Answer:
$112,750
Explanation:
Particulars Cost of making Cost of buying
Direct material 41,000*10=410,000 0
Direct labor 41,000*9=369,000 0
Variable manuf. overhead 41,000*3.70=151,700 0
Fixed manuf. overhead 41,000*4.65=190,650 41,000*4.65=190,650
Outside supplier's price 0 41,000*25.45=1,043,450
Total cost $1,121,350 $1,234,100
Financial advantage of making the motors = $1,234,100 - $1,121,350
Financial advantage of making the motors = $112,750
Below is financial information for two sporting goods retailers. Extreme Sports Company operates a retail business and franchising business. At the end 2011, Extreme Sports had 263 Company-owned and 120 franchise-operated retail stores. Extreme's stores are located in suburban, strip mall and regional mall locations, the company operates in 32 states. All Sports Corporation sells sporting goods and related products at over 2,500 Company-operated retail stores.
Selected Data for All Sports and Extreme Sports (amounts in millions):
All Sports Extreme Sports
Sales $5,320 $1,344
Cost of Goods Sold 3,897 887
Interest Expense 138 43
Net Income 212 33
Average Accounts Receivable 114 18
Average Inventory 998 286
Average Fixed Assets 1,163 130
Average Total Assets 2,472 662
Average Tax Rate 40% 40%
Calculate the following ratios for All Sports and Extreme Sports: If required, round your answers to two decimal places.
Find the following for each: All Sports / Extreme Sports
a. Return on assets
b. Profit Margin for ROA
c. Assets turnover
d. Accounts receivable turnover
e. Inventory turnover
f. Fixed asset turnover
Answer:
All Sports Company and Extreme Sports Company
All Sports Extreme Sports
a. Return on assets (ROA) = Profit margin * Assets turnover
= 3.98%*2.15 2.46%*2.03
= 8.56% 4.99%
b. Profit Margin for ROA = Net income/Sales
= ($212/5,320 * 100) ($33/1,344 * 100)
= 3.98% 2.46%
c. Assets turnover = Sales/Total assets
= $5,320/$2,472 $1,344/$662
= 2.15 2.03
d. Accounts receivable turnover = Credit Sales/Average receivable
= $5,320/$114 $1,344/$18
= 46.67x 74.67x
e. Inventory turnover = Cost of goods sold/Average Inventory
= $3,897/$998 $887/$286
= 3.9x 3.10x
f. Fixed asset turnover = Sales/Fixed assets
= $5,320/$1,163 $1,344/$130
= 4.57x 1.03x
Explanation:
a) Data and Calculations:
All Sports Extreme Sports
Sales $5,320 $1,344
Cost of Goods Sold 3,897 887
Interest Expense 138 43
Net Income 212 33
Average Accounts Receivable 114 18
Average Inventory 998 286
Average Fixed Assets 1,163 130
Average Total Assets 2,472 662
Average Tax Rate 40% 40%
The spread of ATMs and the increased use of debit cards _______ money. Everything else remaining the same, the nominal interest rate _______.
Answer:
increase the demand for; falls
Explanation:
ATMs means automated teller machine. They increase the ease through which a bank account holder can assess her funds. ATMs can be used to :
withdraw funds check account balancetransfer moneyWith the proliferation of ATMs and the increased use of debit cards, there has been an increase in the demand for money. This has led to a fall in nominal interest rate
The demand for money (the decision to hold money) is inversely related to interest rate. If the demand for money increases, it means that less bonds are been held. As a result, there would be a fall in the interest rates.
