Answer:
Instructions are below.
Explanation:
Giving the following information:
Production:
January= 1,950 units
February= 2,170 units
The company budgets 2 pounds per unit of direct materials for $50 per pound.
Beginning inventory= 5,600 pounds.
Yada desires the ending balance in Raw Materials Inventory to be 80% of the next month's direct materials needed for production. Desired ending balance for February is 4,100 pounds.
We need to use the following formula structure:
Direct material budget= production + desired ending inventory - beginning inventory
Direct material budget January (in pounds):
Production= 1,950*2= 3,900
Desired ending inventory= (2,170*2)*0.8= 3,472
Beginning inventory= (5,600)
Total= 1,772
Total cost= 1,772*50= $88,600
Direct material budget February (in pounds):
Production= 2,170*2= 4,340
Desired ending inventory= 4,100
Beginning inventory= (3,472)
Total= 4,968
Total cost= 4,968*50= $248,400
The River Falls Company has two divisions. The Cutting Division prepares timber at its sawmills. The Coating Division prepares the cut lumber into finished wood for the furniture industry. No inventories exist in either division at the beginning of 20X5. During the year, the Cutting Division prepared 60,000 cords of wood at a cost of $720,000. All the lumber was transferred to the Coating Division, where additional operating costs of $5 per cord were incurred. The 600,000 boardfeet of finished wood were sold for $2,500,000.
Required:
a. Determine the operating income for each division if the transfer price from Cutting to Assembly is at cost - $11 a cord.
b. Determine the operating income for each division if the transfer price is $9 per cord.
c. Since the Cutting Division sells all of its wood internally to the Assembly Division, does the manager care what price is selected? Why? Should the Cutting Division be a cost center or a profit center under the circumstances?
Answer:
a) Operating income at the cost of $11 is $660,000
b) Operating income at the cost of $9 is $540,000
c) Yes, the manager care what price is selected. The Cutting Division be a cost center.
Explanation:
a) Cutting Assembly
Revenue $660,000 $2,500,000
Cost of services
Incurred $660,000 $360,000
Transferred-in $0 $660,000
Total $660,000 $1,020,000
Operating income $0 $1,480,000
Operating income at the cost of $11 = 60,000 cords × $11 = $660,000
b) Cutting Assembly
Revenue $540,000 $2,500,000
Cost of services
Incurred $660000 $360,000
Transferred-in $0 $540,000
Total $660000 $900,000
Operating income ($120,000) $1,600,000
Operating income at the cost of $9 = 60,000 cords × $9 = $540,000
A noncancelable lease contains an option to purchase a leased asset at a price that is sufficiently lower than the asset's expected fair value so that the exercise of the option appears reasonably certain. The fair value of the asset exceeds the lessor's cost of the asset. Therefore, the lease will be accounted for by the lessor as a(n):________ a) Guaranteed lease. b) Financing lease. c) Operating lease. d) Sales-type lease.
Answer:
d) Sales-type lease.
Explanation:
A bargain purchase option is a non-cancelable lease that contains an option to purchase a leased asset at a price that is sufficiently lower than the asset's expected fair value so that the exercise of the option appears reasonably certain.
Hence, the fair value of the asset exceeds the lessor's cost of the asset. Therefore, the lease will be accounted for by the lessor as Sales-type lease.
A Sales-type lease is a type of capital lease that doesn't meet the criteria to be classified as operating and the lessor makes both interest income and a loss or profit on the transaction, thus causing the fair market value of the leased asset to exceed the lessor's cost to purchase the leased asset.
Additionally, in a sales-type lease, the lessor should ensure net investment, impairment, variable lease payment, interest income are accounted for before the commencement date of the lease.
Evaluate the following investment options by comparing their risk and liquidity: buying a franchise real estate (buying property) mutual fund Which of the three investment alternatives is the best for you? Explain the reasons for your choice.
Answer:
Buying a franchise: For me, this is the riskiest investment, because the success of the business depends on the product or service it sells. If there is no demand for the product or service, the business will go under. This investment is also highly illiquid—in addition, finding someone willing to buy a business is difficult.
Mutual fund: This is the least risky of the three investment options. It is highly liquid compared to buying a franchise or real estate. Mutual fund investors can easily cash in their investments by selling the units they hold in a fund at the current market price.
Real estate: Real estate is a risky investment. First, property prices can fall in a depressed housing market. Second, real estate properties are illiquid. They can’t be sold quickly for a good price, especially in times of recession in the housing market or in the overall economy.
A mutual fund is the best of the three investment options for me, for the following reasons:
I can invest small amounts of money regularly and get higher returns on the investment than I would from a savings account. Also, this is a highly liquid investment. In case of a financial emergency, I can quickly sell my mutual fund units at their current market price.
Real estate is currently both a risky and illiquid investment, because of poor market conditions.
Buying a franchise is not a good option for me, because I don’t plan to go into business. In any case, I don’t have the money to make this investment.
