Answer:
the depreciation expense in year 2 is $1,133,475
Explanation:
The computation of the depreciation expense in year 2 is given below:
depreciation in Year 2 is
= Asset amount × Depreciation percentage in year 2
= $2,550,000 × 44.45%
= $1,133,475
Hence, the depreciation expense in year 2 is $1,133,475
Consider Pacific Energy Company and U.S. Bluechips, Inc., both of which reported earnings of $967,000. Without new projects, both firms will continue to generate earnings of $967,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a return of 13%.
A. What is the current PE ratio for each company?
B. Pacific Energy Company has a new project that will generate additional earnings of $117,000 each year in perpetuity. Calculate the new PE ratio of the company.
C. Atlantic Energy has a new project that will increase earnings by $217,000 in perpetuity. Calculate the new PE ratio of the firm.
Answer and Explanation:
The computation is shown below:
a. Current PE ratio is
For Pacific energy company
= Price ÷ Earnings
= ($967,000 ÷ 0.13) ÷ ($967,000)
= 7.69 times
For U.S Bluechips
= Price ÷ Earnings
= ($967,000 ÷ 0.13) ÷ ($967,000)
= 7.69 times
b. The new PE ratio is
= Price ÷ Earnings
= (($967,000 + $117,000) ÷ 0.13) ÷ ($967,000)
= 8.62 times
c. The new PE ratio is
= Price ÷ Earnings
= (($967,000 + $217,000) ÷ 0.13) ÷ ($967,000)
= 9.42 times
Compare and by converting their income statements to common size. Martinez Rojo Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . $10,900 $19,536 Cost of goods sold. . . . . . . . . . . . . . . . . . 6,660 14,203 Other expense. . . . . . . . . . . . . . . . . . . 3,564 4,356 Net income. . . . . . . . . . . . . . . . . . . . . . . . . $676 $977 Which company earns more net income? Which company's net income is a higher percentage of its net sales?
Answer:
a. Rojo
b. Martinez
Explanation:
When converting the income statement to common size, everything is made a percentage of net sales.
Martinez Rojo
Net Sales 100% 100%
Cost of goods sold (61.1% ) ( 72.7%)
Other expenses (32.7% ) ( 22.3%)
Net Income 6.2% 5.0%
Working
Martinez Rojo
Cost of goods 6,660/10,900 14,203/19,536
Other expenses 3,564/10,900 4,365/19,536
Net income 676/10,900 977/19,536
a. Company with more Net income
= Rojo
b. Company with higher net income as percentage of net sales
= Martinez
g 4. The price of a home is $197,000. The bank requires 20% down payment and four points at closing. The cost of the home is financed with a 30-year fixed-rate mortgage at 4.25%. a. Find the required down payment. b. Find the amount of the mortgage. c. How much will be paid for the four points at closing
Answer:
a. $39,400
b. $157,600
c. $6,304
Explanation:
a. Down payment
Bank requires 20% down payment
= 20% * 197,000
= $39,400
b. Mortgage amount
= Price of house - down payment
= 197,000 - 39,400
= $157,600
c. Amount at 4 points:
= Mortgage * 4%
= 157,600 * 4%
= $6,304
Pina Colada Corp. issued 22000 shares of $1 par common stock for $40 per share during 2022. The company paid dividends of $53000 and issued long-term notes payable of $484000 during the year. What amount of cash flows from financing activities will be reported on the statement of cash flows
Answer:
Net cash flows from financing activities $1,311,000.
Explanation:
The computation of the amount that would be reported on the financing activities of the cash flow statement is as follows:
Issue of common stock(22,000 shares × $40) $880,000
Less: payment of dividend ($53,000)
Add: Issue of the long term note payable $484,000
Net cash flows from financing activities $1,311,000.
Stevens Company's inventory on March 1 and the costs charged to Work in Process—Department B during March are as follows:
Beginning work in process, 12,000 units, 60% completed $62,400
From Department A, 55,000 units started this period
Direct materials added 115,500
Direct labor incurred 384,916
Factory overhead incurred 138,000
During March, all direct materials were transferred from Department A, the units in process at March 1 were completed, and of the 55,000 units entering the department, all were completed except 6,000 units that were 70% completed. Inventories are costed by the first-in, first-out method.
Required:
Prepare a cost of production report for March.
