Answer: a. It refers to determining the recognized need, buying power, receptivity, and accessibility of a sales prospect.
Explanation:
Based on the information given in the question, the statement that is true for John's lead qualification is option A "It refers to determining the recognized need, buying power, receptivity, and accessibility of a sales prospect".
From the information given, John saw the recognized need when he realized that after the hailstorm, there'll be many homeowners who will have their roof damage and will then need roof repair or a completely new roof and he also accessed the prospect for his sales.
The master budget of Marigold Corp. shows that the planned activity level for next year is expected to be 50000 machine hours. At this level of activity, the following manufacturing overhead costs are expected:
Indirect labor $800000
Machine supplies 250000
Indirect materials 250000
Depreciation on factory building 70000
Total manufacturing overhead $1370000
A flexible budget for a level of activity of 60000 machine hours would show total manufacturing overhead costs of :_________.
a. $1630000
b. $1370000.
c. $1644000.
d. $1574000.
Answer:
The correct answer is A.
Explanation:
First, we need to separate the fixed costs and calculate the unitary variable costs:
Fixed costs:
Depreciation on factory building= 70,000
Total unitary varaible cost:
Total cost= 800,000 + 250,000 + 250,000= $1,300,000
Unitary cost per hour= 1,300,000 / 50,000= $26
Now, the total cost for 60,000 hours:
Total cost= 26*60,000 + 70,000
Total cost= $1,630,000
Chamberlain Enterprises, Inc. reported the following receivables in its December 31, 2020, year-end balance sheet:
Current assets:
Accounts receivable, net of $24,000 in allowance for
uncollectible accounts $218,000
Interest receivable 6,800
Notes receivable 260,000
Additional information:
1. The notes receivable account consists of two notes, a $120,000 note and a $200,000 note. The $120,000 note is dated October 31, 2020, with principal and interest payable on October 31, 2021. The $200,000 note is dated March 31, 2020, with principal and 8% interest payable on March 31, 2021.
2. During 2021, sales revenue totaled $2,020,000, $1,880,000 cash was collected from customers, and $31,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end gross accounts receivable.
3. On March 31, 2021, the $200,000 note receivable was discounted at the Bank of Commerce. The bank’s discount rate is 8%. Chamberlain accounts for the discounting as a sale.
Required:
1. In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Chamberlain’s 2021 income statement?
2. What amounts will appear in the 2021 year-end balance sheet for accounts receivable?
3. Calculate the receivables turnover ratio for 2021.
Answer:
Chamberlain Enterprises, Inc.
1. In addition to sales revenue, the revenue and expense amounts related to the receivables that will appear in Chamberlain’s 2021 income statement
Bad debts expense $39,700
Interest revenue on the $200,000 notes $4,000
Bank Finance Fee $16,000
2. The amounts that will appear in the 2021 year-end Balance Sheet for accounts receivable (net) is:
Accounts receivable $327,000
Allowance for uncollectible -32,700
Net accounts receivable $294,300
3. The receivables turnover ratio for 2021:
= 5.2 times
Explanation:
a) Data and Calculations:
December 31, 2020
Current assets:
Accounts receivable, net of $24,000 in allowance for
uncollectible accounts $218,000
Interest receivable 6,800
Notes receivable 260,000
Total receivables $484,800
Notes receivable:
October 31, Note = $60,000 payable on October 31, 2021
March 31, 2020 Note = $200,000 payable on March 31, 2021
T-accounts:
Accounts receivable
Date Account Titles Debit Credit
12/31/20 Beginning balance $218,000
12/31/21 Sales revenue 2,020,000
12/31/21 Cash $1,880,000
12/31/21 Allowance for uncollectibles 31,000
12/31/21 Ending balance 327,000
Interest receivable
Date Account Titles Debit Credit
12/31/20 Beginning balance $6,800
Notes receivable
Date Account Titles Debit Credit
12/31/20 Beginning balance $260,000
Allowance for uncollectible accounts
Date Account Titles Debit Credit
12/31/20 Beginning balance $24,000
12/31/21 Accounts receivable $31,000
12/31/21 Bad debts expense 39,700
12/31/21 Ending balance 32,700
Interest on $200,000 notes receivable at 8%:
= $16,000 per year
= $1,333 monthly
Interest due on the $200,000 note, for January 1, 2021 to March 31, 2021 = $4,000
Transactions Analysis:
Accounts receivable $2,020,000 Sales Revenue $2,020,000
Cash $1,880,000 Accounts receivable $1,880,000
Allowance for Uncollectible Accounts $31,000 Accounts receivable $31,000
Bad debts expense $39,700 Allowance for Uncollectible Accounts $39,700
Bank Finance Fee $16,000 ($200,000 * 8%)
Receivables in 2020 = $484,800
Receivables in 2021 = 294,300
Total receivables = $779,100
Average receivables = $389,550 ($779,100/2)
Credit Sales/Average receivable
= $2,020,000/$389,550
= 5.2 times.