Explanation: PLATO
Buying a franchise: For me, this is the riskiest investment, because the success of the business depends on the product or service it sells. If there is no demand for the product or service, the business will go under. This investment is also highly illiquid in addition to someone willing to buy a business is difficult. Mutual fund is the least risky of the three investment options. It is highly liquid compared to buying a franchise or real estate. Mutual fund investors can easily cash in their Investments by selling the units they hold in a fund at the current market price. Real estate: Real estate is a risky investment. First, property prices can fall in a depressed housing market. Second, real estate properties are illiquid. They can't be sold quickly for a good price, especially in times of recession in the housing market or in the overall economy. A mutual fund is the best of the three investment options for me, for the following reasons: I can invest small amounts of money regularly and get higher returns on the investment than I would from a savings account. Also, this is a highly liquid investment. In case of a financial emergency, I can quickly sell my mutual fund units at their current market price. Real estate is currently both a risky and liquid investment, because of poor market conditions. Buying a franchise is not a good option for me, because I don't plan to go into business. In any case, I don't have the money to make this investment.
Explanation:
plato and i change it up a little
Multiple Choice Question 72 Sheffield Corp. produces a product that requires 2.1 pounds of materials per unit. The allowance for waste and spoilage per unit is 0.2 pounds and 0.1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $0.1 per pound, and receiving and handling costs are $0.07 per pound. The hourly wage rate is $12 per hour, but a raise which will average $0.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is 0.2 hours and 0.1 hours, respectively. The standard direct materials quantity per unit is
Answer:
Standard quantity= 2.4 pounds
Explanation:
Giving the following information:
Sheffield Corp. produces a product that requires 2.1 pounds of materials per unit. The allowance for waste and spoilage per unit is 0.2 pounds and 0.1 pounds, respectively.
To calculate the standard quantity, we need to add the allowance for waste and spoilage.
Standard quantity= 2.1 + 0.2 + 0.1
Standard quantity= 2.4 pounds
Consider two ways to protect your car from theft. The Club is a conspicuous steering wheel lock that makes it difficult for a thief to take a car. Lojack is a secret tracking system that makes it easier for police to catch a thief who steals a car on which it is installed.
If a car thief encounters a car with the Club and a car without it, the car with the Club imposes a________externality on the car without the Club. A policy implication of this result is a______those who use the Club.
If a car thief encounters two cars without the Club, but the car thief fears a Lojack system might be installed in one of the cars, the car with the Lojack system imposes a_______externality on the other car. A policy implication of this result is a_______those who use the Lojack technology.
Answer and Explanation:
According to the given situation,
The car with the club enforces on the car without the club a negative externality if a robber experiences a car with the club and a car without them. A policy implication of that result is a tax on those who use the club.
If a car thief reaches two cars even without club, however the car thief is afraid to build a lojack system in one of cars, the car with the Lojakc system forces on the other car positive externality. A resulting policy consequence is a subsidy for those who use the Lojack system.
A company reported net income of $6 million. During the year the average number of common shares outstanding was 3 million. The price of a share of common stock at the end of the year was $5. There were 400,000 shares of preferred stock outstanding on average and no dividends were declared and the preferred stock is noncumulative. The Price/Earnings Ratio is approximately:
a. $0.40.b. $1.76.c. $1.86.d. $2.00.
Answer:
The correct answer is $2.5, but it is not included in the option.
Explanation:
Earning per share (EPS) = Net income / Average number of common shares outstanding = $6,000,000 / 3,000,000 = $2 per share
Common stock market price per share (MPS) = $5
Price/Earnings Ratio = MPS / EPS = $5 / $2 = $2.5
The correct answer is $2.5.
The Digital Electronic Quotation System (DEQS) Corporation pays no cash dividends currently and is not expected to for the next five years. Its latest EPS was $12.50, all of which was reinvested in the company. The firm’s expected ROE for the next five years is 21% per year, and during this time it is expected to continue to reinvest all of its earnings. Starting in year 6, the firm’s ROE on new investments is expected to fall to 16%, and the company is expected to start paying out 45% of its earnings in cash dividends, which it will continue to do forever after. DEQS’s market capitalization rate is 20% per year.A. What is your estimate of DEQS’s intrinsic value per share?B. Assuming its current market price is equal to its intrinsic value, what do you expect to happen to its price over the next year?C. What do you expect to happen to price in the following year?D. What is your estimate of DEQS’s intrinsic value per share if you expected DEQS to pay out only 25% of earnings starting in year 6?
Answer:
Kindly check attached picture
Explanation:
Kindly check attached picture for detailed explanation
Quantas Industries sold $300,000 of consumer electronics during January under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On June 20, a customer was given $183 cash under terms of the warranty. Journalize the entry to record (a) the estimated warranty expense on January 31 for January sales on page 10 of the journal and (b) the June 20 warranty work on page 14 of the journal. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
January 31.
