Answers
Answer:
I agree
Check the file for continuation
Related Questions
A newly issued 20-year maturity, zero-coupon bond making annual coupon payments is issued with a yield to maturity of 8% and face value $1,000. Find the imputed interest income in the first, second, and last year of the bond's life.
Answers
Answer:
1st Year = $80
2nd Year= $166.40
3rd Year= $345.26
Explanation:
Imputed Interest income in this case can be referred to where the investor does not receive any fixed annual interest payments but the bond itself has been purchased at a discount to the face value.
The materials price and efficiency variances could be an indication that the company purchased less expensive ingredients of higher ​quality, which resulted in more than the standard number of rejected units. The labor price variance suggests that more experienced workers may have worked​ more, resulting in a faster work pace and a higher than normal amount of rejects or waste.
a. True
b. False
Answers
Answer:
The answer to the question is False.
Explanation:
Materials Price and Efficiency Variance measures cost of materials purchased against the amount budgeted for it. When materials which are higher in quality are purchased at a lower price, the Materials Price Variance is said to be favorable. This means that it should lead to a lower number of rejected units given that one purchased materials of higher quality.
Labor price variance is favourable if the actual cost of labor to the organisation fall below the budgeted amount.
The measure of expected output from a certain input of materials is referred to as material yield variance. Material yield variance is directly related to labour efficience variance.
A favorable labor price/material yield variance should result in faster work pace and lower of waste or rejects.
Therefore the above assertions are false.
Cheers!
Chillmax Company had planned to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 3,500 units sold is $58,500. The degree of operating leverage is 2.3. Now Chillmax expects to increase sales by 10% next year.
Required:1. Calculate the margin of safety in terms of the number of units.2. Calculate the margin of safety in terms of sales revenue.
Answers
Answer:
Margin of safety (units)= 1,500 units
Margin of safety (dollars)= $90,000
Explanation:
Giving the following information:
Sales= 3,500 units
Selling price= $60
Unitary variable cost= $21
Total fixed cost equals $78,000
First, we need to calculate the break-even point both in units and dollars:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 78,000/ (60 - 21)
Break-even point in units= 2,000 units
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 78,000/ (39/60)
Break-even point (dollars)= $120,000
Now, we can determine the margin of safety:
Margin of safety= (current sales level - break-even point)
Margin of safety (units)= 3,500 - 2,000= 1,500 units
Margin of safety (dollars)= 210,000 - 120,000= $90,000
Selected transactions for the Brook Wang Company are presented in journal form below.Date Account Titles and Explanation Ref. Debit CreditMay 5 Accounts Receivable 4,300 Service Revenue 4,300(Billed for services performed) 12 Cash 1,900 Accounts Receivable 1,900(Received cash in payment of account) 15 Cash 3,900 Service Revenue 3,900(Received cash for services performed) Post the transactions to T-accounts and determine each account's ending balance. (Post entries in the order presented in the problem statement.)
Answers
Answer:
Cash
Debit Credit
May 12 $1,900
May 15 $3,900
$5,800
Accounts receivable
Debit Credit
May 5 $4,300
May 12 $1,900
$2,400
Service revenue
Debit Credit
May 5 $4,300
May 15 $3,900
$8,200
Explanation:
May 5
Accounts Receivable 4,300
Service Revenue 4,300(Billed for services performed)
May 12
Cash 1,900
Accounts Receivable 1,900(Received cash in payment of account)
May 15
Cash 3,900
Service Revenue 3,900(Received cash for services performed)
Rite Shoes was involved in the transactions described below. Journal each transaction. If an entry is not required, state "No Entry." A) Purchased $8,200 of supplies on account.B) Paid weekly salaries, $920. C) Provided services to customers on account, $5,300. D) Paid for supplies purchased in (a) above. E) Placed an order for $6,200 of supplies.
Answers
Answer:
Dr Supplies $8,200
Cr Accounts payable $8,200
Dr salaries expense $920
Cr Cash $920
Dr accounts receivable $5,300
Cr sales revenue $5,300
Dr accounts payable $8,200
Cr cash $8,200
Explanation:
The purchase of supplies on account would be debited to supplies account and credited to accounts payable.
The payment of weekly salaries would be debited to salaries expense and credited to cash.
