is always falling as the quantity of output increases. A cost that depends on the quantity produced is a(n) _______variable cost . The term opportunity cost ________ refers to all the things you must give up for taking some action. The term refers to costs that involve direct monetary payment by the firm. ______ is falling when marginal cost is below it and rising when marginal cost is above it.
Answer: See explanation
Explanation:
In a pizza industry, the cost of the factory is a (fixed cost) only in the short run but not in the long run.
(Average fixed cost) is always falling as the quantity of output increases.
A cost that depends on the quantity produced is a (variable cost).
The term (opportunity cost) refers to all the things you must give up for taking some action.
The term (explicit cost) refers to costs that involve direct monetary payment by the firm.
(Average variable cost) is falling when marginal cost is below it and rising when marginal cost is above it.
As an economy recovers from a recession, the observed level of labor productivity tends to decline. Why?
A. The marginal product of labor declines as new workers enter the expanding work force.
B. The total product increases during the recovery, but the number of workers declines.
C. The marginal product of labor increases at a slower rate than the decline in employment.
D. The total product remains the same during the recovery, but the number of workers declines.
Answer:
Answer is C. The marginal product of labor increases at a slower rate than the decline in employment.
Explanation:
As an economy recovers from a recession, the observed level of labor productivity tends to decline, Why? Because the marginal product of labor increases at a slower rate than the decline in employment.
As an economy recovers from a recession, the observed level of labor productivity tends to decline because the marginal product of labor increases at a slower rate than the decline in employment. Thus option(C) is correct.
What is recession?A recession can be defined as a sustained period of weak or negative growth in real Gross Domestic Product that is accompanied by a significant rise in the unemployment rate.
A recession is a significant, widespread and prolonged downturn in economic activity. A common rule of thumb is that two consecutive quarters of negative Gross Domestic Product (GDP) grwoth mean recession,
A recession is a significant, pervasive and persistent decline in economic activity. Economists measure a recession's length from the prior expansion's peak to the downturn's trough.
The unemployment remains at high during the recession. The nation uses fiscal and monetary policies to limit the risks of a recession.
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Which type of budgeting requests for investment in large assets such as buildings, renovations, software systems and furniture
The type of budgeting requests for investment in large assets is buildings.
An investment property is real estate property purchased with the intention of earning a return on the investment either through rental income, the future resale of the property, or both.
Why do people invest in buildings?Key Takeaways. Real estate investors make money through rental income, appreciation, and profits generated by business activities that depend on the property. The benefits of investing in real estate include passive income, stable cash flow, tax advantages, diversification, and leverage.
Apartment buildings frequently get sold on the basis of their cap rate, which is effectively a multiple of the income they produce. If you increase your building's income by raising rents or cutting expenses, you should be able to sell for a profit.
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To keep your business plan up-to-date, it should be revised every
A-month.
B-6 months.
C-year.
D-other year.
Answer:
A-month
Explanation:
by revising it monthly, it is the most up to date and can be consistently helpful to you as well as organized.
C-year.
Entrepreneur.com recommends that you do a thorough update to your business plan at least once annually.
A small company that makes hand-sewn leather shoes has fixed costs of $320 a day, and total costs of $1200 per day at an output of 20 pairs of shoes per day. Assume that total cost C is linearly related to output x. Find an equation of the line relating output to cost.
A) C = 44x + 320.
B) C = 60x + 1520.
C) C = 60x + 320.
D) C = 44x + 1520.
Answer: c = 44x + 320
Explanation:
Based on the information given, the cost of materials used in the shoe is a variable cost and this will be:
= Total cost - Fixed cost
= $1200 - $320
= $880
Since there are 20 shoes, the cost if materials used per shoe is: = $880/20 = $44
Then the total cost equation will then be:
c = 44x + 320
where,
C = Total cost incurred in a day
x = Number of pair of shoes made in a day.
Therefore, the correct option is A.
The equation that related the output to cost is option c. 60x + 320.
Calculation of an equation:
Since we know that the variable cost is
= Total cost - Fixed cost
= $1200 - $320
= $880
Now the cost per shoe should be
= $880/20
= $44
So here the total cost c equation should be
c = 44x + 320
Here
x be Number of pair of shoes.