Warranty Expense $18,000 (debit)
Warranty Provision $18,000 (credit)
June 20.
Warranty Provision $183 (debit)
Cash $183 (credit)
Explanation:
There is no option on the customer to take the warranty or not. There this type of Warranty is known as an Assurance Type Warranty.
Assurance type warranties are accounted in terms of the Provision Standards as follows ;
Entry when the warranty is granted
Warranty Expense $18,000 (debit)
Warranty Provision $18,000 (credit)
Being recognition of warranty cost and provision.
Warranty Expense $300,000 × 6% = $18,000
When the Warranty Claim is subsequently received.
Warranty Provision $183 (debit)
Cash $183 (credit)
Being utilization of Provision when the warranty claim is received.
RT Renovations is organized with two service departments (S1 and S2) and two production departments (P1 and P2). The company uses the step method to allocate service department costs, allocating from S1 to S2, P1, and P2 first. The cost accountant tells you that in November, $104,000 was allocated from S2 to P1 (including any cost allocated from S1 to S2). She also tells you that $54,000 was allocated from S1 to S2 in November.P1 used 25 percent of S2 services and P2 used 75 percent of S2 services in November. Finally, S2 used 40 percent of S1 services in November.Required:a. What are the total costs incurred by S1 in November? (Do not round intermediate calculations.)b. What are the total costs incurred by S2 (before any allocations) in November? (Do not round intermediate calculations.)
Answer:
a. $135,000
b. $362,000
Explanation:
a. The computation of the total costs incurred by S1 in November is shown below:
= costs assigned by S1 to S2 ÷ percentage of S1 services used by S2
= $54,000 ÷ 40%
= $135,000
b. The total cost incurred by S2 before any allocations is
= (costs assigned by S2 to P1 ÷ percentage of S2 services used by P1) - costs assigned from S1 to S2
= ($104,000 ÷ 25% - $54,000)
= $416,000 - $54,000
= $362,000
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.
The Blossom Hotel opened for business on May 1, 2022. Here is its trial balance before adjustment on May 31. BLOSSOM HOTEL Trial Balance May 31, 2022 Debit Credit Cash $ 2,513 Supplies 2,600 Prepaid Insurance 1,800 Land 15,013 Buildings 67,600 Equipment 16,800 Accounts Payable $ 4,713 Unearned Rent Revenue 3,300 Mortgage Payable 33,600 Common Stock 60,013 Rent Revenue 9,000 Salaries and Wages Expense 3,000 Utilities Expense 800 Advertising Expense 500 $110,626 $110,626 Other data: 1. Insurance expires at the rate of $450 per month. 2. A count of supplies shows $1,070 of unused supplies on May 31. 3. (a) Annual depreciation is $2,760 on the building. (b) Annual depreciation is $2,160 on equipment. 4. The mortgage interest rate is 5%. (The mortgage was taken out on May 1.) 5. Unearned rent of $2,620 has been earned. 6. Salaries of $720 are accrued and unpaid at May 31.
Answer:
BLOSSOM HOTEL
Trial Balance
May 31, 2022
Debit Credit
Cash $2,513
Supplies $2,600
Prepaid Insurance $1,800
Land $15,013
Buildings $67,600
Equipment $16,800
Accounts Payable $4,713
Unearned Rent Revenue $3,300
Mortgage Payable $33,600
Common Stock $60,013
Retained earnings $4,700
$106,326 $106,326
Rent Revenue $9,000
Salaries and Wages Expense $3,000
Utilities Expense $800
Advertising Expense $500
net income $4,700
adjusting entries:
Dr Insurance expense 450
Cr Prepaid insurance 450
Dr Supplies expense 1,530
Cr Supplies 1,530
Dr Depreciation expense 4,920
Cr Accumulated depreciation building 2,760
Cr Accumulated depreciation equipment 2,160
Dr Interest expense 140
Cr Interest payable 140
Dr Unearned revenue 2,620
Cr Rent revenue 2,620
Dr Wages expense 720
Cr Wages payable 720
BLOSSOM HOTEL
Income Statement
May 31, 2022
Rent Revenue $11,620
Salaries and Wages Expense $3,720
Utilities Expense $800
Supplies expense $1,530
Depreciation expense $4,920
Advertising Expense $500
Insurance expense $450
Interest expense $140
net loss -$440
BLOSSOM HOTEL
Balance Sheet
May 31, 2022
Debit Credit
Cash $2,513
Supplies $1,070
Prepaid Insurance $1,350
Land $15,013
Buildings $64,840
Equipment $14,640
Accounts Payable $4,713
Interest payable $140
Wages payable $720
Unearned Rent Revenue $680
Mortgage Payable $33,600
Common Stock $60,013
Retained earnings ($440)
$99,426 $99,426
Debit CreditCash $2,870 Accounts Receivable $3,231 Supplies 800 Equipment 3,800 Accounts Payable 2,666 Unearned Service Revenue 1,200 Common Stock 6,000 Retained Earnings 3,000 Service Revenue 2,380 Salaries and Wages Expense 3,400 Office Expense 940 Totals $13,371 $16,91Each of the listed accounts should have a normal balance per the general ledger. An examination of the ledger and journal reveals the following errors.1. Cash received from a customer on account was debited for $570, and Accounts Receivable was credited for the same amount. The actual collection was for $750.2. The purchase of a computer printer on account for $500 was recorded as a debit to Supplies for $500 and a credit to Accounts Payable for $500.3. Services were performed on account for a client for $890. Accounts Receivable was debited for $890 and Service Revenue was credited for $89.4. A payment of $65 for telephone charges was recorded as a debit to Office Expense for $65 and a debit to Cash for $65.5. When the Unearned Service Revenue account was reviewed, it was found that service revenue amounting to $325 was performed prior to June 30 (related to Unearned Service Revenue).6. A debit posting to Salaries and Wages Expense of $670 was omitted.7. A payment on account for $206 was credited to Cash for $206 and credited to Accounts Payable for $260.8. A dividend of $575 was debited to Salaries and Wages Expense for $575 and credited to Cash for $575.
