Answer:
a) Craig Novar's
Cash budget
Months
Sept. Oct. Nov. Dec.
beginning balance 9,250 2,640 2,190 1,740
football tickets -160
other entertainment -250 -250 -250 -250
semester tuition -4,800
rent -600 -600 -600 -600
food -550 -550 -550 -550
apartment deposit -600 600
part time jobs earnings 950 950 950 950
ending balance 2,640 2,190 1,740 1,890
b) This is a static budget because it is being prepared in advance. A flexible budget adjusts a static budget to the real cash outflows and inflows.
c) Since Craig is spending more money than what he earns, his cash balance is decreasing month by month. This tendency changes in December because Craig gets his apartment's deposit back, but he still will not have enough money to pay for Spring tuition.
________ means that service quality depends on the quality of buyer-seller interaction during the service encounter.
Answer: interactive marketing
Explanation:
Interactive marketing is also referred to as event-driven marketing or trigger based marketing and it simply has to do with using an effective communication which is two-ways to enable the consumers connect directly with a company.
Interactive marketing means service quality depends on the quality of buyer-seller interaction during the service encounter.
According to the Prebisch-Singer hypothesis, this fate has befallen many developing countries given the general decline in commodity prices in relation to the price of manufactured goods.A) TrueB) False
Answer: True
Explanation;
Generally, manufactured goods cost more than the commodity goods that they were manufactured from due to the value that has been added to them. This is what the Prebisch-Singer hypothesis argues, that commodity prices decline overtime in relation to manufacturing good prices.
This is a fate that has befallen many developing countries as many of them export commodity goods to developed countries who then add value to them, turning them into manufactured goods and then selling them back to developing countries at a higher price thereby negatively affecting their balance of trade.
Charlie is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should Charlie consider while choosing his strategy?A) He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance.B) He should rely on his firm's business-level strategy as a clue to possible strategies pursued globally.C) He should remember that he has only one framework at his disposal to make global strategy decisions.D) He must remember that higher levels of control and a lower likelihood of any loss in reputation go along with less investment-intensive foreign entry modes.
Answer: A) He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance.
Explanation:
Charlie must consider that despite the fact that the internet and technology have made globalization more accessible, the location of a business remains very important hence the old saying "its all about location location location".
The firm's geographical location has an effect on stakeholders in the company such as customers, employees and suppliers. For the customers, even if the business was to rely on the internet and delivering goods, the location needs to be convenient enough to ship goods from.
The Suppliers as well need to be able to send the goods ordered for in a timely fashion and an improper location can hamper that. Even employees need a place to work in that is conducive for them in terms of logistics and a safe working environment. Charlie should definitely not forget about the importance of location.
"A retired customer that has a portfolio of blue chip stocks is looking to supplement his retirement income. An appropriate recommendation would be to:"
Answer: sell covered calls
Explanation:
A retired customer that has a portfolio of blue chip stocks is looking to supplement his retirement income. An appropriate recommendation would be to sell covered calls.
It should be noted that a covered call is a financial transaction that takes place when a call option is sold by an investor even though the investor still owns part of the security based on what's sold.
Margin on price as a percentage is the expression of how much you mark your product up by to arrive at your retail price. True False
Answer:
False
Explanation:
The margin on price refers to a percentage by taking a difference between the gross profit and the selling price
Here gross profit comes by
= Selling price - cost price
Now in the cost price we added some markup percentage i.e most probably equivalent to the retail price
Hence, the given statement is false
A Japan-based company, Sumo Gyms, Inc., issues a 35-year, semi-annual coupon bond, with a ¥300 million par value. The coupon rate is given as 5.90%, and the yield to maturity is 6.70. a. What is the value of the semi-annual coupon on the bond?
Answer:
per*
Explanation:
Lacy Technology transferred items with $12,600 of cost out of the Assembly Department because the items were finished and ready to be sold. What journal entries correctly reflects this transaction?