The amount in connection with services provided on account is a credit to sales revenue and a debit to accounts receivable.
Payment for supplies would a credit to cash and a debit to accounts payable.
Placement of an order would have no entry until the goods are received.
First Choice Carpets is considering purchasing new weaving equipment costing $ 734 comma 000. The company's management has estimated that the equipment will generate cash inflows as follows: Year 1 $ 214 comma 000 2 214 comma 000 3 254 comma 000 4 254 comma 000 5 154 comma 000 Considering the residual value is zero, calculate the payback period. (Round your answer to two decimal places.)
Answers
Answer: 3.20 years
Explanation:
The Payback Period is a financial evaluation technique for the viability of projects by checking how long it will take for a project to pay back it's Initial cost of capital.
The above weaving machine cost $734,000 and will generate cash for 5 years.
In the first 3 years it will generate,
= 214,000 + 214,000 + 254,000
= $682,000
You can tell that the Machine will have paid off by the fourth year judging by how much is left to payback.
However, the exact period is needed. You can get that by dividing the amount remaining by the Cashflow for the year in which it is to be completed. This way you can see the proportion of time it will take for the current year to reach the desired sum.
The Cashflow for Year 4 is $254,000.
= (Initial investment - Amount from Year before Payback Year) / Cashflow in Payback Year
= (734,000 - 682,000) / 254,000
= 52,000/ 254,000
= 0.20
It will take 0.20 of Year 4 to payback the amount fully.
That means that the total Payback Period is,
= 3 years + 0.20
= 3.2 years
Geese Company utilizes the dollar-value LIFO retail inventory method. Its cost-to-retail percentage is 60% based on beginning inventory and 64% based on current-period purchases. The company determined that beginning inventory at retail was $200,000 and that ending inventory at current-year retail prices was $250,000. The current-year price index is 1.10. Rounding to the nearest dollar, ending inventory at base-year retail prices would be _______.
Answers
Answer:
$227,272
Explanation:
Ending inventory at base-year retail prices =
Ending inventory at current-year retail prices
÷The current-year price index
Ending inventory at current-year retail prices $250,000
The current-year price index 1.10
Hence:
$250,000÷1.10
=$227,272
What is the true income tax rate on interest income if the nominal interest rate is 8 percent a year, the inflation rate is 5 percent a year, and the tax rate on nominal interest is 25 percent? The true income tax rate is nothing percent.
Answers
Answer:
66.67%
Explanation:
First, we need to calculate the Interest paid
Tax Paid = 25% x 8% = 2%
Tax paid is the nominal rate, now we need to calculate the real rate.
Before-tax real interest rate = Nominal Interest rate - Inflation rate
Before-tax real interest rate = 8% - 5% = 3%
True Income Tax rate = Tax paid / Before-tax real interest rate
True Income Tax rate = 2% / 3%
True Income Tax rate = 66.67%
Nelson Mfg. owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that originally cost $159,000. The facility itself cost $1,390,000 to build. As of now, the book value of the land and the facility are $159,000 and $458,000, respectively. The firm owes no debt on either the land or the facility at the present time. The firm received a bid of $1,700,000 for the land and facility last week. The firm's management rejected this bid even though they were told that it is a reasonable offer in today's market. If the firm was to consider using this land and facility in a new project, what cost, if any, should it include in the project analysis
Answers
Answer: $1700000
Explanation:
If the firm was to consider using the land and facility in a new project, the cost that should be included I the project analysis should be the cost of land and the building facility that was given in the question. This is so because that is the relevant cost to be included in the project analysis. The relevant cost is $,1700,000 which is the bid received for land and building by the firm.
g A depreciation of the U.S. real exchange rate induces U.S. consumers to buy a. fewer domestic goods and fewer foreign goods. b. more domestic goods and fewer foreign goods. c. fewer domestic goods and more foreign goods. d. more domestic goods and more foreign goods.
Answers
Answer:
more domestic goods and fewer foreign goods.
Explanation:
Real exchange rate is the rate at which the goods and services of a domestic country is exchanged for the goods and services of a foreign country.
If there's deprecation, it means that foreign goods becomes more expensive relative to domestic goods. As a result, demand for foreign goods would fall and demand for domestic goods would increase.
