Answer:
The Jensen measure of performance evaluation for Sooner Stock Fund is 2.6%
Explanation:
In order to calculate the the Jensen measure of performance evaluation for Sooner Stock Fund we would have to calculate Jensen's Alpha as follows:
Jensen's Alpha = R(i) - [R(f) + {B x (R(m) - R(f))}]
Jensen's Alpha= 20% - [3% + {1.8 x (11% - 3%)}]
Jensen's Alpha= 20% - [3% + 14.4%] = 20% - 17.4%
Jensen's Alpha= 2.6%
The Jensen measure of performance evaluation for Sooner Stock Fund is 2.6%
You are evaluating two different silicon wafer milling machines. The Techron I costs $285,000, has a three-year life, and has pretax operating costs of $78,000 per year. The Techron II costs $495,000, has a five-year life, and has pretax operating costs of $45,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $55,000. If your tax rate is 24 percent and your discount rate is 11 percent, compute the EAC for both machines.
Answer:
EAC Techron I = -$141,050
EAC Techron II = -$138,181
Explanation:
Techron I costs $285,000, has a three-year life, and has pretax operating costs of $78,000 per year. Salvage value $55,000, use straight line depreciation.
annuity factor = [1 - 1/(1 + r)ⁿ] / r = [1 - 1/(1 + 0.11)³] / 0.11 = 2.4437
depreciation expense per year = ($285,000 - $55,000) / 3 = $76,667
cash outflow years 1 and 2 = [($78,000 + $76,667) x (1 - 24%)] - $76,667 = ($154,667 x 0.76) - $76,667 = $40,880
cash outflow year 3 = [($78,000 + $76,667) x (1 - 24%)] - $76,667 - $55,000 = ($154,667 x 0.76) - $76,667 - $55,000 = -$14,120
NPV = -285,000 - 40,880/1.11 - 40,880/1.11² + 14,120/1.11³ = -285,000 - 36,829 - 33,179 + 10,324 = -344,684
EAC = NPV / annuity factor = -344,684 / 2.4437 = -$141,050
Techron II costs $495,000, has a five-year life, and has pretax operating costs of $45,000 per year. Salvage value $55,000, use straight line depreciation.
annuity factor = [1 - 1/(1 + r)ⁿ] / r = [1 - 1/(1 + 0.11)⁵] / 0.11 = 3.6959
depreciation expense per year = ($495,000 - $55,000) / 5 = $88,000
cash outflow years 1 through 4 = [($45,000 + $88,000) x (1 - 24%)] - $88,000 = ($133,000 x 0.76) - $88,000 = $13,080
cash outflow year 5 = [($45,000 + $88,000) x (1 - 24%)] - $88,000 - $55,000 = ($133,000 x 0.76) - $88,000 - $55,000 = -$41,920
NPV = -495,000 - 13,080/1.11 - 13,080/1.11² - 13,080/1.11³ - 13,080/1.11⁴ + 41,920/1.11⁵ = -495,000 - 11,784 - 10,616 - 9,564 - 8,616 + 24,877 = -510,703
EAC = NPV / annuity factor = -510,703 / 3.6959 = -$138,181
On June 30, Coral, Inc. finished Job 750 with total job costs of $ 4 comma 400, and transferred the costs to Finished Goods Inventory. On July 6, Coral sold goods to a customer for $ 5,800 cash. Which of the following is the correct journal entry to record the cost of goods sold? Assume the perpetual inventory system is used.
a. debit Finished Goods Inventory $4,100 and credit Cost of Goods Sold $4,100
b. debit Cost of Goods Sold $4,100 and credit Work-in-Process Inventory $4,100
c. debit Work-in-Process Inventory $4,100 and credit Cost of Goods $4,100
d. debit Cost of Goods Sold $4,100 and credit Finished Goods Inventory $4,100
Answer:
The correct option is D,debit Cost of Goods Sold $4,100 and credit Finished Goods Inventory $4,100
Explanation:
The total job costs is $4,100 not $4,400 ,which then means that the cost of goods sold is $4,100.
The appropriate entry for such sale is to credit merchandise inventory since the inventory reduces due to such sale being made while cost of goods sold is debited with the same amount.
In a nutshell, the correct option is D,
Stone Culture Corporation was organized on January 1, 2017. For its first two years of operations, it reported the following:
Net Income for 2017 $ 54,000
Net Income for 2018 59,000
Dividends for 2017 22,000
Dividends for 2018 34,000
Total assets at the end of 2017 139,000
Total assets at the end of 2018 256,000
On the basis of the data given, prepare a statement of retained earnings for both 2017 (its first year of operations) and 2018.
Answer:
Statement of retained earnings
For the year ended 2017
Retained earnings, January 1, 2017 $0
Add: Net Income $54,000
Less: Dividends $22,000
Retained earnings, December 31, 2017 $32,000
Statement of retained earnings
For the year ended 2018
Retained earnings, January 1, 2018 $0
Add: Net Income $59,000
Less: Dividends $34,000
Retained earnings, December 31, 2018 $25,000
a. Statement of retained earnings for the year ended 2017 is $32,000.
b. Statement of retained earnings for the year ended 2017 is $25,000.