Answer:
TRIAL BALANCE
Assets:
Cash $2,920
Accounts Receivable $3,051
Supplies $300
Equipment $4,300
Total assets 10,571
Liabilities + Stockholders' Equity
Accounts Payable $2,200
Unearned Service Revenue $875
Common Stock $6,000
Retained Earnings $1,496
Total liabilities + stockholders' equity 10,571
Explanation:
1.Cash received from a customer on account was debited for $570, and Accounts Receivable was credited for the same amount. The actual collection was for $750.
Dr Cash 180
Cr Accounts receivable 180
2. The purchase of a computer printer on account for $500 was recorded as a debit to Supplies for $500 and a credit to Accounts Payable for $500.
Dr Equipment 500
Cr Supplies 500
3. Services were performed on account for a client for $890. Accounts Receivable was debited for $890 and Service Revenue was credited for $89.
Dr Accounts receivable 0
Cr Service revenue 801
4. A payment of $65 for telephone charges was recorded as a debit to Office Expense for $65 and a debit to Cash for $65.
Dr Office expense 0
Cr Cash 130
5. When the Unearned Service Revenue account was reviewed, it was found that service revenue amounting to $325 was performed prior to June 30 (related to Unearned Service Revenue).
Dr Unearned service revenue 325
Cr Service revenue 325
6. A debit posting to Salaries and Wages Expense of $670 was omitted.
Dr Wages expense 670
Cr Cash 0
7. A payment on account for $206 was credited to Cash for $206 and credited to Accounts Payable for $260.
Dr Accounts payable 466
Cr Cash 0
8. A dividend of $575 was debited to Salaries and Wages Expense for $575 and credited to Cash for $575.
Dr Retained earnings 575
Cr Wages expense 575
Service Revenue 2,380 + 801 + 325 = 3,506
Salaries and Wages Expense 3,400 + 670 - 575 = 3,495
Office Expense 940
net loss -929
Cash $2,870 + 180 - 130 = 2,920
Accounts Receivable $3,231 - 180 = 3,051
Supplies 800 - 500 = 300
Equipment 3,800 + 500 = 4,300
Accounts Payable 2,666 - 466 = 2,200
Unearned Service Revenue 1,200 - 325 = 875
Common Stock 6,000
Retained Earnings 3,000 - 575 - 929 = 1,496
Problem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4
[The following information applies to the questions displayed below.]
Marcelino Co.'s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $510,000, and factory payroll cost in April is $365,000. Overhead costs incurred in April are: indirect materials, $53,000; indirect labor, $27,000; factory rent, $32,000; factory utilities, $20,000; and factory equipment depreciation, $53,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 Job 307 Job 308
Balances on March 31
Direct materials $ 25,000 $ 40,000
Direct labor 25,000 18,000
Applied overhead 12,500 9,000
Costs during April
Direct materials 131,000 205,000 $105,000
Direct labor 105,000 152,000 101,000
Applied overhead ? ? ?
Status on April 30
Finished (sold) Finished (unsold)
In process
Problem 15-1A Part 1
Required:
Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).
Answer:
Job No 306 351,000 Cost Of Goods Sold
Job No 307 500,000 Finished Goods Inventory
Job No 308 256,500 Work In Process Inventory
Explanation:
We add the March balance and the April balances for each of the jobs to get the desired results.
