The Clipper Corporation had net operating income of $380,000 and average operating assets of $2,000,000. The corporation requires a return on investment of 18%.
Required ( support your answers with explanations):
a.Calculate the company's return on investment (ROI) and residual income (RI).
b.Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950. If the division planning to make the investment currently has a return on investment of 20% and its manager is evaluated based on the division's ROI, will the division manager be inclined to request funds to make this investment?(Note: the decision model for the division manager is self-interested i.e. centers on the decision's effect on his evaluation criteria)
c.Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950. If the division planning to make the investment currently has a residual income of $50,000 and its manager is evaluated based on the division's residual income, will the division manager be inclined to request funds to make this investment?(Note: the decision model for the division manager is self-interested i.e. centers on the effect on his evaluation criteria)

Answers

Answer 1

Answer:

The Clipper Corporation

a. The company's return on investment (ROI) and residual income (RI):

ROI = $380,000/$2,000,000 x 100

= 19%

RI = $380,000 - (18% of $2,000,000)

= 380,000 - $360,000

= $20,000

b. Investment = $70,000

Annual operating income = $12,950

Department's current return on investment = 20%

Actual return on investment for this project = $12,950/$70,000 x 100

= 18.5%

The manager of the division will not be inclined to request funds to make this investment that will yield an ROI of 18.5% when the department is already making 20%.  This new investment will dilute his current ROI and adversely affect his performance evaluation.

c. Investment = $70,000

Annual operating income = $12,950

Current divisional residual income = $50,000

Actual residual income from this project,

= $12,950 - (18% of $70,000)

= $12,950 - $12,600

= $350

The division manager will be inclined to request funds for this investment that will increase her Residual Income marginally from $50,000 to $50,350, because her evaluation depends on an absolute figure and not a relative one (ROI).

Explanation:

1. The Clipper Corporation's Residual Income is equal to its operating income minus (minimum required return x operating assets).

2. The Clipper Corporation's Return on Investment is a derivative obtained from dividing the returns of its investment by the cost of the investment.

Answer 2

Here, we are preparing the cpmpany's return on investment (ROI), residual income (RI) etc

a. Computation of the Return on investment (ROI):

Return on investment = (Operating income/Average operating assets) * 100

Return on investment = ($380,000/$2,000,000) * 100

Return on investment = 0.19

Return on investment  = 19%

Computation of the residual income (RI)

Residual income = [(Operating income - (Return on investment *Average operating assets)]

Residual income = $380,000 - (18% * $2,000,000)

Residual income = 380,000 - $360,000

Residual income = $20,000

b. Given Information

Investment = $70,000

Annual operating income = $12,950

Department's current return on investment = 20%

The actual return on investment for this project will equals:

= (Annual operating income / Investment) * 100

= ($12,950/$70,000) * 100

= 0.185

= 18.5%

Therefore, the manager of the division will not be inclined to request funds to make this investment that will yield an ROI of 18.5% because the department is already making 20%.

c. Given Information

Investment = $70,000

Annual operating income = $12,950

Current divisional residual income = $50,000

The actual residual income from this project will be:

= Annual operating income - (Return on investment * Investment)

= $12,950 - (18% * $70,000)

= $12,950 - $12,600

= $350

Therefore, the division manager will be inclined to request funds for this investment that will increase the residual Income marginally from $50,000 to $50,350 because her evaluation depends on an absolute figure and not a relative one (Return on investment).

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Related Questions

For the current year ended March 31, Cosgrove Company expects fixed costs of $27,600,000, a unit variable cost of $805, and a unit selling price of $1,150.a. Compute the anticipated break-even sales (units).unitsb. Compute the sales (units) required to realize operating income of $5,175,000.units

Answers

Answer:

Instructions are below.

Explanation:

Giving the following information:

Fixed costs= $27,600,000

Unitary variable cost= $805

Unit selling price= $1,150

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 27,600,000 / (1,150 - 805)

Break-even point in units= 80,000 units

Desired income= $5,175,000

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (27,600,000 + 5,175,000) / 345

Break-even point in units= 95,000 units

Suppose you have ​$ cash today and you can invest it to become worth ​$ in years. What is the present purchasing power equivalent of this ​$ when the average inflation rate over the first years is ​% per​ year, and over the last years it will be ​% per​ year?

