Answer:
Rapidly rising prices not only affect the price consumers pay, they also affect the cost businesses have to pay for materials and inventory. When replacement inventory costs more than the inventory you just sold, it can lead to inventory shortages.
Explanation:
I hope it helped
Nelter Corporation, which has only one product, has provided the following data concerning its most recent month of operations:Selling price $ 122Units in beginning inventory 290Units produced 6,600Units sold 6,590Units in ending inventory 300Variable costs per unit:Direct materials $ 42Direct labor $ 26Variable manufacturing overhead $ 2Variable selling and administrative expense $ 21Fixed costs:Fixed manufacturing overhead $ 151,800Fixed selling and administrative expense $ 46,130The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.Required:a. Prepare a contribution format income statement for the month using variable costing.b. Prepare an income statement for the month using absorption costing.
Answer:
Part a
Nelter Corporation
Contribution format income statement for the month using variable costing
Sales ($ 122 x 6,590) $803,980
Less Cost of Goods Sold
Beginning Inventory $20,300
Add Cost of Goods Manufactured $462,000
Less Ending Inventory ($21,000) ($461,300)
Contribution $342,680
Less Expenses
Selling and administrative expense :
Variable ($21 x 6,590) $138,390
Fixed $46,130
Fixed manufacturing overhead $ 151,800 ($336,320)
Net Income (Loss) $6,360
Part b
Nelter Corporation
Income statement for the month using absorption costing
Sales ($ 122 x 6,590) $803,980
Less Cost of Goods Sold
Beginning Inventory $26,970
Add Cost of Goods Manufactured $613,800
Less Ending Inventory ($27,900) ($612,870)
Gross Profit $191,110
Less Expenses
Selling and administrative expense :
Variable ($21 x 6,590) $138,390
Fixed $46,130 ($184,520)
Net Income (Loss) $6,590
Explanation:
Variable Costing Calculations
Unit Product Cost = Variable Manufacturing Costs
= $ 42 + $ 26 + $ 2
= $ 70
Cost of Goods Manufactured = 6,600 x $ 70 = $462,000
Opening Inventory = 290 x $ 70 = $20,300
Ending Inventory = 300 x $70 = $21,000
Absorption Costing Calculations
Unit Product Cost = Variable Manufacturing Costs
= $ 42 + $ 26 + $ 2 + ($ 151,800 ÷ 6,600)
= $ 42 + $ 26 + $ 2 + $23
= $93
Cost of Goods Manufactured = 6,600 x $93 = $613,800
Opening Inventory = 290 x $93 = $26,970
Ending Inventory = 300 x $93 = $27,900
Current Attempt in Progress Nash's Trading Post, LLC developed the following information about its inventories in applying the lower-of-cost-or-net-realizable-value(LCNRV) basis in valuing inventories: Product Cost MarketA $84000 $89000 B 59000 56000 C 118000 120000 After Nash's Trading Post, LLC applies the LCNRV rule, the value of the inventory reported on the balance sheet would be:___________. a. $261000. b. $265000. c. $258000. d. $268000.
Answer:
c. $258000
Explanation:
The computation of the ending inventory using LCRNV rule is given below:
Product Cost Market LCRNV
A $84000 $89000 $84000
B $59000 $56000 $56000
C $118000 $120000 $118000
Total value $258,000
"Jack owns a local trucking company. With fuel costs being expensive, Jack wants to evaluate how much fuel, on average, he should store in his 6,800 gallon fuel tank. Each year Jack uses 68,000 gallons of diesel (usage is spread evenly throughout the year). Jack knows with certainly that he can have a load of fuel delivered in 5 days. The price of fuel is $2.04 per gallon and there is a separate $50 ordering fee per order. Jack thinks his holding cost per unit is 40%. If Jack orders at EOQ, what will be the average inventory of fuel in his 6,800 gallon tank?"
Answer: 1443.5 gallons
Explanation:
Thw following can be gotten from the question:
Fuel tank capacity = 6800 gallon
Annual demand, A = 68000 gallons
Ordering cost, O= $50
Carrying cost, C = 40% × $2.04 = $0.816
EOQ = ✓2AO/✓C
= ✓(2×68000×50) / ✓0.816
= ✓6800000 / ✓0.816
= 2887
Average inventory = EOQ/2
= 2887/2
= 1443.5 gallons
Therefore, the average inventory will be 1443.5 gallons.
what effect does a rise in fuel prices have on product prices
Answer:
Rise in product prices
Explanation:
It becomes more expensive to produce and to transport the goods, so the product price will increase to make up for it.