Marcelino Co
Job No 306
March
Direct Materials 25000
Direct Labor 25000
Applied Overhead 12500
Opening Work In Process 62500
April
Direct Materials 131000
Direct Labor 105000
Applied Overhead (50% of 105,000) 52,500
Total Costs Added In April 288500
Total Costs 351,000
Status on April 30 Finished & Sold
Included in Cost Of Goods Sold
Job No 307
March
Direct Materials 40000
Direct Labor 18000
Applied Overhead 9000
Opening Work In Process 67,000
April
Direct Materials 205000
Direct Labor 152000
Applied Overhead (50% of 152,000) 76,000
Total Costs Added In April 433,000
Total Costs 500,000
Status on April 30 Finished & Unsold
Included in Finished Goods Inventory
Job No 308
March
Direct Materials ------
Direct Labor --------
Applied Overhead -------
Opening Work In Process ------
April
Direct Materials 105000
Direct Labor 101000
Applied Overhead (50% of 101,000) 50,500
Total Costs Added In April 256,500
Total Costs 256,500
Status on April 30 In Process
Included in Work In Process Inventory
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
In September 2000 the Pullman Group arranged a bond issue for the estate of the late Marvin Gaye. The collateral on the bonds (and source of cash flow for interest and principal payments) consisted of future royalties from classic songs such as "What's Going On," and "I Heard It Though The Grapevine." The bond issue had a $1,000 face value and a coupon rate of 5%. If the bond matures in 26 years, pays semiannual coupons, and the yield to maturity is 6%, what will the bond sell for
Answer:
The bond will sell for the amount of $869.17
Explanation:
According to the given data coupon amount = 50/2 = 25
Therefore, in order to calculate the selling price of the bond we would have to make the following calculation:
selling price of the bond = 25 * PVIFA(3%,52) + 1,000 * PVIF(3%,52)
selling price of the bond= 25 * 26.1662 + 1,000 * 0.2150
selling price of the bond= $869.17
The bond will sell for the amount of $869.17
The bond will sell for $869.17, if the bond matures in 26 years, pays semiannual coupons, and the yield to maturity is 6%.
What is the present value of annuity factor?PVIFA is an abbreviation of the Present Value Interest Factor of Annuity. It is an idea based on the time value of money; the money you have now is worth more than the same amount of money a few years from now.
As per the given information:
[tex]\rm\,By \;the \; amount \;of \;coupon \;data \; provided \; = \dfrac{50}{2} = \$25[/tex]
Therefore, in order to calculate the selling price of a bond we will need to do the following calculations:
[tex]\rm\,Bond \; sale \;price = 25 \times PVIFA (3\%, 52) + 1,000 \times PVIF (3\%, 52)\\\\Bond sale price = 25 \times 26.1662 + 1,000 \times 0.2150\\\\ Bond sale price = \$869.17[/tex]
Hence, the bond will sell for $869.17
To learn more about present value of annuity factor, refer:
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Consider a low-wage labor market. Workers in this market are not presently covered by the minimum wage, but the government is considering implementing such legislation. If implemented, this law would require employers in the market to pay workers a $5 hourly wage. Suppose all workers in the market are equally productive, the current market clearing wage rate is $4 per hour, and that at this market clearing wage there are 600 employed workers. Further suppose that under the minimum wage legislation, only 500 workers would be employed and 300 workers would be unemployed. Finally, assume that the market demand and supply curves are linear and that the market reservation wage, the lowest wage at which any worker in the market would be willing to work, is $2. Compute the dollar value of the impact of the policy on employers, workers, and society as a whole.
Answer:
the total impact of minimum wage on employers, workers, and society as a whole is -$150
Explanation:
From the information given ;
As a result of the increase in the wage they must pay; employers will lose surplus that relates to the area of a trapezoid resulting from the reduction in the size of the surplus triangle according to the demand curve of labor; In short, since the trapezoid is a parallelogram ; it could be thought to be as a rectangle with sides equal to the wage increase of ( $5 - $4) = $1
Also; the new employment level is $500
The triangle with a height equal to the wage increase is $1 with a base equal to the reduction in the number of workers demanded (600 - 500 = 100)
Summing up all two areas together;we get:
= (1)(500) + (1) (100/2)
= 500 + 50
= $550
The worker who remain in the market each gain a surplus equal to the amount of $1 increase in the wage that they receive.
Therefore; the total increase in surplus = (1)(500) = $500
The 100 workers who lose their job will definitely lose surplus.
If these worker are evenly distributed along the market supply curve between the market reservation wage of $2 and market equilibrium wage of $4.
Their average loss of surplus can be computed as:
= 1/2($4 - $2)
=0.5($2)
= $1
Thus; the total loss of surplus is :
= $100× $1
= $100
Thus , the total impact of minimum wage on employers, workers, and society as a whole is :
= $550 -$ 100 - $550
= -$150
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
Using a LIFO perpetual cost flow, calculate the value of the ending inventory and the cost of goods sold for the month of November of Beamer Company using the data below.
Nov 1 Purchased 600 units $80 each
Nov 4 Sold 200 units
Nov 11 Purchased 350 units $82 each
Nov 12 Sold 275 units
Nov 22 Purchased 175 units $84 each
Nov 23 Sold 155 units
Calculate the following:
Inventory valuation at the end of November
Answer:
Ending inventory= $39,830
Explanation:
Giving the following information:
Company using the data below.