Answer:
Dr Finished Goods Inventory 12,600
Cr Work in Process - Assembly 12,600
Explanation:
Based on the information given we were told that the company transferred items that cost the amount of $12,600 from the Assembly Department because the items were finished and ready to be sold which means that the journal entries will be recorded as:
Dr Finished Goods Inventory 12,600
Cr Work in Process - Assembly 12,600
Julie is working on formulating a marketing plan to increase the market share of Little Debbie Snack Cakes. According to the discussion in class, which one of the following strategies would Julie find most effective as a way to increase Little Debbie's long-term market share?
a. Increase product quality
b. Increase product innovation
c. Increase advertising
d. Increase sales promotion
Answer:
Correct answer:
d. Increase sales promotion
Explanation:
For Julie who owns the Little Debbie Snacks Cakes, in order for her to increase the market share of his company, there will be need for her to increase her sales promotion. This would be through series of campaign which she could run like "Buy 2 get 1 FREE" or "A dozen order free delivery + gift" etc.
The total purchase of the products and services of the firm and the percentage that goes to the company's capital is the term definition of market share.
If the consumers buy for instance 50 chocolates, out of which the 25 are from one company, and in that case, that company holds 25% market share.
The correct option is d. Increase sales promotion
Option d. Increase sales promotion is correct because for Julie who owns the Little Debbie Snacks Cakes, in order for her to increase the market share of his company, there will be a need for her to increase her sales promotion. This would be through a series of campaigns.
Options a, b, and c are wrong because they do not the effective way to increase the sale of the products and services. The options are focusing on the other promotional and advertising activities and the efficiency and effectiveness of the product section.
To know more about the long term market share, refer to the link below:
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seigel co. maintains a defined-benefit pension plan for its employees. at each balance sheet date, seigel should report a pension asset / liability equal to the
Answer: funded status relative to the projected benefit obligation
Explanation:
A defined benefit pension plan is a pension plan type in which the employer promises to pay the worker a lump sum or a pension payment which is based on the earnings history, age and the tenure of service of the worker.
Since Seigel co. maintains a defined-benefit pension plan for its employees. at each balance sheet date, seigel should report a pension asset/liability that will be equal to the funded status relative to the projected benefit obligation.
ane is planning to offer a Groupon for inner tube rentals that she will distribute on hot, sunny, summer days by the river that runs through her town. Based on her past experience with Groupon, she has assigned the following probability distribution to the number of tubes she will rent on a randomly selected day. If Jane would like her expected revenue to be at least $300 per day, what should the Groupon price be? (Round your answer up to the nearest whole dollar amount.)
Probability assigned:|
x 30 60 120 180
P(x) .10 .40 .40 .10
Answer:
Jane
Price of Groupon for a revenue of $300 is:
$3
Explanation:
a) Data and Calculations:
Expected Sales volume:
Number of Tubes x 30 60 120 180
Probability P(x) .10 .40 .40 .10
Expected values 3 24 48 18
Total = 93 tubes
Groupon price = $300/93 = $3.23
b) Jane's price for each Groupon will be the rent revenue per day divided by the expected number of tubes to rent daily. The expected number of tubes is derived by multiplying each expected number of tubes by its probability and then summing up the results.
Luther Corporation Consolidated Balance Sheet December 31, 2006 and 2005 (in $ millions) Assets 2006 2005 Liabilities and Stockholders' Equity 2006 2005 Current Assets Current Liabilities Cash 58.5 Accounts payable 73.5 Accounts receivable 39.6 Notes payable / shortterm debt 9.6 Inventories 42.9 Current maturities of longterm debt 36.9 Other current assets 3.0 Other current liabilities 6.0 12.0 Total current assets 144.0 Total current liabilities 132.0 LongTerm Assets LongTerm Liabilities Land 62.1 Longterm debt 168.9 Buildings 91.5 Capital lease obligations Equipment 99.6 Less accumulated depreciation () (52.5) Deferred taxes 22.8 22.2 Net property, plant, and equipment 200.7 Other longterm liabilities Goodwill 60.0 Total longterm liabilities 191.1 Other longterm assets 63.0 42.0 Total liabilities 323.1 Total longterm assets 242.7 Stockholders' Equity 63.6 Total Assets 386.7 Total liabilities and Stockholders' Equity 386.7 Refer to the balance sheet above. Luther's current ratio for 2006 is closest to:
Answer:
Luther Corporation
Current Ratio for 2006 is closest to:
1.1 : 1
Explanation:
a) Data and Calculations:
Total Current Assets = $144 million
Total Current Liabilities = $132 million
Current Ratio = Current Assets/Current Liabilities
= $144/$132
= 1.1 : 1
b) Luther Corporation's current ratio is a liquidity measure that shows Luther's ability to pay off short-term obligations worth $132 million or those due within one year with its current assets of $144 million. The ratio tells investors and analysts of Luther Corporation how Luther can use its current assets to pay off its current debts. Since Luther's current ratio is higher than 1, it is considered good, depending on the industry average. This means that Luther's current ratio of 1.1 : 1 should not be considered in isolation, but in comparison with other firms in the industry and its performance over a number of years.