Statement of retained earnings:
Statement of retained earnings for the year ended 2017
Retained earnings, January 1, 2017 $0
Add Net Income $54,000
Less Dividends ($22,000)
Retained earnings, December 31, 2017 $32,000
($54,000-$22,000)
Statement of retained earnings for the year ended 2018
Retained earnings, January 1, 2018 $0
Add Net Income $59,000
Less Dividends $34,000
Retained earnings, December 31, 2018 $25,000
($59,000-$34,000)
Inconclusion the statement of retained earnings for the year ended 2017 is $32,000 and the Statement of retained earnings for the year ended 2017 is $25,000.
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Assume that you have the following decision-making options: (1) make the decision on your own with available information, (2) consult others before making a decision, and (3) call a meeting and reach a consensus, seeking to arrive at a final decision everyone can agree on. Which approach would you use to make each of the following decisions and why?
You are the leader of a new product development project. Your team has worked hard on developing a third-generation product that incorporates new technology and meets customer demands. The project is roughly 50 per- cent complete. You have just received a report from the marketing depart- ment detailing a similar product that is about to be released by a competitor. The product appears to utilize radical new design principles that expand the functionality of the product. This poses a serious threat to the success of your project. Top management is considering canceling your project and starting over again. They want you to make a recommendation.
Answer:
(2) consult others before making a decision.
Before I make a recommendation, I will consult my team members. Individually, some may have new ideas and modifications which we can incorporate into the project to even beat the competition and cause management to continue supporting the project.
Explanation:
Even though our competitor's "product appears to utilize radical new design principles that expand the functionality of the product," we can still modify our product. This will not only incorporate the features of our competitor's product, but also further introduce new features that will emanate from the challenge from competition.
This is where the SCRUM framework becomes important. This framework for project management emphasizes teamwork, accountability, and iterative progress toward a well-defined goal, while allowing for tweaks.
Developing this project based on this framework must have made it possible for us to receive the report from the marketing department in the first place. The principles of Scrum are Openness, Respect, Courage, Commitment, and Focus. So, the best we can do will be to prioritize, come up with new improvement ideas, and convince top management not to cancel the project.
Cobe Company has already manufactured 23,000 units of Product A at a cost of $30 per unit. The 23,000 units can be sold at this stage for $450,000. Alternatively, the units can be further processed at a $250,000 total additional cost and be converted into 5,900 units of Product B and 11,400 units of Product C. Per unit selling price for Product B is $109 and for Product C is $54. 1. Prepare an analysis that shows whether the 23,000 units of Product A should be processed further or not.
Answer:
Net advantage from further processing $558,700
Explanation:
A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.
Also note that all cost incurred up to the split-off point are irrelevant to the decision to process further .
$
Sales revenue after the split-off point
Product B ( 5,900 ×109) 643,100
Product C (11,400× $54) 615,600
Sales revenue at the split-off point 450,000
Additional sales revenue 808,700
Further processing cost (250,000)
Net advantage from further processing 558,700
Note that all costs incurred up to the split-off points are irrelevant i.e $30 per unit to produce product A. Whether or not the products are processed further they would be incurred. As such, they would not be considered in the analysis.
At the end of April, Cavy Company had completed Job 766 and 765. According to the individual job cost sheets the information is as follows:
Job
Direct Materials
Direct Labor
Machine Hours
Job 765
$5,670
$3,500
27
Job 766
$8,900
$4,775
44
Job 765 produced 152 units, and Job 766 consisted of 250 units.
Assuming that the predetermined overhead rate is applied by using machine hours at a rate of $200 per hour, determine the (a) balance on the job cost sheets for each job, and (b) the cost per unit at the end of April.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Job 765:
Direct material= $5,670
Direct labor= $3,500
Machine Hours= 27
Job 766:
Direct material= $8,900
Direct labor= $4,775
Machine Hours= 44
Job 765 produced 152 units, and Job 766 consisted of 250 units.
Assuming that the predetermined overhead rate is applied by using machine hours at a rate of $200 per hour.
Costs sheet:
Job 765:
Direct material= 5,670
Direct labor= 3,500
Allocated overhead= 200*27= 5,400
Total cost= 14,570
Unitary cost= 14,570/152= $95.85
Job 766:
Direct material= 8,900
Direct labor= 4,775
Allocated overhead= 200*44= 8,800
Total cost= 22,475
Unitary cost= 22,475/250= $89.9
Crane Company purchased equipment on January 1 at a list price of $120000, with credit terms 4/10, n/30. Payment was made within the discount period. Crane paid $4750 sales tax on the equipment and paid installation charges of $2100. Prior to installation, Crane paid $5600 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment
Answer:
The cost of equipment = $127,650
Explanation:
According to International Accounting Standards (IAS) 16, property plants and equipment, the cost of land includes all of the cost necessary to bring and make it ready for the intended use.
These costs include purchase cost, fees and commission associated with the purchase transaction.
