Answer:
The accounting equation holds as follows:
Asset = Liabilities + Equity = $80,000
Explanation:
Note: See the attached excel file for the analysis of the Effect of June Transactions on the Accounting Equation
From the last balances in the attached excel file, we have:
Assets = Cash + Receivable + Equipment = $41,000 + $8,000 + $31,000 = $80,000
Liabilities = Payable = $0
Equity = M. Chen, Capital - M. Chen, Withdrawals + Revenue - Expenses = $75,000 - $1,000 + $10,500 - $4,500 = $80,000
Liabilities + Equity = $0 + $80,000 = $80,000
Therefore, the accounting equation holds as follows:
Asset = Liabilities + Equity = $80,000
As Kyle conducts his annual evaluations of his employees, he notices that Connie and Debbie have both been less productive since they were relocated in the same department. Kyle is in what stage of the managerial decision-making process?
Answer:
Identifying the problem or opportunity.
Explanation:
During this stage, Kyle is first trying to determine what aspects of the firm are troublesome or underperforming. The whole point of doing this is to identify the areas that need some actions or decisions made.
The next step would be to generate alternatives.
As discussed in the lecture video, Crocs’ plastic molding and sandal design capabilities have provided the firm with only a temporary competitive advantage, as incumbent firms began selling sandals that were very similar to the Crocs’ clogs. Crocs lost its competitive advantage primarily because of ___________
Answer: c. competitor imitation
Explanation:
When a company makes a good product that people like and therefore brings in profit, other companies will copy that product if it is not protected by law so that they too can make profit as well.
This is what happened to the Crocs' clogs. Other companies imitated them and so Crocs lost their competitive advantage. This led to prices falling for such footwear as the supply increased. It is for this reason that companies try to get patents when they make a product.
Mustang Corporation has accumulated the following accounting data for the month of April: Finished goods inventory, April 1$32,400 Finished goods inventory, April 30 26,400 Total cost of goods manufactured 122,900 The cost of goods sold for the year is:
Answer:
$128,900
Explanation:
Cost of goods sold calculation
Opening Finished goods inventory $32,400
Add cost of goods manufactured $122,900
Less Closing Finished goods inventory ($26,400)
Cost of goods sold $128,900
therefore,
The cost of goods sold for the year is $128,900.
Prior to recording adjusting entries, the Office Supplies account had a $490 debit balance. A physical count of the supplies showed $175 of unused supplies available. The required adjusting entry is: debit/credit [ Select ] to [ Select ] account for [ Select ] debit/credit [ Select ] to [ Select ] account for [ Select ]
Answer: See explanation
Explanation:
Based on the information that's provided in the question, the required adjusting entry goes thus:
Unadjusted ending balance of supplies = $490
Actual supplies ending balance existing physically = $175
From the information above, the supplies used during the period will be:
= $490 - $175
= $315
Therefore,
Debit office supplies expenses $315 Credit office supplies account $315
Lakeview Engine, Inc., produces engines for the watercraft industry. An outside manufacturer has offered to supply several component parts used in the engine assemblies, which are currently being produced by Lakeview. The supplier will charge Lakeview $325 per engine for the set of parts. Lakeview’s current costs for those part sets are direct materials, $145; direct labor, $85; and manufacturing overhead applied at 100% of direct labor. Variable manufacturing overhead is considered to be 20% of the total, and fixed overhead will not change if the part sets are acquired from the outside supplier.
What would be the net cost advantage or disadvantage if Lakeview decided to purchase the parts?
Answer:
Lakeview Engine, Inc.
The net cost disadvantage if Lakeview decided to purchase the parts from the supplier per part is:
= $78
Explanation:
a) Data and Calculations:
Price by outside supplier per engine = $325
Current costs of manufacturing the engine:
Direct materials per unit = $145
Direct labor per unit = $85
Variable manufacturing overhead (20%) = $17
Fixed manufacturing overhead (80%) = $68
Total variable manufacturing cost per unit = $247
Incremental Analysis:
Make Buy Incremental
Production costs:
Variable manufacturing costs per unit:
Direct materials per unit $145
Direct labor per unit $85
Variable manufacturing per unit $17
Total variable manufacturing costs $247 $325 $78
b) Therefore, it costs more to Lakeview to buy the part from the outside supplier than it does when it makes it internally. Lakeview should continue making the parts.
