Answer:
See below
Explanation:
Variable food and packaging = $6,129.7
Variable payroll = $4,756.0
Variable general, selling and administrative expenses = 40% × $2,487.9 = $995.16
Fixed general, selling and administrative expenses = 60% × $2,487.9 = $1,492.74
Fixed occupancy = $4,402.6
Total fixed cost = $1,492.84 + $4,402.6 = $5,895.34
Total variable cost = Variable food and packaging + Variable payroll + Variable general, selling and administrative expenses
= $6,129.7 + $4,756 + $995.16
= $11,880.86
a. McDonald's contribution margin
= Sales - Variable cost
= $18,169.3 - $11,880.86
= $6,288.44
b. McDonald's contribution margin
= Contribution margin / Sales
= $6,288.44 / $18,169.3
= 34.61%
c. Increase in operating income
= $500 million × 34.71
= $173,050,000
The auto repair shop of Quality Motor Company uses standards to control the labor time and labor cost in the shop.The standard labor cost for a motor tune-up is given below:
Standard Hours Standard Rate Standard Cost
Motor tune-up 2.50 $35.00 $87.50
The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls that 60 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups:
Labor rate variance $ 50 F
Labor spending variance $ 55 U
Required:
1. Determine the number of actual labor-hours spent on tune-ups during the week.
2. Determine the actual hourly rate of pay for tune-ups last week.
Answer:
Actual Quantity= 151.57
Actual Rate= $3.17
Explanation:
Giving the following information:
Standard Hours 2.50
Standard Rate $35.00
Standard Cost $87.50
Number of tune-ups= 60
Labor rate variance $ 50 F
Labor spending variance $ 55 U
First, we need to calculate the actual number of hours. We need to use the direct labor efficiency variance:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
-55 = (60*2.5 - Actual Quantity)*35
-55 = 5,250 - 35Actual Quantity
35Actual Quantity = 5,305
Actual Quantity= 151.57
Now, the actual hourly rate. We need to use the direct labor rate variance formula:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
50 = (3.5 - Actual Rate)*151.57
50= 530.5 - 151.57Actual Rate
151.57Actual Rate= 480.5
Actual Rate= $3.17
The expected return on a portfolio: Group of answer choices can be greater than the expected return on the best performing security in the portfolio. can be less than the expected return on the worst performing security in the portfolio. is independent of the performance of the overall economy. is limited by the returns on the individual securities within the portfolio. is an arithmetic average of the returns of the individual securities when the weights of those securities are unequal.
Answer:
is limited by the returns on the individual securities within the portfolio
Explanation:
Portfolio is simply defined as a list of securities showing how much is (or will be) invested in each of them.
The expected return on a portfolio is calculated as the weighted average of the expected returns on the securities that the portfolio involves. The weight of each security is the a Portion or a fraction of wealth invested in that security. Expected return on a portfolio of N securities is: rp= sum (Xr).
Expected Return is usually based on anticipated income and anticipated capital appreciation.
Here is the income statement for Teal Mountain Inc.
TEAL MOUNTAIN INC.
Income Statement
For the Year Ended December 31, 2017
Sales revenue $402,900
Cost of goods sold 256,700
Gross profit 146,200
Expenses (including $ 10,200 interest and $29,600 income taxes) 89,200
Net income $57,000
Additional information:
1. Common stock outstanding January 1, 2017, was 30,000 shares, and 39,000 shares were outstanding at December 31, 2017.
2. The market price of Teal Mountain stock was $15 in 2017.
3. Cash dividends of $24,700 were paid, $ 6,500 of which were to preferred stockholders.
Compute the following measures for 2017.