Rudy's and Blackstone are all-equity firms. Rudy's has 1,200 shares outstanding at a market price of $36 a share. Blackstone has 2,500 shares outstanding at a price of $38 a share. Blackstone is acquiring Rudy's for $48,000 in cash. What is the merger premium per share
Answer:
$4
Explanation:
Calculation to determine the merger premium per share
Using this formula
Merger premium per share=(Cash/Shares outstanding)-Market price
Let plug in the formula
Merger premium per share = ($48,000 / 1,200) - $36
Merger premium per share=$40-$36
Merger premium per share=$4
Therefore the merger premium per share is $4
You are the manager of a local sporting goods store and recently purchased ashipment of 60 sets of skis and ski bindings at a total cost of $30,000 (yourwholesale supplier would not let you purchase the skis and bindings separately,nor would it let you purchase fewer than 60 sets). The community in whichyour store is located consists of many different types of skiers, ranging fromadvanced to beginners. From experience, you know that different skiers valueskis and bindings differently. However, you cannot profitably price discrimi-nate because you cannot prevent resale. There are about 20 advanced skierswho value skis at $350 and ski bindings at $250; 20 intermediate skiers whovalue skis at $250 and ski bindings at $375; and 20 beginning skiers who valueskis at $175 and ski bindings at $325. Determine your optimal pricing strateg
Answer:
Optimal price is $575 which includes skis and ski binding.
Explanation:
Skiers who value skis at
Advance 20 * [$350 + $250] = $12,000
Intermediate 20 * [$250 + $375] = $12,500
beginners 20 * [$175 + $325] = $10,000
Total Revenue $34,500
Optimal price $34,500 / 60 = $575.
When one uses the after-tax weighted average cost of capital (WACC) to value a levered firm, the interest tax shield is A) not accounted for by the use of the WACC. B) considered by deducting the interest payment from the cash flows. C) automatically considered because the after-tax cost of debt is included within the WACC formula. D) capitalized by the levered cost of equity.
Answer: C) automatically considered because the after-tax cost of debt is included within the WACC formula.
Explanation:
When calculating the Weighted Average Cost of Capital (WACC) for a levered firm, the interest tax shield is included because the cost of debt used is adjusted for tax as shown below:
= (Weight of debt * Cost of debt( 1 - tax rate) ) + (Weight of equity * cost of equity)
As shown above, the interest tax shield is already implicit in the formula so there is no need to adjust the levered firm for an interest tax shield as this would lead to double-counting.
Harry has worked as a general manager at Gringard, a supply chain management firm, for eleven years of his professional life. Gringard is a company that still follows a traditional business model and has not significantly changed its human resource management and talent development processes. Harry is now joining Alivron Inc., a company that focuses on a customer-driven supply chain approach. Which of the following is a change Harry should expect to find in his new company?
a. He should expect Alivron to emphasize strong operational skills rather than cross-functional collaboration skills.
b. He wil most likely need to move from following an agile approach to an analytical approach.
c. He will most likely need to work variable shifts so that he can connect with all his team members.
d. He should expect Alivron's distribution centers to run only two shifts Monday through Friday.
Answer:
C. He will most likely need to work variable shifts so that he can connect with all his team members.
Explanation:
He will most likely need to work variable shifts so that he can connect with all his team members.
In his new company, he will most likely need to work variable shifts so that he can connect with all his team members.
Variable shifts is called rotating shifts because it is different from the conventional workdays.
The Variable shifts are programmed to schedule the employees to cover 24 hour a day, 7 days per week operations.
Hence, In the new company, he will most likely need to work variable shifts so that he can connect with all his team members.
Therefore, the Option C is correct.
Read more about Variable shift
brainly.com/question/8475207
The country of Arcadia has clusters of associated businesses and suppliers which include individual dye and textile manufacturing firms, chemical plants, and leather manufacturing companies, most of which are well reputed and internationally competitive. This has made Arcadia a major force in the global economic market. Which of the following factors of Michael Porter's diamond model is responsible for giving Arcadia an edge over its competitors?
A) Related and supporting industries
B) Demand conditions
C) Company strategy, structure and rivalry
D) Factor conditions
Answer:
A) Related and supporting industries
Explanation:
Competitive advantage is the edge an entity has over others that results in higher profit margins.
According to Michael Porter there are 4 factors that gives national advantage in the international environment:
- firm strategy' structure and rivalry
- related supporting industries
- demand conditions
- factor conditions.