Which per unit cost does the slope of the total cost line represent? Group of answer choices Fixed Variable. Semivariable Step-variable
Answer: Variable cost
Explanation:
The slope of a regression line is meant to represent the change in the total variable or y, as a result of a change in the number of independent observations or x.
The cost that changes during production as a result of an increase in x which is the volume of products, is the variable cost so it is the slope of the total cost line,
Slope of total cost line:
y = mx + c
y = total cost
m = variable cost. m is also slope.
x = production volume
c = fixed cost
Suppose Blue Hamster Manufacturing Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $3,225,000. The project is expected to generate the following net cash flows:
Year Cash Flow
Year 1 $275,000
Year 2 $475,000
Year 3 $425,000
Year 4 $400,000
Blue Hamster Manufacturing Inc.'s weighted average cost of capital is 7%, and project Beta has the same risk as the firm's average project. Based on the cash flows, what is project Beta's NPV?
Answer and Explanation:
The computation of the net present value is shown below:
Year Cash flows Discount factor at 7% Present value
0 -$3,225,000 1 -$3,225,000
1 $275,000 0.934579439 $257,009.3458
2 $475,000 0.873438728 $414,883.3959
3 $425,000 0.816297877 $346,926.5977
4 $400,000 0.762895212 $305,158.0848
Net present value -$1,901,022.576
Drew Davis goes to his local bank to get help developing a financial plan and making investment decisions. Which of the more recent services banks offer is Drew taking advantage of
Answer: b. Getting financial advice
Explanation:
As the number of banks in the world increases, banks are having to offer more products and services apart from their traditional roles as lenders in order to remain relevant and competitive. One such product is giving financial advice.
Banks now offer advice on how to make better investment decisions, develop financial plans and even organize your estate. This is what Drew Davis was taking advantage of here.
$ 485,000 $ 432,000 $Enter a dollar amount Enter percentages rounded to 0 decimal places % Inventory $ 786,000 $ 617,000 $Enter a dollar amount Enter percentages rounded to 0 decimal places % Total assets $3,111,000 $2,707,000 $Enter a dollar amount Enter percentages rounded to 0 decimal places %
Answer:
Accounts receivable
Dec 31, 2017 = $485,000
Dec 31, 2016 = $432,000
Amount = $53,000
Percentage = $53,000/$432,000
Percentage = 0.1226852
Percentage = 12%
Inventory
Dec 31, 2017 = $786,000
Dec 31, 2016 = $617,000
Amount = $169,000
Percentage = $169,000 / $617,000
Percentage = 0.2739060
Percentage = 27%
Total assets
Dec 31, 2017 = $3,111,000
Dec 31, 2016 = $2,707,000
Amount = $404,000
Percentage = $404,000/$2,707,000
Percentage = 0.1492427
Percentage = 15%
Ayayai Corp. uses a periodic inventory system. Its records show the following for the month of May, in which 69 units were sold.
Date Explanation Units Unit Cost Total Cost
May 1 Inventory 32 $8 $256
15 Purchase 25 9 225
24 Purchase 41 10 410
Total 98 $891
Calculate the weighted-average unit cost. (Round answer to 3 decimal places, e.g. 5.125.)
Weighted-average unit cost $____
Calculate the ending inventory at May 31 using the FIFO, LIFO and average-cost methods. (Round answers to 0 decimal places, e.g. 125.)
FIFO LIFO Average Cost
$____ $____ $_______
Answer:
a. Weighted-average unit cost = $9.092
b. We have:
Ending inventory at May 31 using the FIFO method = $290
Ending inventory at May 31 using the LIFO method = $232
Ending inventory at May 31 using the average-cost method = $264
Explanation:
a. Calculate the weighted-average unit cost. (Round answer to 3 decimal places, e.g. 5.125.)
Weighted-average unit cost = Total Cost of units of inventory available for sale / Total units of units of inventory available for sale = $891 / 98 = $9.092
b. Calculate the ending inventory at May 31 using the FIFO, LIFO and average-cost methods. (Round answers to 0 decimal places, e.g. 125.)