(a) Earnings per share $_____
(b) Price-earnings ratio _____ times
(c) Payout ratio _____ %
(d) Times interest earned _____ times
Answer:
See below
Explanation:
a. The earnings per share would be calculated as;
Earnings per share = (Net income - Preferred stock dividend) / Average number of common shares outstanding
But
Weighted average number of common shares = (Number of common shares outstanding in the beginning + Number of common shares outstanding at then end) / 2
= (30,000 + 39,000) / 2
= 34,500
Preferred stock dividend = 6,500
Therefore,
Earnings per share = ($57,000 - $6,500) / 34,500
= $50,500 / 34,500
= $1.46
b. Price earnings ratio
= Market price per share / Earning per share
= $15 / $1.46
= 10.27 times
c. The payout ratio
= (Total cash dividends - Preferred stock dividends) / Net income
= ($24,700 - $6,500) / $57,000
= $18,200 / $57,00)
= 31.93%
d. Times interest
= ( Net income + Interest expense + Tax expense) / Interest expense.
= $57,000 + $10,200 + $29,600) / $10,200
= $96,800 / $10,200
= 9.49 times
8. Zelda owns a 50% general interest in YZ Partnership. At the beginning of the current year, the adjusted basis in her partnership interest was $95,000. In the current year, YZ generated a $110,000 business loss, earned $15,000 dividend and interest income on its investments and recognized a $7,000 capital gain. YZ also made a $5,000 distribution to Zelda. Compute Zelda’s adjusted basis in the partnership at the end of the year.
Answer:
$52,500
Explanation:
Computation for Zelda’s adjusted basis in the partnership at the end of the year.
Zelda’s adjusted basis=$95,000-(50%*$110,000)+(50%*$15,000)+$5,000
Zelda’s adjusted basis=$95,000-$55,000+$7,500+$5,000
Zelda’s adjusted basis= $52,500
Based on the information given we assumed 50% because Zelda is a 50% partner.
Therefore Zelda’s adjusted basis in the partnership at the end of the year will be $52,500
The owners of Whitewater rafting are currently contemplating a manufacturing process (Old Process) that will require an investment of $4,000 and a variable cost of $6 per raft vs. a larger (New Process) initial investment of $20,000 with more automated equipment that would reduce their variable cost of manufacture to $2 per raft. Compare the two manufacturing processes proposed here. For what volume demand should each process be chosen?
A. From 0 to 1000 choose Old Process, From 1000 to infinity choose New Process
B. From 0 to 4000 choose New Process, From 4000 to infinity choose Old Process
C. From 0 to 4000 choose Old Process, From 4000 to infinity choose New Process
D. Always use the Old Process and never use the New Process
E Always use the New Process and never use the Old Process
Answer:
C. From 0 to 4000 choose Old Process, From 4000 to infinity choose New Process
Explanation:
Let the number of raft be denoted by Y
We are told that old process requires an investment of $4,000 and a variable cost of $6 per raft
Thus, old process cost is;
C_old = 4000 + 6Y
We are told that the new process has an investment of $20,000 and that the variable cost is $2 per raft..
Thus, new process cost is;
C_new = 20000 + 2Y
To find the volume demand by which each process will be chosen, we will equate both old and new costs to get;
4000 + 6Y = 20000 + 2Y
Rearranging, we have;
6Y - 2Y = 20000 - 4000
4Y = 16000
Y = 16000/4
Y = 4000
Thus, old process should be applied from 0 to 4000 and new process should be applied from 4000 to infinity.
Thus, option C is correct.
Zeus, Inc. produces a product that has a variable cost of $9.50 per unit. The company's fixed costs are $40,000. The product sells for $12.00 a unit and the company desires to earn a $20,000 profit. What is the volume of sales in units required to achieve the target profit? (Do not round intermediate calculations.)
Answer:
Break-even point in units= 26,087
Explanation:
Giving the following information:
Selling price= $12
Unitary variable cost= 9.7
Fixed costs= $40,000
Desired profit= $20,000
To calculate the number of units to be sold, we need to use the following formula:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (40,000 + 20,000) / (12 - 9.7)
Break-even point in units= 26,087
Bob is the owner of Apartments Complex. Betty is his manager. Bob informs all tenants in writing as part of their lease that rent may ONLY be paid to Bob and not to Betty. However, over the years, tenants pay Betty directly who gives the rent to Bob. Bob never objects. What types of agency authority does Betty have
Answer: perceived relationship
Explanation:
An agent is referred to as someone who is given authority by the principal and acts in his or her behalf and the agent is also under the control of such person.
