Answer:
$0
Explanation:
The computation of the their allowable child and dependent care credit is shown below:
In the case when the income is below $35,000 than full 35% would be allowed
But the qualified child expense would be limited to $6,000
So, here the amount would be
= $6,000 × 35%
= $1,860
Already there is a pre credit tax liability so $0 should be considered as it would not received any credit
a. Why do some price controls help create black markets?
b. What is a black market you have personally seen?
Answer:
Price ceiling creates black markets
Price ceiling is when the government or an agency of the government sets the maximum price of a good or service. Price ceiling is binding if it is set below equilibrium price.
When a binding price floor is established, producers would earn less profits and as a result they would stop selling their products in the free markets. This would lead to scarcity and a result a black market can emerge. Goods would be sold at a higher price in the black markets than it would in the free markets.
So, black markets can arise as a result of price ceiling and the need of producers to earn higher profits
b. During the war, when there was a rationing of meat. Farmers declared less animal births to authorities and sold the undeclared livestock in the black market.
Also, in less developed countries e.g. Nigeria, when there is scarcity of fuel. Black markets arise where fuel are sold for higher prices
Explanation:
Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2021, the company had accounts receivable of $1,060,000. Lonergan needs approximately $640,000 to capitalize on a unique investment opportunity. On July 1, 2021, a local bank offers Lonergan the following two alternatives:________.
a. Borrow $640,000, sign a note payable, and assign the entire receivable balance as collateral. At the end of each month, a remittance will be made to the bank that equals the amount of receivables collected plus 9% interest on the unpaid balance of the note at the beginning of the period.
b. Transfer $690,000 of specific receivables to the bank without recourse. The bank will charge a 2% factoring fee on the amount of receivables transferred. The bank will collect the receivables directly from customers. The sale criteria are met.
Required:
1. Prepare the journal entries that would be recorded on July 1 for
a. alternative a.
b. alternative b
2. Assuming that 80% of all June 30 receivables are collected during July, prepare the necessary journal entries to record the collection and the remittance to the bank for
a. alternative a
b. alternative b.
Answer:
Please see attached detailed solution to the above question
Explanation:
Please find attached journal entries prepared the two alternatives.
Competitive firms' profits are ______________ monopolistically competitive firms' profits in the long run.
Answer and Explanation:
Competitive firms' profits (economic profit) are same as monopolistically competitive firms' profits in the long run. Both competitive firms and monopolistic firms have zero profit in the long run. This is because for competitive firms, increased competition by entry of new firms creates high competition therefore infinitely homogenous divisible products hence zero economic profit in the long run. Also in monopolistically competitive firms, there is economic profit in short run but it soon becomes zero profit in the long run
Mills Corporation acquired as an investment $225 million of 8% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $250 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $240 million. Required: 1. & 2. Prepare the journal entry to record Mills’ investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate. 3. Prepare the journal entry by Mills to record any fair value adjustment necessary for the year ended December 31, 2021. 4. Suppose Moody’s bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $266 million. Prepare the journal entries required on the date of sale.
Answer:
Please see solution below.
Explanation:
1.
July 1, 2021
Dr Investment in bonds $225,000,000
Dr Premium on investment in bonds $25,000,000
Cr Cash $250,000,000
December 31, 2021
Dr Cash $18,000,000
Cr Interest revenue $15,000,000
Cr Premium on investments in bonds
$3,000,000
2.
Investment in bonds. $225,000,000
Premium on investment in bonds $22,000,000
3.
January 2, 2022
Dr. Cash $266,000,000
Cr Investment in bonds $225,000,000
Cr Premium on investment in bonds $22,000,000
Cr Gain on sale of investments $19,000,000
Workings:
Effective interest rate on first coupon received = [ $225,000,000 × 8%] - [ $250,000,000 × 6%]
= $18,000,000 - $15,000,000
= $3,000,000
Premium on investment in bonds = $25,000,000 - $3,000,000
= $22,000,000
Kenya performs research and creates reports for her boss, the company's Chief Executive, Kenya's job title is best
described as
Liz responds to people who contact a company. She deals with people who visit the office in person and people who
call or e-mail the company. Her job title is best described as
Neil handles important paperwork that his office needs to keep track of. He sorts paperwork and keeps it handy so he
can retrieve information whenever it is needed. His job title is best described as
Salvador organizes information and appointments for a department manager. He also reviews and sorts e-mail for his
boss. His job title is best described as
Answer:
Kenya performs research and creates reports for her boss, the company's Chief Executive, Kenya's job title is best
described as an Executive Administrative Assistant
Liz responds to people who contact a company. She deals with people who visit the office in person and people who
call or email the company. Her job title is best described as a Receptionist
Neil handles important paperwork that his office needs to keep track of. He sorts paperwork and keeps it handy so he
can retrieve information whenever it is needed. His job title is best described as a File Clerk.