Ending inventory in units = Total units of units of inventory available for sale – Units sold = 98 - 69 = 29
Therefore, we have:
Ending inventory at May 31 using the FIFO method = Ending inventory in units * Unit cost of purchases on May 24 = 29 * $10 = $290
Ending inventory at May 31 using the LIFO method = Ending inventory in units * Unit cost of inventory on May 1 = 29 * $8 = $232
Ending inventory at May 31 using the average-cost method = Ending inventory in units * Weighted-average unit cost = 29 * $9.092 = $264
The Perfect Rose Co. has earnings of $2.30 per share. The benchmark PE for the company is 16. a. What stock price would you consider appropriate
Answer:
a.$36.80
b. $43.70
Explanation:
a. Calculation to determine What stock price would you consider appropriate
Using this formula
P= Benchmark PE ration x EPS
Let plug in the formula
P=16($2.30)
P=$36.80
Therefore What stock price would you consider appropriate is $36.80
b. Calculation to determine the stock price if the benchmark PE were 19
Using this formula
P= Benchmark PE ration x EPS
Let plug in the formula
P=19($2.30)
P= $43.70
Therefore the stock price if the benchmark PE were 19 will be $43.70
The strategic plan of a solar energy company that manufactures high-efficiency solar cells includes an expansion of its physical plant in 4 years. The manager in charge of planning estimates the expenditure required to be $1.17 million in 4 years. The company plans to sets aside $1 million now into an account that earns interest equal to the rate of inflation. What will the inflation rate have to be in order for the company to have exactly the right amount of money for the expansion?
a) 4%
b) 2%
c) Unknown
d) 6%
Answer:
The answer is "Option a".
Explanation:
Given:
FV=1.17
PV=1
n=4
We are aware of a future value formula that is:
[tex]FV = PV\times (1 + i)^n[/tex]
Put the value into the above formula:
[tex]\to 1.17 = 1\times (1 + i)^{4}\\\\\to 1.04 = (1 + i)\\\\\to 1.04 -1 = i\\\\\to i=0.04\\\\[/tex]
Calculating the percentage of i= 4%
Therefore The rate of interest is equivalent to the inflation rate, which is projected predicted, according to global meta and experts, The Us will reach 5.70 percent even by conclusion of the this year. In the future, we anticipate that the inflation rate in the US is 3.20 in twelve months.
A company would like to invest in a capital budget project that will be worth $500,000 in 40 years. How much should this company invest today, assuming an average inflation rate of 2% and a 10% annual return
Answer:
Company needs to invest amount = $23000
Explanation:
Below is the calculation of the present value:
Given the future value, FV = $500000
Number of years, n = 40 years
Real interest rate = 10% - 2% = 8%
Present value = ?
Present value = FV (P/F, r, n)
Present value = $500000 (P/F, 8%, 40)
Present value = $500000 (0.046)
Present value = $23000
Company needs to invest amount = $23000
For each of the following events, explain the short-run and long-run effects on output and the price level, assuming open economy and that policymakers take no action.
a. The stock market declines sharply, reducing consumers’ wealth.
b. The federal government increases spending on national defense.
c. A technological improvement raises productivity.
d. A recession overseas causes foreigners to buy fewer U.S. goods.
Answer:
High prices of products as well as increases poverty.
Explanation:
The stock market declines sharply, reducing consumers’ wealth that leads to high prices of products as well as increases poverty. The federal government increases spending on national defense that decreases the foreign reserves and money for other fields of the country. A technological improvement raises productivity which increases the economy of the country as well as standard of living. A recession overseas causes foreigners to buy fewer U.S. goods that leads to lower income of the country and purchasing power of the country. Due to this, there is less money for other fields and institutions.
Answer:
b. The federal government increases spending on national defense.
Explanation:
Hope this helps
Life, Inc. experienced the following events in Year 1, its first year of operation: Performed counseling services for $22,000 cash. On February 1, Year 1, paid $15,000 cash to rent office space for the coming year. Adjusted the accounts to reflect the amount of rent used during the year.
Required
Based on this information alone:
a. Record the events under an accounting equation.
TABLE PROVIDED BELOW
a.
Life, Inc.
Effect of Events on the Accounting Equation
Assets = Stockholders’ Equity
Event
Cash
Prepaid Rent
=
Retained Earnings
1. Performed Services 36,000 36,000
2. Prepaid Rent (18,000) 18,000 NA
3. Used Rent (18,000) (18,000)
Totals 18,000 0 = 18,000
b. Prepare an income statement, balance sheet, and statement of cash flows for the 2016 accounting period.
Life, Inc.