From the question, the principal is Bob while Betty is his agent. The relationship that exist in thus case is the perceived relationship which means that the third party that us, the tenants in thus case believe that an agent is authorised by the principal to do a particular work such as collection of rent in this case but in reality thus doesn't exist. They ate not meant to pay to the manager in this case but they acted based on their perception and since the principal didn't complain, they continued doing it.
Information from the records of the Abel Corporation for July 2018 was as follows:
Sales $1,230,000
Selling and administrative expenses 210,000
Direct materials used 264,000
Direct labor 300,000
Factory overhead * 405,000
*variable overhead is $205,000, fixed overhead is $200,000
Inventories
July 1, 2018 July 31, 2018
Direct materials $36,000 $42,000
Work in process 75,000 84,000
Finished goods 69,000 57,000
The total product cost is:_______.
a. $969,000
b. $1,179,000
c. $764,000
d. $615,000
Answer:
a. $969,000
Explanation:
Calculation for what The total product cost is
TOTAL PRODUCT COST
Direct Material Used $264,000
Direct Labor $300,000
Factory Overhead $405,000
Total Product Cost $ 969,000
($264,000+$300,000+$405,000)
Therefore The total product cost is $ 969,000
You want to have $3 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is 10 percent and the inflation rate is 4.8 percent. What real amount must you deposit each year to achieve your goal
Answer:
Annual deposit= $23,647.9
Explanation:
Giving the following information:
Future value (FV)= 3,000,000
Numer of periods (n)= 40 years
Nominal rate= 10%
Inflation rate= 4.8%
To simplify calculations, we will calculate the real interest rate by deducting from the nominal interest rate the inflation rate:
Real interest rate= 0.1 - 0.048
Real interest rate= 0.052
Now, to calculate the annual deposit, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (3,000,000*0.052) / [(1.052^40) - 1]
A= $23,647.9
Jack and Jill are the only two residents in a neighbourhood, and they would like to hire a security guard. The value of a security guard is $50 per month to Jack and $90 per month to Jill. Irrespective of who pays the guard, the guard will protect the entire neighbourhood and charge $120 per month for the service. Suppose Jack earns $4,000 per month and Jill earns $8,000 per month.
a. With a proportional tax of 1 percent on income, how much would Jack and Jill pay, and would it be enough to pay for the security guard?
Jack would pay $ _____.
Jill would pay $ _____.
This tax _____ be enough to pay for the security guard.
b. Suppose instead that Jack proposes a payment scheme under which Jack and Jill would each receive the same net benefit from hiring the guard. How much would Jack and Jill pay now?
Jack would pay $ _____.
Jill would pay $ _____.
Would both Jack and Jill vote for this scheme? _____
Answer:
Jack and Jill
a. With a proportional tax of 1 percent on income, it would be enough to pay for the security guard $120.
Jack would pay $ __40___.
Jill would pay $ __80___.
This tax _will____ be enough to pay for the security guard.
b. Based on net benefit from the guard:
Jack would pay $ __43___.
Jill would pay $ _ 77____.
Would both Jack and Jill vote for this scheme? __No___ Jack will feel cheated by Jill in the sum of $3. Jack will likely prefer the 1% based on income.
Explanation:
a) Data and Calculations:
Value of a security guard for Jack = $50 per month
Value of a security guard for Jill = $90 per month
Total value of a security guard for both Jack and Jill = $140 ($50 + $90)
Cost of hiring a guard = $120 per month
Jack's monthly earnings = $4,000
Jill's monthly earnings = $8,000
Total monthly earnings for both Jack and Jill = $12,000
a. Proportional tax of 1 percent on income = $120 ($12,000 * 1%)
Jack will pay $4,000 * 1% = $40
Jill will pay $8,000 * 1% = $80
Total = $120
b. Net benefit scheme:
Jack will pay $50/$140 * $120 = $43
Jill will pay $90/$140 * $120 = $77
Total = $120
Wesson Company uses the allowance method to record its expected credit losses. It estimates its losses at one percent of credit sales, which were $750,000 during the year. The Accounts Receivable balance was $220,000 and the Allowance for Doubtful Accounts has a credit balance of $1,000 at year-end. What amount is the debit to the Bad Debts Expense
Answer: $7,500
Explanation:
The Bad Debt expense is the amount that might not be paid by the account receivables of a company.
