Which assertions about statement 1 and statement 2 is true? Statement 1: 10,000 bonds sold by Echo Corporation were bought by a variety of investors. If Echo received $10 million from the sale of these bonds, then bonds were more likely sold on the secondary market than on the primary market. Statement 2: Bonds issued by Foxtrot have a face value of $1,000 and pay annual coupons with the next coupon due in 1 year. If the price of the bond is greater than $1,000, then the bond’s coupon rate is more than its YTM.

Answers

Answer 1

Answer: E. Statement 1 is false and statement 2 is true.

Explanation:

Statement 1 is false because when bonds are sold in the secondary market, the issuing company does not get anything from it. That is because sales in the secondary market are between bond holders and those who would like to buy the bond. For the company to make money from a bond issue, they would have to issue it in the Primary Market where it would come directly from them.

Statement 2 is true because when the coupon rate of a bond is higher than it's YTM, it signals that the bond is a PREMIUM bond which means that it is selling at a rate above Par. It is a measure showing that the bond is not very risky therefore investors charge less on the bond than the coupon rate. If the Coupon rate was lower than the YTM that would mean that investors consider the bond risky and so are charging more to hold it and this would reduce the price of the bond below it's face value.


Related Questions

Which of the following is the most likely negative consequence of excessive change in an organization? Group of answer choices Staff being asked to do too much Staff being restricted to a single activity The operation of the organization at less than capacity The establishment of a system for prioritizing projects

Answers

Answer:

Staff being asked to do too much.

Explanation:

Excessive change in an organization is defined as a process when organizations pursue several differing, unrelated and sometimes changes that are conflicting simultaneously. It can also be, when an organization involves in introducing new changes before previous changes are being accomplished.

Additionally, when staffs or employees perceives change as being excessive, they react in various ways. Some of their reactions to excessive change includes;

• They become overwhelmed.

• Lack of motivation.

• They're stressed out.

• Frustration and anger builds among them.

• Inadequacy, uncertainty

and incompetence.

The lower level staffs and middle managers are most likely to experience, the negative consequence of excessive change in an organization because they're being asked to do too much.

Hardware is adding a new product line that will require an investment of $ 1 comma 476 comma 000. Managers estimate that this investment will have a​ 10-year life and generate net cash inflows of $ 300 comma 000 the first​ year, $ 290 comma 000 the second​ year, and $ 240 comma 000 each year thereafter for eight years. Assume the project has no residual value. Compute the ARR for the investment. Round to two places

Answers

Answer:

42,51%

Explanation:

Accounting Rate of Return (ARR) = Average Profits / Average Investment

Calculation of Average Profits

Average Profit = Sum of Profits / Number of Years

                        = (300,000+290,000+240,000×8)/10

                        = $2,510,000 / 8

                        = $313,750

Calculation of Average Investment

Average Investment = Initial Investment + Scrape Value / 2

                                  = $1,476,000/2

                                  = $738,000

Accounting Rate of Return (ARR) = $313,750/$738,000×100

                                                      = 42,51%

Vaughn Manufacturing expects to purchase $180000 of materials in July and $170000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?

Answers

Answer:

The August's cash disbursements for materials purchases would be

$172,500.00   for Vaughn Manufacturing

Explanation:

The cash disbursements in the month of August consist of the three-fourth cost of the August purchases and the one-fourth of the July purchases since the 3/4 of the cost of materials purchased is paid in the same month as purchases and the balance of 1/4 of purchase cost in the succeeding month

Cash disbursements in August=($170,000*3/4)+($180,000*1/4)=$127500 +$45,000=$172,500.00  

Stellar Plastics is analyzing a proposed project with annual depreciation of $19,500 and a tax rate of 34 percent. The company expects to sell 12,000 units, plus or minus 5 percent. The expected variable cost per unit is $3.20 plus or minus 4 percent, and the expected fixed costs are $30,000 plus of minus 2 percent. The sales price is estimated at $7.50 a unit, plus or minus 4 percent. What is the operating cash flow for a sensitivity analysis using total fixed costs of $31,000

Answers

Answer:

$20,226

Explanation:

expected sales = 11,400 - 12,000 - 12,600

expected sales price = $7.20 - $7.50 - $7.80

expected variable cost = $3.072 - $3.20 - $3.328

total fixed costs = $31,000

if you use an excel spreadsheet you can calculate all the different possible simulations and combine all the expected sales x 3 different price levels x 3 different variable costs and 1 fixed cost. Once you get all the 27 possible solutions, you just get the average.

I attached it because there is no room here.