Income Statement
For the Year Ended December 31, 2016
Revenue 36,000
Expense 18,000
Net Income 18,000
Answer:
a. Assets = Liabilities + Stockholders' Equity = $8,250
b. We have:
Net income = $8,250
Assets = Liabilities + Stockholders' Equity = $8,250
Ending cash balance = $7,000
Explanation:
Note: The data in this question are merged together and the question also contains some errors in terms of irrelevant data and date/year inconsistency. These errors are therefore fixed by picking the actual question with the sorted data before answering the question as follows:
Life, Inc. experienced the following events in Year 1, its first year of operation:
1. Performed counseling services for $22,000 cash.
2. On February 1, Year 1, paid $15,000 cash to rent office space for the coming year.
3. Adjusted the accounts to reflect the amount of rent used during the year.
Required
Based on this information alone:
a. Record the events under an accounting equation.
b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period.
The explanation of the answer is now presented as follows:
a. Record the events under an accounting equation.
Note: See Part a of the attached excel file for the record of the events under an accounting equation.
From Part of the attached excel file, we have:
Use rent = Rent paid = (Number of months used in Year 1 / Number of months in a year) = $15,000 * (11 / 12) = $13,750
Assets = Cash + Prepaid rent = $7,000 + $1,250 = $8,250
Liabilities = $0
Stockholders' Equity = $8,250
Therefore, we have:
Assets = Liabilities + Stockholders' Equity = $8,250
b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period.
Note: See Part b of the attached excel file for the income statement, balance sheet, and statement of cash flows for the Year 1 accounting.
From Part of the attached excel file, we have:
Net income = $8,250
Assets = Liabilities + Stockholders' Equity = $8,250
Ending cash balance = $7,000
Note:
Increase in prepaid rent = Rent expense to be recognized in Year 2 = Rent paid - Rent used = $15,500 - $13,750 = $1,250
Dixon Sales has four sales employees that receive weekly paychecks. Each earns $13 per hour and each has worked 40 hours in the pay period. Each employee pays 12% of gross in federal income tax, 3% in state income tax, 6.0% of gross in social security tax, 1.5% of gross in Medicare tax, and 0.5% in state disability insurance.
Required:
Journalize the recognition of the pay period ending January 19 that will be paid to the employees January 26.
Answer:
Jan. 19
Dr Sales Wages Expense $ 3,640.00
Cr Federal Income Tax Payable $ 436.80
Cr State Income Tax Payable $ 109.20
Cr Social Security Tax Payable $ 218.40
Cr Medicare Tax Payable $ 54.60
Cr State Disability Insurance $ 18.20
Cr Sales Wages Payable $ 2,802.80
Explanation:
Preparation of the journal for recognition of the pay period ending January 19 that will be paid to the employees January 26.
Jan. 19
Dr Sales Wages Expense $ 3,640.00 (7 *40 *13)
Cr Federal Income Tax Payable $ 436.80 (3,640 * 12%)
Cr State Income Tax Payable $ 109.20 (3,640 * 3%)
Cr Social Security Tax Payable $ 218.40 (3,640 * 6%)
Cr Medicare Tax Payable $ 54.60 (3,640* 1.5%)
Cr State Disability Insurance $ 18.20 (3,640 *0.5%)
Cr Sales Wages Payable $ 2,802.80
($3,640.00-$436.80-$109.20-$218.40-$54.60-$18.20)
If the substitution effect of the real interest rate on saving is larger than the income effect of the real interest rate on saving, then a rise in the real interest rate leads to a ________ in consumption and a ________ in saving, for someone who's a lender.
Answer:
rise, fall
Explanation:
In the case when the subsitution effect with respect to the real rate of interest should be saved and more than the income effect on the real rate of interest so if there is an increased in the real rate of interest so there is an increase in the consumption also there is the fall in the savings
Also, if there is a more income effect, the consumption should rise and the savings would decline
Therefore the rise and fall should be considered to fill the blanks
Recology CleanScapes, formed when CleanScapes of Seattle merged with San Francisco–based Recology, provides recycling services to about 800,000 residential and commercial customers in four western states. The employee-owned company’s motto is "WASTE ZERO," and it is an industry leader in the waste reduction and recovery industry. Recology CleanScapes has credited much of its financial success, low employee turnover, and high customer satisfaction to open-book management.