Bramble Corp. recorded operating data for its shoe division for the year. Sales $2000000 Contribution margin 440000 Controllable fixed costs 180000 Average total operating assets 880000 How much is controllable margin for the year? 22% 50% $260000 $440000
Answer: 260000
Explanation:
The controllable margin for the year will be calculated thus:
Contribution margin = 440000
Less: Controllable Fixed Costs = 180000
Controllable margin will now be:
= 440,000 - 180,000
= 260,000
Therefore, the controllable margin will be 260000
Several years ago, Nipher paid $70,000 to purchase equipment to use in its business. This year, it sold the equipment for $76,500. Accumulated MACRS depreciation through date of sale was $18,000. Determine the amount and character of Nipher's gain recognized. Group of answer choices $18,000 ordinary gain and $6,500 Section 1231 gain $24,500 Section 1231 gain $18,000 ordinary gain and $6,500 capital gain $24,500 ordinary gain
Answer:
$18,000 ordinary gain and $6,500 Section 1231 gain
Explanation:
Calculation to Determine the amount and character of Nipher's gain recognized.
Based on the information given we were told that the Accumulated MACRS depreciation was the amount of $18,000 which means that the ORDINARY INCOME will be $18,000 as well as $6,500 SECTION 1231 GAIN Calculated as:
Gain= Fair Value of Equipment -Book value of Equipment
Gain=$76,500-$70,000
Gain=$6,500
Therefore the amount and character of Nipher's gain recognized will be $18,000 ordinary gain and $6,500 Section 1231 gain
Think of a business concept that would be appropriate for each of the following:
1) a sole proprietorship
2) a corporation
3) a limited liability company
In your answer address the pros and cons of the business type (sole proprietorship, Corporation, LLC) and why you the believe the business concept you choose best suits that business type. You must list at least 3 pros and 3 cons for each business type.
Answer:
Sole Proprietorship: The business concept that would be suitable for this type of business would be a roadside Fruit Juice Processing business. This involves different blends of organic fruits being blended into one smooth syrup sometimes called a smoothie.This type of business is better registered under a Sole Proprietorship because, it is almost always carried out by those who are self-employed.
Pros:
It is easy to set up and has low operational and corporate costIt enjoys zero corporate business taxesthey are not required to submit annual filingsCons:
The liability is unlimited and unrestricted. This means if there is litigation against the business, the business owner if found culpable will have to defray all amounts due even with his or her personal assets if the business is unable to meet that obligationThis type of business structure will find it difficult to raise money due to the potential liability exposure Also the sole proprietor may be unable to take on business debt
2. A Limited Liability Corporation: The business concept that would be suitable for this type of entity is a Fast Food Franchise like Tastee Fried Chicken. This sort of business will involve processing chicken and other kinds of foods into wholesome dishes.
Burget Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,100 client-visits, but its actual level of activity was 2,110 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue - $47.10
Personnel expenses $22,700 $16.90
Medical supplies 1,600 6.50
Occupancy expenses 6,900 1.50
Administrative expenses 3,400 0.40
Total expenses $34,600 $25.30
Actual results for July:
Revenue $101,491
Personnel expenses 55,699
Medical supplies 15,895
Occupancy expenses 9,785
Administrative expenses 4,424
The revenue variance for July would be closest to: __________
a. $2,581 F
b. $2,110 U
c. $2,110 F
d. $2,581 U
Answer:
Burget Clinic
The revenue variance for July would be closest to: __________
a. $2,581 F
Explanation:
a) Data and Calculations:
Budgeted client-visits for July = 2,100
Actual client-visits for July = 2,110
Fixed element Variable element
per month per client-visit
Revenue - $47.10
Personnel expenses $22,700 $16.90
Medical supplies 1,600 6.50
Occupancy expenses 6,900 1.50
Administrative expenses 3,400 0.40
Total expenses $34,600 $25.30
Actual results for July:
Revenue $101,491
Personnel expenses 55,699
Medical supplies 15,895
Occupancy expenses 9,785
Administrative expenses 4,424
Budgeted Revenue = $98,910 ($47.10 * 2,100)
On the Idaho Store worksheet, in the range B9:B16, use the Fill Series feature to enter interest rates beginning with 8.50%. Decrease the amounts by .50% ending with 5.00%. Format the rates as Percent Style with two decimal places and apply bold and center.
Answer:
Kindly check explanation
Explanation:
To achieve this, a formular is entered to give a rate of 8.50% in B9 ; The formular could be :
Beginning rate - 0.50x
Where x = 1 in cell B9
The beginning rate = 8.50
Hence, the formula to be inputted :
=9.00 - 0.50*1
Kindly lock the beginning rate and decline rate by an absolute reference so it doesn't change as the fill handle is being dragged down
In cell B9 :
9.00% - 0.50%*1 = 8.50%
B10:
9.00% - 0.50%*2 = 8.00%
... B16 :
9.00% - 0.50%*8 = 5.00%
The following budget information is available for the Arch Company for January Year 2: Sales $ 860,000 Cost of goods sold 540,000 Utilities expense 2,800 Administrative salaries 100,000 Sales commissions 5 % of sales Advertising 20,000 Depreciation on store equipment 50,000 Rent on administration building 60,000 Miscellaneous administrative expenses 10,000 All operating expenses are paid in cash in the month incurred. Compute the total budgeted selling and administrative expenses (excluding interest) amount for January Year 2.