Salvador organizes information and appointments for a department manager. He also reviews and sorts e-mail for his
boss. His job title is best described as an Administrative Assistant.
Explanation:
The administrative assistants, receptionists, and file clerks perform important functions. In their various capacities and roles, they help their bosses to function more efficiently and effectively by relieving them of routine tasks. As they perform these duties, their bosses are enabled to concentrate their efforts and time in managing their assigned responsibilities. However, these job titles are not universally uniform, as it depends on the organization.
Answer:
1. Executive Administrative Assistant
2. Receptionist
3. File Clerk
4. Administrative Assistant
Explanation:
Holiday Laboratories purchased a high-speed industrial centrifuge at a cost of $470,000. Shipping costs totaled $14,100. Foundation work to house the centrifuge cost $7,700. An additional water line had to be run to the equipment at a cost of $2,600. Labor and testing costs totaled $7,000. Materials used up in testing cost $3,700. (Leave no cells blank. Enter 0 where needed.) a. What is the total cost of the equipment
Answer:Total Cost of equipment=$502,500
Explanation:
Total Cost of equipment= This is gotten by addition of Cost of Purchase +Shipping costs +Foundation work+ Testing expense
=$470,000+$14,100+$7,700+($7,000+$3,700.)
=$502,500
Tyrone wants to spend $15,000 on a new car three years from now. He opens a savings account and deposits $3,250 today. One year from now, he plans to deposit $3,000 in the account, and one year after that, he plans to deposit another $3,000. If the account earns 6% interest per year, how much additional money will Tyrone need to meet his $15,000 goal?
Answer:
Tyrone will need $4578.4 to meet his $15,000 goal
Explanation:
Tyrone wants to spend amount on a new car three years from now=$15,000
Formula : [tex]A=P(1+\frac{r}{100})^n[/tex]
Where A=future value
P=present value
r=rate of interest
n=time period.
Future value of deposits=[tex]3250 \times(1.06)^3+3000 \times(1.06)^2+3000 \times (1.06)[/tex]
Future value of deposits= 10421.60
So, additional money needed=15000-10421.60=4578.4
Hence Tyrone will need $4578.4 to meet his $15,000 goal
The beginning balance in the raw materials inventory account was $25,000. During the month, the company made raw materials purchases amounting to $54,000. At the end of the month, the balance in the raw materials inventory account was $37,000. Direct labor cost was $25,000 and manufacturing overhead cost was $62,000. The beginning balance in the work in process account was $22,000 and the ending balance was $23,000. The beginning balance in the finished goods account was $44,000 and the ending balance was $50,000. Selling expense was $21,000 and administrative expense was $38,000. The prime cost for November was:
Answer:
$67,000
Explanation:
The computation of prime cost is shown below:-
Total conversion cost = Direct labor + Manufacturing overhead
= $25,000 + $62,000
= $87,000
Total prime cost = Beginning raw material + Raw material purchased - Ending raw material + Direct labor
= $25,000 + $54,000 - $37,000 + $25,000
= $67,000
hence, the prime cost is $67,000
Lincoln’s landlord has included a clause in the rental contract that makes it possible for him to increase Lincoln’s monthly rent if taxes on the property go up. Which clause was included in the contract?
a. tariffs clause.
b. variable costs clause.
c. escalator clause.
d. elastic demand clause.
e. elevator clause.
Answer:
The appropriate answer is Option c (Escalator clause).