Recycling is a worldwide industry. If Recology CleanScapes decided to expand by acquiring companies in other countries, which of the following issues should managers take into consideration when deciding where and how to operate? Check all that apply.
A- In some countries, like China and India, it is not customary to publicly disclose company financial information.
B- In countries with high power distance, where inequality between managers and employees is expected, companies may have difficulty using open-book management.
C- Employees in some countries are not sufficiently well educated to understand company financial information.
Answer:
A- In some countries, like China and India, it is not customary to publicly disclose company financial information. B- In countries with high power distance, where inequality between managers and employees is expected, companies may have difficulty using open-book management.Explanation:
Using open book management would mean disclosing financial information to ensure that employees know how best to use that information to push the company forward. If this is looked down upon in a country like in China and India, Recology would not be able to properly implement its open-book management style so it should take that into consideration.
This is the same problem as countries with high power distance. Inequality is expected and even encouraged between managers and employees yet Recology practices open-book management which actually tries to reduce this equality so Recology needs to properly consider such countries before they move in.
The managers must take into consideration when deciding where and how to operate is that;
In countries with high power distance, where inequality between managers and employees is expected, companies may have difficulty using open-book management.
When there is high power distances, lower-ranking citizens and employees is prone to accept and expect that power will not be distributed equally, and this also makes politicians and business leaders are distanced or isolated from others.
In business, managers need consider the following; information, time, personnel, equipment, and supplies and and also note any limiting factors.
Managers should boast the morale of employees so as to focus on their individual job performance and reward them for individual result.
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Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $430,000 on sales of $1,300,000. The companyâs average operating assets for the year were $1,500,000 and its minimum required rate of return was 10%.
Required:Compute the companyâs residual income for the year.Average Operating Assets-Net Operating Income-Minimum required return-Residual income-
Answer: $280,000
Explanation:
Residual income can be calculated by the formula:
= Net operating income - (Average operating asset * Minimum required rate)
= 430,000 - (1,500,000 * 10%)
= 430,000 - 150,000
= $280,000
You paid $9,700 for a $10,000 par value Treasury bill maturing in 3 months. What is the holding-period return if you hold the treasury bill until maturity
Answer:
The holding-period return if the treasury bill is held until maturity is:
= $300.
Explanation:
a) Data and Calculations:
Par value of Treasury bill = $10,000
Price paid for the bill = 9,700
Holding-period return = $300
Maturity period of the bill = 3 months
b) The holding-period return, otherwise called the yield, is the total return earned on the Treasury bill investment during the 3 months that it is held. The holding period is the 3-months time the Treasury bill is held by an investor, which corresponds to the period between the purchase date and sale date of the Treasury bill.
Required: Monson sells 15 units for $20 each on December 15. Assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Amounts to be deducted should be indicated with a minus sign. Round cost per units to 2 decimals.)
Answer:
The costs assigned to ending inventory are $11.33 per unit and $340 total cost.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 15 units for $20 each.
Purchases on December 7 10 units at $ 6.00 cost
Purchases on December 14 20 units at $12.00 cost
Purchases on December 21 15 units at $14.00 cost
Required: Monson sells 15 units for $20 each on December 15. Assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Amounts to be deducted should be indicated with a minus sign. Round cost per units to 2 decimals.)
The explanation of the answer is no provided as follows:
Periodic inventory refers to an inventory system that is updated on a periodic basis such as monthly, quarterly, or annually.
The weighted average method is a formula that divides the cost of products offered for sale by the number of units available for sales.
Combining these two methods, we have:
Value of Purchases on December 7 = 10 * $6.00 = $60
Value of Purchases on December 14 = 20 * $12.00 = $240
Value of Purchases on December 21 = 15 * $14.00 = $210
Total value of units available for sale = $60 + $240 + $210 = $510
Total units available for sale = 10 + 20 + 15 = 45
Costs assigned to ending inventory per unit = Weighted average cost per unit = Total value of units available for sale / Total units available for sale $510 / 45 = $11.33
Units of ending inventory = Total units available for sale – Number of units sold = 45 - 15 = 30
Total cost of ending inventory = Units of ending inventory * Weighted average cost per unit = $11.33 * 30 = $340
Therefore, the costs assigned to ending inventory are $11.33 per unit and $340 total cost.