Solution :
Particulars Direct materials Conversions
Cost per equivalent unit
Total costs for month March in Department B 115500 522915
Total equivalent units 55000 58000
Cost per equivalent unit 2.10 9.0158
So, total conversion cost for March in the Department B
= 384915 + 138000
= $ 522915
Costs charged to production:
Direct Materials Conversion Total cost
Costs costs
Inventory in process, March 1 62400
Cost incurred in March 638415
Total costs accounted by the department 700815
Therefore, the cost incurred in March = 115500 + 384915 + 138000
= $ 638415
The normal balance for cash in bank is recorded
Answer: go to this link
Debits and Credits - Normal Balances, Permanent ...
Explanation:
Perot Corporation is developing a new CPU chip based on a new type of technology. Its new chip, the Patay2 chip, will take two years to develop. However, because other chip manufacturers will be able to copy the technology, it will have a market life of two years after it is introduced. Perot expects to be able to price the chip higher in the first year, and it anticipates a significant production cost reduction after the first year as well. The relevant information for developing and selling the Patay2 is given as follows: PATAY2 CHIP PRODUCT ESTIMATES Development cost $ 20,000,000 Pilot testing $ 5,000,000 Debug $ 3,200,000 Ramp-up cost $ 3,000,000 Advance marketing $ 5,400,000 Marketing and support cost $ 1,000,000 per year Unit production cost year 1 $ 655.00 Unit production cost year 2 $ 545.00 Unit price year 1 $ 820.00 Unit price year 2 $ 650.00 Sales and production volume year 1 250,000 Sales and production volume year 2 150,000 Interest rate 10 %
Assume all cash flows occur at the end of each period.
a. What is the net present value (at the discount rate of 10%) of this project? (Negative value should be indicated by a minus sign. Enter your answer in thousands of dollars. Round your answer to the nearest thousand.)
b. Perot’s engineers have determined that spending $10 million more on development will allow them to add even more advanced features. Having a more advanced chip will allow them to price the chip $50 higher in both years ($870 for year 1 and $700 for year 2). What is the NPV of the project if this option is implemented? (Negative value should be indicated by a minus sign. Enter your answer in thousands of dollars. Round your answer to the nearest thousand.)
c. If sales are only 200,000 the first year and 100,000 the second year, what would the NPV of the project be? Assume the development costs and sales price are as originally estimated. (Negative value should be indicated by a minus sign. Enter your answer in thousands of dollars. Round your answer to the nearest thousand.)
Answer:
a. Net present value of this project is $12,181,000.
b. Net present value of this project is $19,743,000.
c. Net present value of this project is $342,000.
Explanation:
a. What is the net present value (at the discount rate of 10%) of this project? (Negative value should be indicated by a minus sign. Enter your answer in thousands of dollars. Round your answer to the nearest thousand.)
Present value of year 1 revenue = (Sales and production volume year 1 * Unit price year 1) / (1 + Discount rate)^1 = (250,000 * $820.00) / (1 + 10%)^1 = $186,363,636.36
Present value of year 2 revenue = (Sales and production volume year 2 * Unit price year 2) / (1 + Discount rate)^2 = (150,000 * $650.00) / (1 + 10%)^2= $80,578,512.40
Year 0 total cost = Development cost + Pilot testing + Debug + Ramp-up cost + Advance marketing = $20,000,000 + $5,000,000 + $3,200,000 + $3,000,000 + $5,400,000 = $36,600,000.00
Present value of Year 1 total cost = (Marketing and support cost + (Sales and production volume year 1* Unit production cost year 1)) / (1 + Discount rate)^1 = ($1,000,000 + (250,000 * $655.00)) / (1 + 10%)^1 = $149,772,727.27
Present value of Year 2 total cost = (Marketing and support cost + (Sales and production volume year 1* Unit production cost year 2)) / (1 + Discount rate)^2 = ($1,000,000 + (150,000 * $545.00)) / (1 + 10%)^2 = $68,388,429.75
Net present value of this project = Present value of year 1 revenue + Present value of year 2 revenue - Year 0 total cost - Present value of Year 1 total cost - Present value of Year 2 total cost = $186,363,636.36 + $80,578,512.40 - $36,600,000.00 - $149,772,727.27 - $68,388,429.75 = $2,180,991.74
Rounding to the nearest thousand, we have:
Net present value of this project = $12,181,000
b. Perot’s engineers have determined that spending $10 million more on development will allow them to add even more advanced features. Having a more advanced chip will allow them to price the chip $50 higher in both years ($870 for year 1 and $700 for year 2). What is the NPV of the project if this option is implemented? (Negative value should be indicated by a minus sign. Enter your answer in thousands of dollars. Round your answer to the nearest thousand.)
