Answer:
$30,250
Explanation:
The computation of expected cash collections for March is shown below:-
Particulars January February March
Gross sales $20,000 $10,000 $40,000
Cash sales (25%) $5,000 $2,500 $10,000
Credit sales $15,000 $7,500 $30,000
To reach credit sales we simply deduct the cash sales from gross sales.
Particulars March
Collections from:
March cash sales $10,000
Credit sales for:
January $3,000 ($15,000 × 20%)
February $2,250 ($7,500 × 30%)
March $15,000 ($30,000 x 50%)
Total collections $30,250
To reach total collection we simply added the march cash sales and Credit sales of Jan, Feb and March.
After graduating from college, you are hired by the Ford automobile company as an economic analyst. For your first project, you are asked to estimate what would happen to the sales of Ford Mustangs as a result of a change in (i) the price of a Chevrolet Camaro, (ii) the price of gasoline, and (iii) consumer incomes. You are given the following elasticities:________. 1. Price elasticity of demand for Ford Mustangs = -2.5 2. Cross-price elasticity between Ford Mustangs and Camaros = 1.5 3. Cross-price elasticity between Ford Mustangs and gasoline = -0.80 4. Income elasticity of demand for Ford Mustangs = 3.00
Answer:
1. if the price of Chevrolet Camaro increases, the demand for Ford Mustangs increases. Conversely, if the price of Chevrolet Camaro falls, the demand for Ford Mustangs falls.
2.If the price of gasoline increases, the demand for Ford Mustangs would fall and if the price of gasoline falls, the demand for Ford Mustangs would increase.
3. if income increases, demand for Ford Mustangs increases and if demand falls, demand for Ford Mustangs falls
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Income elasticity of demand measures the responsiveness of quantity demanded to changes in income.
If the absolute value of income elasticity of demand is greater than one, it means demand is elastic.
The income elasticity is given as 3 , it means that demand is elastic. So if income increases, demand for Ford Mustangs increases and if demand falls, demand for Ford Mustangs falls.
Cross price elasticity of demand measures the responsiveness of quantity demanded of good A to changes in price of good B.
If cross price elasticity of demand is positive, it means that the goods are substitutes goods.
Substitute goods are goods that can be used in place of another good.
If the cross price elasticitiy is negative, it means that the goods are complementary goods.
Complementary goods are goods that are consumed together
Because the cross price elasticity between Chevrolet Camaro and Ford Mustangs is positive, it means they are subsituite goods. So, if the price of Chevrolet Camaro increases, the demand for Ford Mustangs increases. Conversely, if the price of Chevrolet Camaro falls, the demand for Ford Mustangs falls.
Because the cross price elasticity of demand between gasoline and Ford Mustangs are negative, they are complementary goods.
If the price of gasoline increases, the demand for Ford Mustangs would fall and if the price of gasoline falls, the demand for Ford Mustangs would increase.
Evaluating strategies LO C2 If the company raises its selling price to $240 per unit. 1. Compute Hudson Co.'s contribution margin per unit. 2. Compute Hudson Co.'s contribution margin ratio. 3. Compute Hudson Co.'s break-even point in units. 4. Compute Hudson Co.'s break-even point in sales dollars.
Answer:
Instructions are below.
Explanation:
We weren't provided with enough information to answer the requirements. But, I will provide the formulas.
1) Contribution margin:
CM= selling price - unitary variable cost
2) contribution margin ratio:
contribution margin ratio= contribution margin / selling price
3) break-even point in units
Break-even point in units= fixed costs/ contribution margin per unit
4) break-even point in sales dollars:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Crystal Lighting Inc. produces and sells lighting fixtures. An entry light has a total cost of $80 per unit, of which $54 is product cost and $26 is selling and administrative expenses. In addition, the total cost of $80 is made up of $40 variable cost and $40 fixed cost. The desired profit is $55 per unit. Determine the markup percentage on product cost.