Nov 1 Purchased 600 units $80 each
Nov 4 Sold 200 units
Nov 11 Purchased 350 units $82 each
Nov 12 Sold 275 units
Nov 22 Purchased 175 units $84 each
Nov 23 Sold 155 units
Under the LIFO (last-in, first-out) method, the ending inventory cost is calculated using the cost of the firsts units incorporated. Using the perpetual method, the company identifies the cost with each specific unit.
Ending inventory in units= total units - units sold= 495 units
COGS:
Nov 4= 200*80= 16,000
Nov 12= 275*82= 22,550
Nov 23= 155*84= 13,020
Ending inventory= 400*80 + 75*82 + 20*84= $39,830
QS 11-6 Recording employer payroll taxes LO P3 Merger Co. has 10 employees, each of whom earns $1,550 per month and has been employed since January 1. FICA Social Security taxes are 6.2% of the first $128,400 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Prepare the March 31 journal entry to record the March payroll taxes expenses. (Round your answers to 2 decimal places.)
Answer:
March 31, 202x, payroll tax expenses
Dr FICA tax (OASDI) expense 961
Dr FICA tax (Medicare) expense 224.75
Dr FUTA tax expense 93
Dr SUTA tax expense 837
Cr FICA tax (OASDI) payable 961
Cr FICA tax (Medicare) payable 224.75
Cr FUTA tax payable 93
Cr SUTA tax payable 837
Explanation:
Since we are calculating only payroll taxes, the wages expense is not included in this journal entry.
total payroll for the 10 employees = 10 x $1,550 = $15,500
each employee has accumulated earnings of $1,550 x 3 = $4,650
A food truck operator originally produced hamburgers and hotdogs. To serve the tastes of their various customers, the hot dog vendor decides to start producing turkey dogs and ham sandwiches as well. Since the new products were introduced, average costs rose dramatically. The vendor is experiencing:__________.
a. Economies of scope
b. Diseconomies of scope
c. Economies of scale
d. Diseconomies of scale
Answer:
The correct answer is (b) Dis-economies of scope
Explanation:
Solution
Dis-economics of scope : This refers to a situation when the average cost of production is greater from the shared production of services than the average costs from the preceding independent production of the services.
The vendor here in this case is experiencing Dis-economics of scope.
Two design alternatives A and B have the following cash flows. Each alternative has 30-year life at a 5% interest rate. Alternative A Alternative B Initial Cost $700,000 $950,000 Annual Benefits $80,000 $120,000 Annual Operating Cost $20,000 $30,000 Using incremental B/C ratio to select the best alternative. Which of the following statements is TRUE?
A. Incremental B/C ratio is 1.52 and Alternative A should be selected.
B. Incremental B/C ratio is 1.52 and Alternative B should be selected.
C. Incremental B/C ratio is 0.66 and Alternative B should be selected.
D. Incremental B/C ratio is 0.66 and Alternative A should be selected.
Answer:
Incremental B/C ratio is 1.46 and Alternative B should be selected.
Explanation:
Alternative A
Annual net benefit = Annual Benefit - Annual Operating Cost
=80,000 - 20,000
=$60,000
Present Value of all future cash flow = Annual net benefit * PV factor {PVIFA = (1 - (1 + r)^-n) / r}
=60,000 * PVIFA (5%, 30years)
=60,000 * 15.372
=$922,320
Incremental B/C= Present Value of all future cash flow / Initial Cost / Initial Cost
=922,320 / 700,000
=1.3176
Alternative B
Annual net benefit = Annual Benefit - Annual Operating Cost
=120,000 - 30,000
=$90,000
Present Value of all future cash flow = Annual net benefit * PV factor {PVIFA = (1 - (1 + r)^-n) / r}
=90,000 * PVIFA (5%, 30years)
=90,000 * 15.372
=$1,383,480
Incremental B/C= Present Value of all future cash flow / Initial Cost / Initial Cost
=1,383,480 / 950,000
=1.4562
Conclusion: Because Alternative B has higher ratio than the Alternative A, it should be chosen.
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15 per ball, of which 60% is direct labor cost. Last year, the company sold 30,000 of these balls, with the following results:
Sales (30,000 balls) $750,000
Variable expenses 450,000
Contribution margin 300,000
Fixed expenses 210,000
Net operating income 90,000
Required:
1A. Compute the CM ratio and the break-even point in balls.
1B. Compute the the degree of operating leverage at last year.
2. Due to an increase in labor rates, the company estimates that variable expenses will increase by $3 per ball next year. If this change takes place and the selling price per ball remains con- stant at $25, what will be the new CM ratio and break-even point in balls?
3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $90,000, as 5. last year? The president feels that the company must raise the sell- ing price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year, what selling price per ball must it charge next year to cover the increased labor costs?
4. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls?
Refer to the data in (5) above.
A. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $90,000, as last year?
B. Assume the new plant is built and that next year the company manufactures and sells 30,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage.