Present value of year 1 revenue = (Sales and production volume year 1 * Unit price year 1) / (1 + Discount rate)^1 = (250,000 * $870) / (1 + 10%)^1 = $197,727,272.73
Present value of year 2 revenue = (Sales and production volume year 2 * Unit price year 2) / (1 + Discount rate)^2 = (150,000 * $700) / (1 + 10%)^2= $86,776,859.50
Year 0 total cost = Development cost + Pilot testing + Debug + Ramp-up cost + Advance marketing + additional development cost = $20,000,000 + $5,000,000 + $3,200,000 + $3,000,000 + $5,400,000 + $10,000,000 = $46,600,000.00
Present value of Year 1 total cost = as already obtained in part a above = $149,772,727.27
Present value of Year 2 total cost = as already obtained in part a above = $68,388,429.75
Net present value of this project = Present value of year 1 revenue + Present value of year 2 revenue - Year 0 total cost - Present value of Year 1 total cost - Present value of Year 2 total cost = $197,727,272.73 + $86,776,859.50 - $46,600,000.00 - $149,772,727.27 - $68,388,429.75 = $19,742,975.21
Rounding to the nearest thousand, we have:
Net present value of this project = $19,743,000
c. If sales are only 200,000 the first year and 100,000 the second year, what would the NPV of the project be? Assume the development costs and sales price are as originally estimated. (Negative value should be indicated by a minus sign. Enter your answer in thousands of dollars. Round your answer to the nearest thousand.
Present value of year 1 revenue = (Sales and production volume year 1 * Unit price year 1) / (1 + Discount rate)^1 = (200,000 * $820.00) / (1 + 10%)^1 = $149,090,909.09
Present value of year 2 revenue = (Sales and production volume year 2 * Unit price year 2) / (1 + Discount rate)^2 = (100,000 * $650.00) / (1 + 10%)^2= $53,719,008.26
Year 0 total cost = Development cost + Pilot testing + Debug + Ramp-up cost + Advance marketing = $20,000,000 + $5,000,000 + $3,200,000 + $3,000,000 + $5,400,000 = $36,600,000.00
Present value of Year 1 total cost = (Marketing and support cost + (Sales and production volume year 1* Unit production cost year 1)) / (1 + Discount rate)^1 = ($1,000,000 + (200,000 * $655.00)) / (1 + 10%)^1 = $120,000,000.00
Present value of Year 2 total cost = (Marketing and support cost + (Sales and production volume year 1* Unit production cost year 2)) / (1 + Discount rate)^2 = ($1,000,000 + (100,000 * $545.00)) / (1 + 10%)^2 = $45,867,768.60
Net present value of this project = Present value of year 1 revenue + Present value of year 2 revenue - Year 0 total cost - Present value of Year 1 total cost - Present value of Year 2 total cost = $149,090,909.09 + $53,719,008.26 - $36,600,000.00 - $120,000,000.00 - $45,867,768.60 = $342,148.76
Rounding to the nearest thousand, we have:
Net present value of this project = $342,000
Analyze the role individual team members and leaders play in ensuring or detracting from team success. In the analysis, considering the advantages and disadvantages of the team effectiveness model (Exhibit 7.2). For example, what would be some of the effective and ineffective individual and leadership behaviors regarding team environmental, design, process, and effectiveness practices
The correct answer to this open question is the following.
Unfortunately, you did not attach the team effectiveness model (Exhibit 7.2). You did not a link or picture of it.
However, trying to help you, we can comment on the following model.
We are going to use the Katzenbach and Smith Team Model.
This team effectiveness model has three important components at the base of the pyramid: collective work product, commitment, and personal growth.
From there, the next level indicates the specific goals of the team, the ground rules, the common approach, and the meaningful purpose of the team.
Going up the pyramid we have the Skills and Accountability.