Answers

Answer: $900,599.04

Explanation:

The present purchasing power equivalent is the present worth of this investment.

The investment will earn 5% for the first 7 years and then 9% for the next 10.

As there are different rates, the present worth calculation will have to reflect that.

At the end of the first 7 years, the present worth of the invested amount given 10 more years of investing at 9%. The Present worth is;

= 3,000,000(Present worth factor, 9%, 10 years)

= 3,000,000 * 0.4224

= $1,267,200

Then what is the Present worth of $1,267,200 in the current year given that it will be invested for 7 years at 5% to get to $1,267,200.

= 1,267,200 (Present worth factor, 5%, 7 years)

= 1,267,200 * 0.7107

= $900,599.04

According to the Prebisch-Singer hypothesis, this fate has befallen many developing countries given the general decline in commodity prices in relation to the price of manufactured goods.A) TrueB) False

Answers

Answer: True

Explanation;

Generally, manufactured goods cost more than the commodity goods that they were manufactured from due to the value that has been added to them. This is what the Prebisch-Singer hypothesis argues, that commodity prices decline overtime in relation to manufacturing good prices.

This is a fate that has befallen many developing countries as many of them export commodity goods to developed countries who then add value to them, turning them into manufactured goods and then selling them back to developing countries at a higher price thereby negatively affecting their balance of trade.

Becker Financial recently declared a 2-for-1 stock split. Prior to the split, the stock sold for $60 per share. If the firm's total market value is unchanged by the split, what will the stock price be following the split?a. $35.28b. $39.53c. $42.50d. $33.58e. $33.15

Answers

Answer:

$30

Explanation:

In a 2 for 1 split, for every 1 share owned, the shareholder receives 2 shares

share price after split = share price before split / 2 = $60 / 2 = $30

4. Giving specific examples of global companies, discuss the following concepts which are contemporary issues of concern to Global Businesses: a) Corporate Social Responsibility b) Off-shoring c) Business Sustainability

Answers

Answer:

a) Corporate Social Responsibility

This is a type of international private business that is self-regulated which helps a company to become socially responsible, that is, giving back to the society through philanthropic activities which may include volunteer work or environmental activism.

b) Off-Shoring

Offshoring is simply taking advantage of difference in the cost of production or labor to relocate a business to another country in order to get cheaper labor for manufacturing operations.

Typically, it moves the production of materials from a country where such materials are expensive to another country where the materials are cheap in order to save costs.

c) Business Sustainability

This is simply taking care of all the major facets of a business in order to ensure that the success they have enjoyed in the past is sustained.

These facets could include management of social and economic demands to ensure optimal performance.

A business that is sustainable has a very little negative impact, rather it impacts its immediate environment positively.

Samuel, a longtime employee of the ABCD Corporation, was injured when he fell off a ladder while stocking widgets at ABDC at their East Lansing, Michigan location. Samuel believes ABCD Corporation was negligent for selling widgets. If Samuel sues his employer in a circuit court under a negligence theory of recovery:
a. he will lose
b. he will win
c. he will forfeit his rights to workers compensation benefits, completely
d. he will forfeit his rights to workers compensation benefits, but only if the court awards him non-economic damages

Answers

Answer:

Option B. He will win

Explanation:

If Samuel is desiring to sue his employer in a circuit court because he thinks that the employer was negligent then he will have to sue under negligence Act, which says that the employer is obliged to take all necessary precautions and if found negligent then the court may apply contributory negligent theory as well as comparative negligent theory. These two negligent theories means that the employer was partly responsible for injury, which means that this would result in compensation to Samuel.

Hence it is more likely that Samuel will win the case.

It is likely that if Samuel sues ABCD Corporation in a circuit court under a negligence theory of recovery, a. he will lose.

 

The question to ask is, is ABCD Corporation negligent in selling widgets? No. Is it the case that the corporation's sale of widgets caused Samuel to fall off a ladder while he was stocking them at the Michigan location? No.