Explanation:
The landlord of Lincoln also put a disclaimer throughout the rental lease which allows him to raise the mortgage payment of Lincoln if property wages increase. The deal had an escalator clause.An Escalator clause would be a clause inside a leasing contract as well as rent disclosure that ensures the improvement in rent sum regardless of the reasons which were not under influence of all the participants. Throughout this situation the taxation on land is raised by that of the government therefore adjustment in taxes wasn't in the jurisdiction of all entities.The other options given aren't connected to just the given case. In such a way that the response above is right.
An equivalent description of the holding of a receive-floating pay-fixed swap is as follows: A. An exchange of a long position in a fixed-rate bond for a short position in a floating-rate note. B. A portfolio of long positions in forward-rate agreements (FRAs) for each swap payment date, all at the same fixed rate as the swap. C. All of the above. D. A bond that pays the fixed rate minus the floating rate each period.
Answer:
The correct answer is
A) An exchange of a long position in a fixed-rate bond for a short position in a floating-rate note.
Explanation:
Swapping a fixed interest for a floating one can occur if the fixed interest tenure in comparison to a floating exchange rate becomes less expensive for the entity who took the loan.
Also executing a swap in interest rates (that is giving up the fixed tenure for the floating tenure) helps to ensure that liabilities are kept at minimum whilst assets are maximised.
It is important to note that the capital remains unmodified.
Cheers
What is the profit margin for a firm with the following: dividend payout ratio of 55 percent, capital intensity ratio of 1.4, debt-equity ratio of .68, and sustainable growth rate of 6.2 percent
Answer:
2.33%
Explanation:
Capital intensity ratio=total assets /sales=1.4
debt-equity ratio=debt/equity=0.68 ( debt is 0.68 while equity is 1 since 0.68/1=0.68)
total assets=debt+equity=0.68+1=1.68
return on equity=sustainable growth rate*retention rate
sustainable growth rate=6.2%
retention rate=1-dividend payout ratio=1-55%=45%
return on equity=6.2%*45%=2.79%
Using the point formula , the return on equity formula is given below:
return on equity=profit margin*asset turnover*assets/equity
return on equity=2.79%
profit margin is the unknown
asset turnover=sales/total assets=1/Capital intensity ratio=1/1.4
assets/equity=1.68/1=1.68
2.79%=profit margin*1/1.4*1.68
2.79%=profit margin*1.20
2.79%/1.20=profit margin
profit margin=2.33%
. If a T-bill promises to repay $10,000 in one year and the market interest rate is 6 percent, how much will the bill sell for in the market?
Answer:
market price = $9,433.96
Explanation:
a T-bill is basically a zero coupon bond, and the formula we can use to calculate its market price is:
market price = face value / (1 + i)ⁿ
face value (value at maturity) = $10,000i = 6%n = 1market price = $10,000 / (1 + 6%) = $10,000 / 1.06 = $9,433.96
Decaprio Inc. produces and sells a single product. The company has provided its contribution format income statement for June.
Sales (5,500 units) $ 192,500
Variable expenses 82,500
Contribution margin 110,000
Fixed expenses 86,500
Net operating income $ 23,500
If the company sells 5,700 units, its net operating income should be closest to:__________
Answer:
Net income= $27,500
Explanation:
Giving the following information:
Sales (5,500 units) $ 192,500
Variable expenses 82,500
Contribution margin 110,000
Fixed expenses 86,500
First, we need to calculate the unitary contribution margin:
unitary contribution margin= 110,000/5,500= $20
Now, the net operating income for 5,700 units:
Net income= 5,700*20 - 86,500
Net income= $27,500
A(n) _____ is a picture of the relationships among tasks and those employees given authority to do those tasks.
Answer:
organizational chart
Explanation:
Every organisation is composed of an hierarchical setup that outlines the tasks and responsibilities that each employees and workers needs to perform according to the heirchical structure.
These structures are laid down on a chart/diagram called organisational chart or organigram. An organisational chart is a picture of the relationships among tasks and those employees given authority to do those tasks.It helps in directing the employees to take the right actions and proper reporting.