Related supporting industries refers to the presence of supporting industries that helps a company to thrive.
Forms depend on others for high productivity. When the presence of other supporting companies is adequate production will be maximised.
This is the case in the given instance where the country of Arcadia has clusters of associated businesses and suppliers which include individual dye and textile manufacturing firms, chemical plants, and leather manufacturing companies, most of which are well reputed and internationally competitive. This has made Arcadia a major force in the global economic market
A natural monopoly arises whenA. a single firm aggressively forces other competitors to exit and industry.B. a single firm has a monopoly over natural resources.C. two firms merge into a single firm in order to capture more of the market.D. a single firm can produce more cheaply than multiple firms due to a downward-sloping average total cost curve.
Answer:
D
Explanation:
A monopoly is when there is only one firm operating in an industry. there are usually high barriers to entry of firms. the demand curve is downward sloping. it sets the price for its goods and services.
An example of a monopoly is a utility company
A natural monopoly occurs due to the high start-up costs or a large economies of scale.
Natural monopolies are usually the only company providing a service in a particular region
Characteristics of natural monopolies
they have a large fixed cost The firms have a low marginal costThey occur naturally through the free market. It does not occur by government regulation or any other forceAccording to the National Association of Colleges and Employers, finance graduates make an average of (µ) $52,402 a year. The standard deviation of annual salaries of finance graduates is (σ) $7,000. A random sample of 100 accounting graduates show that the sample mean salary is $54,390.If we were to increase the sample size (n) from 100 to 144, the z score will:A) increase.B) decrease.C) stay the same.D) be zero.
Answer:
National Association of Colleges and Employers
Therefore, if we were to increase the sample size (n) from 100 to 144, the z score will:
A) increase.
Explanation:
a) Data:
Mean (average) (µ) annual earnings of finance graduates = $52,402
Standard deviation of annual salaries of finance graduates (σ) = $7,000
Sample size of accounting graduates (n) = 100
Sample mean salary = $54,390
If sample size were increased to 144, from 100, what happens to the z score will be:
Calculating z score:
z = (x-μ)/σ
= (54,390 - 52,402)/7,000
= 0.284
Example:
= (58,000 - 52,402)/7,000
= 0.8
b) In statistics, as the sample size is increased from 100 to 144, the sample mean, x, ($54,390) and standard deviation ($7,000) will be closer in value to the population mean, μ, ($52,402) and standard deviation, σ.
Leelanau applies overhead using a predetermined rate. What amount of overhead was applied to work in process last year
Answer:
$138,500
Explanation:
The computation of the overhead applied is shown below:
As we know that
Cost of goods manufactured = Beginning WIP + Total manufacturing costs - Ending WIP
$323,000 = $10,500 + Total manufacturing costs - $19,000
So,
Total manufacturing costs is
= ($323,000 + $19,000 - $10,500)
= $331,500
Now
Total manufacturing costs is
= Direct materials + Direct labor + Overheads
So,
Overheads is
= ($331,500 - $115,000 - $78,000)
= $138,500
The short-run elasticity of demand for gasoline sold at gasoline stations is 0.20. If terrorism causes the supply of gasoline to fall, resulting in a 5 percent drop in quantity, if other things remain the same, the price per gallon will increase by:___________
Answer:
25%
Explanation:
Price elasticity of supply measures the responsiveness of quantity supplied to changes in price of the good.
Price elasticity of supply = percentage change in quantity supplied / percentage change in price
0.2 =5% / percentage change in price
percentage change in price = 5/0.2 = 25%
If the absolute value of price elasticity is greater than one, it means supply is elastic. Elastic supply means that quantity supplied is sensitive to price changes.
Supply is inelastic if a small change in price has little or no effect on quantity supplied. The absolute value of elasticity would be less than one
Supply is unit elastic if a small change in price has an equal and proportionate effect on quantity supplied.
Daphne has received job offers in six different cities across the United States. The table below shows the nominal wage she is being offered in each city and the average monthly rent for an apartment in each city. a. Calculate Daphne’s real wage in terms of how many months of rent her wage could purchase in each city and complete the “Real Wage” column in the table below.