A bidding firm, A, is worth $27,000 as a stand-alone entity. A target firm, B, is worth $12,000 as a stand-alone entity, but $18,000 if it is acquired and integrated with Firm A. Several other firms are interested in acquiring Firm B, and Firm B is also worth $18,000 if it is acquired by these other firms. If A acquired B, would this acquisition create value? If yes, how much? How much of this value would the equity holders of A receive? How much would the equity holders of B receive?

Answers

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

Firm A’s worth as a stand-alone entity = $27,000

Firm B’s worth as a stand-alone entity = $12,000

But if Firm A acquired Firm B it’s increase worth of Firm B at $18000.

Firm A is acquired Firm B, this acquisition create value of

= $18,000 - $12000

= $6000.

With this acquisition equity holders of Firms received $18,000 which is $6,000 more than Firm B stand alone.

On 3/1/14 Fox Corp bought back 1,000 shares of their common stock for $15 per share. There were no shares in the treasury prior to that. On 5/23/14 they sold 200 of those shares for $17 each. On 6/19/14 they sold another 400 shares of those shares for $10 per share. Consider writing out all of your entries on scratch paper to assist you in answering questions 31 and 32. What will the remaining balance in the treasury stock account be after all of the above transactions have been recorded

Answers

Answer:

For question (31) $ 6000 (32) The net impact on retained earning is         1600 (Which is a negative

Explanation:

Question 31

                                                 No. Rate   Value

Purchase of Treasury Stock   1000       15              15000  

Less: Sold on 5/23/14              200        15              3000  

Less: Sold on 6/19/14               400        15              6000  

Net remaining value                                                 6000

Note: to calculate the closing value of treasury stock, rate of selling stock need to be taken same as of date of purchase.

For question 31 the answer is $ 6000

Question 32

Impact on retained earning on first sale

                                                         No. Rate     Value

Sale VALUE                                      200 17         3400  

Less: Purchase of Treasury Stock  200 15         3000

Credit Retained earning                                             400

Impact on retained earning on second sale

                                                          No. Rate     Value

Sale VALUE                                       400 10         4000  

Less: Purchase of Treasury Stock   400 15         6000

Debit Retained earning                                            -2000

Net Impact on retained earning         1600 (Negative i.e. Debit)

Therefore the remaining balance in the treasury stock account be after all of the above transactions have been recorded is $6000

Note: Kindly find an attached copy of the complete question to this solution

Martinez Company received the following selected information from its pension plan trustee concerning the operation of the company’s defined benefit pension plan for the year ended December 31, 2020.

January 1, 2020 December 31, 2020
Projected benefit obligation $1,517,000 $1,545,000
Market-related and fair value of plan assets 803,000 1,132,300
Accumulated benefit obligation 1,580,000 1,698,300
Accumulated OCI (G/L)—Net gain 0 (201,700 )

The service cost component of pension expense for employee services rendered in the current year amounted to $78,000 and the amortization of prior service cost was $118,300. The company’s actual funding (contributions) of the plan in 2020 amounted to $249,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of $1,183,000 on January 1, 2020. Assume no benefits paid in 2020.

Determine the amounts of the components of pension expense that should be recognized by the company in 2020.

Answers

Answer:

$1,337,700

Explanation:

The computation of the amounts of the components of pension expense is shown below:

Service cost $78,000

Amortization of Prior Service cost $1,183,000 ($1,698,300 - $1,580,000)

Interest on PBO  $157,000 ($1,517,000 ×10%)

Less: Expected return on plant assets $80,300  ($803,000 × 10%)

Pension expense $1,337,700

We simply applied the above formula so that the amount of pension expense could come

The student-run newspaper asks students to visit a web page and respond to questions regarding a proposed tuition increase. Only responses to the questions are recorded. Summary statistics based on the survey responses are used in an article published the following week, and no one outside of the newspaper has access to the individual responses. The newspaper's survey is considered to be A) confidential. B) anonymous. C) both anonymous and confidential. D) neither anonymous nor confidential.

Answers

Answer:

C) both anonymous and confidential

Explanation:

As the student-run, the new paper and ask other students to visit a link firm the new paper and respond to those questions and the responses for only those questions were recorded.  This indicates that the newspaper survey is anonymous and confidential as the ant student can fill the survey and the information that is confidential as none outside the newspaper has access to those responses.