It is calculated by the formula:
= Credit sales * Estimated losses
= 750,000 * 1%
= $7,500
6.
Jane's Juice Bar has the following cost schedules:
Quantity
Variable Cost
Total Cost
O vats of juice
1
2.
3
4
5
$ 0
10
25
45
70
100
135
$ 30
40
55
75
100
130
165
6
a. Calculate average variable cost, average total
cost, and marginal cost for each quantity.
b. Graph all three curves. What is the
relationship between the marginal-cost
curve and the average-total-cost curve?
Between the marginal-cost curve and the
average-variable-cost curve? Explain.
Answer:
This may help you to solve it
Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $108 Units in beginning inventory 0 Units produced 8,900 Units sold 8,500 Units in ending inventory 400 Variable costs per unit: Direct materials $ 17 Direct labor $ 59 Variable manufacturing overhead $ 5 Variable selling and administrative expense $ 9 Fixed costs: Fixed manufacturing overhead $133,500 Fixed selling and administrative expense $ 8,700 What is the net operating income for the month under absorption costing
Answer:
Net operating profit= 441,800
Explanation:
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
First, we need to calculate the unitary production cost:
Unitary production cost= 17 + 9 + 5 + (133,500/8,900)
unitary production cost= $46
Now, the income statement:
Sales= 8,500*108= 918,000
COGS= (391,000)
Gross profit= 527,000
Total selling and administrative expense= (8,700 + 9*8,500)= (85,200)
Net operating profit= 441,800
Sage Company began operations at the beginning of 2021. The following information pertains to this company.
1. Pretax financial income for 2021 is $87,000.
2. The tax rate enacted for 2021 and future years is 20%.
3. Differences between the 2021 income statement and tax return are listed below:
a. Warranty expense accrued for financial reporting purposes amounts to $6,600. Warranty deductions per the tax return amount to $1,900.
b. Gross profit on construction contracts using the percentage-of-completion method per books amounts to $84,500. Gross profit on construction contracts for tax purposes amounts to $66,300.
c. Depreciation of property, plant, and equipment for financial reporting purposes amounts to $57,900. Depreciation of these assets amounts to $84,300 for the tax return.
d. A $3,200 fine paid for violation of pollution laws was deducted in computing pretax financial income.
e. Interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500.
4. Taxable income is expected for the next few years. (Assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.)
Required:
a. Compute taxable income for 2021.
b. Compute the deferred taxes at December 31, 2021, that relate to the temporary differences described above.
c. Prepare the journal entry to record income tax expense
Answer:
Answer is explained in the explanation section below.
Explanation:
Solution:
a. Taxable income for 2021.
Sage Company:
Computation of Taxable income and income tax for 2021
Pretax financial Income = $87000
Permanent differences:
Fine for Pollution = $3200
Interest revenue on municipal bonds = -$1500
Temporary differences:
Less: Excess of depreciation as per tax over books = -$26400
Add: Warranty expense in books higher than as per tax = $4700
Less: Gross profit as per books higher than as per tax on construction contracts = -$18200
Taxable Income = $48800
Income Tax (20%) = $9760
b. Deferred Taxes:
Deferred tax assets = $4700*20% = $940
Deferred tax liability = ($26,400 + $18,200) * 20% = $8920
c. Note: Journal Entries are attached in the attachment below.
Lionel is an unmarried law student at State University Law School, a qualified educational institution. This year Lionel borrowed $30,000 from County Bank and paid interest of $1,800. Lionel used the loan proceeds to pay his law school tuition. Calculate the amounts Lionel can deduct for higher education expenses and interest on higher-education loans under the following circumstances:
Answer:
Deductible interest expense of $1440 and deductible education expense of $4000.