You have just made your first $4,400 contribution to your retirement account. Assume you earn a return of 13 percent per year and make no additional contributions. a. What will your account be worth when you retire in 29 years
Answer: $152,309.69
Explanation:
You are looking for the future value of this amount in 29 years assuming it will be compounded annually.
Future value = Amount * (1 + rate)^ number of years
= 4,400 * ( 1 + 13%)²⁹
= $152,309.69
The cost object of the plantwide overhead rate method is: Multiple Choice The production departments of the company. The unit of product. The production activities of the company.
Answer: The unit of product.
Explanation:
The units produced of the goods being produced will be the appropriate cost object because it will apportion the overhead cost to the plant based on how much goods were produced by the plant itself because this would determine how much overhead the plant used.
Manufacturing overheads only occur because goods are being produced which is why the best cost object would be those same goods being produced.
What is the beta for a 2 stock portfolio with a 0.43 weight in Walmart stock and the remainder in Amazon
Answer: 0.82
Explanation:
From the given formulas, the beta of Walmart is 0.3616 and the beta of Amazon is 1.1634.
The portfolio beta is going to be a weighted average of these two betas:
= (0.43 * 0.3616) + ( (1 - 0.43) * 1.1634)
= 0.155488 + 0.663138
= 0.82
What is the present value of a perpetuity that offers to pay $100 next year and every year after the payment grows at 4.3%. Investments with similar risk are offering an 8% annual return.
Answer:
PV= $2,702.70
Explanation:
Giving the following information:
Cash flow= $100
Growth rate (g)= 4.3%
Discount rate (i)= 8%
To calculate the present value of the perpetuity, we need to use the following formula:
PV= Cf / (i - g)
PV= 100 / (0.08 - 0.043)
PV= 100 / 0.037
PV= $2,702.70
Which of the following methods of accounting for investments is appropriate when the investor has significant influence over the investee?
a. cost method.
b. mark to market method.
c. equity method.
d. lower of cost or market method.
Answer:
The answer is "Option c".
Explanation:
The equity method is indeed the conventional technique used whenever an investor, a firm, has a massive effect on some other asset manager.
It is the method used by a company to document its money generated through investment in another company.
The investor should record its profits or losses following its ownership percentage. It regularly changes the value of the property to a balance sheet of even an investor.
The expected average rate of return for a proposed investment of $4,250,000 in a fixed asset, using straight-line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $8,500,000 over the 20 years is:_________ (round to two decimal points).
a. 10.00%
b. 20.00%
c. 40.00%
d. 1.00%
Answer:
A
Explanation:
Average rate of return is a capital budgeting method. It is used to determine if a firm should invest in a project or should not invest in a project
average rate of return = average net income / average cost of investment
average net income = (total net income - depreciation) / useful life
(8,500,000 - $4,250,000) / 20 = 212,500
Average cost of investment =( beginning book value of the investment - ending book value of the investment) / 2
($4,250,000 - 0) / 2 = 2,125,000
ARR = 212,500 / 2125,000 = 0.1 = 10%
Arisk-neutral consumer is deciding whether to purchase a homogeneousproduct from one of two firms. One firm produces an unreliable product andthe other a reliable product. At the time of the sale, the consumer is unable todistinguish between the two firmsîproducts. From the consumerîs perspec-tive, there is an equal chance that a given firmîs product is reliable or unreli-able. The maximum amount this consumer will pay for an unreliable productis $0, while she will pay $50 for a reliable product.
a. Given this uncertainty, what is the most this consumer will pay to purchaseone unit of this product?
b. How much will this consumer be willing to pay for the product if the firmoffering the reliable product includes a warranty that will protect the con-sumer? Explain
Answer:
Uncertainty over Reliable and Unreliable Product
a. Given this uncertainty, the most this consumer will pay to purchase one unit of this product is $25
b. The amount that this consumer will be willing to pay for the product if the firm offering the reliable product includes a warranty that will protect the consumer is $50.
c. This is because the stated maximum amount that the consumer is willing to pay for the reliable product is $50. She is not prepared to spend more than this amount on the reliable product.