Matrix Corporation's balance sheet and income statement appear below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 23 $ 22 Accounts receivable 39 40 Inventory 43 44 Property, plant, and equipment 587 500 Less accumulated depreciation 359 347 Total assets $ 333 $ 259 Liabilities and stockholders' equity: Accounts payable $ 30 $ 26 Accrued liabilities 15 18 Income taxes payable 39 40 Bonds payable 109 120 Common stock 51 50 Retained earnings 89 5 Total liabilities and stockholders' equity $ 333 $ 259 Income Statement Sales $ 972 Cost of goods sold 620 Gross margin 352 Selling and administrative expense 200 Net operating income 152 Gain on sale of equipment 14 Income before taxes 166 Income taxes 50 Net income $ 116 The company sold equipment for $20 that was originally purchased for $7 and that had accumulated depreciation of $1. It paid a cash dividend during the year and did not issue any bonds payable or repurchase any of its own common stock. Required: Determine the net cash provided by (used in) operating activities for the year using the indirect method.

Answers

Answer:

Check the explanation

Explanation:

Cash flow from operating activities:  

Net income                                                                     $116

Adjustment to reconcile net income to cash basis:  

Depreciation expense ($359+1-347)                              $13

Gain on sale of equipment                                              (14)

Decrease in account receivable (40-39)                         $1

Decrease in inventory (44-43)                                          $1

Increase in account payable (30-26)                               $4

Decrease in accrued liabilities (18-15)                              (3)

Decrease in income tax payable (40-39)                         (1)

Net cash flow from operating activities                           $117

Suppose that the standard deviation of monthly changes in the price of commodity A is $2. The standard deviation of monthly changes in a futures price for a contract on commodity B (which is similar to commodity A) is $3. The correlation between the futures price and the commodity price is 0.9. What hedge ratio should be used when hedging a one month exposure to the price of commodity A

Answers

Answer:

0.6

Explanation:

Correlation r = 0.9,

Standard deviation of monthly change in price of commodity A, σA = 2,

Standard deviation of monthly change in price of commodity B, σB = 3

The hedge ratio will be calculated using the formula

Hedge ratio=r×σA÷σB

Hedge ratio=0.9×2÷3

Hedge ratio = 0.6

Therefore, the hedge ratio used when hedging a one month exposure to the price of commodity A is 0.6.

One of the key functions of human resource management is

Answers

Answer: recruiting.

Explanation:

Recruiting is one of the most important aspects of human resource management. Hence, Option B is correct.

What is the meaning of Recruiting?

Finding, vetting, recruiting, and eventually onboarding qualified job prospects is the process of recruitment. The process of finding, vetting, shortlisting, and employing potential resources to fill open jobs in a company is known as recruitment.

It serves as a fundamental part of human resource management. The act of selecting the best candidate for a position at the ideal time is known as recruitment.

Simply announcing that you are hiring is all that hiring entails. The deliberate technique of locating and attracting the best individuals for the position is known as recruiting.

Therefore, Option B is correct.

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The complete question has been attached in text form:

One of the key functions of human resource management is:

a. departmentalizing.

b. recruiting.

c. budgeting.

d. auditing.

Consider two independent firms, BU1 and BU2, which transact with each other through spot market transactions in a competitive market. In a typical year, BU1 incurs total costs of $2 million in producing goods that BU2 buys. BU2 would be willing to pay up to $7.5 million for these goods, but because of the competitive market, ends up paying $5 million. What is the value captured by BU1 from these transactions?

Answers

Answer:

Value captured by BU1 = $5.5 million

Explanation:

Given:

Two firm = BU1 , BU2

BU1 cost of production = $2 million

BU2 will able to pay up-to =  $7.5 million

BU2 will pay = $5 million:

Find:

Value captured by BU1 = ?

Computation:

⇒ Value captured by BU1 = BU2 will able to pay up-to - BU1 cost of production

⇒ Value captured by BU1 = $7.5 million - $2 million

Value captured by BU1 = $5.5 million

Based on the information given  the value captured by BU1 from these transactions is $3 million.

The value captured by the seller (BU1)

Seller value =Value BU1 is willing to sell -Value at which he sold

Where:

Value BU1 is willing to sell=$5 million

Value at which he sold=$2 million

Let plug in the formula

Seller value=$5 million-$2 million

Seller value= $3 million

Inconclusion  the value captured by BU1 from these transactions is $3 million.

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Discuss economic theory related to the quote above. Be sure to include a definition of Labor Force Participation Rate (LFPR) within your discussion. Locate and incorporate outside research that gives evidence and explanation as to the possible causes of these declines in the Labor Force Participation rate. Integrate biblical insights into your discussion board thread. In what way does scripture influence our decision to work

Answers

Answer:

The labor force is the group of individuals for employment. The labor force investment rate is the proportion of labor force partitioned by all out populace of the applicable age. As per month to month work survey, the labor force support rate keeps on falling. As indicated by different market analysts, this wonder is because of the blend of segment, basic, and repetitive elements. Also, due to LFPR , the support of youth and the primary age bunch is required to decay. Likewise, the investment paces of laborers of more seasoned age are additionally anticipated to increment, yet remain essentially lower than those of the prime age group. These aspects have applied descending weight on the general labor force support proportion over the 2012–2022 time period and the proportion is relied upon to decrease further, to 61.6% in 2022.  