I hope my answer helps you
Jill resigns from her job, at which she was earning $50,000 per yer, and uses her $100,000 savings on which she was earning 5 percent interest, to start a business. In the first year she earns revenue of $150,000 and her costs are as follows; Rent 25,000, Utilities 12,000, wages 30,000, materials 20,000 calculate Jill's accounting profit
Answers
Answer:
$63,000
Explanation:
Accounting profit is total revenue less total explicit cost
Total cost = 25,000 + 12,000 + 30,000 + 20,000 = 87,000
Revenue = $150,000
Accounting profit = = $150,000 - 87,000 = $63,000
I hope my answer helps you
The unadjusted trial balance for Monty Corp. is shown below.
MONTY CORP.
Trial Balance
October 31, 2017
Debit Credit
Cash $15,330
Supplies 2,750
Prepaid Insurance 750
Equipment 4,760
Notes Payable $4,760
Accounts Payable 2,300
Unearned Service Revenue 1,720
Common Stock 11,510
Retained Earnings 0
Dividends 540
Service Revenue 13,360
Salaries and Wages Expense 4,000
Rent Expense 5,520
$33,650 $33,650
Assume the following adjustment data.
1. Supplies on hand at October 31 total $690.
2. Expired insurance for the month is $125.
3. Depreciation for the month is $60.
4. As of October 31, services worth $930 related to the previously recorded unearned revenue had been performed.
5. Services performed but unbilled (and no receivable has been recorded) at October 31 are $260.
6. Interest expense accrued at October 31 is $85.
7. Accrued salaries at October 31 are $1,570.
Prepare the adjusting entries for the items above. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Answers
Answer:
1.
No Entry
2.
Insurance Expense $125 (debit)
Insurance Prepaid $125 (credit)
3.
Depreciation $60 (debit)
Accumulated depreciation $60 (credit)
4.
Unearned Revenue $930 (debit)
Earned Revenue $930 (credit)
5.
Accounts Receivable $260 (debit)
Service Revenue $260 (credit)
6.
Interest expense $85 (debit)
Interest payable $85 (credit)
7.
Salaries expense $1,570 (debit)
Salaries Payable $1,570 (credit)
Explanation:
There is no entry required for supplies on hand as this is the Ledger Account Balance.
Insurance expense is recognized out of the prepaid insurance premium.
The liability : Unearned Revenue is de-recognized and Earned Revenue is recognized when services have finally been performed.
Novak Express reports the following costs and expenses in June 2017 for its delivery service. Indirect materials $7,000 Drivers’ salaries $16,900 Depreciation on delivery equipment 12,000 Advertising 5,100 Dispatcher’s salary 5,400 Delivery equipment repairs 450 Property taxes on office building 930 Office supplies 660 CEO’s salary 12,500 Office utilities 1,050 Gas and oil for delivery trucks 2,900 Repairs on office equipment 270 Determine the total amount of (a) delivery service (product) costs and (b) period costs. (a) Delivery service (product) costs $ (b) Period costs $
Answers
Answer and Explanation:
The computation is shown below:
a. For delivery service product cost
Indirect materials $7,000
Depreciation on delivery equipment $12,000
Dispatcher's salary $5,400
Gas and oil for delivery trucks $2,900
Drivers' salaries $16,900
Delivery equipment repairs $450
Total $44,650
The product cost includes direct material, direct labor and factory overhead cost which are used to make the product
b) Period costs:
Property taxes on office building $930
CEO's salary $12,500
Advertising $5,100
Office utilities $11,050
Repairs on office equipment $270
Total $29,850
The period cost includes majorly part of the selling and admin expense and it also recorded those expenses which are incurred according to the passage of time
Larned Corporation recorded the following transactions for the just completed month. $86,000 in raw materials were purchased on account. $84,000 in raw materials were used in production. Of this amount, $70,000 was for direct materials and the remainder was for indirect materials. Total labor wages of $120,000 were paid in cash. Of this amount, $102,100 was for direct labor and the remainder was for indirect labor. Depreciation of $190,000 was incurred on factory equipment.
Required:
Record the above transactions in journal entries.
