Last year "ABC" Company had $121646 of assets, $76058 of sales, $19170 of net income, and an equity multiplier of 1.81369. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets to $99391, Sales, costs and net income would not be affected, and the firm would maintain the equity multiplier at the same level (1.81369). By how much would the reduction in assets will change the ROE value?

Answer:

ABC Company

The reduction in assets will change the ROE value by 6% increase, from 29% to 35%.

Explanation:

a) Data and Calculations:

Equity multiplier = total assets divided by stockholders equity

Last year's figures:

Assets = $121,646

Sales = $76,058

Net income = $19,170

Equity multiplier = 1.81369

Equity = Assets/Equity multiplier

= $67,071 ($121,646/1.81369)

Return on equity = $19,170/$67,071 * 100

= 28.6%

= 29%

New figures:

Assets reduced to $99,391

Sales = $76,058

Net income = $19,170

Equity multiplier = 1.81369

Equity = $54,800 ($99,391/1.81369)

Return on equity = $19,170/$54,800 * 100

= 35%

b) The reduction in assets changes the ROE value from 29% to 35%.

Granger Printing currently uses a manufacturing facility costing $560,000 per year; 90% of the facility's capacity is currently being used. A start-up business has proposed a plan that would utilize the other 10% of the facility and increase the overall costs of maintaining the space by 11%. If the incremental method were used, what amount of cost would be allocated to the start-up business

A student wants to buy a smartphone so she can share pictures with her friends. An insurance claims adjuster wants to buy a smartphone to document accidents (take pictures, write a report, etc.). If they both purchase the same model smartphone, such as an Apple iPhone, which statement is most accurate?

a. Both the adjuster and the student we potential customers because in their own way, they both benefit from the product.
b. The student is the prospective customer since there are more students buying smartphones for personal use than there are insurance adjusters buying smartphones for business use.
c. Neither the adjuster nor the student is a prospective customer since the company will pay for the adjuster's smartphone and the student's parents will pay for hers.
d. Only a person who has bought a smartphone previously is a prospective customer, only previous owners of smartphones benefit from buying new ones.
e. The adjuster is a prospective customer because the smartphone will be used for work, the student is only a secondary user since the purpose of the smartphone is just for entertainment

sykes company has sales revenue of $585,700. Cost of goods sold before adjustment is $335,900. The company's actual manufacturing overhead is $92,000, while allocated manufacturing overhead is $104,400. What is the actual gross profit

The beauty of an economic model comes from:______.
a. its ability to represent a complex reality without any simplification.
b. its ability to make clear predictions that are consistent with reality.
c. its simplicity in presenting the essential elements of an otherwise complex reality.
d. b and c.

Mimi is granted a license to sell her unique Spirit Pins at local high school lacrosse games. When Mimi prices her pins at $10, she sells 20 pins per game. When she lowers her price to $8, she sells 40 pins. The additional money she earns from dropping her price is known as the __________.

a. Output effect
b. Price effect
c. Marginal revenue
d. Opportunity cost

Crandle Manufacturers Inc. is approached by a potential customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $140 Direct labor 100 Manufacturing support 105 Marketing costs 55 Fixed costs: Manufacturing support 175 Marketing costs 65 Total costs 640 Markup (50%) 320 Targeted selling price $960 For Crandle Manufacturers Inc., what is the minimum acceptable price of this special order

Caterpillar Inc. (CAT) pays an annual dividend of $4.45. The company is expected to continue paying this dividend with no future growth in dividends. Investors require 11% rate of return on this investment. What is the current stock value of CAT

Sysco Corporation, formed in 1969, is the largest global distributor of food service products, serving over 500,000 restaurants, hotels, schools, hospitals, and other institutions. The following summarized transactions are typical of those that occurred in a recent year (dollars are in millions). a. Purchased buildings costing $450 and equipment costing $234 for cash.
b. Borrowed $119 from a bank, signing a short-term note.
c. Provided $54,171 in service to customers during the year, with $23,358 on account and the rest received in cash.
d. Paid $129,574 cash on accounts payable.
e. Purchased $41,983 of inventory on account.
f. Paid payroll, $5,240 during the year.
g. Received $19,043 on account paid by customers.
h. Purchased and used fuel of $1,600 in delivery vehicles during the year (paid for in cash).
i. Declared $598 in dividends at the end of the year to be paid the following year.
j. Incurred $126 in utility usage during the year; paid $93 in cash and owed the rest on account.
Required:
For each of the transactions, prepare journal entries.

Determine the internal rate of return for a project that costs $177,000 and would yield after-tax cash flows of $21,000 per year for the first 5 years, $29,000 per year for the next 5 years, and $42,000 per year for the following 5 years.

You can display good customer service by

Rudd Clothiers is a small company that manufactures tall-men's suits. The company has used a standard cost accounting system. In May 2020, 11,250 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours. All materials purchased were used.