The drawn out issue of joblessness is because of repetitive and auxiliary reasons, when numerous individuals the segment organization of a nation mirrors the portions of men, ladies, and the distinctive age, race, and ethnic gatherings inside that populace. The case of the time of increased birth rates age in segment change influences the labor force investment rate. Consistently after 2000, the portion of the time of increased birth rates populace has moved into the 55-years-and-more seasoned age bunch which transfers from the principal age gathering to one with considerable lesser investment proportions, origins the general cooperation of the labor force to decay.

At the beginning of 2020, Vaughn Company acquired a mine for $1,965,400. Of this amount, $115,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 11,010,000 units of ore appear to be in the mine. Vaughn incurred $195,500 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $46,000. During 2020, 2,433,000 units of ore were extracted and 2,081,000 of these units were sold.

Compute the total amount of depletion for 2020.

Answers

Answer:

$462,270.00

Explanation:

The first task is to determine the depletion rate per unit of ore extracted from the mine.

depletion rate=total cost the mine/total units of ore extract

total cost of mine=acquisition cost-land value+development costs+removal cost

total cost of mine=$1,965,400-$115,000+$195,500+$46,000=$2,091,900.00  

total units of ore extract is 11,010,000 units

depletion rate= 2,091,900.00/11,010,000=$0.19 per unit of ore

depletion amount in 2020=depletion rate*ore extracted in 2020=2,433,000*$0.19 =$462,270.00  

Answer:

$408,903

Explanation:

Depletion is an estimated cost of a natural resource that is extracted. This resource is expensed as the extraction is made.

As per given data

Total Payment = $1,965,400

Land Value = $115,000

Value of Rights = $1,965,400 - $115,000 = $1,850,400

Estimated resources = 11,010,000 units

Resources extracted in the period = 2,433,000 units

Depletion expense is based on ratio of the amount of extraction in period to the total expected resource.

Depletion Expense = $1,850,400 x 2,433,000 / 11,010,000 units = $408,903

Assume that the economy is in​ long-run equilibrium. ​Now, assume that there is an unexpected increase in the price of oil. As a result of higher oil​ prices, the A. ​short-run aggregate supply curve will shift left. B. ​long-run aggregate supply curve will shift left. C. ​short-run aggregate supply curve will shift right. D. aggregate demand curve will shift left. The new​ short-run equilibrium will be

Answers

Answer:

The correct answer is D)

The aggregate demand curve will shift left.

Aggregate supply is stimulated only by labour, capital, and technology.

Equilibrium refers to the price point where demand or supply intersect.

Cheers!

How Hard The Day, Inc. makes a product that has the following direct labor standards: Standard direct labor-hours 1.4 hours per unit Standard direct labor rate $ 12.00 per hour The company budgeted for production of 5,400 units in January, but actual production was 5,500 units. The company used 6,800 direct labor-hours to produce this output. The actual total direct labor cost was $82,960. The direct labor efficiency variance for January is:

Answers

Answer:

Direct labor time (efficiency) variance= $10,800 favorable

Explanation:

Giving the following information:

Standard direct labor-hours 1.4 hours per unit

Standard direct labor rate $ 12.00 per hour

Actual production was 5,500 units.

The company used 6,800 direct labor-hours to produce this output.

To calculate the direct labor efficiency variance, we need to use the following formula:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Standard quantity= 5,500*1.4= 7,700

Direct labor time (efficiency) variance= (7,700 - 6,800)*12

Direct labor time (efficiency) variance= $10,800 favorable

Blossom Companyhad the following transactions during 2022: 1. Issued $182500 of par value common stock for cash. 2. Recorded and paid wages expense of $87600. 3. Acquired land by issuing common stock of par value $73000. 4. Declared and paid a cash dividend of $14600. 5. Sold a long-term investment (cost $4380) for cash of $4380. 6. Recorded cash sales of $584000. 7. Bought inventory for cash of $233600. 8. Acquired an investment in Zynga stock for cash of $30660. 9. Converted bonds payable to common stock in the amount of $730000. 10. Repaid a 6-year note payable in the amount of $321200. What is the net cash provided by investing activities

Answers

Answer:

($26,280)

This represents net cash used up by investing activities

Explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.  

The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.

An increase in assets other than cash is an outflow while an increase in liabilities is an inflow and vice versa.

Hence net cash provided by investing activities

= $4380 - $30660

= ($26,280)

Other activities are operating and financing activities.