Explanation:
There are certain tax laws which allows a tax payer to deduct his expenses from the taxable amount. The tax payer can deduct interest expense from the taxable amount since it is a tax shield. Lionel can deduct an interest expense of $1440 from the taxable amount and he can deduct $4000 for his education from the taxable amount.
The Sandeep Company's April 30 pre-reconciliation cash balance on its books was $35,000. While preparing the April 30 bank reconciliation, Sandeep determined that outstanding checks total $11,000, deposits in transit total $7,000, and bank service charges are $50. Assuming there are no other reconciling items, what was Sandeep's April 30 cash balance per the bank statement
Answer: $38,950
Explanation:
The bank balance and the book cash balance might often be different for different reasons, one of which is due to the transactions recorded in the books not having been processed by the banks amongst others.
The books and bank balance will therefore need to be reconciled.
Balance per bank statement = Cash balance in books + Outstanding checks - Deposits in transit - Bank charges
= 35,000 + 11,000 - 7,000 - 50
= $38,950
Swifty Corporation had a 1/1/20 balance in the Allowance for Doubtful Accounts of $35500. During 2020, it wrote off $23000 of accounts and collected $8000 on accounts previously written off. The balance in Accounts Receivable was $780000 at 1/1 and $960000 at 12/31. At 12/31/20, Swifty estimates that 5% of accounts receivable will prove to be uncollectible. What should Swifty report as its Allowance for Doubtful Accounts at 12/31/20
Answer:
$48,000
Explanation:
What should Swifty report as its Allowance for Doubtful Accounts at 12/31/20?
Allowance for Doubtful Accounts 12/31/20 = Accounts receivable at 12/31 * Uncollectible percentage of Accounts receivable
Allowance for Doubtful Accounts 12/31/20 = $960,000 * 5%
Allowance for Doubtful Accounts 12/31/20 = $48,000
Illumination Corporation operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year: Budgeted costs of operating the plant for 2000 to 3000 hours: Fixed operating costs per year $480,000 Variable operating costs $800 per hour Budgeted long-run usage per year: Flashlight Division 1500 hours Night Light Division 700 hours Practical capacity 3000 hours Assume that practical capacity is used to calculate the allocation rates. Actual usage for the year by the Flashlight Division was 1400 hours and by the Night Light Division was 600 hours. If a single-rate cost-allocation method is used, what amount of operating costs will be allocated to the Night Light Division
Answer:
Allocated operating costs= $576,000
Explanation:
First, we need to calculate the predetermined operating costs allocation rate:
Predetermined operating costs allocation rate= total estimated operating costs for the period/ total amount of allocation base
Predetermined operating costs allocation rate= (480,000 / 3,000) + 800
Predetermined operating costs allocation rate= $960 per hour
Now, we can allocate overhead to Night Light Division:
Allocated operating costs= Predetermined operating costs allocation rate* Actual amount of allocation base
Allocated operating costs= 960*600
Allocated operating costs= $576,000
Apple Inc. just paid a dividend of $3 per share. You expect that Apple's dividend will increase at the rate of 10% per year for the next 10 years. After that, you expect that Apple Inc. will increase its dividend at the rate of 3% per year forever. The required rate of return for Apple is 20%. What is the price of Apple just after the current dividend was paid?
Answer:
The price of Apple just after the current dividend was paid is $26.79.
Explanation:
Note: See the attached file for the calculation of present values for year 1 to 10 dividends.
From the attached excel file, we have:
Previous year dividend in year 1 = Dividend just paid = $3
Total of dividends from year 1 to year 10 = $19.17617169980840
Year 10 dividend = $7.781227380
Therefore, we have:
Year 11 dividend = Year 10 dividend * (100% + Perpetual dividend growth rate) = $7.781227380 * (100% + 3%) = $8.0146642014
Price at year 10 = Year 11 dividend / (Rate of return - Perpetual dividend growth rate) = $8.0146642014 / (20% - 3%) = $47.1450835376471
PV of price at year 10 = Price at year 10 / (100% + Required return)^Number of years = $47.1450835376471 / (100% + 20%)^10 = $7.61419419713817
Price of Apple = Total of dividends from year 1 to year 8 + PV of price at year 10 = $19.17617169980840 + $7.61419419713817 = $26.79
Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses.