 

For Samuel to be successful in the circuit court, he must prove that ABCD Corporation acted negligently with its sales of widgets, especially:

ABCD Corporation owed a duty to Samuel not to sell widgets ABCD Corporation breached this duty to Samuel  ABCD's breach was the actual cause of Samuel's injury  ABCD's breach was also the proximate cause of Samuel's fall and injury  Samuel suffered actual damages as a result of the negligent act by ABCD Corporation.

 

Thus, based on the above, Samuel will lose the case because the corporation was not negligent for selling widgets nor for the fall of Samuel from the ladder.

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The production sector would NOT include Group of answer choices a Florida orange grove a California wine grower a meat packing plant

Answers

Answer: Meat packing plant

Explanation:

The options to the question are:

A. California wine grower

B. meat packing plant

C. horticultural nursery

D. Florida orange grove

E. none of the above

Of all the options given in the question, the correct answer is meat packing plant. It should be noted that the meat packaging plant will not be part of the production sector due to the fact that no productive activities are taking place, it only involves in services.

Wyckam Manufacturing Inc. has provided the following information concerning its manufacturing costs:
Fixed Cost per Month Cost per Machine-Hour
Direct materials $ 5.40
Direct labor $ 42,400
Supplies $ 0.30
Utilities $ 1,700 $ 0.25
Depreciation $ 15,200
Insurance $ 11,600
For example, utilities should be $1,700 per month plus $0.25 per machine-hour. The company expects to work 4,200 machine-hours in June. Note that the company’s direct labor is a fixed cost.
Required:
Prepare the company's planning budget for manufacturing costs for June.

Answers

Answer:

Total Manufacturing Costs is $95,680

Explanation:

                        Wyckam Manufacturing Inc.

              Planning Budget for Manufacturing costs

                       For the month Ended June 30

Direct Materials      (4,200 hours *$5.40)                    $22,680

Direct Labor                  Fixed                                        $42,400

Supplies                  (4,200 hours * $0.25 )                   $1,050

Utilities                   ($1,700+ 4,200 Hours * $0.25)      $2,750

Depreciation                  Fixed                                        $15,200

Insurance                       Fixed                                        $11,600

Total Manufacturing Costs                                         $95,680

Martha, who is single, has a main home in Houston. In the current year, she rented it for 10 days, receiving $5,000 in rental income. Martha paid $20,000 in mortgage interest and $10,000 in real estate taxes on her home in the current year. What is the net effect of these items on her adjusted gross income g

Answers

Answer:

$5,000 increase

Explanation:

As Martha has the main home in Houston and in the current year she rented it for only 10 days, this means that house is rented for less than 14 days and will be still treated as her personal residence, therefore, no deduction will be available for Martha against her rental income. Martha's Adjusted gross income will be increased by an amount of $5,000.

A beta of 0.5 for a security indicates Group of answer choices the security has no market risk. the security has above average market risk. the security has above average company-unique risk. the security has below average company-unique risk. the security has below average market risk.

Answers

Answer:

the security has below average market risk.

Explanation:

As we know that the beta is the systematic risk i.e. market risk of the stock.

if we assume that the average risk in the market is 1 so the beta of the market or market beta is the average risk

Now if the beta of the stock is less than 1 i.e. 0.5 so it is below the average risk of the market

Hence, the correct option is d.

College Logos buys​ logo-imprinted merchandise and then sells it to university bookstores. Sales are expected to be $ 2 comma 009 comma 000 in​ September, $ 2 comma 240 comma 000 in​ October, $ 2 comma 379 comma 000 in​ November, and $ 2 comma 520,000 in December. College Logos sets its prices to earn an average 40​% gross profit on sales revenue. The company does not want inventory to fall below $ 425 comma 000 plus 15​% of the next​ month's cost of goods sold.Required:Prepare a cost of goods​ sold, inventory, and purchases budget for the months of October and November.