Markley Manufacturing calculated its predetermined overhead rate to be 120% of direct labor cost. During June, the company incurred $90,000 of factory labor costs, of which $85,000 is direct labor and $5,000 is indirect labor. Actual overhead incurred was $84,000. Compute the amount of manufacturing overhead applied during the month. Determine the amount of under- or over-applied manufacturing overhead.

Answers

Answer:

Applied Manufacturing Overheads are $102,000

Overapplied Manufacturing overheads are $18,000

Explanation:

Under or over applied manufacturing overhead can be determined by comparing the actual and applied manufacturing overheads.

Applied overheads can be calculated by multiplying pre-determined overhead rate and actual level of quantity. Predetermined overhead rate is calculated using estimated overhead and estimated activity on which overheads are applied.

In this question the predetermined overhead rate is 120% of direct labor cost.

Applied overhead = Direct labor cost x 120% = $85,000 x 120% = $102,000

Actual overheads incurred = $84,000

Overapplied Manufacturing overheads = $102,000 - $84,000 = $18,000

Marcellus Company is involved in a lawsuit. Footnote disclosure of the contingent liability which could arise does not have to be presented if the probability of Marcellus owing money as a result of the lawsuit is A) reasonably possible and the amount cannot be reasonably estimated. B) probable and the amount cannot be reasonably estimated. C) reasonably possible and the amount can be reasonably estimated. D) remote and the amount can be reasonably estimated.

Answers

Answer:

The answer is option B) probable and the amount cannot be reasonably estimated.

Explanation:

Contingency liability is the likelihood that a liability might occur sometimes in the future in the face of uncertain circumstances. To validate a contingency liability, the fa cts presented has to be reasonably possible and reasonably estimated.

in the case of Marcellus Company, footnote disclosure of the contingent liability which could arise does not have to be presented if the probability of Marcellus owing money as a result of the lawsuit is probable and the amount cannot be reasonably estimated.

All of the following are correct statements about transfers between divisions located in countries with different tax rates except that

A. differences in tax rates across countries complicate the determination of the appro-priate transfer price
B. a decreasing number of transfers are between divisions located in different countries
C. companies must pay income tax in the country where income is generated
D. many companies prefer to report more income in countries with low tax rates.

Answers

I think it’s A .................

All of the following are correct statements about transfers between divisions located in countries with different tax rates except that the companies must pay income tax in the country where income is generated. Thus option (C) is correct.

What is tax?

Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local, regional, or national.

Tax revenues finance government activities, including public works and services such as roads and schools, or programs such as Social Security and Medicare.

In economics, taxes fall on whoever pays the burden of the tax, whether this is the entity being taxed, such as a business, or the end consumers of the business’s goods.

From an accounting perspective, there are various taxes to consider, including payroll taxes, federal and state income taxes, and sales taxes.

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On January 1, 2021, the Blackstone Corporation purchased a tract of land (site number 11) with a building for $600,000. Additionally, Blackstone paid a real estate brokerâs commission of $36,000, legal fees of $6,000, and title insurance of $18,000. The closing statement indicated that the land value was $500,000 and the building value was $100,000. Shortly after acquisition, the building was razed at a cost of $75,000.
Blackstone entered into a $3,000,000 fixed-price contract with Barnett Builders, Inc., on March 1, 2021, for the construction of an office building on land site 11. The building was completed and occupied on September 30, 2022. Additional construction costs were incurred as follows:
Plans, specifications, and blueprints .....................$ 12,000
Architectsâ fees for design and supervision ............95,000
To finance the construction cost, Blackstone borrowed $3,000,000 on March 1, 2021. The loan is payable in 10 annual installments of $300,000 plus interest at the rate of 14%. Blackstoneâs average amounts of accumulated building construction expenditures were as follows:
For the period March 1 to December 31, 2021 ...........$ 900,000
For the period January 1 to September 30, 2022 .......2,300,000
Required:
1. Prepare a schedule that discloses the individual costs making up the balance in the land account in respect of land site 11 as of September 30, 2022.
2. Prepare a schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2022.

Answers

Answer:

Blackstone Corporation

1. A schedule that discloses the individual costs making up the balance in the land account in respect of land site 11 as of September 30, 2022:

Cost of Land =              $600,000

Broker's Commission =  $36,000

Legal Fees  =                    $6,000

Title Insurance =              $18,000

Razing of old building =  $75,000

Total  =                          $735,000

2. A schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2022:

Payment to contractor for building =  $3,000,000

Plans, specifications, and blueprints =      $12,000

Architect's fees (design & supervision = $95,000

Capitalized Interest ($3m x14%/10 x 2) = $84,000

Total =                                                    $3,191,000

Explanation:

a) The cost of land to recognize includes the actual cost for the parcel of land, including the building which was razed.  All other expenses incurred ordinarily and necessarily in order to put the land to its intended use are also capitalized.  The costs for the broker's commission, legal fees, title insurance, and razing of old building were incurred ordinarily and necessarily for the land and are therefore capitalized in determining the value of the land.

b) The capitalized interest portion for the building is the interests paid to date.  The contractor's fee, payments for plans, architect's fee, and interests are included as costs of the building.