Answer and Explanation:
The computation of the total budgeted selling and administrative expenses is shown below;
Utilities expense $2,800
Administrative salaries $100,000
Sales commissions 5 % of sales i.e. 5% of $860,000 $43,000
Advertising $20,000
Depreciation on store equipment $50,000
Rent on administration building $60,000
Miscellaneous administrative expenses $10,000
total budgeted selling and administrative expenses $285,800
An auto repair shop orders cleaning rags in batches of 120 boxes. This inventory is depleted at a constant rate and new rags are ordered to arrive exactly when the on-hand inventory of rags reaches zero boxes. What is the average inventory level over time
Answer:
60
Explanation:
the computation of the average inventory level over time is given below:
As the order is placed only when the inventory level is zero
So, The average inventory level is
= (120 +0) ÷ 2
= 60
Hence, the average inventory level over time is 60
The same would be considered and relevant
Basically we take an average of it to determine the average inventory level
Take a Load Off Hotels is considering the construction of a new hotel for $22,400,000. The expected life of the hotel is 8 years with no residual value. The hotel is expected to earn revenues of $16,688,000 per year. Total expenses, including straight-line depreciation, are expected to be $14,000,000 per year. Take a Load Off's management has set a minimum acceptable rate of return of 12%. Assume straight-line depreciation.
a. Determine the equal annual net cash flows from operating the hotel.
Present Value of an Annuity of $1 at Compound Interest
Periods 8% 9% 10% 11% 12% 13% 14%
1 0.92593 0.91743 0.90909 0.90090 0.89286 0.88496 0.87719
2 1.78326 1.75911 1.73554 1.71252 1.69005 1.66810 1.64666
3 2.57710 2.53129 2.48685 2.44371 2.40183 2.36115 2.32163
4 3.31213 3.23972 3.16987 3.10245 3.03735 2.97447 2.91371
5 3.99271 3.88965 3.79079 3.69590 3.60478 3.51723 3.43308
6 4.62288 4.48592 4.35526 4.23054 4.11141 3.99755 3.88867
7 5.20637 5.03295 4.86842 4.71220 4.56376 4.42261 4.28830
8 5.74664 5.53482 5.33493 5.14612 4.96764 4.79677 4.63886
9 6.24689 5.99525 5.75902 5.53705 5.32825 5.13166 4.94637
10 6.71008 6.41766 6.14457 5.88923 5.65022 5.42624 5.21612
b. Calculate the net present value of the new hotel using the present value of an annuity of $1 table above.
c. Does your analysis support the purchase of the new hotel?
Answer:
a. Net cash flows
Depreciation has to be added back to income because it is a non-cash expense.
Depreciation = (Cost - Residual value)/ Useful life
= 22,400,000 / 8
= $2,800,000
Net cash flows = Revenue - Expenses + Depreciation
= 16,688,000 - 14,000,000 + 2,800,000
= $5,488,000
b. Net Present Value
= Present value of cash inflows - Construction cost
= (Net cash flows * Present value interest factor of annuity, 8 years, 12%) - 22,400,000
= (5,488,000 * 4.96764) - 22,400,000
= $4,862,408.32
c. Analysis SUPPORTS PURCHASE of hotel because it results in a positive Net Present Value.
Wilson sells software during the recruiting seasons. During the current year, 10,000 software packages were sold resulting in $470,000 of sales revenue, $130,000 of variable costs, and $48,000 of fixed costs. If sales increase by $80,000, operating income will increase by ________. (Round interim calculations to two decimal places and the final answer to the nearest whole dollar.) Group of answer choices $48,000 $57,872 $32,000
Answer:
$57,872
Explanation:
Calculation to determine what the operating income will increase by
Price = $470,000 / 10,000
Price= $47.00
Sales in software packages = $80,000 / $47.00 Sales in software packages= 1,702.13 software packages
Operating income increase = 1,702.13 × $34.00 per
Operating income increase = $57,872
Therefore the operating income will increase by
$57,872
Please select the proper term in each of the descriptions. Because of the existence of certain types of market failure, employers can still engage in and not necessarily lose profits. As an individual allocates their time, they face a trade-off between and work. Employers have some control over and adjust them in order to compensate for the danger or unpleasantness of a job and help contribute to certain types of market failure. Not all markets are perfectly competitive, due to the presence of , which advocates for better salaries and working conditions on behalf of their members.
Answer:
Because of the existence of certain types of market failure, employers can still engage in DISCRIMINATION and not necessarily lose profits.
Due to the existence of market failures like asymmetric information held by the employers, they can be able to discriminate in the wages they pay to employees such that they do not lose profit.
As an individual allocates their time, they face a trade-off between LEISURE and work.
An individual spends their time between leisure and work and they need to find a trade-off between the two that they are comfortable with because more hours allocated to one means less hours to the other.
Employers have some control over WAGES and adjust them in order to compensate for the danger or unpleasantness of a job and help contribute to certain types of market failure.