Here in this question the installation charges, sales taxes and the cost of concrete slab all fall within the definition of IAS 16
The quotation 4/10, n/30 implies that if payment is made within =10 days, Crane would get 4% off the initial purchase price.
Since the payment was made within the discounted period, the net purchase price would be
Purchase price = 120,000 - (4%× 120,000)= 115,200
The cost of equipment = 115,200 +4,750 + 2,100 + 5600= 127650
The cost of equipment = $127,650
The payroll register of Heritage Co. indicates $13,440 of social security withheld and $3,360 of Medicare tax withheld on total salaries of $224,000 for the period. Federal withholding for the period totaled $43,140. Retirement savings withheld from employee paychecks were $2,660 for the period. Journalize the entry to record the period’s payroll. Refer to the Chart of Accounts for exact wording of account titles.
Answer and Explanation:
The journal entries are shown below:
Salary & Wages expense $224,000
To social security Payable $13,440
To Medicare tax Payable $3,360
To Federal Tax Witholding Payable $43,140
To Retirement contribution payable $2,660
To Salary & Wages Payable $161,400 (Balancing figure)
(Being the period payroll is recorded)
For recording this we debited the salary & wages expense as it increased the expenses and credited all other accounts as it increased the liabilities
Akwamba made this statement ‘organisations cannot be successful if managers fail to pay attention to the forces in the external environment’. Do you agree or not? Justify using practical examples (9 marks)
Answer:
I agree
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OS Environmental provides cost-effective solutions for managing regulatory requirements and environmental needs specific to the airline industry. Assume that on July 1 the company issues a one-year note for the amount of $5.0 million. Interest is payable at maturity. Required:Determine the amount of interest expense that should be recorded in a year-end adjusting entry under each of the following independent assumptions: (Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)Find the interest expense:interest rate fiscal year-end interest expense12% december 31 =10% September 30 =9% october 31 =6% january 31 =
Answer: The answers are given below
Explanation:
December 31 has interest rate = 12 % Interest expense will be:
= 5 000 000 × (12/100) × (6 /12)
= 5 000 000 × 0.12 × 0.5
= $ 300,000
September 30 has interest rate = 10 % Interest expense will be:
= 5 000 000 × (10/100) × (3/12)
= 5 000 000 × 0.10 × 0.25
= $ 125,000
October 30 has interest rate = 9% Interest expense will be:
= 5 000 000 × (9/100) × (4/12)
= 5 000 000 × 0.09 × 0.33
= $ 150,000
January 31 has interest rate = 6% Interest expense will be:
= 5 000 000 × (6/100) × (7/12)
= 5 000 000 × 0.06 × 0.583
= $ 175,000
Use the following information for Shafer Company to compute inventory turnover for year 2.
Year 2 Year 1
Net sales $651,500 $583,700
Cost of goods sold 389,300 360,920
Ending inventory 78,500 80,180
a. 8.28
b. 4.89
c. 4.04
d. 7.25
e. 5.89
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Year 2 Year 1
Net sales $651,500 $583,700
Cost of goods sold 389,300 360,920
Ending inventory 78,500 80,180
To calculate the inventory turnover, we need to use the following formula:
Inventory turnover= Cost of goods sold/ average inventory
Average inventory= (beginning inventory + ending inventory) / 2
Average inventory= 158,680/2= 79,340
Inventory turnover= 389,300/79,340
Inventory turnover= 4.91
Jordan has inherited some money and he wants to put it into an account
that would be very safe. He's worried about having to pay taxes on the
interest as well. What is the best option for savings? *
O
Treasury Bill or Note
O
Corporate Bond
High Yield Savings Account
O
Certificate of Deposit
Answer:
The correct answer is the third option: High Yield Savings Account.
Explanation:
To begin with, the name of "High Yield Savings Account" refers to a financial tool whose purpose is to act as a deposit account in order to save money with the plus of getting a higher interest rate than in other traditional saving accounts and also offers better returns than traditional checking accounts. Moreover, this typo of account does also tends to come with no monthly fees and low fees for certain situations like having non-sufficient funds. That is why this is best option for Jordan in order to save the money that he inherited.
At the end of August, the first month of operations, the following selected data were taken from the financial statements of Tucker Jacobs, an attorney:Net income for August$112,500Total assets at August 31650,000Total liabilities at August 31225,000Total stockholders' equity at August 31425,000In preparing the financial statements, adjustments for the following data were overlooked:1. Unbilled fees earned at August 31, $31,900.2. Depreciation of equipment for August, $7,500.3. Accrued wages at August 31, $5,200.4. Supplies used during August, $3,000.Instructions1. Journalize the entries to record the omitted adjustments.2. Determine the correct amount of net income for August and the total assets, liabilities, and stockholders' equity at August 31.
Answer:
1. See the journal below.
2. Correct answers are:
a. Correct amount of net income = $ 128,700.
b. Correct amount of total assets = $671,400.
c. Correct amount of total liabilities = $230,200.
d. Correct amount of stockholders' equity = $441,200
Explanation:
1. Journalize the entries to record the omitted adjustments
Details Dr ($) Cr ($)
Accounts Receivable 31,900
Unbilled fees earned 31,900
To record the unbillled fees earned. Depreciation 7,500
Accumulated Depreciation 7,500
To record the depreciation expenses.