If the distribution of water is a natural monopoly, then a. a single firm cannot serve the market at the lowest possible average total cost. b. multiple firms would likely each have to pay large fixed costs to develop their own network of pipes. c. allowing for competition among different firms in the water-distribution industry is efficient. d. average cost increases as the quantity of water produced increases.

Answers

Answer:

The correct option is C) If the distribution of water is a natural monopoly, average cost increases as the quantity of water produced increases.

Explanation:

Natural monopoly occurs when there is a hig cost of entry into a particular market niche. The high cost is usually caused by expensive equipment and infrastructural set up for manufacturing as well as maintenance costs.

Therefore, If the distribution of water is a natural monopoly, average cost increases as the quantity of water produced increases.

Distribution of water falls into the category of natural monopoly. Due to the prevailing circumstances, Fixed cost is larger comparable to variable cost such that it is cheaper for a single firm to serve the market.

Fultz Company has accumulated the following budget data for the year 2020.

1. Sales: 31,410 units, unit selling price $85.
2. Cost of one unit of finished goods: direct materials 1 pound at $6 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $7 per direct labor hour.
3. Inventories (raw materials only): beginning, 10,120 pounds; ending, 15,480 pounds.
4. Selling and administrative expenses: $170,000; interest expense: $30,000.
5. Income taxes: 30% of income before income taxes.

Prepare a schedule showing the computation of cost of goods sold for 2020.

Answers

Answer:

COST OF Goods SOLD $ 1,1539,110

Explanation:

Fultz Company

Schedule  of Cost of Goods Sold for 2020

As there are no beginning and ending finished goods inventories the total units produced are sold. (Finished Goods   required       31410  Units)

Inventories raw materials : beginning, 10,120 pounds

Add Direct Materials Purchases 36770 pounds

Less Inventories ending raw materials , 15,480 pounds

Direct Materials Used 31410 pounds

Materials 1 pound at $6 per pound= $ 6*  31410  Units=  $ 188460

Direct labor 3 hours at $12 per hour= $ 36*  31410  Units= $ 1130780

Manufacturing Overhead $7 per direct labor hour= $ 7*  31410  Units=

                                                                                             $ 219870

Total Manufacturing Costs  $ 1,1539,110

There are no beginning and ending work in process inventories so the total manufacturing cost gives us the COST OF Goods SOLD.

Dexter Industries purchased packaging equipment on January 8 for $116,600. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $6,600. The equipment was used for 8,700 hours during Year 1, 7,380 hours in Year 2, and 3,920 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the three years ended December 31 by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. (Note: For STRAIGHT-LINE ONLY, round the first two years to the nearest whole dollar, then round the third year as necessary. For DECLINING BALANCE ONLY, round the multiplier to five decimal places. Then round the answer for each year to the nearest whole dollar.) 2. What method yields the highest depreciation expense for Year 1

Answers

Answer:

Straight-line method: $36,667 yearly depreciation expense for 3 years. Unit-of-production method: Year 1 - $47,850, Year 2 -  $40,590, Year 3 - $21,560Double-declining method: Year 1 - $77,737, Year 2 -  $25,910, Year 3 - $6,353

Total for 3 years is $110,000 for all the depreciation methods.

Explanation:

(A) Under straight-line method, depreciation expense is (cost - residual value) / Estimated useful life = ($116,600 - $6,600) / 3 years = $36,667 yearly depreciation expense.

Accumulated depreciation for 3 years is $36,667 x 3 years is $110,000.

(B) The unit-of-production method is used when the asset value closely relates to the units of output it is able to produce. It is expressed with the formula below:

(Original Cost - Salvage value) / Estimated production capacity x Units/year

At Year 1, depreciation expense (DE) is: ($116,600 - $6,600) / 20,000 operating hours x 8,700 hours = $47,850

At Year 2, depreciation expense (DE) is: ($116,600 - $6,600) / 20,000 operating hours x 7,380 hours = $40,590

At Year 3, depreciation expense (DE) is: ($116,600 - $6,600) / 20,000 operating hours x 3,920 hours = $21,560

Accumulated depreciation for 3 years is $47,850 +$40,590 + $21,560 = $110,000.