Answers
Answer and Explanation:
The Journal entries are shown below:-
1. Raw materials inventory Dr, $86,000
To Accounts payable $86,000
(Being raw material is recorded)
Here we debited the raw material inventory as it increased the assets and we credited the accounts payable as it also increase the liabilities
2. Work in process inventory Dr, $70,000
Manufacturing overhead Dr, $14,000
To Raw materials inventory $84,000
(Being raw material inventory is recorded)
Here we debited the work in process inventory and manufacturing overhead as it increased the assets and expenses and we credited the raw material inventory as decrease the assets.
3. Work in process inventory Dr, $102,100
Manufacturing overhead Dr, $17,900
To Cash $120,000
(Being cash paid is recorded)
Here we debited the work in process inventory and manufacturing overhead as it increased the assets and expenses and we credited the cash as decrease the assets.
4. Manufacturing overhead Dr, $190,000
Accumulated depreciation-Equipment $190,000
(Being manufacturing overhead is recorded)
Here we debited the manufacturing overhead as it increase the expenses and we credited the accumulated depreciation-equipment as decrease the assets.
Hi-Test Company uses the weighted-average method of process costing to assign production costs to its products. Information for September follows. Assume that all materials are added at the beginning of its production process, and that conversion costs are added uniformly throughout the process.
Work in process inventory, September 1 (2,000 units, 100% complete with respect to
direct materials, 80% complete with respect to direct labor and overhead; includes
$45,000 of direct material cost, $25,600 in direct labor
cost, $30,720 overhead cost) $101,320
Units started in April 28,000
Units completed and transferred to
finished goods inventory 23,000
Work in process inventory, September 30 (units, 100% complete with respect to direct materials, 40% complete with respect to direct labor and overhead) ?
Costs incurred in September
Direct materials $375,000
Conversion $341,000
Required:
Compute each of the following, assuming Hi-Test uses the weighted-average method of process costing.
1. The number of physical units that were transferred out and the number that are in ending work in process inventory.
2. The number of equivalent units for materials and conversion for the month.
Equivalent Units of Production (EUP)
Units % Material EUP-Materials % Conversion EUP-Conversion
Equivalent units of production
3. The cost per equivalent unit of materials and conversion for the month.
Cost per Equivalent Unit of Production Direct Materials Conversion
Total costs
÷ Equivalent units of production
Cost per equivalent unit of production
4. The total cost of goods transferred out.
Costs Transferred Out EUP Cost per EUP Total cost
Direct materials
Conversion
Total transferred out
7. The total cost of ending work in process inventory.
Costs of Ending Work in Process EUP Cost per EUP Total cost
Direct materials
Conversion
Total cost of ending work in process
Answers
Answer and Explanation:
The computation of given question is shown below:-
Hi-Test Company
Weighted-average method
Equivalent units
Particulars Physical units Material Conversion costs
Units to be accounted for
Beginning work-in-progress 2,000
Production started 28,000
Total units 30,000
Units accounted for:
1. Completed and transferred
out 23,000 23,000 23,000
(23,000 × 100%)
Ending work-in-progress 7,000 7,000 2,800
(7,000 × 100%) (7,000 × 40%)
2. Total units 30,000 30,000 25,800
Materials Conversion costs Total costs
Costs to account for:
Beginning work in
progress $45,000 $56,320 $101,320
($25,600 + $30,720)
Costs added during
period $375,000 $341,000 $716,000
Total costs $420,000 $397,320 $817,320
÷
Total equivalent unit
of production $30,000 $25,800
3. Cost per equivalent unit $14.00 $15.40
Cost accounted for
4. Completed and transferred
out $322,000 $354,200 $676,200
(23,000 × $14.00) (2,800 × $15.40)
7. Ending work in progress $98,000 $43,120 $141,120
(30,000 × $14.00) (25,800 × $15.40)
Total cost $420,000 $397,320 $817,320
Consider a second hand car market where three types of cars are being sold: High quality (H), medium quality (M) and low quality (L). Sellers value an H at $2000, an M at $1200 and an L at $800, whereas buyers value an H at $1800, an M at $1600 and an L at $1400. As discussed in the ”Akerloff’s Lemons Market”, sellers are able to distinguish between different quality cars but buyers are not and a buyer believes that in this market 40% of the cars is an H, 30% of the cars is an M and 30% of the cars is an L.
a) Determine which type of cars will be sold at the efficient allocation.
b) Determine which type of cars will be sold at the market equilibrium.