As a result of employers adjusting wages to suit the job characteristics or to entice employees, the job can contribute to market failure if the wages being paid are simply too high for that position.
Not all markets are perfectly competitive, due to the presence of UNIONS, which advocates for better salaries and working conditions on behalf of their members.
Unions campaign for their members to get better salaries and working conditions which might not be representative of the contribution of the job which leads to a situation where the market is no longer competitive because the tradeoff is not balanced.
The U.S. has expected inflation of 2%, while Country A, Country B, and Country C have expected inflation of 7%. Country A engages in much international trade with the U.S. The products that are traded between Country A and the U.S. can easily be produced by either country. Country B engages in much international trade with the U.S. The products that are traded between Country B and the U.S. are important health products, and there are not substitutes for these products that are exported from the U.S. to Country B or from Country B to the U.S. Country C engages in much international financial flows with the U.S. but very little trade. If you were to use purchasing power parity (PPP) to predict the future exchange rate over the next year for the local currency of each country against the dollar, PPP would provide the most accurate forecast for the currency of: _________
Answer:
If you were to use purchasing power parity (PPP) to predict the future exchange rate over the next year for the local currency of each country against the dollar, PPP would provide the most accurate forecast for the currency of: _________
Country A.
Explanation:
The U.S. and Country A have Purchasing Power Parity (PPP) if an exchange rate can be determined between these two countries' currencies when their purchasing power is in equilibrium. This parity can only be established by comparing a basket of goods in the two countries. This basket of goods is not possible to compare with Country B or Country C that has no similar goods with the U.S.
Consumption expenditures $ 4,150 Federal government purchases of goods and services 850 State and local government’s purchases 331 Investment 751 Proprietors income 150 Compensation of employees 4,080 Corporate profits 134 Taxes on corporate profits 23 Rental income 31 Capital consumption allowance 295 Indirect business taxes 130 Net interest 147 Exports 300 Imports 320 Undistributed corporate profits 111 Transfer payments 66 Personal taxes 45 Dividends 0 Income Earned from the Rest of the World 252 Income Earned by the Rest of the World 1,347 Social insurance taxes 222 Statistical discrepancy 5 Refer to Exhibit 7-1. What is the value of disposable income?
Answer:
The value of disposable income is $4,207
Explanation:
Dispossable income refers to the addition of income of an individual minus his taxes.
Therefore, the value of the value of disposable income can be calculated as follows:
Disposable income = Proprietors income + Compensation of employees + Rental income + Net interest + Transfer payments - Social insurance taxes - Personal taxes = $150 + $4,080 + $31 + $147 + $66 - $222 - $45 = $4,207
Therefore, the value of disposable income is $4,207.
In a town with exactly 1,000 residents, 60 percent of the residents make healthy choices and 40 percent of the residents consistently make unhealthy choices. The health insurance company in town cannot tell, in advance, who is healthy and who is unhealthy. A healthy person has an average of $600 in medical expenses each year and is willing to pay $800 for insurance. An unhealthy person has an average of $2,100 in medical expenses each year and is willing to pay $2,400 for insurance. The health insurance provider can offer insurance at only one price.
Required:
In equilibrium, the price of insurance will be at least what?
At the equilibrium, the price of insurance should be equal to at least $2,100.
What is equilibrium?Equilibrium is the scenario where the economic factors are in an equal position. There is no factor that rises above the equilibrium point or falls below the equilibrium point.
Given information:
The average expense of a healthy person is $600 and the average expense of an unhealthy person is $2,100. Every person is interested to buy insurance are from $0 to $800, the unhealthy people would buy the insurance from $800 to $2,400, and lastly, No one would take up the insurance lies over and above $2,400
Computation of expected payment received to the company:
[tex]\rm\ Expected \rm\ payout \rm\ received = \rm\ Average \rm\ expense \rm\ of \rm\ a \rm\ healthy \rm\ person \times\ 60 \% \\+ \rm\ Average \rm\ expense \rm\ of \rm\ an \rm\ unhealthy \rm\ person \times\ 40 \%\\\rm\ Expected \rm\ payout \rm\ received =\$ 600 \times\ 60 \% + \$ 2,100 \times\ 40 \%\\\rm\ Expected \rm\ payout \rm\ received =\$ 360 + \$ $840\\\rm\ Expected \rm\ payout \rm\ received = \$1,200[/tex]
Now if an insurance company charges less than $1,200, it will incur a loss to the company, if it charges $1,200, then no one will acquire the insurance, and more than $1,200, cannot be charged by the company.
Therefore, the price of insurance at equilibrium is $2,100 equivalent to the last amount of expense paid to the person for the insurance.
Learn more about insurance prices at equilibrium in the mentioned link:
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Spam Corp. is financed entirely by common stock and has a beta of .70. The firm is expected to generate a level, perpetual stream of earnings and dividends. The stock has a price-earnings ratio of 7.90 and a cost of equity of 12.66%. The company’s stock is selling for $52. Now the firm decides to repurchase half of its shares and substitute an equal value of debt. The debt is risk-free, with an interest rate of 3%. The company is exempt from corporate income taxes. Assume MM are correct.