Answer:
Mark-up = 101.9%
Explanation:
Mark up is the percentage of the product cost that is made as profit. It is profit expressed as a percentage of the product cost.
Mark-up = profit/product cost × 100
Mark-up = $55/54 × 100 =101.85%
Mark-up = 101.9%
Answer:
Explanation:
Mark up percentage = [ (desired profit ) + (Total selling and administrative expenses) ] / total product cost
Desired profit = $55
Total selling and administrative expenses = $26
Total cost = $80
($55 + $26)/80 = 1.0125
1.0125 - 1 = 0.0125 = 1.25%
I hope my answer helps you
Comparing marginal revenue to marginal cost (i) reveals the contribution of the last unit of production to total profit. (ii) is helpful in making profit-maximizing production decisions. (iii) tells a firm whether its fixed costs are too high. a. (i) only b. (i) and (ii) only c. (ii) and (iii) only d. (i) and (iii) only
Answer:
B
Explanation:
Marginal revenue is defined as an incremental revenue generated from the sales of an additional unit of a product and services while a a marginal cost is an incremental cost incurred from the production of additional unit of a goods and services
Looking at these definitions , it can be inferred that marginal revenue reveals the contribution of the last unit of production to the total unit as well as helping in making profit maximizing decision in a production process
Widget Makers LLC started business January, 01, 2010. They paid a $6,000 premium for insurance coverage on their inventory. The coverage expires June 01, 2010. At this time they renew for the remainder of the year by paying an additional premium of $7,700. What is the quarterly insurance expense that Widget Makers should report for the period ending June 30,2010.
Answer:
$3,500
Explanation:
The quarterly insurance expense to report for the period ending June 30 2010 comprises of two months payment from the first payment and one month portion of the second payment as computed thus:
Insurance for April to May=$6,000*2/5=$2400
Insurance for June=$7,700*1/7=$1100
insurance expense for June=$2,400+$1,100=$3,500
Note that the first payment covers first 5 months while the second one covers the last 7 months
Lean AccountingCom-Tel Inc. manufactures and assembles two models of smartphones-the Tiger Model and the Lion Model. The processconsists of a lean cell for each product. The data that follow concern only the Lion Model lean cell.For the year, Com-Tel Inc. budgeted these costs for the Lion Model production cell:Conversion Cost Categories BudgetLabor $166,300 Supplies 63,000 Utilities 22,700 Total $252,000 Com-Tel plans 3,000 hours of production for the Lion Model cell for the year. The materials cost is $71 per unit. Each assembly requires 18 minutes of cell assembly time. There was no May 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory.The following summary events took place in the Lion Model cell during May:Electronic parts were purchased to produce 10,200 Lion Model assemblies in May.Conversion costs were applied for 9,700 units of production in May.9,510 units were completed and transferred to finished goods in May.9,220 units were shipped to customers at a price of $336 per unit.If required, round your answers to the nearest cent.Required:1. Determine the budgeted cell conversion cost per hour.$ per hour2. Determine the budgeted cell conversion cost per unit.
Answer: 1. $84 per hour
2. $25.20 per unit
Explanation:
The conversion costs are manufacturing or the production costs that are necessary to convert raw materials into final products.