Answers
Answer:
a) Determine which type of cars will be sold at the efficient allocation.
All cars would be sold in a Pareto efficient allocation.
In a Pareto efficient market, resources are all allocated in the most efficient possible way. This is the reason why this is just a theoretical concept that does not necessarily apply in real life.
b) Determine which type of cars will be sold at the market equilibrium.
Since consumers are only willing to pay up to $1,620 for a used car, only medium quality and low quality cars will be sold. The price of high quality used cars is higher than the equilibrium price.
Explanation:
the most a buyer would be willing to pay for a used car is ($1,800 x 40%) + ($1,600 x 30%) + ($1,400 x 30%) = $720 + $480 + $420 = $1,620
North Company has completed all of its operating budgets. The sales budget for the year shows 50,180 units and total sales of $2,273,600. The total unit cost of making one unit of sales is $23. Selling and administrative expenses are expected to be $301,900. Interest is estimated to be $10,240. Income taxes are estimated to be $214,000. Prepare a budgeted multiple-step income statement for the year ending December 31, 2020.
Answers
Answer:
income statement for the year ending December 31, 2020
Sales Revenue $2,273,600
Less Cost of Sales ( 50,180 units × $23) ($1,154,140)
Gross Profit $1,119,460
Less Operating Expenses :
Selling and administrative ($301,900)
Operating Income $817,560
Less Non - Operating Expenses :
Finance Cost - Interest ($10,240)
Income tax Expense ($214,000)
Net Income / (Loss) $593,320
Explanation:
A multi-step Income statement presents separately Income derived from Primary Activities of the entity known as Operating Income. When other Secondary Activities are added, the result gives us the Net Income for the period.
Sandhill Company purchases an oil tanker depot on January 1, 2020, at a cost of $639,700. Sandhill expects to operate the depot for 10 years, at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that it will cost $69,980 to dismantle the depot and remove the tanks at the end of the depot’s useful life.
Prepare the journal entries to record the depot (considered a plant asset) and the asset retirement obligation for the depot on January 1, 2017. Based on an effective-interest rate of 6%, the present value of the asset retirement obligation on January 1, 2017, is $40,070.
Answers
Answer:
Dr Depot $639,700
Cr Cash $639,700
Dr Depot $40,070
Cr Asset retirement obligation $40,070
Explanation:
Sandhill Company Journal entries
Dr Depot $639,700
Cr Cash $639,700
Dr Depot $40,070
Cr Asset retirement obligation $40,070
Financial Statements of a Manufacturing Firm
The following events took place for Sorensen Manufacturing Company during January, the first month of its operations as a producer of digital video monitors:
Purchased $48,800 of materials.
Used $37,600 of direct materials in production.
Incurred $56,100 of direct labor wages.
Incurred $79,100 of factory overhead.
Transferred $131,300 of work in process to finished goods.
Sold goods for $234,700.
Sold goods with a cost of $104,400.
Incurred $60,000 of selling expense.
Incurred $26,400 of administrative expense.
Using the information given, complete the following: a. Prepare the January income statement for Sorensen Manufacturing Company.
A. Prepare the January income statement for Sorensen Manufacturing Company.
B. Determine the inventory balances at the end of the first month of operations.
Answers
Answer:
A. income statement for Sorensen Manufacturing Company.
Sales $234,700
Less Cost of Sales
Opening Finished Goods Inventory 0
Cost of Manufacture $131,300
Less Finished Goods Inventory (131,300 - 104,400) ($26,900) ($104,400)
Gross Profit $130,300
Less Expenses
Selling Expense ($60,000)
Administrative Expense ($26,400)
Net Income / (loss) $43,900
B. inventory balances at the end of the first month
Work In Process Inventory = $41,500
Raw Materials Inventory = $11,200
Finished Goods Inventory = $26,900
Explanation:
Calculation of Work in Process Inventory
Direct Materials $37,600
Direct Labor $56,100
Factory Overhead $79,100
Total Cost of Manufacture $172,800
Less Closing Work in Process ($41,500)
Cost of Manufacture $131,300
Calculation of Raw Materials Inventory
Opening Raw Materials Inventory $0
Add Purchases $48,800
Less Raw Materials Unsed In Manufacturing ($37,600)
Closing Raw Materials Inventory $11,200
Calculation of Finished Goods Inventory
Opening Stock of Finished Goods $0
Add Costs of Goods Manufactured $131,300
Less Cost of Goods Sold ($104,400)
Opening Stock of Finished Goods $26,900
g Your savings account earns 1.72% interest. You have $3,000 left over from an internship that you will put into the saving account. There is currently no money in the account :( How many years is it until there is $3,756 in the account?