Wages Expense 5,200
Wages Payable 5,200
To record accrued wages expense.
Supplies Expense 3,000
Supplies 3,000
To record the supplies expenses.
2. Determine the correct amount of net income for August and the total assets, liabilities, and stockholders' equity at August 31.
a. Correct amount of net income = Net income recorded + Unbilled fees earned - Depreciation - Accrued wages - supplies expense = $112,500 + $31,900 - $7,500 - $5,200 - $3,000 = $ 128,700.
b. Correct amount of total assets = Recorded total assets + Unbilled fees earned - depreciation - Supplies = $650,000 + 31,900 - $7,500 - $3,000 = $671,400.
c. Correct amount of total liabilities = Recorded total liabilities + Accrued wages = $225,000 + 5,200 = $230,200.
d. Correct amount of stockholders' equity = Correct amount of total assets - Correct amount of total liabilities = $671,400 - $230,200 = $441,200
Explain whether the Statement of Cash Flows is able to illustrate the ‘liquidity’ of an entity to its users and provide ONE recommendation how companies can maintain liquidity during this pandemic.
Answer:
A cash flow is an important part of an organisation. it helps in understanding the cash flows from investing, operating and financial activities.
A cash flow statement helps in evaluating the liquidity of a company.
During the current Pandemic, maintaining liquidity is very important.
some business functions freezes. such firm will experience cash operating cots. the firm should have enough cash to maintain the business in moving forward.
Explanation:
Solution
A cash flow statement is a vital parts or components provided by an organisation.i t helps in interpreting the cash flows from investing, operating and financial activities or functions.
An organisation income statement is made ready based on the accrual basis and so it does help or aid in the understanding the movement of cash during.
A cash flow statement helps in evaluating the liquidity of a company.
Operating activities of cash flows is computed or estimated by putting Non cash expense to net income and then deducting current liabilities and assets.
Cash flow from operating activities are necessary to the firm because it helps in providing cash to invest assets and payback of debt.
Maintaining liquidity during the present pandemic has become very necessary.
Since business functions freezes, the firm will experience cash operating cots. hence the firm should have sufficient cash to maintain the business running.
The firm can also take a loo at their current assets to see if it can be converted to cash on quickly basis.
Over the past 4 years, Cardi, age 28, has contributed a total of $20,000 to a Roth IRA. The current balance is $25,000. She was tired of renting, so this year she took a distribution of $15,000 for a down payment on a home. What amount of the distribution should she include in her gross income this year
Answer:
$0
Explanation:
According to the scenario, computation of the given data are as follow:-
Contributed amount = $20,000
Distribution amount = $15,000
As we know,
Taxable amount = Distribution amount - contribution amount
= $15,000 - $20,000
= - $5,000
The contribution amount is $20,000 more than the distribution amount $15,000. So distribution amount is not taxable.
She included $0 amount in her gross income this year.
Portions of the financial statements for Alliance Technologies are provided below. Alliance Technologies Income Statement For the year ended December 31, 2018Net sales $405,000Expenses:Cost of goods sold $235,000 Operating expenses 70,000Depreciation expense 17,000 Income tax expense 27,000 Total expenses 349,000Net income $56,000 Alliance Technologies Selected Balance Sheet Data December 31, 2018, compared to December 31, 2017Decrease in accounts receivable $7,000Increase in inventory 14,000Decrease in prepaid rent 10,000Increase in salaries payable 6,000Decrease in accounts payable 9,000Increase in income tax payable 24,000Required:Prepare the operating activities section of the statement of cash flows for Alliance Technologies using the direct method.
Answer:
Net cash flow from Operating activities $ 97,000.00
Explanation:
The problem can not be solved on the answer box here, that is why i made use of the microsoft word table in other to understand the solution properly
The Net cash flow from the Operating activities is $97,000.
Alliance Technologies
Cash Flow Statement
For year ended 31st December 2018
Cash Flows from Operating Activity
Net Income $56,000
Adjustments to reconcile net income
to net cash from operations
Depreciation expense $17,000
Changes in working Capital
Decrease in Accounts receivables $7,000
Increase in Inventory $(14,000)
Decrease in prepaid rent $10,000
Increase in salaries payable $6,000
Decrease in accounts payable $(9,000)
Increase in income tax payable $24,000 $41,000
Net cash flow from Operating activities $97,000
Therefore, the Net cash flow from the Operating activities is $97,000.