1. The budgeted cell conversion cost per hour will be:
= Budgeted Conversion Cost/Planned Hours of Production
= $252,000 ÷ 3000
= $84 per hour
2. The budgeted cell conversion cost per unit will be:
= Manufacturing Time × Cell Conversion Cost Rate
= 18/60 × $84
= $25.20 per unit
Manitowoc Crane (U.S.) exports heavy crane equipment to several Chinese dock facilities. Sales are currently 16.000 units per year at the yuan equivalent of $25.000 each. the Chinese yuan (renminbi) has been trading at Yuan8.40/$, but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan9.10/$, after which it will remain unchanged for at least a decade. Accepting this forecast as given, Manitowoc Crane faces a pricing decision in the face of the impending devaluation. It may either (1) maintain the same yuan price and in effect sell for fewer dollars, in which case Chinese volume will not change; or (2) maintain the same dollar price, raise the yuan price in China to offset the devaluation, and experience a 10% drop in unit volume Direct costs are 75% of the U.S. sales price. a. What would be the short-run (one-year) impact of each pricing strategy? Which do you recommend? If Manitowoc Crane maintains the same yuan price and same unit volume, what will be the firm's gross profits? (Round to the nearest dollar.) b. If Manitowoc Crane maintains the same dollar price, raises the yuan price in China to offset the devaluation, and experiences a 10% drop in unit volume, what will be the firm's gross profits? (Round to the nearest dollar.) Which do you recommend?
Answer:
Explanation:
a) Yuan price before devaluation = 25000 × 8.4 = Y210,000
Dollar price after devaluation = 210000/9.1 = $23,076.92
Total sales = 16000 × 23076 = 369230720
COGS = 16000 × 25000 × 75% = 300000000
Gross profit 69230720
Dollar price after devaluation = $25000
Total sales = 16000 × 90% × 25000 = 360000000
COGS = 16000*90%× 25000 ×75% = 270000000
Gross profit 90000000
b) Maintaining the same dollar price is better because it yields higher profits.
Which of the following statements is correct?
A. Governmental funds must prepare a Statement of Revenue, Expenditures and Changes in Fund Balance, Statement of Fund Balance and Statement of Cash Flows. RSI is optional.
B. Fiduciary funds must prepare a Statement of Fiduciary Net Assets, Statement of Changes in Fiduciary Net Assets, Statement of Cash Flows and RSI.
C. Government-wide statements include data from Fiduciary and Proprietary Funds.
D. Proprietary funds must prepare a Statement of Revenues, Expenses and Changes in Fund Net Position, Statement of Net Position and Statement of Cash Flows.
Answer:
D. Proprietary funds must prepare a Statement of Revenues, Expenses and Changes in Fund Net Position, Statement of Net Position and Statement of Cash Flows.
Explanation:
Remember, proprietary funds are still under the regulation of the IRS and thus are required to prepare account statements of their revenue, expenses, net position and cash flows.
This proprietary funds consist of a pool of money and assets owned by investors and customers and are usually managed by financial institutions such as a bank.
It costs Garrison Company $9.50 of variable and $5.20 of fixed costs to produce one bathroom scale which normally sells for $19.70. A foreign wholesaler offers to purchase 2,600 scales at $12.20 each. Garrison will incur special shipping costs of $1.70 per scale if the order is accepted. Garrison has sufficient unused capacity to accommodate the order. If the special order is accepted, what will be the effect on net income?
Answer:
Effect on income= $2,600 increase
Explanation:
Giving the following information:
It costs Garrison Company $9.50 of variable costs.
A foreign wholesaler offers to purchase 2,600 scales at $12.20 each. Garrison will incur special shipping costs of $1.70 per scale if the order is accepted.
Because it a special offer and there is unused capacity, we will not take into account the fixed costs:
Effect on income= units sold*contribution margin per unit
Effect on income= 2,600*(12.2 - 9.5 - 1.7)
Effect on income= $2,600 increase
If a Cournot duopolist announced that it will double its output A. the other firm will double output also. B. the other firm does not view the announcement as credible. C. the other firm will shut down. D. it becomes the leader.
Answer:
B) the other firm does not view the announcement as credible
Explanation:
The reason is that the other firm thinks that the announcing firm will make losses as it will not be able to sell the products in an imperfect market where both the firms have identical cost functions and knew all about the cost. So increasing the production when the demand is the same will decrease the price of the product and result in increased losses to the announcing company.