In the Skills, the authors include interpersonal skills, technical skills, and problem-solving abilities. Regarding Accountability, the authors include mutual and personal accountability.
At the very top of the pyramid, we have the performance results.
This model helps to establish the foundation of the role individual team members and leaders play in ensuring team success.
For this to happen, leaders have to set the example of the n¿behavior they like to observe on team members. On the other hand, setting that example, team members are expected to follow through with the goals and expectations, following high standards of performance to accomplish goals.
Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 215,000 Fixed manufacturing overhead cost $ 3,655,000 Variable manufacturing overhead cost per machine-hour $ 2.00 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job P90 was started, completed, and sold to the customer for $3,500. The following information was available with respect to this job: Direct materials $ 1,610 Direct labor cost $ 1,155 Machine-hours used 82 Compute the total manufacturing cost assigned to Job P90.
Answer:
1. Plant wide predetermined overhead rate is $19 per hour
2. Manufacturing cost assigned to job P90 is $4,323
Explanation:
1. In order to calculate the predetermined overhead rate based on machine hours expended, the fixed overhead cost would have to be divided by the machine hours and then add up variable overhead cost per machine hour
= [ Fixed manufacturing overhead / Machine hours required to support production ] + Variable manufacturing overhead cost per machine hour
= [$3,655,000/215,000] + $2
= $17 + $2
= $19 per hour
2. Manufacturing cost of job P90
Direct materials
$1,610
Direct labor cost
$1,155
Overhead 82 machine hours × $19
$1,558
Total cost
$4,323
A country has constant opportunity cost of production. If they devote all of their resources to the production of blankets they can produce a total of 284 per week. If they devote all of their resources to the production of t-shirts they can produce a total of 612 shirts per week. What is the opportunity cost of producing 1 blanket
Answer:
2.15 shirts
Explanation:
Opportunity cost or implicit is the cost of the next best option forgone when one alternative is chosen over other alternatives
By producing one more blanket, the country would be forgoing the opportunity to produce one more shirt.
opportunity cost of producing 1 blanket = 612 shirts / 284 = 2.15 shirts
In 2008, Betserai was a 10-year-old quintrillionaire living in Bulawayo, Zimbabwe. He was literally rolling in money. In fact, Betserai has so much money that he decided to make kites out of billion dollar bills instead of putting the money into the bank to earn interest. None of Betserai's friends bothered to save their money, either. Rupert was Betserai's American pen pal and heard of Betserai's story and was extremely confused. He was taught that Zimbabwe was one of the poorer countries in the world, or at the least substantially poorer than the United States. Which statement best explains this phenomenon?
A. A country's wealth is based on the amount of money in circulation.
B. Zimbabwe was in the midst of an incredible economic boom, substantially increasing the wealth of all its citizens.
C. Rapid rises in price levels made the Zimbabwean dollar near worthless in terms of purchasing power.
D. All of these statements could explain what happened in Zimbabwe in 2008.
Answer:
C. Rapid rises in price levels made the Zimbabwean dollar near worthless in terms of purchasing power.
Explanation:
As in the given situation it is mentioned that 10 year old boy has the bill of billion dollar this represented that the country really printed the bill of billion dollar. It means that the attempt is to be done in order to print a currenct note of higher denomination that also represent that the country would increased such level also at the same time a big amount is required to purchased the goods and services.
Also the high denomination values would not consist of actual value as they have purchasing power i.e. negligible
Tirri Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 7.50 Direct labor $ 3.85 Variable manufacturing overhead $ 1.55 Fixed manufacturing overhead $ 24,400 Sales commissions $ 1.05 Variable administrative expense $ 0.60 Fixed selling and administrative expense $ 8,800 If the selling price is $28.10 per unit, the contribution margin per unit sold is closest to:
Answer:
$13.55
Explanation:
The contribution margin per unit is computed as;
= Selling price - (Direct materials + Direct labor + Variable manufacturing overhead + Sales commission + Variable administrative expense)
= $28.10 - ($7.50 + $3.85 + $1.55 + $1.05 + $0.60)
= $28.10 - $14.55
= $13.55
Therefore , the contribution margin per unit is $13.55
On January 1 of the current reporting year, Coda Company's projected benefit obligation was $30 million. During the year, pension benefits paid by the trustee were $4 million. Service cost was $10 million. Pension plan assets earned $5 million as expected. At the end of the year, there was no net gain or loss and no prior service cost. The actuary's discount rate was 10%. Required: Determine the amount of the projected benefit obligation at December 31.