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Statement of Shareholders' Equity You may use the attached spreadsheet to help you complete this activity, but you are not required to do so. You will find the spreadsheet by clicking on the green Excel icon in the upper left hand corner of the activity. On January 1, 2019, Powder Company provided the following shareholders' equity section of its balance sheet: Contributed Capital: Preferred stock, $100 par $ 92,800 Common stock, $5 par 37,400 Additional paid-in capital on preferred stock 21,500 Additional paid-in capital on common stock 58,700 Total contributed capital $210,400 Retained earnings 185,700 Total Shareholders' Equity $396,100 During 2019, the following transactions and events occurred and were properly recorded: Powder issued 1,800 shares of common stock at $13 per share. Powder issued 340 shares of preferred stock at $130 per share. Powder earned net income of $38,950. Powder paid a $7 per share dividend on the preferred stock and a $1 per share dividend on the common stock outstanding at the end of 2019. Required: Prepare Powder's statement of shareholders' equity (include retained earnings) for 2019. POWDER COMPANY Statement of Shareholders' Equity For Year Ended December 31, 2019 Preferred Stock $100 par Common Stock $5 par Additional Paid-in Capital on Preferred Stock Additional Paid-in Capital on Common Stock Retained Earnings Total $ $ $ $ $ $ $ $ $ $ $ $
Answer:
POWDER COMPANY Statement of Shareholders' Equity For Year Ended December 31, 2019:
Preferred Stock $100 par $126,800
Common Stock $5 par $46,400
Additional Paid-in Capital on Preferred Stock $31,700
Additional Paid-in Capital on Common Stock $73,100
Retained Earnings $206,494
Total Shareholders' Equity $484,494
(See calculations below:)
Explanation:
a) Statement of Shareholders' Equity: This is a financial statement under the balance sheet which a company issues to show the changes within the equity section of the balance sheet over a designated period of time.
b) Preferred Stock $100 par $92,800
New Issue, 340 $34,000
Total $126,800
c) Common stock, $5 par = $37,400
New Issue, 1,800 shares = $9,000
Total $46,400
d) Additional paid-in capital on preferred stock 21,500
From new issue of 340 by $30 per share 10,200
Total $31,700
e) Additional paid-in capital on common stock $58,700
From New Issue 1,800 by $8 per share $14,400
Total $73,100
f) Retained earnings = $185,700
Net Income for the year $38,950
Less Dividends: Preferred -$8,876 ($7 x 1,268 shares)
Less Dividends: Common -$9,280 ($1 x 9,280 shares)
Retained Earnings balance $206,494
The annual accounts payable is 4,800; the annual revenue is 75,000, and the gross profit margin is 40%. The payable days estimated from the data above is ______. Review Later 29 46 39
Answer:
Estimated Payable Days = 39
Explanation:
Given:
Annual account Payable = 4,800
Annual revenue = 75,000
Gross profit margin = 40%
Find:
Payable days
Computation:
Annual expense = Annual revenue(1-Gross profit margin)
Annual expense = 75,000(1-0.4)
Annual expense = 45,000
Estimated Payable Days = [4,800 × 365] / 45,000
Estimated Payable Days = 39
Equipment was acquired on January 1, 2019 at a cost of $190,000. The equipment was originally estimated to have a salvage value of $22,000 and an estimated life of 10 years. Depreciation has been recorded through December 31, 2021 using the straight-line method. On January 1, 2022, the estimated salvage value was revised to $28,000 and the useful life was revised to a total of 9 years.Prepare the journal entry to record depreciation expense for 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)Depreciation expense for 2022$enter the Depreciation expense for 2017 in dollars Adjusting journal entry at 12/31/22:DateAccount Titles and ExplanationDebitCreditDec. 31
Answer:
Journal:
Dec. 31, 2022:
Debit Depreciation Expense $18,600
Credit Accumulated Depreciation $18,600
To record depreciation expense for the year.
Explanation:
a) Depreciation charge for each of the 3 years, calculated as ($190,000 - $22,000)/10 = $16,800
2019: $16,800
2020: $16,800
2021: $16,800
Accumulated Depreciation to date = $50,400 ($16,800*3)
b) Book Value on January 1, 2022 = $139,600 ($190,000 - $50,400)
c) New Depreciation charge from 2022 = $18,600 ($139,600 - $28,000) /6 years, the remaining useful life based on the revised estimate.
d) There is adjusting journal entry. Depreciation is an estimate based on judgement and past events. Judgement can change to address current events. So, there is no need adjusting the entries for the previous three years.
Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 40,000 units next year and Product L is expected to sell 8,000 units. A unit of either product requires 0.4 direct labor-hours. The company's total manufacturing overhead for the year is expected to be $1,632,000. Required: 1-a. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method is followed, how much overhead cost per unit would be applied to each product
Answer:
Product L= $34
Product H= $34
Explanation:
Giving the following information:
Product H is expected to sell 40,000 units next year and Product L is expected to sell 8,000 units.
A unit of either product requires 0.4 direct labor-hours.