Sunland Chemicals Company acquires a delivery truck at a cost of $30,400 on January 1, 2022. The truck is expected to have a salvage value of $3,200 at the end of its 4-year useful life. Compute annual depreciation for the first and second years using the straight-line method.
Answer:
$6,800 and $6,800
Explanation:
The computation of the depreciation expense for the first year and the second year using the straight line method is shown below:
= (Original cost - residual value) ÷ (useful life)
= ($30,400 - $3,200) ÷ (4 years)
= ($27,200) ÷ (4 years)
= $6,800
In this method, the depreciation is the same for all the remaining useful life
Therefore for the first and second year, the same depreciation expense i.e $6,800 should be charged separately in each year
Alpha Company uses its sales invoices for posting perpetual inventory records. Inadequate control activities over the invoicing function allow goods to be invoiced that are not shipped. The inadequate control activities could cause an Group of answer choices Understatement of revenues, receivables, and inventory. Overstatement of revenues and receivables and an understatement of inventory. Understatement of revenues and receivables and an overstatement of inventory. Overstatement of revenues, receivables, and inventory.
Answer:
Overstatement of revenues and receivables and an understatement of inventory.
Explanation:
Invoicing in different occasions could be done for the case of inventory and reference purposes in the hands of both the salesman and buyer. Therefore on the case above, inadequate control could possibly cause overstatement of revenues and receivables and an understatement of inventory. It is also been observed that the sales invoice provides the seller with a record of what has been sold, whether the said transaction has been carried out or not and how much money is involved. This information is useful for internal company records and also to follow up with buyers for billing purposes.
David Jones, the new administrator for a surgical clinic, was trying to determine how to allocate his indirect expenses. His staff was complaining that the current method of taking a percentage of revenues was unfair. He decided to try to allocate utilities based on square footage of each department, administration based on direct costs, and laboratory based on tests. Use the information in the chart below to answer the question.
Square Footage Direct Expenses Lab Tests
Utilities 200,000
Administration 2,000 500,000
Laboratory 2,000 625,000
Day-op Suite 3,000 1,400,000 4,000
Cystoscopy 1,500 350,000 500
Endoscopy 1,500 300,000 500
Total 10,000 3,375,000 5,000
Based on the scenario above, what are the Cystoscopy Department's total expenses?
Answer:
The Cystoscopy Department's total expenses are $380,500
Explanation:
According to the given data we have the following:
For Cystoscopy Department,
(A) The Direct Expenses are $350,000
(B) Lab Tests are $500
We should need to calculate the allocation of Utilities for 1500 square feet and then add all these 3 costs.
Total Square feet is 10,000 and Total Expenses for Utilities is $200,000
So per Square foot expense for Utilities = $200,000 / 10,000 = 20 per square foot
(C) So, for Utilities having 1,500 square foot space, the cost allocated = 1,500 X 20 = $30,000
Adding all (A) + (B) + (C), the total expenses for Cystoscopy Department are
$350,000 + $500 + $30,000 = $380,500
The Cystoscopy Department's total expenses are $380,500
A sewage treatment revenue bond issue is being underwritten on a negotiated basis. The offering consists of $50,000,000 par value of term bonds. The underwriter has agreed to a spread of $45.00 for each $5,000 bond. The manager has set the additional takedown at $20.00 per bond and the selling concession at $22.00 per bond. If a selling group member sells a $5,000 par value bond directly to the public, the selling group member earns:____________
Answer:
The multiple choices are :
a.$8
b.$20
c.$22
d.$45
The correct option is C.$22
Explanation:
The earnings accruing to the selling group is the selling concession of $22 per $5,000 per bond.
Option A is obviously wrong as there is nothing in the questions that suggest earnings of $8 per bond for the selling group.
Option D is wrong as well because $45 per bond is the spread which is the extra yield to bondholders when compared to investment in government securities
Place in order the events that occur in the short run when the Federal Reserve enacts expansionary monetary policy.
a. The increased borrowing leads to increased investment and purchasing of goods and services.
b. The aggregate demand curve shifts rightward.
c. Market equilibrium shifts toward more money being lent at a lower interest rate.
d. As the Fed buys bonds, new money enters the loanable funds market.