Explanation:
a) Data and Calculations:
Unreliable Reliable
Maximum amount the consumer will pay $0 $50
Probability of reliability 0.5 0.5
Expected amount to pay for either product $0 $25 ($50 * 0.5)
a. Given this uncertainty, the most this consumer will pay to purchase one unit of this product is $25 ($0 + $25)
Which of these is more likely to be true?
A. An adaptor is likely to consider radical innovations
B. An innovator is likely to consider incremental innovations
C. Large companies often find it easier to adopt radical innovations.
D. Innovators will often push for radical innovations.
Answer: D. Innovators will often push for radical innovations.
Explanation:
A radical innovation is one that when made, changes up the way things were being done in the industry that it appears in. For instance, when the first digital camera was made, it changed photography forever.
This is what innovators want. They want to come up with a product that would change the way things are being done and enable them to take over the market.
Curtis purchased stock with an initial share price of $140, and sold it when the share price was $119. While he owned the stock, he earned $10 in dividends.
What was his total percentage return on the investment?
-17.65%
-15.00%
-9.24%
-7.86%
Answer:
Curtis
The total percentage return on the investment is:
= -7.86%.
Explanation:
a) Data and Calculations:
Initial share price at which the stock was purchased = $140
The selling share price = $119
Dividends earned during the stock ownership (holding period) = $10
Total returns, including proceeds from the sales = $129 ($119 + $10)
Total returns from holding the stock until sold
= Total returns + sales proceeds minus Initial purchase cost
= -$11 ($129 - $140)
Total percentage return on the investment = $11/$140 * 100
= 7.857
= 7.86%
A bond has a yield to maturity (YTM) of 9.00%. If the YTM decreases to 8.90%, then the price of the bond will_____.
Answer:
increase
Explanation:
Spanolia LLC is estimating its WACC. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sell for 1,000 USD. The firm's marginal tax rate is 40 percent. What is the after-tax cost of debt? Answer in % terms to 2 decimal places w/o the % sign.
Answer:
Spanolia LLC
The after-tax cost of debt is:
= 7.20%.
Explanation:
a) Data and Calculations:
Coupon interest rate of bonds = 12%
Maturity period = 20 years
Selling price = $1,000
Firm's marginal tax rate = 40%
After-tax cost of debt = Coupon interest rate * (1 - tax rate)
= 12% * (1 - 0.4)
= 12% * 0.6
= 7.20%
b) Spanolia's after-tax cost of debt is derived by multiplying the cost of debt by the after-tax rate. The after-tax cost of debt represents the interest that Spanolia LLC pays on the bonds less the income tax savings that it gains because interest expenses are tax-deductible.
John believes his sales team's performance is due to outside forces, like economic and market factors. Which of the following best describes is John's locus of control?
a. External
b. Market driven
c. Internal
d. Based on labor trends.
Answer:
a. External
Explanation:
There are only two types of locus of control and these are internal and external. In this scenario, John's locus of control would be external. This is because John is connecting various external forces that he cannot control, to the performance of the sales team. This indicates an external locus of control. If John where to instead attribute something such as hard work and training to his sales team's perfomance, then that would be considered an internal locus of control.
Project 1 requires an original investment of $125,000. The project will yield cash flows of $50,000 per year for 10 years. Project 2 has a computed net present value of $135,000 over an eight-year life. Project 1 could be sold at the end of eight years for a price of $8,000. (a) Using the present value tables in Exhibits 2 and 5, determine the net present value of Project 1 over an eight-year life, with residual value, assuming
Answer: $126,613
Explanation:
Net Present value of Project A is:
= Present value of $50,000 annuity + Present value of residual value - Initial investment
Present value of $50,000 annuity:
= 50,000 * ( 1 - ( 1 + rate)^-number of periods) / rate
= 50,000 * ( 1 - ( 1 + 12%) ⁻⁸) / 12%
= $248,382
Present value of residual value:
= 8,000 / ( 1 + 12%)⁸
= $3,231
Net present value
= 248,382 + 3,231 - 125,000
= $126,613
SmartCorp sells 500 units, resulting in $75,000 of sales revenue, $32,000 of variable costs, and $20,000 of fixed costs. The number of units that must be sold to achieve $41,000 of operating income is: (Round intermediary calculations to two decimal places, and your final answer up to the nearest whole number.)