Calculate the cost of equity after the refinancing. (Enter your answer as a percent rounded to 2 decimal places.)
Calculate the overall cost of capital (WACC) after the refinancing. (Enter your answer as a percent rounded to 2 decimal places.)
Calculate the price-earnings ratio after the refinancing. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Calculate the stock price after the refinancing.
Calculate the stock’s beta after the refinancing. (Round your answer to 1 decimal place.)
Answer:
a. Cost of equity after the refinancing = 22.31%
b. Cost of capital (WACC) after the refinancing = 12.66%
c. Price-earnings ratio after the refinancing = 4.48
d. Stock price after the refinancing = $51.99
e. Stock’s beta after the refinancing = 2.52
Explanation:
Given:
Beta = 0.70
PE ratio = Price-earnings ratio = 7.90
Ke = Cost of equity = 12.66%
MPS = Market price per share = $52
Debt rate = 3%
Let assume that the company’s total number of shares outstanding is 1,000. Therefore, we have:
Equity market value = MPS * Number of shares = $52 * 1,000 = $52,000
By repurchasing half shares and substituting an equal value of debt, we have:
Debt = Equity market value / 2 = $52,000 / 2 = $26,000
Interest on debt = Debt * Debt rate = $26,000 * 3% = $780
Old EPS = MPS / PE ratio = $52 / 7.90 = $6.58 per share
Net income = Old EPS * Number of shares = $6.58 * 1,000 = $6,580
Earnings available to shareholders = Net income – Interest on debt = $6,580 – 780 = $5,800
New number of shares = 500
New EPS = Earnings available to shareholders / New number of shares = $5,800 / 500 = $11.60 per share
Therefore, we have:
a. Calculate the cost of equity after the refinancing. (Enter your answer as a percent rounded to 2 decimal places.)
Cost of equity after the refinancing = New EPS / MPS = $11.60 / $52 = 0.2231, or 22.31%
b. Calculate the overall cost of capital (WACC) after the refinancing. (Enter your answer as a percent rounded to 2 decimal places.)
Cost of capital (WACC) after the refinancing = (Weight of debt * Cost of debt) + (Weight of equity * New cost of equity) = (50% * 3%) + (50% * 22.31%) = 12.66%
c. Calculate the price-earnings ratio after the refinancing. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Price-earnings ratio after the refinancing = 1 / Cost of equity after the refinancing = 1 / 22.31% = 4.48
d. Calculate the stock price after the refinancing.
Stock price after the refinancing = Price-earnings ratio after the refinancing * New EPS = $11.60 * 4.48 = $51.99
e. Calculate the stock’s beta after the refinancing. (Round your answer to 1 decimal place.)
Stock’s beta after the refinancing = (Cost of equity after the refinancing – Cost of debt) / (WACC – Cost of debt) = (0.2231 - 0.03) / (0.1266 - 0.05) = 2.52
Microbiotics currently sells all of its frozen dinners cash-on-delivery but believes it can increase sales by offering supermarkets 1 month of free credit. The price per carton is $100, and the cost per carton is $65. The unit sales will increase from 1,050 cartons to 1,110 per month if credit is granted. Assume all customers pay their bills and take full advantage of any credit period offered.
a. If the interest rate is 1% per month what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers?
b. If the interest rate is 1.5% per month v/hat will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers?
c. Assume the interest rate is 1 5% per month but the firm can offer the credit only as a special deal to new customers, while existing customers will continue to pay cash on delivery. What will be the change in the firm's total monthly profits on a present value basis under these conditions?
Answer:
Following are the responses to the given question:
Explanation:
[tex]\text{Present value of profit} = ( Revenue - cost ) \times Unit\ sold[/tex]
[tex]= (\$100 - \$65 ) \times 1,050\\\\= (\$35 ) \times 1,050\\\\= \$36,750[/tex]
For point a:
[tex]\text{PV of profits} = PV(REV -COST) \times Units \ sold[/tex]
[tex]= (\frac{\$100}{ (1 + .01)} - \$65) \times 1,110\\\\= (\frac{\$100}{ (1 .01)} - \$65) \times 1,110\\\\= (99.0 -65) \times 1,110\\\\= 34\times 1,110\\\\= \$37,740\\[/tex]
Changes in monthly profits:
[tex]= \$37,740 - \$36,570 = \$1,170[/tex]
At 1%, the credit offer raises the company's earnings for one month.
For point b:
[tex]\text{PV of profits} = PV(REV -COST) \times Units \ sold[/tex]
[tex]=(\frac{\$100}{(1 + .015)} -\$65) \times 1,110\\\\=(\frac{\$100}{(1.015)} -\$65) \times 1,110\\\\=33.52\times 1,110\\\\= 37,207.2[/tex]
Changes in monthly profits:
[tex]= \$37,207.2- \$36,570 = $637.2.[/tex]
At 1.5%, the loan offering raises the company's earnings for one month.