The order should be
1. As the fed buys bonds, new money enters the loanable funds market.
2. Market equilibrium shifts towards more money being lent at lower interest rates.
3. The increased borrowing leads to increased investment and purchasing of goods and services
4. The aggregate demand curve shifts rightwards.
The following information should be considered:
In the case when the federal reserve should considered the expansionary monetary policy so it purchased the bonds from the open market. The banking system liquidity should increased but the lending rate is decreased. Now if the rate of interest is less so the spending in an investment should be increased.Due to this, it trigerred the economic growth and the aggregrate demand curve should be shifted to the right.
Learn more: brainly.com/question/6201432
Problems and Applications
The many identical residents of Whoville love drinking Zlurp. Each resident has the following willingness to pay for the tasty refreshment:
Quantity Willingness to Pay (Dollars)
First bottle 5
Second bottle 4
Third bottle 3
Fourth bottle 2
Fifth bottle 1
Further bottles 0
The cost of producing a bottle of Zlurp is $1.50, and the competitive suppliers sell it at this price. (The supply curve is horizontal.)
Each Whovillian will consume ______ bottles and receive a consumer surplus of _______$ . Producing Zlurp creates pollution. Each bottle has an external cost of $1.
Taking this additional cost into account, total surplus per person in the allocation you previously determined decreases to _______$ .
Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by 1 bottle.
Cindy's consumer surplus (ignoring the cost of pollution she experiences) is now ______$ . Her decision_____ total surplus in Whoville by _______$ .
Mayor Grinch imposes a $1 tax on each bottle of Zlurp.
Consumption per person is now _______bottles. This yields a per-person consumer surplus of ______$ not including the cost of pollution, a per-person external cost of _____$ , and government revenue of_______ $ per person. Total surplus per person is now ______$ as a result of this policy. (Hint: Total surplus is equal to consumer surplus minus the external cost of pollution plus government revenue.)
Based on your calculations, you_____ support the mayor's policy because it ______welfare compared to before the tax.
Answer and Explanation:
The calculations are shown below:
1) 4 is choosen because the marginal utility should be less than the marginial cost and if he choose beyong this point, the cost of the drink is more than the willingness to pay
2) The consumer surplus is
= (5 - 1.5) + (4 - 1.5) + (3 - 1.5) + (2 - 1.5)
= 8
3) Total surplus decreases to
= Consumer surplus - external cost
= 8 - 4
= 4
4) Cindy's Consumer surplus is
= (5 - 1.5) + (4 - 1.5) + (3 - 1.5)
= 7.5
5) Increases
6) 8 - 7.5 = 0.5
7) Consumption = 3 bottles
8) Consumer surplus is
= (5 - 2.5) + (4 - 2.5) + (3 - 2.5)
= 4.5
9) External cost = 3 × 1 = 3 bottle
10) Government revenue = 3 × 1 = 3 bottle
11) Total surplus is
= Consumer surplus - external cost + government revenue
= 4.5 - 3 + 3
= 4.5
12) would
13) increases
The following costs result from the production and sale of 1,000 drum sets manufactured by Tight Drums Company for the year ended December 31. 2019. The drum sets sell for $500 each. The company has a 25% income tax rate. For each dollar of sales, how much is left to cover fixed costs and contribute to operating income.