Answer: 709
Explanation:
selling price per unit will be:
= $75000/500
= $150
Variable cost per unit:
= $32000/500
= $64
Contribution margin per unit = $150 - $64 = $86
Number of units to be sold will now be:
= ($20000 + $41000) / $86
= $61000/$86
= 709
The adjusted trial balance of Pronghorn Corp at December 31, 2022, includes the following accounts: Retained Earnings $17,000, Dividends $6,700, Service Revenue $36,300, Salaries and Wages Expense $14,000, Insurance Expense $1,880, Rent Expense $4,080, Supplies Expense $1,440, and Depreciation Expense $900.
Required:
Prepare an income statement for the year.
Answer and Explanation:
The preparation of the income statement is presented below:
Service Revenue $36,300
Less:
Salaries and Wages Expense $14,000
Insurance Expense $1,880
Rent Expense $4,080
Supplies Expense $1,440
Depreciation Expense $900
Net income $14,000
Basically we subtracted the expenses from the revenues in order to get the net income
K Company estimates that overhead costs...
K Company estimates that overhead costs for the next year will be $3,700,000 for indirect labor and $890,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. Of 125,000 direct labor hours are planned for this next year, what is the company's plantwide overhead rate?
a. $0.03 per direct labor hour
b. $36.72 per direct labor hour.
c. $2960 per direct labor hour
d. $712 per direct labor hour
e. $0.14 per direct labor hour
Answer:
Predetermined manufacturing overhead rate= $36.72 per direct labor hour
Explanation:
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (3,700,000 + 890,000) / 125,000
Predetermined manufacturing overhead rate= 4,590,000 / 125,000
Predetermined manufacturing overhead rate= $36.72 per direct labor hour
Agreement and disagreement among economists
Suppose that Raphael, an economist from an AM talk radio program, and Susan, an economist from a nonprofit organization on the West Coast, are arguing over saving incentives. The following dialogue shows an excerpt from their debate:
Yvette: I think it's safe to say that, in general, the savings rate of households in today's economy is much lower than it really needs to be to sustain the improvement of living standards.
Sean: I think a switch from the income tax to a consumption tax would bring growth in living standards.
Yvette: You really think households would change their saving behavior enough in response to this to make a difference? Because I don't.
1. The disagreement between these economists is most likely due to (differences in values, differences in perception versus reality, differences in scientific judgments) .
2. Despite their differences, with which proposition are two economists chosen at random most likely to agree?
A. Lawyers make up an excessive percentage of elected officials.
B. Minimum wage laws do more to harm low-skilled workers than help them.
C. Tariffs and import quotas generally reduce economic welfare.
Answer:
Differences in values C. Tariffs and import quotas generally reduce economic welfare.Explanation:
Yvette and Sean most likely have a difference in values because they believe that one thing is better for the economy than the other. This means that when it comes down to the economy, they value a certain approach over other approaches.
Economist don't usually find common ground on many things but there are some things where they have a general consensus and one of them is that tariffs and import quotas are bad for the economy. They believe that people stand more to gain from free trade than restricted trade.
On the balance sheet, total assets minus net fixed assets equals:________.
a. current assets
b. current liabilities
c. gross fixed assets
d. total assets
Answer:
Current assets
Explanation:
the Answer is subtracting from total assets so it can’t be d. It also doesn’t include liabilities as your answer is something in the asset category. You are already subtracting fixed assets so it can’t be c. The answer is a. Current assets