FORTEN COMPANY
Comparative Balance Sheets
December 31
Current Year Prior Year
Assets
Cash $ 66,400 $ 84,500
Accounts receivable 82,380 61,625
Inventory 292,156 262,800
Prepaid expenses 1,320 2,115
Total current assets 442,256 411,040
Equipment 146,500 119,000
Accum. depreciation—Equipment (42,125) (51,500)
Total assets $ 546,631 $ 478,540
Liabilities and Equity
Accounts payable $ 64,141 $ 131,175
Short-term notes payable 13,300 8,200
Total current liabilities 77,441 139,375
Long-term notes payable 59,500 59,750
Total liabilities 136,941 199,125
Equity
Common stock, $5 par value 179,250 161,250
Paid-in capital in excess of par, common stock 54,000 0
Retained earnings 176,440 118,165
Total liabilities and equity $ 546,631 $ 478,540
FORTEN COMPANY
Income Statement
For Current Year Ended December 31
Sales $ 637,500
Cost of goods sold 296,000
Gross profit 341,500
Operating expenses
Depreciation expense $ 31,750
Other expenses 143,400 175,150
Other gains (losses)
Loss on sale of equipment (16,125)
Income before taxes 150,225
Income taxes expense 39,650
Net income $ 110,575
Additional Information on Current Year Transactions
The loss on the cash sale of equipment was $16,125 (details in b).
Sold equipment costing $79,875, with accumulated depreciation of $41,125, for $22,625 cash.
Purchased equipment costing $107,375 by paying $52,000 cash and signing a long-term note payable for the balance.
Borrowed $5,100 cash by signing a short-term note payable.
Paid $55,625 cash to reduce the long-term notes payable.
Issued 3,600 shares of common stock for $20 cash per share.
Declared and paid cash dividends of $52,300.
Required:
Prepare a complete statement of cash flows using a spreadsheet using the indirect method. (Enter all amounts as positive values.)
Answer:
Cash flow from all activities -$18,100
Cash at the beginning of the year $84,500
Cash at the end of year $66,400
Explanation:
Preparation of a complete statement of cash flows using a spreadsheet using the indirect method.
FORTEN COMPANY
Statement of Cash Flows
For the Year ended December 31
Cash Flow from Operating Activities:
Net Income $110,575
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation $31,750
Loss on sale of Equipment $16,125
Increase in Accounts Receivables -$20,755
($61625 - $82380)
Increase in Inventory -$29,356
($262800-292156)
Decrease in Prepaid Expenses $795
($2115-1320)
Decrease In Accounts Payable -$67,034
($64141 - $131175)
Increase in Short term note payable $5,100
($13300-8200)
Total Adjustments -$63,375
Net Cash Flow From Operating Activities (A) $47,200
Cash Flow from Investing Activities:
Cash Received from sale of Equipment $22,625
Purchase of Equipment (In cash) -$52,000
Net Cash Flow From Investing Activities (B) -$29,375
($22,625-$52,000)
Cash Flow from Financing Activities:
Repayment of Long Term Note Payable -$55,625
Cash received from issue of common stock $72,000 (3600*$20)
Dividend paid -$52,300
Net Cash Flow From Financing Activities (C) -$35,925
Total Cash flow from all activities
(A+B+C) -$18,100
($47,200+-$29,375+-$35,925)
Cash at the beginning of the year $84,500
Cash at the end of year $66,400
($84,500-$18,100)
Therefore The complete statement of cash flows using a spreadsheet using the indirect method will be :
Cash flow from all activities -$18,100
Cash at the beginning of the year $84,500
Cash at the end of year $66,400
Zhang Industries sells a product for $700. Unit sales for May were 400 and each month's sales are expected to grow by 3%. Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars. Assume 30% of Zhang's sales are for cash. The remaining 70% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June.Multiple Choice$282,520.$196,000.$280,000.$201,880.$285,880.