Answer:
$0.72
Explanation:
total direct materials = $125,000
total variable selling costs = $15,000
total variable costs = $140,000
variable cost per unit = $140,000 / 1,000 units = $140 per unit
contribution margin ratio = (sales price - variable cost) / sales price = ($500 - $140) / $500 = 72%
this means that per dollar of sales, $0.72 are left to cover fixed costs and contribute to operating income
A consumer values a house at $525,000 and a producer values the same house at $485,000. If the transaction is completed at $510,000, what amount of tax will result in unconsummated transaction
Answer:
$15,000
Explanation:
Amount of tax that will result in unconsummated transaction will be :
Consumer values of house $525,000
Less completed transaction $510,000
Tax $15,000
Therefore $15,000 is the amount of tax which will result in Unconsummated transaction because the actual value of the house was $525,000 in which the transaction process was later completed at $510,000.
A semi-annual coupon bond has a coupon of 6% and its duration is 5.78 years. It trades at a yield of 7%, or a price of $94.54 per $100 face. The comparable Treasury rate is 5%. If the yield curve shifts up across the board by 50 bp and the spread increases to 280 bp, what is the new price of the bond
Answer:
$ 101.39
Explanation:
The new coupon rate would be the treasury rate plus 280bp which is 5%+2.8%=7.8%
The new yield to maturity would be 7%+0.5%=7.5%
Note that 100 basis point is 1%
The new price can be computed using excel pv formula
new price=-pv(rate,nper,pmt,fv)
rate is the semiannual yield i.e 7.5%*6/12=3.75%
nper is the number of semiannual coupons of the bond i.e 5.78*2=11.56
pmt is the semiannual coupon =$100*7.8%*6/12=$3.9
face value is $100
=-pv(3.75%,11.56,3.9,100)=$101.39
A company establishes a petty cash fund for $470. By the end of the month, employees had made the following expenditures from the fund: supplies, $139; fuel for deliveries, $123; postage, $76; miscellaneous, $40. Record the entry to recognize expenditures from the petty cash fund.
Answer:
A petty cash fund is created by debiting the petty cash account and credited to the cash account
The expenses made is debited to the respective expenses account and then credited to the cash account
Explanation:
petty cash = $470
Expenditures made by employees :
supplies = $139
Fuel for deliveries = $123
postage = $76
Miscellaneous = $40
NOTE : A petty cash fund is created by debiting the petty cash account and credited to the cash account
The expenses made is debited to the respective expenses account and then credited to the cash account
ATTACHED IS THE JOURNAL ENTRY
Parallel sentences are balanced and easy for readers to understand.
Choose which sentence has the better parallel structure.
1. Although the presentation is extremely long, it outlines the research, analyzes the data, and provides clear recommendations that are useful in the future.
2. Although the presentation was extremely long, it outlined the research, analyzed the data, and provided clear recommendations that will be useful in the future.
Answer: 2. Although the presentation was extremely long, it outlined the research, analyzed the data, and provided clear recommendations that will be useful in the future.
Explanation:
Parallel Sentences are constructed when you used the same grammatical form across the entire sentence. This way the sentence is balanced and easier to read.
For example, Sophia likes reading, hiking and watching television. As opposed to, Sophia likes reading, hiking and watch Television. The watch in the sentence is not using the grammatical form that is the present participle which is present in most of the sentence.
The correct sentence above therefore is the second one.
It uses the same form throughout the sentence by putting it in past tense.
The Soft Company has provided the following information after year-end adjustments:
• Allowance for doubtful accounts was $11,000 at the beginning of the year and $30,000 at the end of the year.
• Accounts receivable were $80,000 at the beginning of the year and $420,000 at the end of the year.
• Accounts written off as uncollectible totaled $21,000.
• Net sales totaled $2,720,000.
• Sales discounts were $102,000.
How much was Soft's bad debt expense for the year?
a. $1,200
b. $19,800.
c. $21,000.
d. $40,800
Answer:
The allowance for doubtful accounts at end of the year is $30,800, not $30,000
The correct option is D,$40,800
Explanation:
The bad debt expense for the current year is the sum of the ending allowance for doubtful debt plus the amount written off in the year as uncolletible minus the opening balance of allowance for doubtful debt.