Look in a recent issue of The Wall Street Journal at "NYSE-Composite Transactions."a. What is the latest price of IBM stock? b. What are the annual dividend payment and the dividend yield on IBM stock? c. What would the yield be if IBM changed its yearly dividend to $1.50? d. What is the P/E on IBM stock? e. Use the P/E to calculate IBM’s earnings per share. f. Is IBM’s P/E higher or lower than that of Exxon Mobil? g. What are the possible reasons for the difference in P/E?
Answer:
A) $191.08
B) The annual dividend = $0.85 per share
dividend yield = 1.78%
C) 3.14%
D) 13.74
E) $13.91
F) IBM's P/E at 13.74 is higher than Exxon Mobil P/E at 11.29
G) The possible reasons for the difference in P/E is due to the difference in EPS earned by each company and also the difference in stock price of each company's stock
Explanation:
Referring the the recent issue of the wall street Journal at NYSE-Composite Transactions
A) The Latest price of IBM stock = $191.08
B) What are the annual dividend payment and the dividend yield on IBM stock
The annual dividend = $0.85 per share
dividend yield = 1.78%
C) calculate what the yield will become if yearly dividend is moved up to $1.50
first we find the price per share
price per share = annual dividend per share / current dividend yield
= 0.85 / 1.78% = 0.85 / 0.0178 = $47.75
since we now have the price per share value we can now calculate the dividend yield
dividend yield = annual dividend / price per share
= $1.50 / $47.75 = 0.0314
= 3.14 %
D) Calculate the P/E on IBM stock
= 13.74 times as it was traded for the last 12 months
E) calculate IBM's earnings per share using P/E
earnings per share = Price / P/E
Latest price of IBM stock = $191.08
P/E = 13.74
earnings per share = 191.08 / 13.74 = $13.91
F) IBM's P/E at 13.74 is higher than Exxon Mobil P/E at 11.29
G) The possible reasons for the difference in P/E is due to the difference in EPS earned by each company and also the difference in stock price of each company's stock
The manager of Triks Burgers keeps track of the number of customers served at different periods of the day in an attempt to plan a schedule for workers that matches the demand for the restaurant's products. By using this tracking system, the manager of Triks Burgers is utilizing ________ control.
Answer:
"Output" is the right approach.
Explanation:
Performance monitoring would be an output control method where current output measures are opposed to scheduled output to detect issues at the job core. That's the method used to analyze the production, which would be the end outcome or the facilities that an organization offers. It must be clearly explained that the production or the final result is the only component to be evaluated by the client.You estimate that by the time you retire in 35 years, you will have accumulated savings of $2 million. If the interest rate is 8% and you live 15 years after retirement, what annual level of expenditure will those savings support?
Answer:
We can use the present value of an annuity formula to determine the annual distribution. I'm assuming that your distributions will be made in a similar manner to an annuity due (the first payment happens when you retire).
annual distribution = principal balance / PV annuity factor
principal balance = $2,000,000PV factor annuity due, 8%, 15 periods = 9.24424annual distribution = $2,000,000 / 9.24424 = $216,350.94
if instead, the first distribution is received at the end of the first year of retirement, then the annual distribution will be:
annual distribution = principal balance / PV annuity factor
principal balance = $2,000,000PV factor ordinary annuity, 8%, 15 periods = 8.55948annual distribution = $2,000,000 / 8.55948 = $233,659.05
A company forecasts growth of 6 percent for the next five years and 3 percent thereafter. Given last year's free cash flow was $100, what is its horizon value (PV looking forward from year 4) if the company cost of capital is 8 percent?
a. $0
b. $1,672
c. $2,000
d. $2,676
Answer:
d. $2,676
Explanation:
The computation of the horizontal value is shown below:
FCF1 = (100 × 1.06) = 106
FCF2 = (106 × 1.06) = 112.36
FCF3 = (112.36 × 1.06) = 119.1016
FCF4 = (119.1016 × 1.06) = 126.247696
FCF5 = (126.247696 × 1.06) = 133.8225578
Now
Horizon value is
= FCF5 ÷ (Cost of capital - Growth rate)
= 133.8225578 ÷ (0.08 - 0.03)
= $2,676
Hence, the correct option is d.