Cost Element Standard (per unit) Actual

Direct materials 8 yards at $4.40 per yard $375,575 for 90,500 yards ($4.15 per yard)
Direct labor 1.2 hours at $13.40 per hour $200,925 for 14,250 hours ($14.10 per hour)
Overhead 1.2 hours at $6.10 per hour (fixed $3.50; variable $2.60) $49,000 fixed overhead $37,000 variable overhead

Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $49,000, and budgeted variable overhead was $36,400.
Required:
Compute the total, price, and quantity variances for (1) materials and (2) labor.

cutter enterprises purchased equipment for $75,000 on january 1, 2021. the equipment is expected to have a five-year life and a residual value of $4,200. using the double-declining-balance method, depreciation for 2021 and the book value at december 31, 2021, would be: book

What is the difference between economics and geography? -,-​

A pharmaceutical company with headquarters in India sells fluconazole, the generic version of Pfizer's anti-fungal drug Diflucan internationally for significantly less money than many U.S. generic drug manufacturers. The generic drugs industry in this country needs to rethink its

whistle works manufacturers safety whistle keychains. They have the following information available to prepare their master budget whistle works sells eafch whistle for $12. It takes .25 direct labor hours to produce each whistle at a cost of $15 per hour. How much will direct labor cost be in December

The following data relate to direct labor costs for the current period: Standard costs 7,500 hours at $11.70 Actual costs 6,400 hours at $10.50 What is the direct labor time variance

Compute Lead Time Jackson Fabricators Inc. machines metal parts for the automotive industry. Under the traditional manufacturing approach, the parts are machined through two processes: milling and finishing. Parts are produced in batch sizes of 40 parts. A part requires 6 minutes in milling and 8 minutes in finishing. The move time between the two operations for a complete batch is 5 minutes. Under the lean philosophy, the part is produced in a cell that includes both the milling and finishing operations. The operating time is unchanged; however, the batch size is reduced to 5 parts and the move time is eliminated. Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the traditional and lean manufacturing methods. If required, round percentages to one decimal place. Traditional Philosophy Lean Manufacturing Philosophy Value-added time fill in the blank 1 min fill in the blank 2 min Non-value-added time fill in the blank 3 min fill in the blank 4 min Total lead time fill in the blank 5 min fill in the blank 6 min Value-added ratio (as a percent) fill in the blank 7 % fill in the blank 8 %

Mary makes 10 pies and 20 cakes a day and her opportunity cost of producing a cake is 2 pies. Tim makes 20 pies and 10 cakes a day and his opportunity cost of producing a cake is 4 pies. If Mary and Tim specialize in the good in which they have a comparative​ advantage, ______.

Waterway Industries Recorded operating data for its Cheap division for the year. Waterway requires its return to be 10%. Sales $1600000 Controllable margin 88000 Total average assets 4400000 Fixed costs 100000 What is the ROI for the year

A company purchased a marketable security for $10,000 on 3/3/2013. On 3/30/2013, the company prepared its financial statements and marked the security to its market value, which was $17,500. The security was sold on 4/30/2013 for $15,000. The company used the Trading Securities method to account for the security. The statutory tax rate is 35%. What was the effect of the sale of the security on Income Tax Payable on 4/30/2013

In the month of June, a department had 19900 units in beginning work in process that were 75% complete. During June, 90200 units were transferred into production from another department. At the end of June there were 11000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for conversion costs for June were

The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 2800 units, the actual direct labor cost was $83200 for 5200 direct labor hours worked, the total direct labor variance is $2800 unfavorable. $800 favorable. $800 unfavorable. $500 unfavorable.

India now has pockets of strengths in key high-technology industries such as software and pharmaceuticals. Why do you think India is developing strength in these areas?

Gullett Corporation had $34,000 of raw materials on hand on November 1. During the month, the Corporation purchased an additional $83,000 of raw materials. The journal entry to record the purchase of raw materials would include a:

Is an increase in the marginal income tax rate reflected by a shift in the after-tax supply of labor or a movement along the supply curve when the pretax wage rate is on the vertical axis?

Name four commercial services which are useful to the manufacturer​

Assume that, on January 1, 2021, Matsui Co. paid $1,795,200 for its investment in 74,800 shares of Yankee Inc. Further, assume that Yankee has 220,000 total shares of stock issued. The book value and fair value of Yankee's identifiable net assets were both $440,000 at January 1, 2021. The following information pertains to Yankee during 2021:

Net income $240,000
Dividends declared and paid $72,000
Market price of common stock on 12/31/2016 $29/share

What amount would Matsui report in its year-end 2016 balance sheet for its investment in Yankee?
a. $1,608,000.
b. $1,368,000.
c. $1,329,600.
d. None of these answer choices is correct.

On January 1, 2024, an investor paid $261,000 for bonds with a face amount of $315,000. The contract rate of interest is 8% while the current market rate of interest is 10%. Using the effective interest method, how much interest income is recognized by the investor in 2025 (assume annual interest payments and amortization)

Sales $ 100,000 Operating expenses $ 94,000 Operating assets $ 40,000 Stockholder's equity $ 25,000 Cost of capital 10 % What is Sweet Dreams Company's return on investment (ROI)

Your company has an opportunity to invest in a project that is expected to result in after-tax cash flows of $7,000 the first year, $9,000 the second year, $12,000 the third year, -$8,000 the fourth year, $19,000 the fifth year, $25,000 the sixth year, $28,000 the seventh year, and -$6,000 the eighth year. The project would cost the firm $47,300. If the firm's cost of capital is 18%, what is the modified internal rate of return