On January 1, 2020, Ellison Co. issued eight-year bonds with a face value of $5,000,000 and a stated interest rate of 8%, payable semiannually on June 30 and December 31. The bonds were sold to yield 6%. The issue price of the bonds is closest to:
Answer:
"$4,417,800" is the correct solution.
Explanation:
According to the question,
Principal amount,
= $5,000,000
Number of period will be:
= [tex]8\times 2[/tex]
= [tex]16[/tex]
Interest rate yield per period will be:
= [tex]\frac{8 \ percent}{2}[/tex]
= [tex]4[/tex] %
Interest rate started per period will be:
= [tex]\frac{6 \ percent}{2}[/tex]
= [tex]3[/tex] %
Now,
The present value of principal will be:
= [tex]Principal\ amount\times Yield \ discount \ factor[/tex]
= [tex]5,000,000\times 0.534[/tex]
= [tex]2,670,000[/tex] ($)
The present value of interest will be:
= [tex]Interest \ amount\times Yield \ discount \ factor[/tex]
= [tex](5,000,000\times 3 \ percent)\times 11.652[/tex]
= [tex]1,747,800[/tex] ($)
hence,
The issue price of bonds will be:
= [tex]2,670,000+1,747,800[/tex]
= [tex]4,417,800[/tex] ($)
Camaro GTO Torino Cash $ 2,000 $ 110 $ 1,000 Short-term investments 50 0 580 Current receivables 350 470 700 Inventory 2,600 2,420 4,230 Prepaid expenses 200 500 900 Total current assets $ 5,200 $ 3,500 $ 7,410 Current liabilities $ 2,000 $ 1,000 $ 3,800 Compute the current ratio and acid-test ratio for each of the following separate cases.
Answer:
Current Ratio :
Camaro = 2.6
GTO = 3.5
Torino = 1.95
Acid Test Ratio :
Camaro = 1.3
GTO = 1.08
Torino = 0.84
Explanation:
The current ratio and acid-test ratio for each of the following separate cases will be as follows
Current ratio = Current Assets ÷ Current Liabilities
Camaro = 2.6
GTO = 3.5
Torino = 1.95
Acid Test Ratio = (Current Assets - Inventory) ÷ Current Liabilities
Camaro = 1.3
GTO = 1.08
Torino = 0.84
A company purchased equipment valued at $66000. It traded in old equipment for a $9000 trade in allowance. The old equipment cost $44000 and accumulated depreciation of $36000. This transaction has commercial substance. What is the recorded value of the new equipment?
Answer:
11000.
Explanation:
Is the answer to this question
Kiddy Toy Corporation needs to acquire the use of a machine to be used in its manufacturing process. The machine needed is manufactured by Lollie Corp. The machine can be used for 15 years and then sold for $20,000 at the end of its useful life. Lollie has presented Kiddy with the following options: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. Buy machine. The machine could be purchased for $170,000 in cash. All insurance costs, which approximate $15,000 per year, would be paid by Kiddy. 2. Lease machine. The machine could be leased for a 15-year period for an annual lease payment of $35,000 with the first payment due immediately. All insurance costs will be paid for by the Lollie Corp. and the machine will revert back to Lollie at the end of the 15-year period. Required:Assuming that a 12% interest rate properly reflects the time value of money in this situation and that all maintenance and insurance costs are paid at the end of each year, determine which option Kiddy should choose. Ignore income tax considerations. (Negative amounts should be indicated by a minus sign. Round your final answers to nearest whole dollar amount.)
Answer:
Kiddy Toy Corporation
The company should lease. It will save $30,123 by leasing than by buying the machine.
Explanation:
a) Data and Calculations:
1. Buy Machine:
Initial cost = $170,000
Annual Insurance Premium = $15,000
Interest rate = 12%
Estimated useful (Lease Period) = 15 years
Insurance Premium for 15 years (PV) = $102,162.97
PV of Salvage value ($20,000 * 0.183) = $3,660
Total cost of buying machine = $268,503 ($170,000 + $102,162.97 - $3,660)
Present value of lease payments = $238,380
NPV of leasing over buying = $30,123 ($268,503 - $238,380)
N (# of periods) 15
I/Y (Interest per year) 12
PMT (Periodic Payment) 35000
FV (Future Value) 0
Results
PV = $238,380.26
Sum of all periodic payments = $525,000.00
Total Interest = $286,619.74
Insurance Premium:
N (# of periods) 15
I/Y (Interest per year) 12
PMT (Periodic Payment) 15000
FV (Future Value) 0
Results
PV = $102,162.97
Sum of all periodic payments $225,000.00
Total Interest $-122,837.03
An expansion/ boom can be stabilized/fixed by following expansionary fiscal policy. Expansionary monetary policy used to fix stagflation can worsen the problem of inflation. Recession caused by a negative demand shock is fixed by an expansionary monetary policy. A boom can be stabilized/fixed by following contractionary monetary policy.