According to the question,
The computation of the horizontal value will be:
→ [tex]FCF_1 = 100\times 1.06[/tex]
[tex]= 106[/tex]
→ [tex]FCF_2 = 106\times 1.06[/tex]
[tex]= 112.36[/tex]
→ [tex]FCF_3 = 112.36\times 1.06[/tex]
[tex]= 119.1016[/tex]
→ [tex]FCF_4 = 119.1016\times 1.06[/tex]
[tex]= 126.25[/tex]
→ [tex]FCF_5 = 126.25\times 1.06[/tex]
[tex]= 133.8226[/tex]
hence,
The horizon value will be:
= [tex]\frac{FCF_5}{Cost \ of \ capital - Growth \ rate}[/tex]
By putting the values, we get
= [tex]\frac{133.8226}{0.08-0.03}[/tex]
= [tex]2,676[/tex] ($)
Thus the above approach i.e., "option d" is right.
Learn more about cost here:
https://brainly.com/question/15576484
Which education degree does a Guidance Counselor usually hold?
has a master's degree, but some could have a doctorate or bachelor's degree.
has a doctorate degree, but some could have a master's or bachelor's degree.
has a bachelor's degree, but some could have a master's degree.
has a master's degree, but some could have a doctorate degree.
Answer:
I would say has a bachelor's degree, but some could have a master's degree.
But from what I know I believe they need both a master's and a bachelor's degree.
Explanation:
Answer:
c / has a bachelor’s degree, but some could have a masters degree
Explanation:
Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Fortes' income for the year consists of $119,000 in salary, $500 interest income, $1,000 nonqualifying dividends, and $500 long-term capital gains. The Fortes' expenses for the year consist of $2,500 in investment interest expense and $800 in tax preparation fees. Assuming that the Fortes' marginal tax rate is 32 percent and they make no special elections, what is the amount of investment interest expense deduction for the year
Answer:
$1,500
Explanation:
Calculation for the amount of investment interest expense deduction for the year
Using this formula
Investment interest expense deduction=Interest income+ Nonqualifying dividend
Let plug in the formula
Investment interest expense deduction=$500+$1,000
Investment interest expense deduction=$1,500
Therefore the amount of investment interest expense deduction for the year will be $1,500
you can acquire an existing business for $2 million. You are uncertain about future demand. There is a 40% chance of high demand, in which case the present value of the business will be $3 million. There is a 25% chance of moderate demand, and the associated present value is $1.5 million. Finally, there is a 35% chance of low demand, in which case the present value is $1 million. Draw a decision tree for this problem. What is the expected net present value of the business
Answer:
Expected net present value of the project = $1,925,000
Explanation:
The cost of acquiring business = $2,000,000
Expected net present value of the project = High demand NPV*High demand percent + Moderate demand NPV*Moderate demand percent + Low demand NPV*Low demand percent
Expected net present value of the project = $3,000,000 *40% + $1,500,000*25% + $1,000,000*35%
Expected net present value of the project = $1,200,000 + $375,000 + $350,000
Expected net present value of the project = $1,925,000
Conclusion: The cost of acquiring business is more than expected net present value, it is advisable not to invest in the project.