For point c:
[tex]\text{PV of profits} = PV(REV -COST) \times Units \ sold[/tex]
[tex]= (\$100 - \$65 ) \times 60\\\\ = \$2,100[/tex]
[tex]\text{PV of profits} = PV(REV -COST) \times Units \ sold[/tex]
[tex]= (\frac{\$100}{(1 + .015)} - \$65) \times 60\\\\= (\frac{\$100}{(1.015)} - \$65) \times 60\\\\=33.52 \times 60\\\\= 2011.2[/tex]
Changes in monthly profits:
[tex]= \$2,011.2 -\$2,100 = \$88.8[/tex]
At a cost of 1.5%, the credit rates decrease the company's income for one month.
As part of its stock-based compensation package, International Electronics granted 24 million stock appreciation rights (SARs) to top officers on January 1, 2018. At exercise, holders of the SARs are entitled to receive stock equal in value to the excess of the market price at exercise over the share price at the date of grant. The SARs cannot be exercised until the end of 2021 (vesting date) and expire at the end of 2023. The $1 par common shares have a market price of $46 per share on the grant date. The fair value of the SARs, estimated by an appropriate option pricing model, is $3 per SAR at January 1, 2018. The fair value reestimated at December 31, 2018, 2019, 2020, 2021, and 2022, is $4, $3, $4, $2.50, and $3, respectively. All recipients are expected to remain employed through the vesting date.
Required:
1. Prepare the appropriate journal entry to record the award of SARs on January 1, 2018. Will the SARs be reported as debt or equity?
2. Prepare the appropriate journal entries pertaining to the SARs on December 31, 2018–December 31, 2021.
3. The SARs remain unexercised on December 31, 2022. Prepare the appropriate journal entry on that date.
4. The SARs are exercised on June 6, 2023, when the share price is $50. Prepare the appropriate journal entry(s) on that date.
Answer:
1. January 1, 2018
No Journal entry
The SARs will be reported as EQUITY
2. December 31, 2018
Dr Compensation expense $18,000,000
Cr Paid in capital SAR plan $18,000,000
December 31, 2019
Dr Compensation expense $18,000,000
Cr Paid in capital SAR plan $18,000,000
December 31, 2020
Dr Compensation expense $18,000,000
Cr Paid in capital SAR plan $18,000,000
December 31, 2023
Dr Compensation expense $18,000,000
Cr Paid in capital SAR plan $18,000,000
3. December 31, 2022
No Journal entry
4. June 6, 2023
Dr Paid in capital SAR plan $72,000,000
Cr Common stock $1,920,000
Cr Paid in capital in excess of Par $70,080,000
Explanation:
1. Preparation of the appropriate journal entry to record the award of SARs on January 1, 2018.
January 1, 2018
No Journal entry
Based on the information The SARs will be reported as EQUITY reason been that IE which full meaning is INTERNATIONAL ELECTRONICS
will tend to settle in shares of the INTERNATIONAL ELECTRONICS stock during exercise.
2. Preparation of the appropriate journal entries pertaining to the SARs on December 31, 2018–December 31, 2021.
December 31, 2018
Dr Compensation expense $18,000,000
Cr Paid in capital SAR plan $18,000,000
(3*$24 million/4)
December 31, 2019
Dr Compensation expense $18,000,000
Cr Paid in capital SAR plan $18,000,000
(3*$24 million/4)
December 31, 2020
Dr Compensation expense $18,000,000
Cr Paid in capital SAR plan $18,000,000
(3*$24 million/4)
December 31, 2023
Dr Compensation expense $18,000,000
Cr Paid in capital SAR plan $18,000,000
(3*$24 million/4)
3. Preparation of the appropriate journal entry on that date.
December 31, 2022
No Journal entry
4. Preparation of the appropriate journal entry(s) on June 6, 2023
June 6, 2023
Dr Paid in capital SAR plan $72,000,000
(3*$24 million)
Cr Common stock $1,920,000
[($50-$46)*$24,0000/$50]
Cr Paid in capital in excess of Par $70,080,000
($72,000,000-$1,920,000)
The standards for product V28 call for 8.3 pounds of a raw material that costs $19.00 per pound. Last month, 2,200 pounds of the raw material were purchased for $41,360. The actual output of the month was 240 units of product V28. A total of 2,100 pounds of the raw material were used to produce this output.
The direct materials purchases variance is computed when the materials are purchased.
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
Answer:
Results are below.
Explanation:
To calculate the direct material price variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (19 - 18.8)*2,200
Direct material price variance= $440 favorable
Actual price= 41,360 / 2,200= $18.8
Now, we can determine the direct material quantity variance:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (8.3*240 - 2,100)*19
Direct material quantity variance= $2,052 unfavorable
27. If your company purchases land and a building for $100,000, and it intends to tear down the existing building to allow construction of a new warehouse, the purchase price should be allocated to the following accounts: A) $100,000 to the Construction Expense account B) $100,000 to the Land account and $0 to the Building account C) Prorated to the Land account and Building account based on the appraised values of each. D) $100,000 to the Building account and $0 to the Land account
Answer:
The correct option is B) $100,000 to the Land account and $0 to the Building account.