Your client in the 25% federal income tax bracket lives in a state where his earnings place him in the 6% bracket for state income tax purposes. If he were to purchase a 4% bond issued by a political subdivision of another state, his total tax-equivalent yield would be
Answer:
Slightly more than 5.33%.
Explanation:
In case when the municipal bond owned by an individual i.e. issued is not for interest free tax rate but also it is non tax on that particular state
So here the tax-equivalent yield is
= Purchase bond percentage ÷ (1 - tax rate)
= 0.04 ÷ (1 - 0.25)
= 5.33%
Hence, his total tax-equivalent yield is 5.33% i.e. calculated by applying the above formula
Alpha Industries is considering a project with an initial cost of $9.1 million. The project will produce cash inflows of $1.84 million per year for 7 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.94 percent and a cost of equity of 11.49 percent. The debt–equity ratio is .71 and the tax rate is 40 percent. What is the net present value of the project?
Answer:
NPV = $1.22 million
Explanation:
The Net present value (NPV) is the difference between the Present value (PV) of cash inflows and the PV of cash outflows. A positive NPV implies a good investment decision and a negative figure implies the opposite.
NPV of an investment:
NPV = PV of Cash inflows - PV of cash outflow
To work oit the NPV we would need to determine the discount rate i.e cost of capital as follows:
Cost of capital -discount rate -
WACC = We×Ke + Wd×Kd
After cost o debt = 5.94× (1-0.4)=3.56
WACC = (0.71×3.56 %) + (0.29×11.49%)=5.86 %
PV of cash inflow = A× (1- (1+r)^(-n))/r
A- annul cash inflow, r- 5.86%, n- 7
PV of cash inflow= 1.84 million × (1- 1.0586^(-7))/0.0586 =10.32
Initial cost = 9.1 million
NPV = 10.32 - 9.1 = 1.22 million
NPV = $1.22 million
Cash Payback Method Lily Products Company is considering an investment in one of two new product lines. The investment required for either product line is $540,000. The net cash flows associated with each product are as follows:
Year Liquid Soap Body Lotion
1 $170,000 $90,000
2 150,000 90,000
3 120,000 90,000
4 100,000 90,000
5 70,000 90,000
6 40,000 90,000
7 40,000 90,000
8 30,000 90,000
Total $720,000 $720,000
A. Recommend a product offering to Lily Products Company, based on the cash payback period for each product line.
Payback period for liquid soap
Payback period for body lotion
B. The project with the_____net cash flows in the early years of the project life will be favored over the one with the______net cash flows in the initial years.
Answer:
1a. Payback period for LIQUID SOAP =4 years
Payback period for BODY LOTION =6 years
1b. GREATEST; LESS
Explanation:
1a.Calculation for the Payback period for liquid soap
LIQUID SOAP
Year Cash flow Cumulative Cash flow
1 $170,000 $170,000
2 (150,000+170,000) =320,000
3 (120,000+320,000)=440,000
4 (100,000+440,000)=540,000
5 (70,000+540,000)= 610,000
6 (40,000+610,000)= 650,000
7 (40,000+650,000)= 690,000
8 (30,000+690,000)= 720,000
The Payback period for LIQUID SOAP will be 4 years
Calculation for the Payback period of body lotion
BODY LOTIO
Year Cash flow Cumulative Cash flow
1 $90,000 $90,000
2 (90,000+90,000)=180,000
3 (90,000+180,000)=270,000
4 (90,000+270,000)=360,000
5 (90,000+360,000)=450,000
6 (90,000+450,000)=540,000
7 (90,000+540,000)=630,000
8 (90,000+630,000)=720,000
The Payback period for BODY LOTION will be 6 years
Based on the calculation above for both liquid soap and body lotion the product offering i will recommend to Lily Products Company, based on the cash payback period for each product line will be LIQUID SOAP because it has a 4 years payback period.