Hy-Vee (grocery store) would most accurately be classified as
Answer:
distributer
Explanation:
You are the marketing analyst for Better Beans Coffee Company, which has nine stores nationwide. The company wants to build two additional stores. Your executive team has decided that rather than expand to new markets, they want Better Beans to begin opening additional stores in existing markets. While this will create cannibalization in the short term, it will create marketing and operating efficiencies as more stores are opened in each city.As a scrappy and growing startup, Better Beans does not yet have access to complex marketing analytics software. Fortunately, you are an expert at gathering market data from inside and outside the company and crunching accurate numbers with nothing more than an Excel spreadsheet.You have been tasked with calculating the two best markets for opening an additional store. You have already calculated two things that allow you to estimate the net additional revenue in each market after adding a second store:Revenue for a second store in each marketThe revenue lost from estimated cannibalization at the first store.Important note: Due to the high investments already made in existing stores, management has specified that any market where cannibalization is 25% or more should be eliminated from consideration.1. Ignoring cannibalization rates for now, what two markets have the highest net revenue increases when adding a second store?a. Dallas and Portlandb. Los Angeles and Orlandoc. Chicago and Dallasd. Orlando and Dallase. Los Angeles and Portland2. What two markets should be chosen for a second store based on management's criteria that the cannibalization rate for the existing store should be less than 25%?Note: Cannibalization rates and net revenue increase amounts need to be considered when making this determination.a. Los Angeles and Orlandob. Atlanta and Houstonc. Atlanta and Portlandd. Los Angeles and Portlande. Los Angeles and Houston
Question Completion:
Existing Store Revenue 2nd Store Cannibalization Revenue Net Revenue
Revenue Estimate Drop Increase for
Market
Los Angeles 1,450,000 1,570,000 10% 145,000 1,425,000
Houston 1,400,000 1,475,000 25% 350,000 1,125,000
Orlando 2,100,000 2,155,000 30% 630,000 1,525,000
Atlanta 1,600,000 1,780,000 55% 880,000 900,000
Chicago 1,950,000 1,730,000 40% 780,000 950,000
San Diego 3,400,000 3,090,000 10% 340,000 2,750,000
Portant 1,000,000 1,075,000 25% 250,000 825,000
Dallas 2,000,000 1,850,000 60% 1,200,000 650,000
Boston 2,300,000 2,200,000 50% 1,150,000 1,050,000
1. Ignoring cannibalization rates for now, what two markets have the highest net revenue increases when adding a second store?
San Diego and Orlando
Atlanta and Dallas
Orlando and Dallas
San Diego and Portland
Dallas and Portland
2. What two markets should be chosen for a second store based on management's criteria that the cannibalization rate for the existing store should be less than 30%
Note: Cannibalization rates and net revenue increase amounts need to be considered when making this determination.
San Diego and Orlando
San Diego and Los Angeles
Chicago and Los Angeles
Chicago and Portland
San Diego and Portland
Answer:
Better Beans Coffee Company
1. San Diego's $2,750,000 and Orlando's $1,525,000 presented the highest net revenue increases when adding a second store.
2. Based on management's criteria that the cannibalization rate for the existing store should be less than 30%, San Diego with 10% and Los with 10% Cannibalization rates should be chosen.
Explanation:
Cannibalization Rate is a measure of the impact of new products or the presence of new stores on sales revenue for existing products or stores. Cannibalization happens when a business, like the Better Beans Coffee Company, opens a new store in a town where there is an existing store. It can also happen when Better Beans releases new coffee products. Consumers' attention and demand for existing products can decrease, as a switch to new products or new stores takes place.
Pension data for David Emerson Enterprises include the following: ($ in millions) Discount rate, 10% Projected benefit obligation, January 1 $ 360 Projected benefit obligation, December 31 465 Accumulated benefit obligation, January 1 300 Accumulated benefit obligation, December 31 415 Cash contributions to pension fund, December 31 150 Benefit payments to retirees, December 31 54 Required: Assuming no change in actuarial assumptions and estimates, determine the service cost component of pension expense for the year ended December 31.
Answer:
$123
Explanation:
Calculation to determine the service cost component of pension expense for the year ended December 31.
PENSION BENEFIT OBLIGATION
Beginning of the year Projected benefit obligation $360
Service cost ?