C. If you were a member of top management, would you have been in favor of constructing the new plant? Explain.
Answer:
1A. Compute the CM ratio and the break-even point in balls.
CM ratio = 2.5break even point = 21,000 balls1B. Compute the degree of operating leverage at last year.
31.82%2. Due to an increase in labor rates, the company estimates that variable expenses will increase by $3 per ball next year. If this change takes place and the selling price per ball remains constant at $25, what will be the new CM ratio and break-even point in balls?
CM ratio = 3.57break even point = 30,000 balls3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $90,000, as 5. last year? The president feels that the company must raise the sell- ing price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year, what selling price per ball must it charge next year to cover the increased labor costs?
42,858 ballsnew price of $28 per ball4. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls?
CM = 1.3226,250 ballsA. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $90,000, as last year?
31,875 balls
B. Assume the new plant is built and that next year the company manufactures and sells 30,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage.
Income Statement
Total revenue $750,000
Variable expenses $270,000
Contribution margin $480,000
Fixed expenses $420,000
Net operating income $60,000
Degree of operating leverage = 60.87%
C. If you were a member of top management, would you have been in favor of constructing the new plant?
If you cannot avoid paying the salary raise, then the company needs to carry on the new plant project.
Explanation:
sales price per ball = $25
variable expenses: $15 per unit
direct labor $9other variable costs $6CM ratio = net sales / CM = $750,000 / $300,000 = 2.5
break even point = total fixed costs / CM per unit = $210,000 / $10 = 21,000 balls
degree of operating leverage = fixed costs / total costs = $210,000 / $660,000 = 31.82%
new CM ratio = net sales / CM = $750,000 / $210,000 = 3.57
break even point = total fixed costs / CM per unit = $210,000 / $7 = 30,000 balls
sales level for $90,000 profit = ($210,000 + $90,000) / $7 = 42,857.14 ≈ 42,858 balls
CM ratio (new plant) = net sales / CM = $750,000 / $570,000 = 1.32
break even point = total fixed costs / CM per unit = $420,000 / $16 = 26,250 balls
sales level for $90,000 profit = ($420,000 + $90,000) / $16 = 31,875 balls
For the next nine questions, use the data in the following tables for an economy that produces only two things, bread and computers. Assume that all production is consumed in each year:
Year 1
Good Quantity Price
Bread 30 $10
Computers 10 $50
Year 2
Good Quantity Price
Bread 40 $15
Computers 15 $60
1. Using the chain weighted method, and selecting year 1 as a base, what is real GDP in year 2?
2. Using the chain weighted method, and selecting year 2 as a base, what is real GDP in year 2?
Answer:
1. Using the chain weighted method, and selecting year 1 as a base, what is real GDP in year 2?
$1,1502. Using the chain weighted method, and selecting year 2 as a base, what is real GDP in year 2?
$1,500Explanation:
When you use the chain weighted method, you must multiply the base year's price times the current quantities to determine real GDP.
Year 1 Year 2
Quantity Price Quantity Price
Bread 30 $10 40 $15
Computers 10 $50 15 $60
real GDP in year 2 using year 1 as base = (15 x $50) + (40 x $10) = $750 + $400 = $1,150
real GDP in year 2 using year 2 as base = (15 x $60) + (40 x $15) = $900 + $600 = $1,500
In the Stackelberg model, the leader has a firstminusmover advantage because it A. has lower costs than the follower. B. reacts to the follower's decision. C. differentiates its output. D. chooses its output to manipulate the follower to produce the output that most benefits the leader.
Answer:
D. chooses its output to manipulate the follower to produce the output that most benefits the leader.
Explanation:
Strackelberg model is one where a market leader makes the first move and then the other followers firms follow sequentially.
For this model to be successful, the followers need to observe the leader and follow their lead in a production process or venture.
The market leader usually has an advantage that enables it make the first move.
For example a firm that has a monopoly in a market leads while new entrants follow.
In this model the market leader chooses an output and manipulates the followers to produce the same output, and this benefits the leader
Juhasz Corporation makes a product with the following standards for direct labor and variable overhead: Standard Quantity or HoursStandard Price or Rate Direct labor 0.40hours$29.00per hour Variable overhead 0.40hours$4.90per hour In August the company produced 8,800 units using 3,700 direct labor-hours. The actual variable overhead cost was $17,020. The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for August is:
Answer: -882
Explanation:
A variable overhead efficiency variance is simply defined as the actual labor hours less the budgeted labor hours which is then multiplied by the hourly rate for the standard variable overhead. It should be note that the standard variable overhead consist of the indirect labor costs like the security and the shop foreman.
Bases on the explanation above, the variable overhead efficiency will be:
= [(8800 × 0.40) - 3700] × 4.90
= -882
This is an unfavorable variance which means that the number of actual hours worked is more than the budgeted hours.