Ending balance of allowance for doubtful debts is $30,800
The amount written off as uncollectible is $21,000
opening balance of allowance for uncollectible is $11,000
bad debt expense=$30,800+$21,000-$11,000=$40800
Job 731 was recently completed. The following data have been recorded on its job cost sheet: Direct Materials: $2,500 Direct Labor hours: 100 Direct Labor wage rate: $10.00 per hour The company applies manufacturing overhead on the basis of direct labor cost. The pre-determined overhead rate is 150% of direct labor cost. The total cost that would be recorded on the job cost sheet for job 731 would be:
Answer:
Total cost= $5,000
Explanation:
Giving the following information:
Job 731:
Direct Materials= $2,500
Direct Labor hours= 100
Direct Labor wage rate: $10.00 per hour
First, we need to calculate the direct labor cost and then allocate overhead:
Direct labor= 100*10= $1,000
Allocated overhead= 1,000*1.5= $1,500
Total cost= 2,500 + 1,000 + 1,500
Total cost= $5,000
Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. Determine the second-year depreciation using the straight-line method.
Answer:
$9,600
Explanation:
Annual Depreciation = Cost – Residual Value/Useful Life
Using the formula
Cost=$57,000
Residual value =$9,000
Useful life =5years
Hence:
$57,000 – $9,000/5
=$48,000/5
= $9,600
The second-year depreciation will therefore be $9,600
Long-Term Notes Receivable and TVM. Use the following present value tables to help answer the following questions. *Do not round any answer until your final answer. Round your final answer to the nearest whole dollar. When entering your final answer, do not use commas or $ sign. (Sorry...Blackboard is very sensitive and will mark your answer incorrect due to rounding and punctuation.)
PV of $1
Periods 4% 6% 8% 9%
3 .89 .84 .79 .77
5 .82 .74 .68 .65
9 .70 .59 .50 .46
10 .68 .56 .46 .42
Present Value of an Ordinary Annuity
Period 4% 6% 8% 9%
3 2.77 2.67 2.57 2.53
5 4.45 4.21 3.99 3.89
9 7.43 6.80 6.25 5.99
10 8.11 7.36 6.71 6.41
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (3) QUESTIONS:Sun Devil Inc. accepts a $1,000,000, 8% note on January 1, 2019, in exchange for merchandise. The note is due in 5 years and requires the customer to pay interest quarterly, beginning March 31, 2019. Principal will be received at maturity. The customer’s normal borrowing rate is 12%. Determine the amount of Sales Revenue Sun Devil can recognize on Jan 1, 2019: $_____________Using the information in #1 above, determine the carrying value of the Note Receivable at December 31, 2021: $_________________Using the information in #1 above, determine the Total Interest Revenue Sun Devil will earn over the entire 5-year lending agreement:$_______________________
Answer:
Determine the amount of Sales Revenue Sun Devil can recognize on Jan 1, 2019: $567,430
Determine the carrying value of the Note Receivable at December 31, 2021: $711,780
Determine the Total Interest Revenue Sun Devil will earn over the entire 5-year lending agreement: $1,308,114
Explanation:
the present value of the notes receivable = future value / (1 + 12%)⁵ or we can calculate using the annuity = $1,000,000 x 0.56743 = $567,430
the value of the note receivable 2 years later = future value / (1 + 12%)³ or again use the annuity = $1,000,000 x 0.71178 = $711,780
total interest revenue = ($1,000,000 x 8%) x annuity factor (2%, 20 payments) = $80,000 x 16.35143 = $1,308,114
Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. CashReceipts CashpaymentsJanuary$525,000 $475,000 February 400,000 350,000 March 450,000 525,000 According to a credit agreement with its bank, Kayak requires a minimum cash balance of $30,000 at each month-end. In return, the bank has agreed that the company can borrow up to $150,000 at a monthly interest rate of 1%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. The company repays loan principal with any cash in excess of $30,000 on the last day of each month. The company has a cash balance of $30,000 and a loan balance of $60,000 at January 1.