Interest cost $36
(10%*360)
Loss (gain) on PBO $0
Less: Retiree Benefits ($54)
End of the year Projected benefit obligation $465
Hence,
SERVICE COST= ($465-$360-$36+$54)
SERVICE COST= $123
Therefore the service cost component of pension expense for the year ended December 31 will be $123
Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Sporty line is used to increase the production of Luxury watches by 250%, how will operating income be affected
Answer:
c. Increase of $192,500
Explanation:
Note: The full question is attached
Particulars Luxury Amount$
Sales $950,000
(380000*250/100)
Less: Variable cost $612,500
(245000*250/100 )
Total contribution $337,500
Less: Fixed expenses $80,000
Net Operating Income $257,500
Change in Operating Income = New Profit - Existing profit = $257,500 - $65,000 = $192,500
Hence, there is an increase of $192,500
A company, which is currently operating at full capacity, has sales of $2,480, current assets of $820, current liabilities of $510, net fixed assets of $1,670, and a 5 percent profit margin. The company has no long-term debt and does not plan on acquiring any. The company does not pay any dividends. Sales are expected to increase by 10 percent next year. If all assets, short-term liabilities, and costs vary directly with sales, how much additional equity financing is required for next year
Answer:
$61.60
Explanation:
Equity funding need = Projected assets - Projected liabilities - Current equity - Projected increase in retained earnings
Equity funding need = $2,739 - $561 - $1,980 - $136.40
Equity funding need = $61.60
Workings
Projected assets = (Current assets + Fixed assets) * 1.10 = 820+1,670 * 1.10 = $2,739
Projected liabilities = Current liabilities * 1.10 = 510 * 1.10 = $561
Current equity = Current assets + Fixed assets - Current liabilities = 820 + 1,670 - 510 = $1,980
Projected increase in retained earnings = Sales*5% * 1.10 = $2,480*5% * 1.10 = 124*1.10 = $136.40
Check My Work (No more tries available) Field Industries' outstanding bonds have a 25-year maturity and $1,000 par value. Their nominal yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $850. What is the bond's nominal (annual) coupon interest rate
Answer:
7.70%
Explanation:
Semi-annual YTM = 9.25%/2 = 4.625%
Number of periods = 25*2 = 50 Periods
C = Coupon Amount
Price of the bond = Present Value of coupon interests + Present Value of Par Value
$850 = C*(PVIFA 4.625%, 50 Years) + $1,000*(PVIF 4.625%, 50 Years)
$850 = (C x 19.3667869) + ($1000 x 0.1042861)
$850 = (C x 19.3667869) + 104.29
$745.71 = (C x 19.3667869])
C = $745.71 / 19.3667869
C = $38.50
Coupon payment (C) = $38.50
Hence, annual Coupon Amount = $38.50 * 2 = $77.00
Bond Nominal (annual) Coupon Interest Rate = (Annual Coupon Amount / Par Value) x 100
Bond Nominal (annual) Coupon Interest Rate = ($77.00 / 1,000) x 100
Bond Nominal (annual) Coupon Interest Rate = 7.70%
Joint Cost Allocation—Net Realizable Value Method Nature's Garden Inc. produces wood chips, wood pulp, and mulch. These products are produced through harvesting trees and sending the logs through a wood chipper machine. One batch of logs produces 20,304 cubic yards of wood chips, 14,100 cubic yards of mulch, and 9,024 cubic yards of wood pulp. The joint production process costs a total of $32,000 per batch. After the split-off point, wood chips are immediately sold for $25 per cubic yard while wood pulp and mulch are processed further. The market value of the wood pulp and mulch at the split-off point is estimated to be $22 and $24 per cubic yard, respectively. The additional production process of the wood pulp costs $5 per cubic yard, after which it is sold for $30 per cubic yard. The additional production process of the mulch costs $4 per cubic yard, after which it is sold for $32 per cubic yard.
Allocate the joint costs of production to each product using the net realizable value method.
Joint Product Allocation
Wood chips $
Wood pulp
Mulch
Totals $
Support department cost allocation—comparison
Becker Tabletops has two support departments ( Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows:
Support Department Cost Driver
Janitorial Department Square footage to be serviced
Cafeteria Department Number of employees
Janitorial
Department Cafeteria
Department Cutting
Department Assembly
Department
Department costs $310,000 $169,000 $1,504,000 $680,000
Square feet 50 5,000 1,000 4,000
Number of employees 10 3 30 10
Allocated the support department costs to the production departments using the direct method below.
Cutting
Department Assembly
Department
Janitorial Department cost allocation $62,000 $248,000
Cafeteria Department cost allocation $126,750 $42,250
Allocated the support department costs to the production departments using the reciprocal services method below.
Cutting
Department Assembly
Department
Janitorial Department cost allocation $38,200 $152,800
Cafeteria Department cost allocation $216,000 $72,000
Allocated the support department costs to the production departments and Cafeteria Department using the sequential method below.
Cafeteria
Department Cutting
Department Assembly
Department
Janitorial Department cost allocation $155,000 $31,000 $124,000
Cafeteria Department cost allocation $243,000 $81,000
Compare the total support department costs allocated to each production department under each cost allocation method.
a. Which production department is allocated the most support department costs under the direct method?
Cost
$
b. Which production department is allocated the most support department costs under the sequential method?