Answer:
Total cash collection= $282,520
Explanation:
Giving the following information:
Sales May= 400 units
Sales June= 400*1.03= 412 units
Selling price= $700
30% of Zhang's sales are for cash.
The remaining 70% are credit sales; these customers pay in the month following the sale.
To calculate the cash receipts, we need to use the following structure:
Cash collection June:
Sales in Cash June= (412*700)*0.3= 86,520
Sales in Account from May= (400*700)*0.7= 196,000
Total cash collection= $282,520
Which of the following statements is CORRECT? a. More of Project A's cash flows occur in the later years. b. We must have information on the cost of capital in order to determine which project has the larger early cash flows. c. The crossover rate, i.e., the rate at which Projects A and B have the same NPV, is greater than either project's IRR. d. The NPV profile graph is inconsistent with the statement made in the problem. e. More of Project B's cash flows occur in the later years.
Answer: a. More of Project A's cash flows occur in the later years.
Explanation:
When a project has its cashflows occurring in later years, the NPV will be less because the discount rate would have a greater period to discount it in as opposed to cashflows that occur more recently which would receive less discounting from the discount rate.
As a result of Project A having more distant cashflows, the discount rate discounted its cash flows more which is why higher rates led to its NPV being zero because those higher rates got to discount it over a longer period.
Testbank Multiple Choice Question 81 At the beginning of 2020, Sunland Company issued 8% bonds with a face value of $5700000. These bonds mature in the five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $5259870 to yield 10%. Sunland uses a calendar-year reporting period. Using the effective-interest method of amortization, what amount of interest expense should be reported for 2020
Answer:
$527,737
Explanation:
The Bond Payment or Coupon always includes the Interest Portion and the the Capital Potion. The question only requires the Interest Portion of the Bond.
The Bond Parameters can be set as :
PV = - $5,259,870
FV = $5,700,000
PMT = ($5,700,000 x 8%) ÷ 2 = $228,000
N = 5 x 2 = 10
YTM = 10 %
P/YR = 2
Constructing an amortization schedule for 2020 gives :
Date Capital Portion Interest Balance
June 30 $34,994 $262,994 $5,294,864
Dec 30 $36,743 $264,743 $5,331,607
Total $71,737 $527,737 $5,331,607
therefore,
The amount of interest expense to be reported for 2020 is $527,737
If The Wall Street Journal lists a stock's dividend as $1, then it is most likely the case that the stock: Multiple Choice pays $1 per share per quarter. paid $.25 per share per quarter for the past year. paid $1 during the past quarter, with no future dividends forecast. is expected to pay a dividend of $1 per share at the end of next year.
Answer:
paid $.25 per share per quarter for the past year
Explanation:
A stock is ownership rights purchased by investors in a public company. Holders of stock are called stockholders and they are regarded as owners of the company.
Stockholders are paid dividends. Dividends are a proportion of a company's profits paid to shareholders.
If the stock's dividend is $1, it means it either paid $1 the past year or paid $.25 per share per quarter for the past year
Dumphy and Funke are rival tattoo artists in the small town of Feline. There are no other tattoo artists in town. It costs $30 to produce a Tweety Bird tattoo. Assume for simplicity that fixed costs are zero and that Dumphy and Funke perform identical work. For a while, there was too much demand for Funke and Dumphy to handle and they both charged $200 for a tattoo. But recently, demand has dropped significantly and there is not enough work for both to fill their days at any price. However, there is some demand at all prices. What type of competition would Funke and Dumphy likely engage in after the decrease in demand
Answer: price competition
Explanation:
The type of competition would Funke and Dumphy likely engage in after the decrease in demand is price competition.
Price competition simply means when the companies in a particular industry lower their prices afsubst the prices of identical products in order to boost demand and sales.
Since there's a reduction in demand, Dumphy and Funke will engage in price competition to boost sales.