Answers

Answer:

College Logos

Cost of goods sold, inventory, and purchases budget for the months of October and November:

                                                           October             November

Sales                                             $ 2,240,000         $ 2,379,000

Cost of goods sold  60%                 1,344,000             1,427,400

Gross profit, 40% of sales               $896,000             $951,600

Inventory Budget:

Ending Inventory                              $626,600              $639,110

Beginning Inventory                         $606,810             $626,600

Purchases Budget:

Ending Inventory                            $626,600             $639,110

Cost of goods sold                         1,344,000            1,427,400

Cost of goods available for sale $1,970,600         $2,066,510

less Beginning Inventory               $606,810           $626,600

Purchases                                    $1,363,790          $1,439,910

Explanation:

a) Data and Calculations:

                       September      October        November        December

Sales             $ 2,009,000   $ 2,240,000  $ 2,379,000  $ 2,520,000

Cost of goods

 sold  60%       1,205,400        1,344,000       1,427,400       1,512,000

Gross profit     $803,600        $896,000       $951,600    $1,008,000

Ending Inventory $606,810   $626,600         $639,110       $651,800

Beginning Inventory               $606,810          $626,600     $639,110

Purchases:

Ending Inventory $606,810      $626,600         $639,110       $651,800

Cost of goods

 sold                   1,205,400       1,344,000       1,427,400       1,512,000

Cost of goods available

for sale             $1,812,210     $1,970,600    $2,066,510    $2,163,800

less Beginning Inventory          $606,810      $626,600        $639,110

Purchases                               $1,363,790     $1,439,910    $1,524,690

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
Standard Quantity or Hours Standard Price or Rate Standard Cost
Direct materials 5.50 pounds $ 2.50 per pound $ 13.75
Direct labor 0.50 hours $ 6.50 per hour $ 3.25
During the most recent month, the following activity was recorded:
1. Ten thousand six hundred pounds of material were purchased at a cost of $2.40 per pound.
2. The company produced only 1,060 units, using 9,540 pounds of material. (The rest of the material purchased remained in raw materials inventory.)
3. 630 hours of direct labor time were recorded at a total labor cost of $7,560.
Required:
Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)

Answers

Answer:

Instructions are below.

Explanation:

Giving the following information:

Direct materials 5.50 pounds $ 2.50 per pound.

Actual:

1. 10,600 were purchased for $2.40 per pound.

2. The company produced only 1,060 units, using 9,540 pounds of material.

To calculate the direct material price and quantity variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (2.5 - 2.4)*10,600

Direct material price variance= $1,060 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

standard quantity= 1,060*5.5= 5,830

Direct material quantity variance= (5,830 - 9,540)*2.5

Direct material quantity variance= $9,275 unfavorable

Andy tells Ervin and Marina that everyone will lose their jobs if the company goes out of business, whether they have guild protection or not. Which influence tactic is Andy most likely utilizing?

consultation
rational persuasion
legitimating tactics
ingratiation
exchange

Answers

Answer: Legitimating tactics

Explanation:

Rational Persuasion has to do with when an individual is being convinced with logic, reasons or facts.

Consultation means simply getting other people to participate in making decisions and planning.

Ingratiation is when an individual tried to influence someone else by becoming likeable to the person.

Legitimating tactics occur when an individual uses his or her power to influence others. This tactic is intended to make people do something and not to motivate them.

This strategy is designed to force people to accomplish something rather than to motivate them. When a person utilizes his or her power to persuade others, this is known as legitimizing methods.

So, Option C is correct.

The other Options are incorrect as:

Option A is incorrect as Getting other people involved in decision-making and planning is what consultation entails.

Option B is incorrect as When a person is persuaded using logic, arguments, or facts, this is known as rational persuasion.

Option D is incorrect as When someone tries to influence someone else by becoming likable to them, this is known as ingratiation.

Option E is incorrect as A strategy entails making explicit or inferred commitments and exchanging favors. Tactics used by the coalition.

Thus Option C is the correct tactic andy has used.