B. The project with the GREATEST net cash flows in the early years of the project life will be favored over the one with the LESS net cash flows in the initial years.
Let M be the number of units to make and B be the number of units to buy. If it costs $2 to make a unit and $3 to buy a unit and 4000 units are needed, the objective function is
Min 2M + 3B
Min 4000 (M + B)
Max 2M + 3B
Max 8000M + 12000B
Answer:
Min 2M + 3B
Explanation:
Data provided in the question
Let us assume M denotes the making units
B denotes the buying units
So,
Making cost per unit = $2
And, the buying cost per unit = $3
And, the total number of units required = 4,000 units
Based on the above information, the objective function is Min 2M + 3B.
This indicates the minimum total cost
Hence, the correct option is A.
Which of the following is NOT a benefit of a social media presence for a brand? Group of answer choices Social media allows companies to have a short-term focus. Social media allows marketers to establish a public voice and presence online. Social media can cost-effectively reinforce other communication activities. Social media can encourage companies to stay innovative and relevant. Social media can be used to build or tap into online communities.
Answer: Social media allows companies to have a short-term focus.
Explanation:
Social Media has made the world way more connected than it was before even with the advent of the Internet. As such, companies were able to leverage on this to improve their brand and popularity by being present on the various social media platforms.
With social media, companies have been able to marketers to establish a public voice and presence online, cost-effectively reinforce other communication activities, build online forums and communities as well as remain relevant in a fast changing world.
Companies having a short term focus as a result of social media is not a benefit of social media. A company should always think long term and even social media can help them achieve long term growth if long term marketing plans are integrated with social media marketing.
Suppose annual inflation rates in the U.S. and Mexico are expected to be 6% and 80%, respectively, over the next several years. If the current spot rate for the Mexican peso is $.005, then the best estimate of the peso's spot value in 3 years is Group of answer choices $.00276 $.01190 $.00321 $.00102
Answer:
$.00102
Explanation:
The forward peso's spot value in 3 years can be computed using the below formula:
forward exchange rate=current spot rate*(1+US inflation)^3/(1+Mexican inflation)^3
current spot rate=$.005,
US inflation rate is 6%
Mexican inflation rate is 80%
forward exchange rate=$.005,*(1+6%)^3/(1+80%)^3
forward exchange rate(in 3 years)=$0.00102
What describes minerals that are deemed real property, such as gold and silver, until they are removed from the earth and become personal property?
A. Mineral rights.
B. Nutrients.
C. Synthetics.
D. Solid minerale.
Answer:
The correct answer is D
Explanation:
Solid minerals contained in the land
(Coal, iron, ore, gold or silver)
Hope this helps! （づ￣3￣）づ╭❤～
Minerals known as real property such as gold and silver are known as Solid minerale before they later become personal property.
What is a Solid minerale?These are mineral that is natural occurring in a solid and inorganic state and are representable by a chemical formula.
An example of Solid minerale includes Talc, Gold, Clay, Lithium, Kyanite, Wolframite, Gemstones etc
Therefore, the Option D is correct.
Read more about Solid minerale
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After analyzing its own resources and unique abilities, a company is now trying to determine what group of customers it can satisfy with a good or service. It is in the process of choosing a
Answer: target market
Explanation: A target market is simply a group of people whose needs and preferences match the product range of a company and to whom those products are marketed, often times actively. As such, when the resources and unique abilities of a firm has been analysed, and is now in the process of determining what group of customers it can satisfy with a good or service, then it is in the process of choosing a target market.
Georgia is the primary shareholder in Acme, Inc., a small corporation. After its corporate certificate was issued by the state, there were no other formalities or documentation. In fact, Georgia does not keep separate books for the corporation, and sometimes combines her personal assets with those of the corporation. If she is sued individually by a corporate creditor, what would be the likely outcome
Answer:
The likely outcome would be the judgement debt being settled from her personal assets.
Explanation:
Georgia being a primary shareholder in the small corporation, it was expected that she should keep accounts that differentiate the corporation from her personal expenses. Unfortunately such didn't happen.