Setrakian Industries needs to raise $48.5 million to fund a new project. The company will sell bonds that have a coupon rate of 5.56 percent paid semiannually and that mature in 10 years. The bonds will be sold at an initial YTM of 6.13 percent and have a par value of $2,000. How many bonds must be sold to raise the necessary funds
Answer:
25,317 unit
Explanation:
Current price of bond = PV(Rate, Nper, Pmt, Fv)
Current price of bond = PV(6.13%/2, 10*2 ,5.56%/2*2000, 2000)
Current price of bond = $1,915.71
Number of bonds to issue = $48,500,000 / $1,915.71
Number of bonds to issue = 25316.98430
Number of bonds to issue = 25,317 unit
On December 30, 2017, the Board of Directors of Blue Manufacturing, Inc. committed to a plan to discontinue the operations of its Owl division. Blue estimated that Owl's 2018 operating loss would be $750,000 and that the fair value of Owl's facilities was $450,000 less than their carrying amounts. The estimate for the 2018 operating loss turned out to be correct. Owl's 2017 operating loss was $1,000,000, and the division was actually sold for $400,000 less than its carrying amount in 2018. Blue's effective tax rate is 35%. In its 2017 income statement, what amount should Blue report as loss from discontinued operations
Answer:
$942,500
Explanation:
Calculation to determine what amount should Blue report as loss from discontinued operations
Using this formula
Loss from discontinued operations=[(Operating loss+Fair value)*Tax rate]
Let plug in the formula
Loss from discontinued operations=[($1,000,000+ $450,000)* (100% - 35% tax rate)]
Loss from discontinued operations=$1,450,0000*65%
Loss from discontinued operations= $942,500
Therefore what amount should Blue report as loss from discontinued operations is $942,500
Jamarcus was his collegiate chapter's delegate at a national conference of a professional business fraternity, Phi Chi Theta, in which he is a member. When the business meeting was conducted, parliamentary procedure was used, and Jamarcus was not familiar with this. Thus, he looked to the others to learn how he should behave in this situation. What type of influence does this reference group exhibit? procedural transient substantive informational legal
Answer:
informational
Explanation:
Informational influence is defined as a new concept or information that occurs within a group and leads to change in group member attitudes, behaviour, and belief.
In the given scenario parliamentary procedure was used in a business meeting and Jamarcus was not familiar with this.
He looked to other group members to learn how he should behave in this situation.
In this case the group is providing information of proper way of behaving during the meeting.
You are the VP of Marketing at Stauffer Foods and you learn that the puddings packaged desserts line from General Foods (GF) is available for acquisition. This division produces successful products like Pudding Pops, Instant Pudding, and Pudding in a Cup. You make some of assumptions about this line. Which assumption would you not make
Answer: purchasing the line would bring immediate cash flow for Stauffer Foods
Explanation:
The options include:
a. purchasing the line would bring established distribution for Stauffer Foods.
b. purchasing the line would add equity value to Stauffer Foods.
c. All would be reasonable assumptions to make.
d. purchasing the line would bring immediate cash flow for Stauffer Foods
e. purchasing the line could create some difficulties in dealing with debt load.
The assumption that shouldn't be made is that purchasing the line would bring immediate cash flow for Stauffer Foods.
When a product is acquired, one should not expect immediate profit or cash flow instantly. Purchasing the line would not bring immediate cash flow for Stauffer Foods because it's a gradual process even though there may eventually be cash flow and profit in the long run.
All the other options that re given are correct, therefore the correct option is D.
The governor has proposed to clean up all the trash on the side of the highway. The project is estimated to cost the tax payers and additional $15,000. The city will benefit by having a clean highway which will entice tourists to stop along their routes. The project is estimated to bring in $12,000 of revenue from the highway being cleaned. Should the governor continue with the project
Answer:
No, the project will not bring in enough benefit to cover the costs.
Explanation:
In a project or business enterprise there is a need to do a cost-revenue analysis with the aim of maximising profit.
If the revenue generated by a project is more than the cost, then it is viable and profitable.
However if the revenue is less than cost then the project will not be sustainable.
In the given scenario the clean up project is estimated to cost the tax payers an additional $15,000.
The city will have an estimated revenue of $12,000 from the highway being cleaned.
As the revenue is less than the cost it is better to discontinue the project.