Explanation:
Originally, the $100,000 paid is for both land and a buildling. There would have been a need to prorate the $100,000 to the Land account and Building account based on the appraised values of each if the existing building was not tore down.
However, since the existing building was tore sown, that indicates the building was of no use to the company and only land is useful. This indicates that the $100,000 is paid for the land alone.
Therefore, the correct option is B) $100,000 to the Land account and $0 to the Building account.
Joel is the sole shareholder of Manatee Corporation, a C corporation. Because Manatee’s sales have increased significantly over the last several years, Joel has determined that the corporation needs a new distribution warehouse. Joel has asked your advice as to whether (1) Manatee should purchase the warehouse or (2) he should purchase the warehouse and lease it to Manatee. What relevant tax issues will you discuss with Joel?
Answer:
If Joel purchases the warehouse, he can rent it to the corporation and charge the highest possible rent within reasonable terms. Joel can avoid double taxation and the corporation will be able to deduct rent expense.
Joel is also able to deduct depreciation expenses, real estate taxes, and other costs from his passive income.
As an individual, Joel is taxed differently for capital gains in case he sells the warehouse, and that rate is generally lower than corporate tax rates.
A company is considering the purchase of new equipment for $51,000. The projected annual net cash flows are $21,200. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 10% return on investment. The present value of an annuity of $1 for various periods follows: Period Present value of an annuity of $1 at 10% 1 0.9091 2 1.7355 3 2.4869 What is the net present value of this machine assuming all cash flows occur at year-end
Answer:
$1721.26
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = -$51,000
Cash flow in year 1 to 3 = $21,200
I = 10%
NPV = $1721.26
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Darrell is a clothier whose company, 24-7 Activewear, has separate product lines for men, women, and children. He has grouped his organization into different departments such as production, marketing, and finance. Most of the employees report to two managers a departmental head and a divisional head. Darrell encourages lower-level managers to make important decisions in order to promote quick and effective decision making.
It can be inferred that Darrell's firm utilizes the ________ approach to departmentalization.
a. geographical
b. product
c. vertical
d. matrix
e. conglomerate
Answer:
d. matrix
Explanation:
In the matrix organization structure, here the employees would have the multiple line for reporting and also they perform various kinds of roles. In this, the resources are used effectively and also it builds the motivation between the employees due to this the employee could show their skills in various fields also it improves the decision making
Therefore as per the given situation, the option d is correct
A portfolio manager buys $1 million of U.S. Treasury bills maturing in 90 days at a price of $990,390 and discount rate of 3.8%. The portfolio also includes the following investments: Bank commercial paper maturing in 90 days with a bond equivalent yield of 4.34% and a market value of $100,000. Bank certificates of deposit maturing in six months with a bond equivalent yield of 4.84% and a market value of $200,000. The bond-equivalent yield of a comparable benchmark portfolio is 4.0%. Including the Treasury bill purchase, the manager's portfolio is:
Answer:
A. Outperforming the benchmark
Explanation:
Calculation to determine what the manager's portfolio
First step is to calculate the Treasury bill, bond-equivalent yield for U.S.
Using this formula
Treasury bill
=(Face value − Market value) / Market value × 365 / 90
Let plug in the formula
Treasury bill= ($1,000,000 − 990,390) / 990,390 × 365 / 90
Treasury bill=0.0097 × 0.04056
Treasury bill= 3.93%.
Second step is to calculate The total market value of the portfolio
Total market value portfolio=$990,390 + $100,000 + $200,000
Total market value portfolio= $1,290,390
Now let calculate the manager's portfolio
Manager's portfolio=3.93% ($990,390 / $1,290,390) + 4.34% ($100,000 / $1,290,390) + 4.84% ($200,000 / $1,290,390)
Manager's portfolio=3.93%(76.75%)+4.34%(7.75%)+4.84%(15.50%)
Manager's portfolio=0.0410*100
Manager's portfolio= 4.10%
Therefore Based on the above calculation the manager's portfolio is 4.10% OUTPERFORMING THE BENCHMARK because the manager's portfolio of 4.10% is higher than bond-equivalent yield benchmark portfolio of 4.0%.
In early April 2020, an amendment to the annual budget for 2020 was approved by the city council for inflows and outflows in the Street Improvement Bond Debt Service Fund related to the bond issue. The debt service fund budget amendment provides for estimated other financing sources of $20,000 for the premium on bonds sold and estimated revenues of $12,500 for accrued interest on bonds sold; and appropriations in the amount of the one interest payment of $25,000 to be made during 2020. (The payment that is due on July 1, 2020.)
Required:
Record the budget for the Street Improvement Bond Debt Service Fund for year 2020.
Answer:
attached below
Explanation:
Given data :
Year : 2020
estimated other financing sources = $20,000 ( premium on bonds sold )
estimated revenues = $12500 ( accrued interest on bonds sold )
approximations in amount of one interest payment = $25,000 ( to be made during 2020 )
attached below is the Budget for the street improvement Bond debt service fund for year 2020
Sunland Company had the following department data: Physical Units Work in process, beginning 0 Completed and transferred out 90900 Work in process, ending 7800 Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period?