Answer:
The amount of projected benefit obligation is on Dec 31 is $39 million
Explanation:
The computation of the amount of projected benefit obligation is on Dec 31 as follows;
Beginning PBO $30 million
Service cost $10 million
Interest cost (10% × $30) $3 million
Loss (gain) on PBO $0
Less: benefits paid -$4 million
Ending PBO $39 million
Hence, the amount of projected benefit obligation is on Dec 31 is $39 million
Classify each of the following costs as a direct cost or an indirect cost, assuming that the cost object is the Juniors Department (clothing and accessories for teenage and young women) in the Stow Kohl's department store. (Kohl's is a chain of department stores and has stores located across the United States.) a. Juniors Department sales clerks ▼ b. Cost of Juniors clothing c. Cost of hangers used to display the clothing in the store d. Electricity for the building e. Cost of radio advertising for the store f. Juniors clothing buyers' salaries (these buyers buy for all the Juniors Departments of Kohl's stores)
Answer:
The correct answers are:
a - Direct cost
b - direct cost
c - indirect cost
d - indirect cost
e - indirect cost
f - direct cost
Explanation:
On the one hand, the term of "direct cost" in the field of management and accounting refers to the type of cost that is directly associated with the production of a good in particular. So that basically means that a direct cost of a product is something that was extremely necessary to use in the production of it or in the other case it could not have been made.
On the other hand, the term of "indirect cost" refers to the whole opposite concept, meaning that the indirect cost will be those who can not be directly associated with a product or its production but instead it is implicated actually with a whole other activites in the company, such is the case of the electricity of the building.
Stephenson Company's computer system recently crashed, erasing much of the company's financial data. The following accounting information was discovered soon afterwards on the CFO's back-up computer data.
Cost of Goods Sold $380,000
Work-in-Process Inventory, Beginning 30,000
Work-in-Process Inventory, Ending 40,000
Selling and Administrative Expense 50,000
Finished Goods Inventory, Ending 15,000
Finished Goods Inventory, Beginning ?
Direct Materials Purchased 171,000
Factory Overhead Applied 112,000
Operating Income 22,000
Direct Materials Inventory, Beginning 18,000
Direct Materials Inventory, Ending 6,000
Cost of Goods Manufactured 340,000
Direct Labor 55,000
The CFO of Stephenson Company has asked you to recalculate the following accounts and report to him by week's end.
What should be the amount of direct materials used?
a. $208,400
b. $405,500
c. $440,800
d. $201,500
Answer:
Direct material used= $183,000
Explanation:
Giving the following information:
Direct Materials Purchased 171,000
Direct Materials Inventory, Beginning 18,000
Direct Materials Inventory, Ending 6,000
To calculate the direct material used, we need to use the following formula:
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 18,000 + 171,000 - 6,000
Direct material used= $183,000
Prove:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 30,000 + 183,000 + 55,000 + 112,000 - 40,000
cost of goods manufactured= $340,000
Blue Dog Manufacturing Corp. just reported a net income of $7,000,000, and its current stock price is $23.00 per share. Blue Dog is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 1,900,000 new shares of stock (raising its shares outstanding from 5,500,000 shares to 7,400,000 shares).
Required:
If Blue Dog’s forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does management expect its stock price to be one year from now?
Answer:
$21.41
Explanation:
The computation of the stock price one year from now is as follows:
As we know that
Earnings per share = Earnings after tax ÷ Number of shares
= $7,000,000 ÷ 5,500,000 shares
= $1.27 per share
And,
P/E ratio = Current price per share ÷ Earnings per share
= $23 ÷ $1.27
= 18.11
Next Year:
Earnings after tax is
= $7,000,000 × 1.25
= $8,750,000
Now
Earnings per share = Earnings after tax ÷ Number of shares
= $8,750,000 ÷ 7,400,000 shares
= $1.18 per share
And,
P/E ratio = Current price per share ÷ Earnings per share
18.11 = Current price per share ÷ $1.18
So, the current price per share is
= $1.18 × 18.11
= $21.41
A Student table and an Address table contain one linked record. What kind of table relationship do these tables
demonstrate?
a. one-to-one
b. one-to-many
c. many-to-many
d. many-to-none
Answer:
A.)