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A project has an initial cost of $18,400 and produces cash inflows of $7,200, $8,900, and $7,500 over three years, respectively. What is the discounted payback period if the required rate of return is 16 percent

Answers

Answer:

Never. the amount invested is never recovered

Explanation:

Discounted payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative discounted cash flows

Discounted cash flow in year 1 = 7200 / 1.16 = $6206.90

Discounted cash flow in year 2 = $8,900 / 1.16² = $6614.15

Discounted cash flow in year 3 = $7,500 / 1.16³ = $4804.93

Adding the discounted cash flows together gives a value of $17,625.98. This value is less than the cost of the project. So, the amount invested is never recovered

Assume that you have recently purchased 250 shares in an investment company. Upon examining the balance sheet, you note that the firm is reporting $320 million in assets, $60 million in liabilities, and 25 million shares outstanding. What is the net asset value (NAV) of these shares

Answers

Answer:

$10.4

Explanation:

250 shares was recently purchased in an investment company

The firm is reporting $320 million in assets

$60 million in liabilities

25 million shares outstanding

Therefore, the net asset value(NAV) of the shares can be calculated as follows

NAV = $320 million-$60 million/25 million shares

= 260/25

= $10.4

Hence the net asset value is $10.4

Use the following information to calculate the dollar cost of using a money market hedge to hedge 200,000 British pounds of payables due in 180 days. Assume the firm has no excess cash. Assume the spot rate of the pound is $2.02, and the 180-day forward rate is $2.00. The British interest rate is 5 percent, and the U.S. interest rate is 4 percent over the 180-day period.

Answers

Answer:

The dollar cost of using a money market hedge to hedge 200,000 British pounds of payable due in 180 days is $400,152.38.

Explanation:

A money market hedge refers to a method that employed to to preserve the value of a foreign currency transaction in the domestic currency of a company in order to reduce the exchange rate or currency risk that is associated with business transactions with a foreign company.

For this question, the dollar cost of using a money market hedge can be calculated as follows:

Amount needed to invest in British pounds = Amount needed to hedge / (1 + British interest rate) = £200,000 / (1 + 0.05) = £190,476.19

Since this is in British pounds, we have to convert to the US dollars to obtain the amount of the US dollars that is needed to exchange as follows:

Amount needed to invest in the US dollars = Amount needed to invest in British pounds * Spot rate of the pound = £190,476.19 * $2.02 = $384,761.90

We can now calculate the amount needed to repay loan after 180-day as follow:

Amount needed to repay loan after 180-day = Amount needed to invest in the US dollars * (1 + U.S. interest rate) = $384,761.90 * (1 + 0.04) = $400,152.38

Therefore, the dollar cost of using a money market hedge to hedge 200,000 British pounds of payable due in 180 days is $400,152.38.

Assuming Digby’s current market share for its Drat product remains the same, how many units of Drat should Digby expect to sell in the primary segment for the upcoming year?

Answers

Available Options Are:

A. 401 units

B. 294 units

C. 441 units

D. 305 units

Answer:

Option C. 441 Units

Explanation:

The first thing would be to analyze the situation. It is crystal clear in the Accessibility Elite table that the accessibility of Digby products are 2nd largest among the rival companies.

Now we will look at whether the company has taken advantage of its second largest accessibility position or not. This can be seen in Actual Vs Potential Market Share table. The units produced were sold in the year which means that the accessibility of the product is even more than its rivals as the market share captured in the year by Digby is above 40%. This means that their is an increased demand for Digby's Product. This can also be seen by segment growth rate in the Elite Statistics (Top Left Corner) which is anticipated to be at 16%.

All these things says that Digby must produce as much as possible, hence quantity would be a greater number.

In which exchange rate system is the exchange rate determined entirely by the supply of and demand for a currency

Answers

Answer: Floating exchange rate system.

Explanation:

Floating exchange rate system is one in which the exchange rate is determined entirely by the supply of and demand for a currency.

In floating exchange rate system, the value of a currency fluctuates based on the happeninge that occur in the foreign exchange market.