Answers
Answer:
It will take 13 years and 66 days
Explanation:
Giving the following information:
Your savings account earns 1.72% interest.
Present value= $3,000
Final value= $3,756
To calculate the number of years, we need to use the following formula:
n= ln(FV/PV) / ln(1+i)
n= ln(3,756/3,000) / ln(1.0172)
n= 13.18 years
To be more specific= 365*0.18= 66
It will take 13 years and 66 days
On June 1, Year 1 Oxian Corp. receives $24,000 from a customer for work to be performed evenly over the next 2 years. What is the amount of revenue that Oxian should recognize on the income statement for Year 1
Answers
Answer:
$7,000 is the amount of revenue in year 1
Explanation:
The amount received from the customer is $24,000,which is payment for work to be performed over 24-month period i.e 2 years
In year 1,the work would be performed from June -December,hence 7-month worth of revenue should be recognized in year 1 as follows
revenue recognition in year=$24,000*7/24=$7,000
The amount of revenue attributable to year 1 on the income statement is $7,000
Richman Company purchased $1,200,000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1,249,896 at an effective interest rate of 7%. Using the effective interest method, Richman Company adjusted the Available-for-Sale Debt Securities account for the Carlin, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums. At December 31, 2021, the fair value of the Carlin, Inc. bonds was $1,272,000. Prepare the journal entry for Richman Company to record the same.
Answers
Answer:
Dr. Bond Receivable $30,761
Cr. Gain on Revaluation $30,761
Explanation:
A bond is issued on the premium if it is issued at a value over its face value,
Bond Premium = Issuance value - Face Value = $1,249,896 - $1,200,000 = $49,896
July 1,2021
Amortization = ($1,200,000 x 8% ) - ( $1,249,896 x 7% ) = $8,507 x 6/12 = $4,254
Un-amortised Premium = $49,896 - $4,254 = $45,642
Carrying Value = $1,200,000 - $45,642 = $1154,358
Dec 31 , 2021
Amortization = ($1,200,000 x 8% ) - ( $1,245,642 x 7% ) = $8,507 x 6/12 = $4,403
Un-amortised Premium = $45,642 - $4,403 = $41,239
Carrying value = $1,200,000 + $41,239 = $1,241,239
Revaluation Gain = 1,272,000 - $1,241,239 = $30,761
Professor Stern's colleague, Dr. Schmertz, gives one midterm exam and a final exam. He weights the final twice as heavily as the midterm to determine the course grade. No grades can be dropped. If the midterm score is represented on the horizontal axis and the final score on the vertical axis, and if a student in Dr. Schmertz's class cares only about her course grade, her indifference curve is:______
(a) a line with slope -2.
(b) a line with slope -1.
(c) a line with slope - 0:5.
(d) L-shaped with the kink at (x, 2x).
(e) L-shaped with the kink at (2x, x).
Answers
Answer: c) a line with slope - 0:5.
Explanation:
The final exam weights twice as much as the midterm.
Denote that by assuming that the final exam is Y and the midterms is X.
This would mean that the Course grade is,
= 2y + x
Since the Course grade is all the student cares about then that means that her Utility is the same.
U = 2y + x
If we were to draw an indifference curve based on a utility level of hers say for instance c, we would denote it as,
c = 2y + x
The equation of a line takes the form,
y = mx + c with m being the slope.
Denoting the indifference curve in this manner would therefore be,
c = 2y + x
c/2 = y + x/2
c/2 - x/2 = y
y = -x/2 + c/2
y = -½x + c/2
The slope will therefore be -½.