Answer:
An expansion/ boom can be stabilized / fixed by following expansionary fiscal policy.
Explanation:
The statement mentioned above is not correct, rest of all the statements are correct. An expansionary fiscal policy is used when money supply is increase in the economy. This will raise spending and taxes will be cut down in order to increase investments in the country.
Which of the following statements is incorrect? Employment insurance compensation encourages longer job searches, which may lead to a better match between jobs and employees. Employment insurance compensation increases the opportunity cost of being unemployed. The typical employment insurance compensation is roughly one third of one's latest salary for up to 26 weeks. Demand and supply curves for labor are constantly shifting.
Answer:
Employment insurance compensation increases the opportunity cost of being
unemployed.
Explanation:
The Employment insurance program is the benefit that is provided temporarily to the people who do not have jobs or had lost their jobs of no fault of their own. This program helps the unemployed with financial help temporarily so that they can survive and search for another jobs.
The compensations provided from the employment insurance encourages the people for a longer job search and better match between the employees and the jobs. This financial aid is provided for up to a maximum of 26 months and for 1/3rd of one's latest salary. The demand and supply curve for te labor is shifting constantly.
Thus the incorrect statement is :
Employment insurance compensation increases the opportunity cost of being
unemployed.
Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company’s normal activity level of 86,400 units per year is: Direct materials $ 1.50 Direct labor $ 2.00 Variable manufacturing overhead $ 0.60 Fixed manufacturing overhead $ 3.75 Variable selling and administrative expenses $ 1.90 Fixed selling and administrative expenses $ 1.00 The normal selling price is $25.00 per unit. The company’s capacity is 122,400 units per year. An order has been received from a mail-order house for 3,000 units at a special price of $22.00 per unit. This order would not affect regular sales or the company’s total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company’s inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for these units?
Answer:
Delta Company
1. The financial advantage of accepting the special order is:
= $53,700.
2. The minimum selling price for these units that is relevant is:
= $4.10 (the unit variable manufacturing cost).
Explanation:
a) Data and Calculations:
Normal activity level per year = 86,400 units
Direct materials $ 1.50
Direct labor $ 2.00
Variable manufacturing overhead $ 0.60
Variable manufacturing cost per unit $4.10
Fixed manufacturing overhead $ 3.75
Variable selling and administrative expenses $ 1.90
Fixed selling and administrative expenses $ 1.00
The normal selling price = $25.00 per unit.
The company’s capacity is 122,400 units per year
Special Order:
Sales revenue $66,000 (3,000 * $22)
Cost of goods:
Variable manufacturing 12,300 (3,000 * $4.10)
Contribution margin $53,700
A company has an overhead application rate of 124% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $24,000?
Answer:
$29,760
Explanation:
Overhead application rate = 124% of direct labor cost
The required total labor costing = $24,000
Total overhead applied = Overhead application rate * $24,000
Total overhead applied = 124% * $24000
Total overhead applied = $29,760
The sources of economic growth are _______. A. work hours growth and labor productivity growth B. democracy and labor productivity growth C. job experience and low inflation D. work hours growth and a stable government
Answer:
A. work hours growth and labor productivity growth
Explanation:
An economy is a function of how money, means of production and resources (raw materials) are carefully used to facilitate the demands and supply of goods and services to meet the unending needs or requirements of the consumers.
Hence, a region's or country's economy is largely dependent on how resources are being allocated and utilized, how many goods and services are to be produced, what should be produced, for whom they are to be produced for and how much money are to be spent by the consumers to acquire these goods and services.
Basically, there are four (4) main types of economy and these are;
I. Mixed economy.
II. Free market economy.
III. Traditional economy.
IV. Command economy.
Generally, the sources of economic growth of a country are work hours growth and labor productivity growth.
Labor (working) is simply the human capital or workers who are saddled with the responsibility of overseeing and managing all the aspects of production.