Estimated overhead= $1,632,000. R
First, we need to calculate the estimated overhead rate:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 1,632,000/(48,000*0.4)
Estimated manufacturing overhead rate= $85 per direct labor hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Product L= 85*0.4= $34
Product H= 85*0.4= $34
The owner of Miller Restaurant is disappointed because the restaurant has been averaging 7,500 pizza sales per month but the restaurant and wait staff can make and serve 10,000 pizzas per month. The variable cost (for example, ingredients) of each pizza is $1.55. Monthly fixed costs (for example, depreciation, property taxes, business license, manager's salary) are $12,000 per month. The owner wants cost information about different volumes so that some operating decisions can be made.REQUIREMENTS:1) Fill in the following chart to provide the owner with the cost information. Then use the completed chart to help you answer the remaining questions:Monthly pizza volume 6,000 7,500 10,000 Total fixed costs Total variable costs Total costs Fixed cost per pizza Variable cost per pizza Average cost per pizza Selling price per pizza S 6.25 S 6.25 S 6.25 Average profit per pizza2) From a cost standpoint, why do companies such as Miller Restaurant want to operate near or at full capacity?3) The owner has been considering ways to increase the sales volume. The owner thinks that 10,000 could be sold per month by cutting the selling price per pizza from $6.25 to $5.75. How much extra profit (above the current level) would be generated if the selling price were to be decreased? (HINT: Find the restaurant's current monthly profit and compare it to the restaurant's projected monthly profit at the new sales price and volume.)
Answer: The answer is provided and attached below.
Explanation:
The explanation for number 1 and 3 has been attached.
2. The break even point is level of production whereby a company makes no profit or loss. When a company operates below the break even point, the company makes a loss and when a company operates above this level, the company make a profit. The higher the level, the higher the profit.
Therefore, from a cost point of view, Miller restaurant and every other company wants to operate at the full or near full capacity in order to earn higher level of profit. At this point, the fixed costs have been recovered, and every additional unit makes up the profit of the company.
Nieto Company’s budgeted sales and direct materials purchases are as follows. Budgeted Sales Budgeted D.M. Purchases January $261,000 $39,300 February 250,800 43,300 March 344,000 44,000 Nieto’s sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Nieto’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.(a) Prepare a schedule of expected collections from customers for March. (Round answers to 0 decimal places, e.g. 2,500.)NIETO COMPANYExpected Collections from Customers MarchMarch cash salesCollection of March credit salesCollection of February credit salesCollection of January credit salesJanuary cash salesPayment of February credit purchasesFebruary cash salesMarch cash purchasesPayment of March credit purchases $Collection of January credit salesJanuary cash salesCollection of March credit salesCollection of February credit salesMarch cash purchasesPayment of March credit purchasesFebruary cash salesMarch cash salesPayment of February credit purchasesPayment of March credit purchasesCollection of February credit salesCollection of January credit salesFebruary cash salesJanuary cash salesMarch cash purchasesMarch cash salesPayment of February credit purchasesCollection of March credit salesMarch cash purchasesMarch cash salesPayment of February credit purchasesCollection of March credit salesCollection of February credit salesCollection of January credit salesPayment of March credit purchasesFebruary cash salesJanuary cash salesTotal collections $(b) Prepare a schedule of expected payments for direct materials for March. (Round answers to 0 decimal places, e.g. 2,500.)NIETO COMPANYExpected Payments for Direct MaterialsMarchCollection of January credit salesFebruary cash salesMarch cash purchasesPayment of March credit purchasesPayment of February credit purchasesJanuary cash salesMarch cash salesCollection of March credit salesCollection of February credit sales $Collection of January credit salesMarch cash salesFebruary cash salesCollection of March credit salesCollection of February credit salesMarch cash purchasesJanuary cash salesPayment of February credit purchasesPayment of March credit purchasesCollection of February credit salesPayment of March credit purchasesCollection of January credit salesMarch cash salesPayment of February credit purchasesMarch cash purchasesCollection of March credit salesFebruary cash salesJanuary cash salesTotal payments $
Answer:
a is correct
Explanation:
Cost of Goods Sold, Cost of Goods Manufactured
Glenville Company has the following information for April:
Cost of direct materials used in production $48,000
Direct labor 57,000
Factory overhead 34,000
Work in process inventory, April 1 35,000
Work in process inventory, April 30 40,000
Finished goods inventory, April 1 25,000
Finished goods inventory, April 30 16,000
For April, determine
A. The cost of goods manufactured.
B. The cost of goods sold.
Using the data given, prepare a statement of Cost of Goods Manufactured.
Glenville Company
Statement of Cost of Goods Manufactured
Work in process inventory, April 1 Y $72,300
Cost of direct materials used in production $280,000
Direct labor 324,000
Factory Overhead 188,900
Answer:
Instructions are below.
Explanation:
Giving the following information:
Cost of direct materials used in production $48,000
Direct labor 57,000
Factory overhead 34,000
Work in process inventory, April 1= 35,000
Work in process inventory, April 30= 40,000
Finished goods inventory, April 1= 25,000
Finished goods inventory, April 30= 16,000
A. To calculate the cost of goods manufactured, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 35,000 + 48,000 + 57,000 + 34,000 - 40,000
cost of goods manufactured= $134,000
B. To calculate the cost of goods sold, we need to use the following formula:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 25,000 + 134,000 - 16,000
COGS= $143,000
C. Prepare a statement of Cost of Goods Manufactured.
Work in process inventory, April 1 Y $72,300
Cost of direct materials used in production $280,000
Direct labor 324,000
Factory Overhead 188,900
cost of goods manufactured= $865,200
You work for an auto parts manufacturer that has traditionally had an immense marketing budget. Company executives, however, recently reallocated some of the company’s marketing funds to production. Consequently, the company needs to cut marketing costs. You decide to pitch an idea to the automobile manufacturer with whom you work most closely—to use cross-promotion to market both companies’ products.