Explanation:
hope this helps
he accounts in the ledger of Monroe Entertainment Co. are listed below. All accounts have normal balances. Accounts Payable $418 Fees Earned $2,221 Accounts Receivable 765 Insurance Expense 411 Prepaid Insurance 4,395 Land 1,763 Cash 1,386 Wages Expense 735 Drawing 301 Capital 7,117 Total assets are
Answer:
See below
Explanation:
With regards to the above,
Total assets = $765 + $4,395 + $1,763 + $1,386
The accounts in the ledger of Hickory Furniture Company as of December 31, 2019, are listed in alphabetical order as follows. All accounts have normal balances. The balance of the cash account has been intentionally omitted.
Accounts Payable $42,770
Accounts Receivable 116,900
Cash ?
Elaine Wells, Capital 75,000
Elaine Wells, Drawing 24,000
Fees Earned 745,230
Insurance Expense 3,600
Land 50,000
Miscellaneous Expense 9,500
Notes Payable 50,000
Prepaid Insurance 21,600
Rent Expense 48,000
Supplies 4,275
Supplies Expense 6,255
Unearned Rent 12,000
Utilities Expense 26,850
Wages Expense 580,700
Prepare an unadjusted trial balance.
Answer:
Hickory Furniture Company
Unadjusted Trial Balance
As of December 31, 2019
Accounts Title Debit Credit
Accounts Payable $42,770
Accounts Receivable $116,900
Cash 33,320
Elaine Wells, Capital 75,000
Elaine Wells, Drawing 24,000
Fees Earned 745,230
Insurance Expense 3,600
Land 50,000
Miscellaneous Expense 9,500
Notes Payable 50,000
Prepaid Insurance 21,600
Rent Expense 48,000
Supplies 4,275
Supplies Expense 6,255
Unearned Rent 12,000
Utilities Expense 26,850
Wages Expense 580,700
Totals $925,000 $925,000
Explanation:
a) Data and Calculations:
Accounts Title Debit Credit
Accounts Payable $42,770
Accounts Receivable $116,900
Cash ?
Elaine Wells, Capital 75,000
Elaine Wells, Drawing 24,000
Fees Earned 745,230
Insurance Expense 3,600
Land 50,000
Miscellaneous Expense 9,500
Notes Payable 50,000
Prepaid Insurance 21,600
Rent Expense 48,000
Supplies 4,275
Supplies Expense 6,255
Unearned Rent 12,000
Utilities Expense 26,850
Wages Expense 580,700
Totals $891,680 $925,000
Cash = $925,000 - $891,680 = $33,320
b) The unadjusted Trial Balance lists the general ledger account balances of Hickory Furniture Company before the adjustment of accounts. It is the first trial balance that is prepared.
Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following:
Machine A could be purchased for $60,500. It will last 10 years with annual maintenance costs of $2,100 per year. After 10 years the machine can be sold for $6,050.
Machine B could be purchased for $55,000. It also will last 10 years and will require maintenance costs of $8,400 in year three, $10,500 in year six, and $12,600 in year eight. After 10 years, the machine will have no salvage value.
Required:
Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year.
Answer:
Esquire should purchase Machine A.
Explanation:
Note: The requirement of this question is not complete. The complete requirement is therefore presented before answering the question as follows:
Required:
Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations.
Calculate the present value of Machine A & Machine B. Which machine Esquire should purchase? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
Explanation of the answer is now given as follows:
Note: See the attached excel file for the calculations of the present value of Machine A & Machine B.
In the attached excel file, the following is used:
Discounting factor = 1 / (1 + r)^n ……………………………. (1)
Where:
r = interest rate = 8%, or 0.08
n = the year in focus
From part 1 of the attached excel file, we have:
Net present value of Machine A = -$71,788.85
From part 2 of the attached excel file, we have:
Net present value of Machine B = -$75,092.36
Since the Net present value of Machine A of -$71,788.85 is less than the Net present value of Machine B of -$75,092.36, Esquire should purchase Machine A.
Owner, Andy Pforzheimer, talks to his staff about their technical skills. He likely expects the Executive Chef, in particular, to excel at which technical
skills? Check all that apply.