A customer has requested that Byrd Corporation fill a special order for 9,000 units of product S51 for $20.50 a unit. Product S51's normal unit product cost is $14.40: Direct materials $ 3.10 Direct labor 1.50 Variable overhead 6.40 Fixed overhead 3.40 Unit product cost $ 14.40 The customer would like modifications made to product S51 that would increase the variable costs by $5.00 per unit and that would require an investment of $36,000 in special molds that would have no salvage value. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: _______
Answers
Answer:
Effect on income= $4,500 increase
Explanation:
Giving the following information:
Special offer: 9,000 units of product S51 for $20.50 a unit.
Direct materials $ 3.10
Direct labor 1.50
Variable overhead 6.40
The customer would like modifications made to product S51 that would increase the variable costs by $5.00 per unit and that would require an investment of $36,000 in special molds that would have no salvage value.
Because it is a special offer, we will not have into account the fixed costs.
Unitary variable cost= 3.1 + 1.5 + 6.4 + 5= $16
Investment= 36,000
Effect on income= 9,000* (20.5 - 16) - 36,000
Effect on income= 40,500 - 36,000
Effect on income= $4,500 increase
The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past month, and you are convinced it is going to break far out of that range in the next 3 months. You do not know whether it will go up or down, however. The current price of the stock is $120 per share, and the price of a 3-month call option at an exercise price of $120 is $8.89. a. If the risk-free interest rate is 8% per year, what must be the price of a 3-month put option on P.U.T.T. stock at an exercise price of $120? (The stock pays no dividends.) (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. A straddle would be a simple options strategy to exploit your conviction about the stock price’s future movements. How far would it have to move in either direction for you to make a profit on your initial investment? (Round your intermediate calculations and final answer to 2 decimal places.)
Answers
Answer:
A) according to put call parity:
price of put option = call option - stock price + [future value / (1 + risk free rate)ⁿ]
put = $8.89 - $120 + [$120 / (1 + 8%)¹/⁴] = $8.89 - $120 +$117.71 = $6.60
B) you have to purchase both a put and call option ⇒ straddle
the total cost of the investment = $8.89 + $6.60 = $15.496, this way you can make a profit if the stock price increases higher than $120 + $6.60 = $126.60 or decreases below than $120 - $6.60 = $113.40
Assume that a $1,000,000 par value, semiannual coupon US Treasury note with three years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 7.70%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:
Answers
Answer:
Value of treasury Note =$876,205.93
Explanation:
The value of the notes is the present value of future cash flow discounted at its YTM of 7.70%.
The value of the Note is the present value of the future cash receipts expected from the it. The value is equal to present values of interest payment and the redemption value (RV).
Value of Notes = PV of interest + PV of RV
The value of Note can be worked out as follows:
Step 1
Calculate the PV of Interest payment
Present value of the interest payment
PV = Interest payment × (1- (1+r)^(-n))/r
r-Yield to Maturity, n- number of years
Interest payment = 3% × $1,000,000 × 1/2= $15000 .
Semi-annual interest yield = 7.7%/2 =3.85
PV = 15,000 × (1 - (1.0385)^(-3×2)/0.0385) = 79,017.4892
Step 2
PV of redemption Value
PV of RV = RV × (1+r)^(-n)
= 1000,000 × (1.0385)^(-3×2)
= 797188.4444
Step 3
Calculate Value of the Notes
=79,017.4892 + 797,188.44
= $876,205.93
Value of treasury Note =$876,205.93
Mr. Bagley, a self-employed musician, timely filed his Year 1 income tax return, which showed an AGI of $180,000 and total tax of $45,000. He expects his Year 2 total tax to be $70,000. What is his required payment through withholding and estimated tax for Year 2
Answers
Answer:
$45,000
Explanation:
Since we assume that Mr. Bagley calculated his next year's taxes correctly, in order to determine the federal tax withholding, we should divide the total expected taxes by 4. Generally self-employed pay federal tax withholdings in quarterly payments.
Mr. Bagley has two options:
the first option is to pay quarterly taxes according to last year's taxes = $45,000 / 4 = $11,250 per quarter. This would be the required payment. Mr. Bagley's second option is to pay $70,000 / 4 = $17,500 every quarter in order to lower his final annual payment. He can choose to do this, but he is not required to do so.26. Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory.What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?