Answer: The parties involved must compromise in order to work well together
Explanation:
Here is the complete question:
You work for an auto parts manufacturer that has traditionally had an immense marketing budget. Company executives, however, recently reallocated some of the company’s marketing funds to production. Consequently, the company needs to cut marketing costs. You decide to pitch an idea to the automobile manufacturer with whom you work most closely—to use cross-promotion to market both companies’ products.
Which of the following is detrimental to using cross-promotion?
a. One or both companies lose customers.
b. One or both companies lose competitive edge.
c. One company garners all the attention and support.
d. The parties involved must compromise in order to work well together.
e. One of the companies absorbs most of the costs associated with marketing.
Solution:
Cross-promotion is a form of marketing promotion that involves targeting of the customers of one product or service awith promotion of a related product. A common example is the cross-media marketing of a brand e.g Oprah Winfrey's promotion on her shows on television of her magazines, books, and website.
The main aim of cross promotion is the expansion of the marketing reach of a product. Since the company executives, want to reallocate some of the company’s marketing funds to the production department, it will be harmful in a case whereby the parties that are involved compromise in order to work well together.
Selected financial information for Thornton Company for 2019 follows: Sales $ 2,000,000 Cost of goods sold 1,400,000 Merchandise inventory Beginning of year 159,000 End of year 200,000 Required Assuming that the merchandise inventory buildup was relatively constant, how many times did the merchandise inventory turn over during 2019? (Round your answer to 2 decimal places.)
Answer:
7.80 times
Explanation:
First of all we have to calculate the average inventory
Opening inventory= 159,000
Closing inventory= 200,000
Average inventory= (opening inventory+closing inventory)/2
= ( 159,000+200,000)/2
= 359,000/2
= 179,500
The next step is to find the merchandise inventory turnover which is calculated as
= Cost of goods/ Average inventory
Cost of goods= $1,400,000
Average inventory= 179,500
= 1,400,000/179,500
= 7.799 times
= 7.80 times (to 2 decimal places)
Hence the merchandise inventory was turned over 7.80 times in 2019
Answer: 7.80 times
Explanation:
The Merchandise Inventory Formula can be calculated with the Inventory Turnover Ratio which aims to measure how often a company is able to change inventory over a period. The purpose being to see if the company in question is carrying enough Inventory per period.
The formula for this is,
= Cost of Goods sold / Average Inventory
Average Inventory = (Beginning Inventory + Ending Inventory ) / 2
= (159,000 + 200,000) / 2
= 359,000/2
= $170,500
Therefore,
Inventory Turnover Ratio = 1,400,000/170,500
= 7.7994
= 7.80
The Merchandise was turned over 7.80 times in 2019.
Match the following statements to the appropriate terms. Segregation of duties. select the appropriate term Cash that is not available for general use, but instead is limited to a particular purpose. select the appropriate term Two or more employees circumventing prescribed procedures. select the appropriate term Prevent a transaction from being recorded more than once. select the appropriate term Checks which have been returned by the maker's bank for lack of funds. select the appropriate term Checks which have been paid by the depositor's bank. select the appropriate term A projection of anticipated cash flows. select the appropriate term Anything that a bank will accept for deposit. select the appropriate term Physical control devices. select the appropriate term A basic principle of cash management. select the appropriate term Insurance protection against misappropriation of assets. select the appropriate term Document indicating the purpose of a petty cash expenditure. select the appropriate term Issued checks that have not been paid by the bank. select the appropriate term Highly liquid investments.
Answer and Explanation:
The matching of the following statements to the appropriate terms :
1. Segregagtion of duties = Property custody should be kept away from keeping records of such assets
2. Cash that is not available for general use, but instead is limited to a particular purpose = Restricted cash as it is used for specific purpose not for the general purpose
3. Two or more employees circumventing prescribed procedures = Collusion. It means there is a secret agreement in view to deceived others or mislead others
4. Prevent a transaction from being recorded more than once = Prenumbered documents. It means the documents like recepits, checks, invoices that are to be accounted which reduced the unauthorized transactions
5. Checks which have been returned by the maker's bank for lack of funds. = NSF checks. It is a non sufficent fund which represents that the account have does not contain sufficent funds
6. Checks which have been paid by the depositor's bank = Cancelled checks. The checks which are cancelled due to insufficent balance or any other reason
7. A projection of anticipated cash flows.= Cash budget. It records all cash receipts and all cash payments related to the business transactions
8. Anything that a bank will accept for deposit = Cash. Cash is a more liquid assets that is shown in the current assets side of the balance sheet
9. Physical control device = Televison monitors, sensors, etc. These are the devices which are physically controlled
10. A basic principle of cash management = Invest idle cash. It refers to the cash which is not earned any value or neither it increased the value
11. Insurance protection against misappropriation of assets = Bonding employees. This refers to protect employees against any losses, theft, etc
12. Document indicating the purpose of a petty cash expenditure = Petty cash recipts. It refers how much cash is used till date, etc
13. Issued checks that have not been paid by the bank = Outstanding checks. For this the treatment is that we have to show this in a negative sign while computing the adjsuted balance of bank balance
14. Highly liquid investments = Cash equiivalent. This include cash in hand, cash at bank, marketable securities which shows the highly liquid investment and the same is shown in the current asset side of the balance sheet
William has an A.A. in general studies, but he does not know what career he wants to pursue. He decides to get a job for a year before going back to school. He wants a job near home in an office. He enjoys collaborating with other employees. William places a lot of value on freedom of thought and action at work. He needs about $50,000 per year.