Answer: Knowledge of kitchen equipment such as an anti-griddle or kitchen torch
Preparing delicious menu items for customers to enjoy
Explanation:
Technical skills simply refers to the skills and the abilities that one should have so that the person can be able to do his or her job effectively.
In this case, the owner expects the Executive Chef to excel at:
• Knowledge of kitchen equipment such as an anti-griddle or kitchen torch
• Preparing delicious menu items for customers to enjoy.
As a chef, he must be able to prepare delicious meals and also have knowledge of the kitchen utensils and the equipments.
Data pertaining to the postretirement health care benefit plan of Danielson Delivery Service include the following for the current calendar year: Service cost $ 150,000 APBO, January 1 $ 800,000 Plan assets (fair value), January 1 $ 80,000 Prior service cost (current year amortization, $2,000) $ 90,000 Retiree benefits paid (end of year) $ 90,000 Net gain (current year amortization, $1,000) $ 92,000 Contribution to health care fund (end of year) $ 85,000 Return on plan assets (actual and expected) 10 % Discount rate 8 % Required: 1. Determine Danielson's postretirement benefit expense for the current year.
Answer: $207,00
Explanation:
Postretirement benefit for the year is:
= Service cost + Interest cost + Amortization of prior service cost - Return on plant assets - Amortization of net gain
Interest cost = Discount rate * Actual Projected benefit obligation (APBO)
= 8% * 800,000
= $64,000
Return on plant assets = Return on plan assets (actual and expected)* Plan assets
= 10% * 80,000
= $8,000
Postretirement benefit = 150,000 + 64,000 + 2,000 - 8,000 - 1,000
= $207,000
Derek will deposit $9,359.00 per year for 18.00 years into an account that earns 4.00%, The first deposit is made next year. He has $18,418.00 in his account today. How much will be in the account 49.00 years from today
Answer:
FV= $904,322.05
Explanation:
First, we will calculate the future value of the 18 deposits 19 years from now. Also the value of the $18,418 19 years from now.
FV= {A*[(1+i)^n-1]}/i
A= annual deposit= 9,359
n= 18
i= 0.04
FV= {9,359*[(1.04^18) - 1]} / 0.04
FV= $240,015.42
FV= PV*(1+i)^n
FV= 18,418*(1.04^19)
FV= $38,803.95
Total FV= 240,015.42 + 38,803.95= $278,819.37
Finally, the value of the account for the remaining 30 years:
FV= 278,819.37*(1.04^30)
FV= $904,322.05
Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $7.7 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent facilities elsewhere. The land would net $10.5 million if it were sold today. The company now wants to build its new manufacturing plant on this land; the plant will cost $21.7 million to build, and the site requires $920,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project
Answer:
$33,120,000
Explanation:
Calculation for What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project
Using this formula
Proper Cash Flow Amount = (Expected Cost of Selling + Cost of Building Manufacturing Plant + Cost of Grading)
Let plug in the formula
Proper Cash Flow Amount = ($10,500,000 + $21,700,000 + $920,000)
Proper Cash Flow Amount = $33,120,000
Therefore the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project will be $33,120,000
Karl works at Moe's grocery. This year Karl was paid $30,000 in salary, but he was allowed to purchase his groceries at 15 percent below Moe's cost. This year Karl spent $2,040 to purchase groceries, costing Moe $2,400. The groceries were worth $3,600. What amount must Karl include in his gross income
Answer:
$30,360
Explanation:
Calculation for What amount must Karl include in his gross income
Gross income amount= [($30,000 + ($2,400 × .15))]
Gross income amount=$30,000 + $360
Gross income amount= $30,360
Therefore the amount that Karl must include in his gross income is $30,360
An insurance company accepts an obligation to pay 10,000 at the end of each year for 2 years. The insurance company purchases a combination of the following two bonds at a total cost of X in order to exactly match its obligation: 1-year 4% annual coupon bond with a yield rate of 5% 2-year 6% annual coupon bond with a yield rate of 5% Calculate X.
Answer:
$18,594.10
Explanation:
Insurance company has to pay $10,000 for two year with rate of 5% since market rate remain same in both the bond.