Note that this depreciation method results in higher depreciation charge when the asset is heavily used, at this time, it was in Year 1.

(C) The double-declining method is otherwise known as the reducing balance method and is given by the formula below:

Double declining method = 2 X SLDP X BV

SLDP = straight-line depreciation percentage

BV = Book value

SLDP is 100%/3 years = 33.33%, then 33.33% multiplied by 2 to give 66.67% or 2/3

At Year 1, 66.67% X $116,600 = $77,737

At Year 2, 66.67% X $38,863 ($116,600 -  $77,737) = $25,910

At Year 3, 66.67% X $12,953 ($38,863 -  $25,910) = $8,636. This depreciation will decrease the book value of the asset below its salvage value $12,953 - $8,636 = $4,317 < $6,600. Depreciation will only be allowed up to the point where the book value = salvage value. Consequently the depreciation for Year 3 will be $6,353.

Accumulated depreciation for 3 years is $77,737 + $25,910 + $6,353 = $110,000.

Assume that an economy is initially in​ long-run equilibrium. Explain the ​short-run effect of monetary policy that causes an increase in interest rates. As a result of higher interest​ rates, the A. ​long-run aggregate supply curve will shift left. B. aggregate demand curve will shift left. C. ​short-run aggregate supply curve will shift left. D. aggregate demand curve will shift right. The new equilibrium will be A. where the original aggregate demand curve intersects the original​ short-run aggregate supply curve. B. where the new aggregate demand curve intersects the original​ short-run aggregate supply curve. C. where the new aggregate demand curve intersects the original aggregate demand curve.

Answers

Answer:

As a result of higher interest​ rates, the

B. aggregate demand curve will shift left.

The new equilibrium will be

B. where the new aggregate demand curve intersects the original​ short-run aggregate supply curve.

Explanation:

A contractionary monetary policy will increase the interest rates, lowering investment and consumption. This will result in a leftward shift of the aggregate demand curve.

The new equilibrium (E1) will be at the point where the new aggregate demand curve (AD1) intersects the original short run aggregate supply curve (SRAS) and the long run aggregate supply curve (LRAS).

Brooke and John formed a partnership. Brooke received a 40% interest in partnership capital and profits in exchange for contributing land (basis of $30,000 and fair market value of $120,000). John received a 60% interest in partnership capital and profits in exchange for contributing $180,000 of cash. Three years after the contribution date, the land contributed by Brooke is sold by the partnership to a third party for $150,000. What gain must Brooke recognize on the land contribution when establishing the partnership

Answers

Answer:

$102,000

Explanation:

According to 26 US code Section 704(c) - Partner's distributive share :

Taxable gain to be recognized from sale = Sale value - ( Partner's share * Fair market value )

Brooke contributed the land, the gain realized before the land was contributed = $120,000 - $90,000 will be allocated entirely to her. She will also be allocated 40% of the gain after the contribution was made = ($150,000 - $120,000) x 40% = $30,000 x 40% = $12,000.

So the total gain recognized by Brooke will be $90,000 + $12,000 = $102,000.

Partnerships are pass through entities, the partners are taxed, not the partnership itself.

Frederick Company has two service departments (Cafeteria Services & Maintenance). Frederick has two production departments (Assembly Department & Packaging Department.) Frederick uses a step allocation method where Cafeteria Services is allocated to all departments and Maintenance Services is allocated to the production departments. All allocations are based on total employees. Cafeteria Services has costs of $255,000 and Maintenance has costs of $175,000 before any allocations. What amount of Maintenance total cost is allocated to the Packaging Department? (round to closest whole dollar) Employees are: Cafeteria Services 4 Maintenance 5 Assembly Department 10 Packaging Department 10

Answers

Answer:

The Total allocation of maintenance cost of packaging department is $87,500

Explanation:

According to the given data we have the following:

The Total Maintenance cost is $175,000 before allocation.

Total employees of in Production Department is=  10 Assembly + 10 Packaging= 20

Hence, Total maintenance cost per employee = $175,000 / 20

Total maintenance cost per employee =$8,750

                                                       

Therefore, the Total allocation of maintenance cost of packaging department= Total maintenance cost per employee× Employees Packaging Department

Total allocation of maintenance cost of packaging department=$ 8,750 X 10 employees= $87,500

If a firm has retained earnings of $2.7 million, a common shares account of $4.7 million, and additional paid-in capital of $9.4 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity.

Answers

Answer:

Change in retained earnings = $1.02 million (Decrease)

Change in common shares account = $5.17 million (Increase)

Change in additional paid-in capital = $10.61 million (Increase)

Explanation:

Given:

Retained earnings = $2.7 million

Common shares account = $4.7 million

Additional paid-in capital = $9.4 million

Stock dividend = 10%

Find:

Changes in account.