Since she was sued individually by a corporate creditor, it was expected that the judgement debt should be settled from her individual account which is quite different form the corporate account.
Answer: Georgia would likely be liable
Explanation:
Based on the scenario that have been provided in the question, Georgia would likely be liable because the creditors can end up piercing the corporate veil.
This means that Georgia would be held responsible for the activities of the organization.
Prepare the journal entry to record Jevonte Company’s issuance of 35,000 shares of its common stock assuming the shares have a: $3 par value and sell for $22 cash per share. $3 stated value and sell for $22 cash per share.
Answer: Please see answer in explanation column
Explanation:
a)journal entry to record Jevonte Company’s issuance at $3 par value and $22 cash per share
Account Debit Credit
Cash(35,000 x $22) $770,000
Common stock, $3 par value(35,000 x 3) $105, 000
Paid-in captial in excess of par value, common stock
($770,000 - $105, 000 ) $665,000
b)journal entry to record Jevonte Company’s issuance at $3 stated value and $22 cash per share
Account Debit Credit
Cash (35,000 x $22) $770,000
Common stock, $3 stated value (35,000 x 3) $105, 000
Paid-in captial in excess of stated value, common stock
($770,000 - $105, 000 ) $665,000
Pisa, Inc. leased equipment from Williamsburg Company under a four-year lease requiring equal annual payments of $68,830, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Pisa, Inc.'s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is 8%. Assuming that this lease is properly classified as a capital lease, what is the approximate amount of principal reduction recorded when the second lease payment is made in Year 2?
Answer:
$54,639
Explanation:
the approximate amount of principal reduction when the second lease payment is made in Year 2 can be calculated by making the Lease amortization table as follows
DATA
Annual payments = 68,830
Implicit rate = 8%
Annuty factor for 4 years at 8% = 3.55710
Present value of lease payment =$246,212 (68830*3.57710 )
Year 1 Year 2
Opening balance - $177,382(w)
interest - $14,191(w)
payments $68,830 $68,830
principal payments $68,830 $54,639
closing balance $177,382(w) $122,743
Working
Closing balance = Present value of lease payment - Annual payment
Closing balance = $256,212 - $68,830
Closing balance = $177,382
Interest = closing balance x implicit rate
Interest = $177,382 x 8%
Interest = $14,190.56
Your textbook discussed a model of a simple economy with four markets: labor, capital, energy, and food. Which of the following statements is inconsistent with a general equilibrium for this simple economy?
A. The household demand for energy equals the industry supply of energy.
B. The household demand for food equals the industry supply of food.
C. The household demand for labor equals the industry supply of labor.
D. The household supply of capital equals the industry demand for capital.
Answer:
The correct answer is the option C: The household demand for labor equals the industry supply of labor
Explanation:
To begin with, when it comes to the microeconomics theory the market of labor is considered to be as a factor of production market and from that point of view the labor is demanded by the companies to the households who are the ones who offered the labor due to the fact that the workers are the one who put their force to disposition of the companies. And that is why that it would be inconsistent to say that the household demand for labor will equals the industry supply of labor, because it is all the way around, the household supply of labor will equals the industry demand of it.
Projectized organizations are especially effective at helping team members to maintain their discipline-specific competencies. Group of answer choices
Answer: False
Explanation:
A projectized organization is a form of organization structure is that is designed such that it is hierarchical and headed by the project manager who is typically involved in every decision that is made regarding the project as he or she is the one that team members report to.
Therefore, projectized organizations are not effective at helping team members to maintain their discipline-specific competencies.
fremont which uses the high-low method reported total cost of $10 per unit its lowest production level, 5000 units. when production tripled to its highest level, the total cost per unit dropped to $5 variable cost per unit
Answer:
$2.50
Explanation:
Calculation for the estimation of variable cost per unit
Units Total cost
High method 15,000×$5 per units =$75,000
(5,000*3)=15,000
Low method 5,000*$10 per units=$50,000
Difference 10,000 $25,000
Variable cost per unit =$25,000/10,000
Variable cost per unit=$2.50
Note: Based on the information given we were told that production tripled to its highest level which means the high method units will be 15,000 units (5,000 units*3)
Therefore Fremont would estimate its variable cost per unit as: $2.50
The net income reported on the income statement for the current year was $121,900. Depreciation recorded on store equipment for the year amounted to $20,100. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $48,030 $44,190 Accounts receivable (net) 34,440 32,660 Merchandise inventory 47,020 49,710 Prepaid expenses 5,280 4,200 Accounts payable (merchandise creditors) 45,000 41,800 Wages payable 24,590 27,310 a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: $ Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities $ b. Cash flows from operating activities differs from net income because it does not use the of accounting. For example revenues are recorded on the income statement when .