Answer:

Managed -> exchange rate determined by both government intervention and supply and demand

Floating -> exchange rate determined by demand and supply of foreign currency

Fixed -> exchange rate pegged to the value of another nation's currency

Explanation:

A company is considering replacing an old piece of machinery, which cost $400,000 and has $175,000 of accumulated depreciation to date, with a new machine that has a purchase price of $550,000. The old machine could be sold for $250,000. The annual variable production costs associated with the old machine are estimated to be $72,500 per year for eight years. The annual variable production costs for the new machine are estimated to be $24,000 per year for eight years.

Required:
a. Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine.
b. What is the sunk cost in this situation?

Answers

Answer:

Company A

a. Differential Analysis dated May 29

                                              Alternative 1           Alternative 2

Opportunity cost                       $250,000            $550,000

Variable production costs          580,000                192,000

Total cost                                  $830,000             $742,000

b. Sunk cost in this situation is: $225,000 ($400,000 - $175,000) cost of the old machine.

Explanation:

Company A's relevant cost for the old machine is the opportunity cost that it will lose if it continues with Alternative 1 or continued use of the old machine and the additional cost for the new machine for Alternative 2.  Also relevant is the variable production costs that would be incurred if the old or new machine is used.

Company A's sunk cost is the cost of the old machine minus accumulated depreciation.  Sunk cost is not relevant for decision making under differential analysis.

Company A's differential analysis is a managerial tool that is used to differentiate one decision alternative from another.  In this analysis, only relevant costs are considered.  A relevant cost in this case is cost that its inclusion or elimination makes a difference in the decision outcome.

In the United States, many agricultural products (such as corn, wheat, and rice) are subsidized. What are the benefits of subsidizing these products? Instructions: You may select more than one answer. .
a) higher prices for consumers and producers
b) lower prices for consumers and producers
c) higher prices for consumers and lower prices for producers
d) lower prices for consumers and higher prices for producers

Answers

Answer:

Correct answer:

b) lower prices for consumers and producers

Explanation:

In United States of America, food is one of the fundamental things which the government guarantee its citizens. Most agricultural products are subsidized by the government both for the farmers (producer) and the citizens (consumers).

The subsidy for the producer could be inform of payment of incentive, giving out agricultural implements and grants. On the other-hand, the subsidy to the consumer could be inform of reduced price of the agricultural food crops.

Empirical evidence from 1960 to 2010 shows that convergence in economic growth is occurring in which of the following cases?

a. All low-income countries are catching up to all high-income countries.
b. Low-income industrial countries are catching up to high-income developing countries.
c. Low-income developing countries are catching up to high-income industrial countries.
d. Low-income industrial countries are catching up to high-income industrial countries.

Answers

Answer:

Correct Answer:

c. Low-income developing countries are catching up to high-income industrial countries.

Explanation:

The evidence which shows that low income developing countries are catching up to high-income industrial countries could be found in the series of developmental strides made by some countries like Rwanda, Kenya, Tanzania, Indonesia, Vietnam etc over the years. Most of their achievements is at par with most European countries in different sectors such as educational, and social sectors.

Steelcase Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it produces filing cabinets in two departments: Fabrication and Assembly. Assume the following information for the Assembly Department:Steel per filing cabinet ............................................. 55 poundsDirect labor per filing cabinet ...................................... 20 minutesSupervisor salaries ................................................ $180,000 per monthDepreciation ...................................................... $28,000 per monthDirect labor rate................................................... $21 per hourSteel cost ......................................................... $0.40 per poundRequired:Prepare a flexible budget for 12,000, 15,000, and 18,000 filing cabinets for the month of August 2014.

Answers

Answer:

Total Flexible Budgets  for 12,000, 15,000, and 18,000 units  is $ 556,000         $ 643,000 and  $830,000  

Explanation:

Steelcase Inc.

Assembly Department:

Steel per filing cabinet ............................................. 55 pounds

Direct labor per filing cabinet ...................................... 20 minutes

Supervisor salaries ................................................ $180,000 per month

Depreciation ...................................................... $28,000 per month

Direct labor rate................................................... $21 per hour

Steel cost ......................................................... $0.40 per pound

Steelcase Inc.

Flexible budget

For the month of August 2014.