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LUVFINANCE, Inc. is estimating its WACC. The firm could sell, at par, $100 preferred stock that pays a 10 percent annual dividend and incurs 4.72% flotation costs. What is the cost of new preferred stock financing?
Answer:
The answer is "10.49%".
Explanation:
Preference inventory values are incurred as described below:
Using formula:
[tex]= \frac{Annual \ \ dividend}{ Price \times (1 - flotation\ cost) ]}[/tex]
[tex]= \frac{\$ 10}{[ \$ 100 \times (1 - 0.0472) ]}\\\\= \frac{\$ 10}{ \$ 100 \times (0.9528) }\\\\= \frac{\$ 10}{ \$ 95.28}\\\\=0.10495\\\\=10.49\%[/tex]
Capital allocation line is _______________ Question 18 options: plot of risk-return combinations available by varying portfolio allocation between a risk-free rate and a risky portfolio None of the options are correct plot of risk-return combinations available by varying portfolio allocation between two risky assets plot of risk-return combinations available by equal weighting allocation between a risk-free rate and a risky portfolio
Answer:
plot of risk-return combinations available by varying portfolio allocation between a risk-free rate and a risky portfolio
Explanation:
The capital allocation line (CAL) is called as the capital market line tha developed on the graph for all the expected combinations related to the risk-free and risk assets. In this, the graph presented the return investor that expected earn by assuming the particular level of risk along with the investment
Therefore the first option is correct
Chavez Corporation reported the following data for the month of July: Inventories: Beginning Ending Raw materials $ 36,000 $ 34,500 Work in process $ 20,500 $ 26,000 Finished goods $ 36,500 $ 51,500 Additional information: Raw materials purchases $ 70,500 Direct labor cost $ 95,500 Manufacturing overhead cost incurred $ 63,500 Indirect materials included in manufacturing overhead cost incurred $ 9,800 Manufacturing overhead cost applied to Work in Process $ 62,500 Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. The cost of goods manufactured for July is:
Answer:
Cost of goods manufactured= $214,700
Explanation:
First, we need to calculate the direct material used:
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 36,000 + 70,500 - 34,500
Direct material used= $72,000
Now, we can determine the cost of goods manufactured:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 20,500 + 72,000 + 95,500 + (62,500 - 9,800) - 26,000
cost of goods manufactured= $214,700
Actual indirect materials costs$11,800 $6,700 Actual indirect labor costs 55,600 45,900 Other overhead costs 16,000 49,900 Overhead applied 91,400 96,700 Storm Concert Promotions Determine whether overhead is overapplied or underapplied. Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold. Valle Home Builders Determine whether overhead is overapplied or underapplied. Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.
Answer:
See below
Explanation:
1. Actual costs = $11,800(indirect material + $55,600(indirect labor) + $16,000(other overhead costs) = $83,400(actual cost)
$91,400(overhead applied) - $83,400(actual cost) = Overhead applied is greater than the actual cost which means that overhead was over applied by $8,000
2. Debit: Manufacturing overhead $8,000
______ Credit: Cost of goods sold $8,000
3. Actual costs = $6,700(indirect material) + $45,900(indirect labor) + $49,900(other overhead costs) = $102,500
$96,700(overhead applied) - $102,000(actual costs) = Overhead applied is less than the actual costs which means that overhead was under applied by $5,800
4. Debit : Cost of goods sold $5,800
_______ Credit: Manufacturing overhead $5,800
Nouvelle-Aquitaine Railroad is comparing two separate capital structures. The first structure consists of 405,000 shares of stock and no debt. The second structure consists of 252397 shares of stock and $1.82 million of debt. What is the price per share of equity?
a. $75.56.
b. $88.76.
c. $82.42.
d. $72.12.
e. $93.20.
Answer:
$11.93
Explanation:
Calculation to determine the price per share of equity
Using this formula
Price per share of equity = Debt under Plan II / (Number of shares under Plan I - Number of shares under Plan II)
Let plug in the formula
Price per share of equity= $1,820,000 / (405,000 - 252,397)
Price per share = $1,820,000 / 152,603
Price per share = $11.93
Therefore the price per share of equity is $11.93