Answers
Answer:
The answer is 38,880
Explanation:
Solution
We recall that:
Tell cooperation plans to sell boxes = 900
The estimated production during May = 870 boxes
The Cost of f clay mix = $0.40 per pound
Each of the boxes requires = 44 pounds of clay mix
The company employees are paid per hour = $12.00
The manufacturing overhead = 110%
The beginning inventory, the teller has = 3900 pounds of clay mix
The ending inventory = 4,500
Now,
The total amount budgeted for the direct materials to be purchased for the month is stated as follows:
The materials budgeted to be purchased is = The budgeted production of materials * the number of raw materials ) plus the ending - beginning inventory.
Thus
(870 * 44) + 4500- 3900
=38,880
Soap Company manufactures soap X and soap Y and can sell all it can make of either. Hours available to produce the products are the constrained resources. Based on the following data, if Soap could reduce the processing time for X by 10 percent, which of the following statements is true?
X Y
Sales Price $20 $25
Variable Cost 14 15
Hours needed to process 3 5
A. It would take 162 minutes to process one unit of X.
B. There would be no difference in the contribution margin per hour as compared to it before the processing time reduction.
C. The contribution margin per hour for X would be $2.
D. Soap Y would still be the most profitable.
Answers
Answer:
It would take 162 minutes to make one unit of product X.
Explanation:
Giving the following information:
Hours available to produce the products are the constrained resources.
Soap could reduce the processing time for X by 10 percent.
X Y
Sales Price $20 $25
Variable Cost 14 15
Hours needed to process 3 5
First, we need to determine the number of minutes required to make one unit of Product X under the new method:
Number of minutes required= (3*60)*0.9= 162 minutes.
It would take 162 minutes to make one unit of product X.
B) False. The contribution margin per hour of Product B is higher than product Y.
C) False. The contribution margin per hour of $2 was before the improvement in product X.
D) False. Product Y has a higher contribution margin per unit but lower compared to the contribution margin per hour.
Selected account balances before adjustment for Alantic Coast Realty at July 31, 2016, the end of the current year, are as follows:
Debits Credits
Accounts Receivable $ 75,000
Equipment 345,700
Accumulated Depreciation—Equipment $112,500
Prepaid Rent 9,000
Supplies 3,350
Wages Payable –
Unearned Fees 12,000
Fees Earned 660,000
Wages Expense 325,000
Rent Expense –
Depreciation Expense –
Supplies Expense –
Data needed for year-end adjustments are as follows:
a. Unbilled fees at July 31, $11,150.
b. Supplies on hand at July 31, $900.
c. Rent expired, $6,000.
d. Depreciation of equipment during year, $8,950.
e. Unearned fees at July 31, $2,000.
f. Wages accrued but not paid at July 31, $4,840.
Required:
1. Journalize the six adjusting entries required at July 31, based on the data presented. Refer to the Chart of Accounts for exact wording of account titles.
2. What would be the effect on the income statement if adjustments (a) and (f) were omitted at the end of the year?
3. What would be the effect on the balance sheet if adjustments (a) and (f) were omitted at the end of the year?
4. What would be the effect on the "Net increase or decrease in cash" on the statement of cash flows if adjustments (a) and (f) were omitted at the end of the year?
Answers
Answer:
Required 1.
a.
Trade Receivables $11,150 (debit)
Deferred Revenue $11,150 (credit)
b.
Supplies $900 (debit)
Income Statement $900 (credit)
c.
Rent Expense $6,000 (debit)
Prepaid Rent $6,000 (credit)
d.
Depreciation $8,950 (debit)
Accumulated Depreciation $8,950 (credit)
e.
Trade Receivables $2,000 (debit)
Deferred Revenue $2,000 (credit)
f.
Wages Expense $4,840 (debit)
Wages Payable $4,840 (credit)
Required 2.
a. No Effect
b. Income is Overstated by $4,840
Required 3.
a. Decrease in Assets $11,150 and Decrease in Liabilities $11,150
b. Decrease in Liabilities $4,840
Required 4.
a. No Effect
b. Net Increase in Cash $4,840
Explanation:
Journal a.
We recognized the Assets of Trade Receivable at $11,150 and Liability : Deferred Revenue $11,150. Both entries do not affect the Income statement.
Journal b.
We recognized the Expense : Wages Expense at $4,840 and a Liability Wages Payable at $4,840. The Wage Expense increases the expenses in income statement to correct an Overstated Profit.