On October 31, Legacy Rocks Inc., a marble contractor, issued for cash 400,000 shares of $10 par common stock at $18, and on November 19, it issued for cash 50,000 shares of preferred stock, $75 par at $80. a. Journalize the entries for October 31 and November 19. For a compound transaction, if an amount box does not require an entry, leave it blank.
Answer and Explanation:
The journal entries are shown below:
On Oct 31
Cash (400,000 × $18) $7,200,000
To Common stock (400,000 × $10) $4,000,000
To Paid in capital in excess of par value - common stock $3,200,000
(Being the issuance of the common stock is recorded)
For recording this we debited the cash as it increased the assets and credited the common stock and paid in capital as it also increased the stockholder equity
On Nov 19
Cash (50,000 × $80) $4,000,000
To Preferred stock (50,000 × $75) $3,750,000
To Paid in capital in excess of par value - Preferred stock $250,000
(Being the issuance of the preferred stock is recorded)
For recording this we debited the cash as it increased the assets and credited the common stock and paid in capital as it also increased the stockholder equity
Ethan Manufacturing Inc. produces floor mats for automobiles. The owner, Joseph Ethan, has asked you to assist in estimating maintenance costs. Together, you and Joseph determine that the single best cost driver for maintenance costs is machine hours. These data are from the previous fiscal year for maintenance costs and machine hours: Month Maintenance Costs Machine Hours 1 $ 2,750 1,840 2 2,910 1,920 3 3,060 2,000 4 3,170 2,020 5 3,250 2,050 6 3,220 2,030 7 3,160 2,010 8 3,000 1,990 9 2,770 1,850 10 2,370 1,250 11 2,380 1,450 12 2,600 1,740 Required: 1. What is the cost equation for maintenance costs using the high-low method? 2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1.
Answer:
Month Maintenance Machine Equation MAPE
costs hours error (Abs.)
1 $2,750 1,840 $269 9.78%
2 $2,910 1,920 $197 6.77%
3 $3,060 2,000 $135 4.41%
4 $3,170 2,020 $47 1.48%
5 $3,250 2,050 0 0%
6 $3,220 2,030 $8 0.25%
7 $3,160 2,010 $46 1.46%
8 $3,000 1,990 $184 6.13%
9 $2,770 1,850 $260 9.39%
10 $2,370 1,250 0 0%
11 $2,380 1,450 $210 8.82%
12 $2,600 1,740 $309 11.88%
60.37%
variable cost per unit = (highest activity cost - lowest activity cost) / (highest activity units - lowest activity units) = ($3,250 - $2,370) / (2,050 - 1,250) = $880 / 800 units = $1.10 per unit
fixed cost = $3,250 – ($1.10 x 2,050) = $995
Cost model = $995 + $1.10X
2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1.
MAPE = 60.37% / 12 = 5.03%
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
A team has prepared and estimate for what it can get accomplished in a Sprint. The Product Owner has wanted more to get accomplished in the upcoming Sprint and wants the Team to take on an additional user story. What should the ScrumMaster do in response to this conflict?
Answer: ScrumMaster should ask the Product Owner which other User Story they would like to give up in exchange for the one they want to add for this upcoming Sprint.
Explanation:
The options to the question are:
a. ScrumMaster should replan the Product Backlog and propose better user stories to address in the Sprint.
b. ScrumMaster should ask the Product Owner which other User Story they would like to give up in exchange for the one they want to add for this upcoming Sprint.
c. Stay out of the way as this is not the ScrumMaster's job to resolve.
d. ScrumMaster should ask the team to take the story on and work overtime.
From the question, we are informed that a team has prepared an estimate for what it can get accomplished in a Sprint and that the Product Owner has wanted more to get accomplished in the upcoming Sprint and therefore wants the team to take on an additional user story.
The best way to tackle this conflict is for the ScrumMaster should ask the Product Owner which other User Story they would like to give up in exchange for the one they want to add for this upcoming Sprint. Since an estimate has already been prepared, taking an additional user story will bring about an overestimation. Therefore, to being the right track, the thing to do is to actually give up a user story for the new one to be added.
Describe at least three exchange rate factors that are likely to attract foreign investors to a country's currency. Explain why these factors are attractive to foreign investors.
Answer: 1. High Interest
2. Low Government Debt
3. Political Stability
Explanation:
Foreign Investors are Investors and investors always like to invest where there are prospects of growth and profit.
High Interest Rates give them the opportunity to invest their money in a currency that will give them a great return because a country where there are high interest rates imparts this on its currency which causes it to rise in value thereby giving currency holders a capital gain.
Another factor is Government Debt. A country with high Government debt will typically be unable to raise funds through the bond market easily. This shortage of funds can lead to inflation which devalues currency causing foreign currency investors to flee.
Finally there is the Political Factor (other factors exist). A stable country politically stands a better chance of maintaining a higher value currency that one with lower political stability. This is because political Stability attracts investors and as more investments come into a country, this reflects in its currency by making it stronger which will attract foreign currency investors.