Units:                                  12000            15000            18000

Steel for filing cabinet     660,000          825000         990,000 pounds

Steel cost                         $264,000         330,000        $ 396,000

Direct labor Hrs               4,000              5,000               6,000

Direct labor Cost             $84,000       $105,000             $ 126,000

Supervisor salaries      $180,000           $180,000         $180,000

Depreciation                 $28,000             $28,000           $28,000            

 Total                              $ 556,000         $ 643,000          $830,000  

First we find the Steel for filing cabinets in pounds . Then we multiply with the rate to find the steel cost.

Similarly we find the direct labor hours and then the direct labor cost.

We assume that the supervisor salaries and depreciation are fixed.

Design specifications reflecting customer requirements for a product are known as:________
a) control limits
b) capability indices
c) natural variability
d) tolerances

Answers

Answer:

d) Tolerances.

Explanation:

This is seen to directly reflect on total range of the customer satisfactory choices of the said product. It is also known according to product research and customer satisfaction on choices to conventionally deal properly with the variation of manufacturing processes to meet the requirements of product quality. Cases that bring up things like customer development in product customization has also been generally accepted that customer requirements also have acceptable tolerance range. Top business moguls are seen to most times leverage on these requirements which include tolerance, customers are more likely to get their desired product.

Dextra Computing sells merchandise for $9,000 cash on September 30 (cost of merchandise is $7,200). Dextra collects 7% sales tax. Record the entry for the $9,000 sale and its sales tax. Also record the entry that shows Dextra sending the sales tax on this sale to the government on October 15.
View transaction list
Journal entry worksheet
Record the cash sales and 9% sales tax.
Note: Enter debits before credits.
Date General Journal Debit Credit
Sep 30
Record entry Clear entry View general journal

Answers

Answer:

Sept 30

DR Cash ........................... $9,630

CR Sales ..........................................$9,000

CR Sales Tax Payable...................$630

(To record Sales and Sales taxes)

Working

Cash = 9,000 + (9,000 * 7%)

= $9,630

Sales tax = 9,630 - 9,000

= $630

Sept 30

DR Cost of Goods Sold .....................$7,200

CR Merchandise Inventory ...................................$7,200

(To record cost of goods sold)

Oct 15

DR Sales Tax Payable...........................$630

CR Cash...............................................................$630

(To record remittance of Sales Tax)

MV Corporation has debt with market value of ​million, common equity with a book value of ​million, and preferred stock worth million outstanding. Its common equity trades at per​ share, and the firm has million shares outstanding. What weights should MV Corporation use in its​ WACC?

Answers

Answer:

The Weighted Average cost of capital measures the cost to the company of its current capital structure by using the weights of the various capital measures. WACC usually uses market values so;

Total amount = Debt + Preferred stock + common equity

= 100 million + 20 million + ( 50 * 6 million)

= $420 million

Proportions.

Debt

= 100/420

= 24%

Preferred Stock

= 20/420

= 5%

Common Equity

= 300/420

= 71%

Suppose that a country has no public debt in year 1 but experiences a budget deficit of billion in year​ 2, a budget surplus of billion in year​ 3, a budget surplus of billion in year​ 4, and a budget deficit of billion in year 5.
A) What is the absolute size of its public debt in year 4?
B) If its real GDP in year 4 is $104 billion, what is this country's public debt as a percentage of real GDP in year 4?

Answers

Answer:

a. 72 billion

b. 69.2%

Explanation:

a. The absolute size of its public debt in year 4 would be the total value of the deficit from year 1 till 4.

= 0 + 50 + 30 - 10 (budget surplus so it reduces deficit) - 2

= 72 billion

b. Percentage of real GDP in year 4;

= (72/104) * 100%

= 69.2%

Ivan incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation?s stock. The property transferred to the corporation had the following fair market values and adjusted bases:

FMV Adjusted Basis
Inventory $19,900 $37,000
Building 82,500 60,500
Land 82,750 50,250
Total $185,150 $147,750
The fair market value of the corporation's stock received in the exchange equaled the fair market value of the assets transferred to the corporation by Ivan. The transaction met the requirements to be tax-deferred under 351. (Any answer representing a loss should be entered as a negative number. Leave no answer blank. Enter zero if applicable.)

a. What amount of gain or loss does Ivan realize on the transfer of the property to his corporation?

b. What amount of gain or loss does Ivan recognize on the transfer of the property to his corporation?

c. What is Ivan's basis in the stock he receives in his corporation?

d. What is the corporation's adjusted basis in each of the assets received in the exchange?

e. Would the stock held by Ivan qualify as 1244 stock?