Computation:

1. Change in retained earnings

Change in retained earnings = Retained earnings - (Retained earnings - Common shares account - Additional paid-in capital)Stock dividend

Change in retained earnings = $2.7 million - ($2.7 million - $4.7 million - $9.4 million)10%

Change in retained earnings = $2.7 million - 1.68 million

Change in retained earnings = $1.02 million (Decrease)

2. Change in common shares account

Change in common shares account = Common shares account (1+Stock dividend)

Change in common shares account = $4.7 million (1+10%)

Change in common shares account = $5.17 million (Increase)

3. Change in additional paid-in capital

Change in additional paid-in capital = Additional paid-in capital + (Additional paid-in capital + Retained earnings)Stock dividend

Change in additional paid-in capital = $9.4 million + ($9.4 million + $2.7 million)10%

Change in additional paid-in capital = $9.4 million + 1.21 million

Change in additional paid-in capital = $10.61 million (Increase)

A company incurs $3,600,000 of overhead each year in three departments: Processing, Packaging, and Testing.

The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge.

The following data are available:

Department Expected Use of Driver Cost
Processing 800 $1,500,000
Packaging 200,000 1,500,000
Testing 2,000 600,000
Production information for the two products is as follows:

Oil Sludge
Department Expected Use of Driver Expected Use of Driver
Processing 300 500
Packaging 120,000 80,000
Testing 1,600 400

The amount of overhead assigned to Sludge using ABC is

a. $1,800,000.

b. $1,657,500.

c. $1,942,500.

d. $1,380,000.

Answers

Answer:

its 1,800,000

because it the answer

Medallion Cooling​ Systems, Inc., has total assets of $9,800,000​, EBIT of $2,050,000​, and preferred dividends of $201,000 and is taxed at a rate of 40%. In an effort to determine the optimal capital​ structure, the firm has assembled data on the cost of​ debt, the number of shares of common stock for various levels of​ indebtedness, and the overall required return on​ investment:

Capital structure/debt Cost of​ debt Number of stock shares Rate of​ return
0% 0% 200,000 12.3%
15 7.8 175,000 13.1
30 9.1 140,000 14.2
45 12.1 111,000 16.3
60 15.2 75,000 20.1

Calculate earnings per share for each level of indebtedness.

Answers

Answer:

Earnings per share:

0% debt = $5.145 per share

15% debt = $5.487 per share

30% debt = $6.203 per share

45% debt =  $6.386 per share

60% debt = $6.570 per share

Explanation:

The earnings per share is the monetary value of how much each share of common stock outstanding has earned. The earnings per share can be calculated by dividing the Net Income attributable to common stockholders by the number of common stock shares outstanding.

Net Income attributable to Common stockholders = Net Income - Preferred stock dividends

Thus, Earnings per share = (Net Income - Preferred stock dividends) / Number of common stock shares outstanding

To calculate Earnings per share at each level of indebtedness, we first need to calculate the net income at each debt level. The net income will change as interest is deducted before calculating net income.

Net Income = EBIT - interest - tax

Total debt = Total assets * weightage of debt in capital structure

Tax = EBT * tax rate

a. 0% debt

Net Income = 2,050,000 - 0 - (2050000 * 0.4) = $1,230,000

Earnings per share = (1230000 - 201000) / 200000   =  $5.145 per share

b. 15% debt

Total debt = 9,800,000 * 0.15 = 1470000

EBT = 2,050,000 - (1470000 * 0.078)  =  $1935340

Net Income = 1935340 - ( 1935340 * 0.4) = $1161204

Earnings per share = (1161204 - 201000) / 175000   =  $5.487 per share

c. 30% debt

Total debt = 9,800,000 * 0.30 = 2940000

EBT = 2050000 - (2940000 * 0.091)   =  $1782460

Net Income = 1782460 - (1782460 * 0.4) = $1069476

Earnings per share = (1069476 - 201000) / 140000   =  $6.203 per share

d. 45% debt

Total debt = 9,800,000 * 0.45 = 4410000

EBT = 2050000 - (4410000 * 0.121)   =  $1516390

Net Income = 1516390 - (1516390 * 0.4) = $909834

Earnings per share = (909834 - 201000) / 111000   =  $6.386 per share

e. 60% debt

Total debt = 9,800,000 * 0.60 = 5880000

EBT = 2050000 - (5880000 * 0.152)  =  $1156240

Net Income = 1156240 - (1156240 * 0.4) = $693744

Earnings per share = (693744 - 201000) / 75000   =  $6.570 per share

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