Answer:
See answers below.
Explanation:
In order to get net cash flow through indirect method, we will have to make adjustment to the net income; hence we get the increase or decrease of different accounts with the data balance.
a) End beginning cash $48,030 $44,190
Increase in cash $3,840
Accounts receivable(net) $34,440 $32,660
Increase in accounts receivable $1,780
Merchandise Inventory $47,020 $49,710
Decreased inventory -$2,690
Prepaid expenses $5,280 $4,200
Increase prepaid expenses $1,080
Accounts payable(Merchandise creditors) $45,000 $41,800
Accounts payable increase $3,200
Wages payable $24,590 $27,310
Decreased wages payable -$2,720
Per below, we have some accounts that are added (+) to the net income while some are also deducted (-).
Net income $121,900
Adjustment to reconcile the net income to cash
+ Depreciation $20,100
+ Increase in cash $3,840
- Increase in accounts receivable ($1,780)
+ Inventory decrease $2,690
- Increase prepaid expenses ($1,080)
+ Accounts payable increase $3,200
- Decreased wages payable ($2,720)
Net cash $146,150
b) Briefly explain why net cash flow from operating activities is different other than net income.
The reason is that while net income refers to the earned profit by a company for a period ; cash flow from operating activities are measurement of daily cash (in and out) expended on business operation. Cash flow give explanation on the use of cash in an organization on a daily basis which includes net income from the income statement, changes in working capital, adjustments to net profits etc. t is to be noted that the starting point of calculating cash flow from operating activities is the net income.
Antitrust regulations would most likely require one of the following in order to determine whether or not a merger may enhance competition. Which one is it?
A. Highly complex analytical tools
B. Analysis using numerical tools
C. Obvious objective judgments
D. Readily qualified judgments
Answer: analysis using numerical tools
Explanation:
The main reason for the creation of Antitrust laws was to give power to the government to block some particular mergers and also break up the large firms to smaller ones.
Antitrust regulations would most likely require analysis using numerical tools in order to determine whether or not a merger may enhance competition.
Suppose that the income tax rate is reduced by the federal government and simultaneously a recession hits causing the economy to move below its potential output, this will:
Answer:
Raise both the cyclical and structural deficits
Explanation:
During economic downturn the cyclical deficit will rise, leading to rise in already structural deficit of federal government. The Structural deficit arises when government continue to spend more than its revenue, and thus cyclical deficit will add upward pressure in structural deficit.
Therefore there will be Raise in both the cyclical and structural deficits
In its third year, a project is expected to produce earnings before interest and taxes of $671,551 and depreciation expense of $125,193. If the company’s tax rate is 34%, what is the project’s expected operating cash flow?
Answer:
Operating cash flow= $568,416.66
Explanation:
Giving the following information:
Earnings before interest and taxes= $671,551
Depreciation expense= $125,193.
Tax rate= 34%
To calculate the operating cash flow, we need to use the following structure:
EBIT= 671,551
Tax= (671,551*0.34)= (228,327.34)
Depreciation= 125,193
Operating cash flow= 568,416.66
For an automobile company, the total overhead applied was $48,000,000 at the end of the year. Actual overhead was $52,850,000. Closing over/under applied overhead into cost of goods sold would cause net income to:
Answer:
Net income decreased by $4,850,000.
Explanation:
Given total overhead applied = $48000000
The actual overhead = $52850000
Over/under Applied overhead = total overhead applied - Actual overhead at the end of the year.
Over / under Applied overhead = 48000000-52850000
Over / under Applied overhead = -$4850000
From the calculation, it can be seen that the overhead is underapplied therefore when under applied overhead allocated to cost of goods sold then cost of goods sold decreased by $4850000.