X = PV (PMT, N, I/Y)
X = PV(10000, 2, 5)
X = 18594.1043
X = $18,594.10
Below are several transactions that took place in Seneca Company last year: Paid suppliers for inventory purchases. Bought equipment for cash. Paid cash to repurchase its own stock. Collected cash from customers. Paid wages to employees. Equipment was sold for cash. Common stock was sold for cash to investors. Cash dividends were declared and paid. A long-term loan was made to a supplier. Income taxes were paid to the government. Interest was paid to a lender. Bonds were retired by paying the principal amount due. Required: Indicate how each of the above transaction would be classified on a statement of cash flows. As appropriate, place an X in the Operating, Investing, or Financing column. Also, place an X in the Cash Inflow or Cash Outflow column.
Answer:
Note: Operating = A, Investing = B, Financing = C, Cash Inflow column = D, Cash Outflow column = E
A B C D E
a. Paid suppliers for inventory X X
purchases.
b. Bought equipment for cash. X X
c. Paid cash to repurchase its X X
own stock.
d. Collected cash from customers. X X
e. Paid wages to employees. X X
f. Equipment was sold for cash. X X
g. Common stock was sold for X X
cash to investors.
h. Cash dividends were declared X X
and paid.
i. A long-term loan was made to X X
a supplier.
j. Income taxes were paid to X X
the government.
k. Interest was paid to a lender. X X
l. Bonds were retired by paying X X
the principal amount due
On January 2, 2014, a calendar-year corporation sold 8% bonds with a face value of $1,500,000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $1,384,000 to yield 10%. Using the effective-interest method of computing interest, how much should be charged to interest expense in 2014
Answer:
$69,660
Explanation:
Calculation for how much should be charged to interest expense in 2014 Using the effective-interest method of computing interest
2014 Interest expense =($1,384,000 × .05) =
2014 Interest expense=[$1,384,000 + ($1,384,000 × .05 - $60,000)] × .05
2014 Interest expense=[$1,384,000 + ( $69,200- $60,000)] × .05
2014 Interest expense=[$1,384,000 +$9,200] × .05
2014 Interest expense=$1,393,200×0.05
2014 Interest expense=$69,660
Therefore Using the effective-interest method of computing interest, how much should be charged to interest expense in 2014 is $138,860
The chart below gives prices and output information for the country of Utopia. Use this information to calculate real and nominal GDP for both years. Use 2001 as the base year.
Year 2000 2001
Price Quantity Price Quantity
Ice Cream $7.00 600 $3.00 400
Blue Jeans $70.00 20 $20.00 90
Laptops $300.00 5 $300.00 5
2000 nominal GDP = $_________
2001 nominal GDP = $_________
2000 real GDP = $_________
2001 real GDP = $_________
Answer and Explanation:
The computation is shown below:
As we know that
Nominal GDP = Sum of (Present Year Price × Present Year Quantity)
And,
Real GDP = Sum of (Base Year Price × Present Year Quantity)
Now
(a) Nominal GDP, 2000 is
= $[(7 × 600) + (70 × 20) + (300 × 5)]
= $4,200 + $1,400 + $1,500
= $7,100
(b) Nominal GDP, 2001 is
= $[(3 × 400) + (20 × 90) + (300 × 5)]
= ($1,200 + $1,800 + $1,500)
= $4,500
(c) Real GDP, 2000 is
= $[(3 × 600) + (20 × 20) + (300 × 5)]
= $1,800 + $400 + 1,500
= $3,700
(d) Real GDP, 2001 is
= $[(3 × 400) + (20 × 90) + (300 × 5)]
= $1,200 + $1,800 + $1,500
= $4,500
The following data pertains to Lam Co.'s manufacturing operations: Inventories 4/1 4/30 Direct Materials $ 18,000 $ 15,000 Work in Process 9,000 6,000 Finished Goods 27,000 36,000 Additional information for the month of April: Direct materials purchased $ 32,000 Direct labor 30,000 Direct labor rate per hour 10.00 Factor overhead incurred 40,000 Overhead is applied at $12 per direct labor hour. For the month of April, conversion cost incurred was:
Answer: $65000
Explanation:
For the month of April, the conversion cost that was incurred would be calculated as:
Beginning inventory of Direct Materials = $18000
Add: Purchase = $32000
Total cost of Direct Materials available = $50000
Less: Ending inventory of Direct Material = $15000
Therefore, Direct material used:
= $50000 - $15000 = $35000
Add: Direct labor = $30000
Conversion cost incurred = $35000 + $30000 = $65000