Prepare monthly cash budgets for each of the first three months of next year.
Answer:
Kayak Co.
Cash Budgets for three months:
January February March
Beginning Balance $30,000 $30,000 $58,694
Loan Balance -60,000 -10,600 0
Cash Receipts 525,000 400,000 450,000
Cash Payments -475,000 -350,000 -525,000
Interest on Loan -600 -106 0
Loan Receipt (Payment) 10,600 -10,600 46,306
Ending Balance 30,000 58,694 30,000
Explanation:
A cash budget is an estimate of the cash payments and cash receipts. It helps management to know when to borrow funds to meet required minimum cash balance and when to repay borrowed funds. It is an important managerial tool for making decisions on the management of the company's cash flows.
You just deposited $4,000 in cash into a checking account at the local bank. Assume that banks lend out all excess reserves and there are no leaks in the banking system. That is, all money lent by banks gets deposited in the banking system. Round your answers to the nearest dollar. If the reserve requirement is 20 %, how much will your deposit increase the total value of checkable bank deposits
Answer: $20,000
Explanation:
The reserve requirement is a central bank regulation which sets minimum amount of reserves which must be held by a commercial bank.
When reserve requirement = 20%
= 20/100
= 0.20
Total increase in the checkable deposit will be = $4,000 / 0.20= $20,000
Rolf Steps is the production manager for a local manufacturing firm. This company produces staplers and other items. The annual demand for a particular stapler is 1,600 units. The holding cost is $2 per unit per year. The cost of setting up the production line is $25. There are 200 working days per year. The production rate for this product is 80 per day. If Rolf decided to produce 200 units each time he started production of the stapler, what would his maximum inventory level be
Answer:
His maximum inventory level would be 180 units
Explanation:
According to the given data we have the following:
daily demand rate , d=1,600/200=8 units;
daily production rate p=80 units;
C0=25 dollar
Cc=2 dollar
Therefore, Qopt=√2*25*1,600/(2(1-8/80))
Qopt=210.82
But here Rolf decide to produce 200 units each time he started production, hence fix Q=200
Therefore, Maximum inventory level=200*(1-8/80)=200*0.9
Maximum inventory level=180 units
His maximum inventory level would be 180 units
Rolf Steps' maximum inventory level would be 126 units.
Data and Calculations:
Annual demand = 1,600 units
Holding costs = $2 per unit
Setup cost = $200 ($25 x 8)
Working days per year = 200 days
Production rate per day = 80 units
Number of setup = 8 setups (1,600/200)
Re-order quantity = square root of (2 x 1,600 x $200)/$2
= 566 units
Maximum Level = Re-order level + Re-order quantity – (Minimum usage × Minimum lead time)
= 200 + 566 - (80 x 8)
= 766 - 640
= 126 units
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34. 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 for manufacturing overhead for the month?
Answer:
budgeted manufacturing overhead=$2871
Explanation:
Direct labour hours= budgeted production × standard hours per unit
= 870× 1/4 hour=217.5 hours
Direct labour cost = 217.5 × $12 =$2610
Manufacturing overhead = Overhead absorption rate × direct labour cost
= 110%×2610 =2,871
Budgeted manufacturing overhead=$2871
In an indefinitely repeated game, a firm might use a ________ to ________ a rival that defects from a cooperative strategy. A. trigger strategy; threaten B. trigger strategy; punish C. legal maneuver; sue D. tacit threat; dissuade
Answer:
Option B is correct
Explanation:
In an indefinitely repeated game, a firm might use a trigger strategy to punish a rival that defects from a cooperative strategy. A trigger strategy threatens other players with a punishment of a worse level if they deviate from the decided action profile.
In this game, players interact repeatedly with each other which might foster cooperation. Repeated games mean a situation in which the same stage game is played at each date.