Answer:
Equivalent units of production= 98,700
Explanation:
Giving the following information:
Physical Units Work in process, beginning 0
Completed and transferred out 90,900
Work in process, ending 7,800
Materials are added at the beginning of the process.
To calculate the equivalent units, we need to use the following formula:
Units completed in the period + Equivalent units in ending inventory WIP (units*%completion) = Equivalent units of production
Equivalent units of production= 0 + 90,900 + 7,800*1
Equivalent units of production= 98,700
Because the materials are added at the beginning of the process, the percentage of completion is 100%.
The sales volume variance is the difference between the: A. static budget (based on planned volume) and actual revenue or cost. B. flexible budget (based on actual volume) and actual revenue or cost. C. static budget (based on actual volume) and the flexible budget (based on planned volume). D. static budget (based on planned volume) and the flexible budget (based on actual volume).
Answer:
The correct answer is the option A: static budget (based on planned volume) and actual revenue or cost.
Explanation:
To begin with, the name of "Sales volume variance" refers to a method used in the business and accounting field with the main purpose of obtaining the comparison between the planned sales and the actual sales. It does it by stating that the difference between those two multiply by the budget price of the product will result in the variance itself. The goal of this method is to measure the sales performance and to see if there are no mathces with the expected revenues then the company has to take a lead and do something about it.
Tony has been sent to sales training and the final examination requires delivering an effective sales presentation. If he passes this examination, he will be placed into a sales job. If he does not pass, he will be let go from the company. In assessing Tony’s performance, the trainer remarks that although his talk was solid as far as content, he did not pass. The trainer fails to mention that the talk lacked several elements of excellence. Tony’s presentation graphics were inconsistent, he mumbled, and he failed to answer any of the follow-up questions. Tony throws the evaluation at the trainer, shouting, "Whatever, dude!" and slams the door on the way out. The trainer’s failure to discuss these aspects of Tony’s presentation performance demonstrated a lack of attention to which form of fairness or justice?
Answer: interactional
Explanation:
Based on the information given, the trainer’s failure to discuss these aspects of Tony’s presentation performance demonstrated a lack of attention to the interactional justice.
Interactional Justice involves the communication of the procedures that are used in judging the performance of a person. It focuses on the treatment that individuals get when there are implementation of certain procedures. This standard is utilized by the employees at work.
In this scenario, the trainer failed to interact with Tony as he didn't explain his flaws to him and didn't tell him the reason that he wasn't chosen. Thereby, the trainer didn't pay attention to interactional fairness.
Whirlwind mowers manufacturers and sells power lawnmower still public and distributes the products through its own dealers. Andrew is a homeowner who has purchased a power mower from an authorized dealer on the basis of the dealer's recommendation that the mower is the best one available to the job. Andrew was cutting his lawn when the mower blade flew off and seriously injured his leg.
Required:
a. Andrew sues Whirlwind Mowers and asks for damages based on negligence in producing the power mower. Is Whirlwind Mowers guilty of negligence? Explain your answer.
b. The doctrine of res ipsa loquitur can often be applied to cases of this type. Show how this doctrine can be applied to this case. Your answer must include a definition of res ipsa loquitur .
c. Explain the various types of damages that Andrew might receive if Whirlwind Mowers is found guilty of negligence.
Answer:
A) Yes Whirlwind mowers are guilty
B) If
The negligence causes an injury event occurred due to the negligence applicant/defendant has an exclusive ownership of the equipmentC) Compensative damages : special and general
Explanation:
A)
Andrew can sue whirlwind mowers and claim damages for production negligence ( i.e. not following the standard of care ) as enshrined in the doctrine of " res ipsa loquitur " hence Whirlwind mowers are guilty
B)
"res ipsa loquitur ." means the thing speaks for itself and this doctrine can be applied to this case following that the:
The negligence causes an injury event occurred due to the negligence applicant/defendant has an exclusive ownership of the equipmentc) The various types of damages
Compensative damages ( divided into 2 )
i) special damages which includes hospital expenses and other properly documented damages ii) general damages : includes damages that are non-measurable damages
Coronado Industries makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable Cost Per Unit Sold Monthly Fixed Cost Sales commissions $0.60 $ 4500 Shipping 1.20 Advertising 0.30 Executive salaries 50000 Depreciation on office equipment 7400 Other 0.35 38000 Expenses are paid in the month incurred. If the company has budgeted to sell 8500 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October?
Answer:
$120,725
Explanation:
Calculation to determine how much is the total budgeted variable selling and administrative expenses for October
Total budgeted variable selling and administrative expenses =( 0.60+1.2 + 0.3 + 0.35) x 8,500 + 4500 + 50,000 + 7400 + 38,000
Total budgeted variable selling and administrative expenses =2.45*8500+4500 + 50,000 + 7400 + 38,000
Total budgeted variable selling and administrative expenses=$20,825+4500 + 50,000 + 7400 + 38,000
Total budgeted variable selling and administrative expenses=$120,725
Therefore the total budgeted variable selling and administrative expenses for October is $120,725