William interviews at a company as an entry level sales person. He learns that it takes about 15 minutes to drive to the office. His job would be to work in a cubicle on a phone talking to potential clients from a script. The job pays about $50,000 per year with the possibility for performance-based bonuses. Which factor makes this job a poor fit for William?A. The company is in a bad location.B. He wants more freedom in how he makes sales.C. He is opposed to sales work.D. The job does not pay enough money.
Answer:
He wants more freedom in how he makes sales
Explanation:
William places a lot of value on freedom of thought and action at work but the job entails him speaking from a script. This hinders freedom in how he makes sales.
I hope my answer helps you
Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Calculate the adjusted cash balance per books on May 31. Cash balance per books, 5/31 $3,398 Deposits in transit 202 Notes receivable and interest collected by bank 983 Bank charge for check printing 26 Outstanding checks 1,694 NSF check 175
Answer:
$4,180
Explanation:
Cash balance per books (May 31) $3,398
Notes receivable and interest collected by bank $983
Bank fees ($26)
NSF check ($175)
total reconciled cash balance per books = $4,180
Outstanding checks and deposits in transit are used to reconcile bank accounts, not the firm's cash account.
A new operating system for an existing machine is expected to cost $520,000 and have a useful life of six years. The system yields an incremental after-tax income of $150,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000.
Required A Required B
Cash Flow Select Chart Amount * PV Factor = Present Value
Annual Cash Flow Present Value of an Annuity of 1
Residual value Present Value of 1
Present value of cash inflows
Immediate Cash Flow
Net Present Value
A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation.
Required A Required BCash Flow Select Chart Amount * PV Factor = Present Value Annual Cash Flow Present Value of an Annuity of 1Residual value Present Value of 1 Present value of cash inflows Immediate Cash Flow Net Present Value
Assume the company requires a 10% rateo return on its vestments. Compute the net present value of each potential investment.
Answer:
a. $509,141
b. $189,495
Explanation:
The computation of the net present value for each case is shown below:
a.
Net present value = Present value after considering the discount rate and salvage value - initial investment
where,
Present value is
= Incremental after tax income + depreciation expense
= $150,000 + ($520,000 - $10,000) ÷ 6 years
= $150,000 + $85,000
= $235,000
Now PVIFA factor at 6 years for 10% is 4.3553
So, present value is
= $235,000 × 4.3553
= $1,023,496
For salvage value, the present value is
= $10,000 × 0.5645 (Discounting factor)
= $5,645
So, total present values is
= $1,023,496 + $5,645
= $1,029,141
And, the initial investment is $520,000
So, the net present value is
= $1,029,141 - $520,000
= $509,141
b.
Net present value = Present value after considering the discount rate and salvage value - initial investment
where,
Present value is
= Incremental after tax income + depreciation expense
= $60,000 + ($380,000 - $20,000) ÷ 8 years
= $60,000 + $45,000
= $105,000
Now PVIFA factor at 6 years for 10% is 5.3349
So, present value is
= $105,000 × 5.3349
= $560,164.50
For salvage value, the present value is
= $20,000 × 0.4665 (Discounting factor)
= $9,330
So, total present values is
= $560,164.50 + $9,330
= $569,494.50
And, the initial investment is $380,000
So, the net present value is
= $564,494.50 - $380,000
= $189,495
On June 3, Marigold Company sold to Chester Company merchandise having a sale price of $2,200 with terms of 4/10, n/60, f.o.b. shipping point. An invoice totaling $97, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company.
Prepare journal entries on the Sage Company books to record all the events noted above under each of the following bases.
a. Sales and receivables are entered at gross selling price.
b. Sales and receivables are entered at net of cash discounts.
Answer:
A.
Jun 3
Dr Account receivable 2,200
Cr Sales 2,200
Jun 12
Dr Cash 2,112
Dr Sales discount 88
Cr Account receivable 2,200
B.
Jun 3
Dr Account receivable 2,112
Cr Sales discount 2,112
Jun 12
Dr Cash 2,112
Cr Account receivable 2,112
Explanation:
Marigold Company Journal entries
A.
Jun 3
Dr Account receivable 2,200
Cr Sales 2,200
Jun 12
Dr Cash 2,112
(2,200-88)
Dr Sales discount 88
(2,200*4%)
Cr Account receivable 2,200
B.
Jun 3
Dr Account receivable 2,112
Cr Sales discount 2,112
(2,200*96%)
Jun 12
Dr Cash 2,112
Cr Account receivable 2,112
100%-4%=96%