Answers

Answer:

Ivan Incorporated

a. Ivan realizes a gain of $37,400 on the transfer of the property to his corporation.

b. Ivan recognizes $0 gain on the transfer of the property to his corporation under tax deferred 351.

c. Ivan's basis in the stock he receives in his corporation is equal to $185,150, the fair market value.

d. The corporation's adjusted basis in each of the assets received in the exchange is as follows:

Inventory   $19,900

Building      82,500

Land           82,750

Total        $185,150

e. The stock held by Ivan would qualify as 1244 stock when it is disposed of by Ivan.

Explanation:

a) Data and Calculations:

                     FMV        Adjusted Basis

Inventory   $19,900         $37,000

Building      82,500           60,500

Land           82,750           50,250

Total        $185,150        $147,750

Gain = FMV minus Adjusted Basis

= $185,150 - $147,750

= $37,400

b) Section 351(a) of the IRS Code "provides that no gain or loss shall be recognized if Ivan transfers property to his corporation solely in exchange for stock in the corporation and immediately after the exchange, Ivan is in control (as defined in § 368(c)) of the corporation."  Therefore, Ivan will not recognize any loss on the transfer.

c) Section 1244 of the IRS Code "allows Ivan as a shareholder of a small corporation to deduct losses on the disposal of his shares to be treated as ordinary loss and not capital loss."  This can treatment is allowed on disposal or if the shares become worthless.

What is the required monthly payment on a $350,000 mortgage? Assume a standard mortgage (360 months) with monthly payments. Use a nominal rate of 6.90%.

Answers

Answer:

EMI = $2,305

Explanation:

We can calculate Monthly payment on a $350,000 mortgage by using following formula of equated monthly installments. You just need to collect the data to input in the formula for further calculation.

Data

Principal amount = $350,000

Rate = 6.90% = 6.90%/12months = 0.00575

number pf periods = 360 months

Formula

EMI = [[tex]\frac{[P x R x (1+R)^{n} }{(1+R)^{n-1} }[/tex]]

P = Principal amount

R = Rate

n = number pf periods

Solution

EMI =[tex]\frac{[350,000 x0.00575 x ((1+0.00575)^{360-1}) ]}{1+0.00575)^{360-1}}[/tex]

EMI = $2,305

All of the following actions by a custodian in an account opened under the Uniform Gifts to Minors Act are permitted except:_______.
A. donating funds to the account to make additional investments
B. withdrawing funds from the account for the custodian's use
C. managing the investments in the account with the objective of generating enough income for college tuition
D. selling securities in the account to generate proceeds for other investments

Answers

Answer: B. withdrawing funds from the account for the custodian's use

Explanation:

Under the Uniform Gifts to Minors Act, the Custodian's duty is to manage the account for the minor and allocate the assets within in such a way that it will bring about the best returns for the minor.

Custodians should not abuse this power for their own benefit or gain which is why the custodian withdrawing funds from the account for their own use is a violation of the act.

Which ratios measure the extent of a firm’s financing with debt relative to equity and its ability to cover interest and fixed charges?

Answers

Answer:

Debt to Equity ratio and Times Interest Earned (TIE) ratio

Explanation:

The Debt to Equity ratio measures the extent of a firm’s financing with debt relative to equity

Formulae :

Debt to Equity ratio = Total Debt ÷ Total Equity

The Times Interest Earned (TIE) ratio measures the ability of a firm  ability to cover interest and fixed charges

Formulae :

Times Interest Earned (TIE) ratio = Earnings Before Interest and Tax ÷ Interest

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