Cost
$
c. Which production department is allocated the most support department costs under the reciprocal services method?
Cost
$
Support Department Cost Allocation—Direct Method
Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance and janitorial labors are performed throughout the production process by nonproduction employees. Maintenance and janitorial costs are allocated based on machine hours used and the number of trees in each department, respectively. The company estimates that the cutting and pruning areas typically have about 18 and 72 trees, respectively, in them at 1 time. The company also estimates that the cutting process requires about 9 times as many machine hours as the pruning process. The total costs of each department are as follows:
Maintenance Department $8,000
Janitorial Department 5,000
Cutting Department 56,000
Pruning Department 12,000
Using the direct method of support department cost allocation, determine the total cost of each production department after allocating all support costs to the production departments.
Cutting
Department Pruning
Department
Production departmentsʼ total costs $ $
Answer:
1. Nature's Garden Inc.
Joint Cost Allocation—Net Realizable Value Method:
Joint Product Allocation
Wood chips $11,268 ($25/$71 * $32,000)
Wood pulp 9,915 ($22/$71 * $32,000)
Mulch 10,817 ($24/$71 * $32,000)
Totals $32,000
2. Becker Tabletops
Allocation of Janitorial and Cafeteria Costs:
a. Assembly
b. Cutting
c. Cutting
Direct Method:
Department Cutting Assembly
Janitorial $62,000 $248,000
Cafeteria $126,750 $42,250
Total costs $188,750 $290,250
Reciprocal Method:
Department Cutting Assembly
Janitorial $38,200 $152,800
Cafeteria $216,000 $72,000
Total costs $254,200 $224,800
Sequential Method:
Department Cutting Assembly Cafeteria
Janitorial $155,000 $31,000 $124,000
Cafeteria $243,000 $81,000
Total costs $398,000 $112,000 $124,000
3. Christmas Timber, Inc.
Allocation of support departmental costs to production to departments:
Maintenance Janitorial Cutting Pruning
Department costs $8,000 $5,000 $56,000 $12,000
Maintenance (8,000) 7,200 800
Janitorial (5,000) 1,000 4,000
Total costs $64,200 $16,800
Maintenance allocation ratio = 9:1
Janitorial allocation ratio = 1:4
Explanation:
Becker Tabletops
Allocation of Janitorial and Cafeteria Costs:
Direct Method:
Department Cutting Assembly
Janitorial $62,000 $248,000
Cafeteria $126,750 $42,250
Total costs $188,750 $290,250
Reciprocal Method:
Department Cutting Assembly
Janitorial $38,200 $152,800
Cafeteria $216,000 $72,000
Total costs $254,200 $224,800
Sequential Method:
Department Cutting Assembly Cafeteria
Janitorial $155,000 $31,000 $124,000
Cafeteria $243,000 $81,000
Total costs $398,000 $112,000 $124,000
Which statement is correct? In the short run, the pure monopolist will maximize total profits by producing at that level of output where the difference between price and average total cost is greatest. Pure monopolists do not always realize economic profits. Because of its ability to administer prices, the pure monopolist can increase its price and increase its volume of sales simultaneously. In the short run, the pure monopolist will charge the highest price it can get for its product.
Answer: Pure monopolists do not always realize economic profits.
Explanation:
Even though Pure Monopolies are the only sellers or makers of a good in a market and can therefore set their own prices, this does not mean that they will always make a profit talk more an economic one.
In the short run for instance, a Pure monopoly could see its average cost higher than its average revenue because some factors of production could not be varied. In this scenario, the monopolist would realize economic losses.
The Josey Company uses the weighted average method. The beginning work in process consists of 6,000 units (100% completed as to materials and 50% complete as to conversion costs). The number of units completed was 130,000. The ending work in process consists of 10,000 units (100% complete as to materials and 20% complete as to conversion costs). What are the equivalent units of production for conversion costs
Answer:
Total equivalent units= 135,000 units
Explanation:
The weighted average method blends the costs and units of the previous period with the costs and units of the current period.
Conversion costs:
Units completed and transferred out= 133,000 units
Ending WIP= 10,000*0.2= 2,000 units
Total equivalent units= 135,000 units