Fuqua Company’s sales budget projects unit sales of part 198Z of 10,000 units in January, 12,000 units in February, and 13,000 units in March. Each unit of part 198Z requires 4 pounds of materials, which cost $2 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month’s production requirements, and its ending finished goods inventory to equal 20% of the next month’s expected unit sales. These goals were met at December 31, 2019.
Requried:
a. Prepare a projected budget for Jan and Feb 2017.
b. Prepare a direct material budget for Jan 2017.
Answer:
Results are below.
Explanation:
To calculate the production budget for January, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
January:
Production= 10,000 + (12,000*0.2)
Production= 12,400 units
February:
Production= 12,000 + 13,000*0.2 - (12,000*0.2)
Production= 12,200
Now, the raw material budget:
Purchases= production + desired ending inventory - beginning inventory
Purchases= 12,400*4 + (12,200*4)*0.4
Purchases= 69,120 pounds
Total cost= 69,120*2= $138,240
On May 7, Hatch Company purchased on account 490 units of raw materials at $20 per unit. During May, raw materials were requisitioned for production as follows: 211 units for Job 200 at $16 per unit and 186 units for Job 305 at $20 per unit.Journalize the entry on May 7 to record the purchase. If an amount box does not require an entry, leave it blank. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTSBergan CompanyGeneral Ledger
ASSETS
110 Cash
121 Accounts Receivable
125 Notes Receivable
126 Interest Receivable
131 Materials
132 Work in Process
133 Factory Overhead
134 Finished Goods
141 Supplies
142 Prepaid Insurance
143 Prepaid Expenses
181 Land
191 Factory
192 Accumulated Depreciation-Factory
LIABILITIES
210 Accounts Payable
221 Utilities Payable
231 Notes Payable
236 Interest Payable
241 Lease Payable
251 Wages Payable
252 Consultant Fees Payable
EQUITY
311 Common Stock
340 Retained Earnings
351 Dividends
390 Income Summary
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Goods Sold
520 Wages Expense
531 Selling Expenses
532 Insurance Expense
533 Utilities Expense
534 Office Supplies Expense
540 Administrative Expenses
560 Depreciation Expense-Factory
590 Miscellaneous Expense
710
Interest Expense
Journalize the entry on May 7 to record the purchase and on May 31 to record the requisition from the materials storeroom. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
Hatch Company
Journal Entries:
May 7:
Debit 131 Materials $9,800
Credit 210 Accounts Payable $9,800
To record the purchase of materials on account.
May 31: Debit 132 Work in Process:
Job 200 $3,376
Job 305 $3,720
Credit Materials $7,096
To record materials requisitioned for production.
Explanation:
a) Data and Analysis:
May 7: Materials $9,800 Accounts payable $9,800 (490 * $20)
May 31: Work in Progress:
Job 200 $3,376 (211 * $16)
Job 305 $3,720 (186 * $20)
Materials $7,096
Assume Purity Ice Cream Company, Inc., in Ithaca, NY, bought a new ice cream maker at the beginning of the year at a cost of $9,000. The estimated useful life was four years, and the residual value was $1,000. Assume that the estimated productive life of the machine was 16,000 hours. Actual annual usage was 5,500 hours in Year 1; 3,800 hours in Year 2; 3,200 hours in Year 3; and 3,500 hours in Year 4.
Required:
Complete a separate depreciation schedule for each of the alternative methods.
A. Straight-line.
B. Units-of-production (use four decimal places for the per unit output factor).
C. Double-declining-balance.
Answer:
Straight line depreciation Method
Year Depreciation Cumulative depreciation Net Book value
1. $2000 $2000 $7000
2 $2000 $4000 $5000
3 $2000 $6000 $3000
4. $2000 $8000 $1000
Unit of production
Year Depreciation Cumulative depreciation Net Book value
1 $2,750 $2750 $6250
2. $1,900 $4,650 $4,350
3. $1,600 $6,250 $2,750
4. $1,750 $8,000 $1,000
Double declining method
Year Depreciation Cumulative depreciation Net Book value
1 $4500 $4500 $4500
2. $2250 $6,750 $2250
3. $1125 $7,875 $1125
4. $562.50 $8437.5 $562.50
Explanation:
Book value in year in subsequent years = previous book value - that year's depreciation expense
Accumulated depreciation is sum of depreciation expense
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($9000 - $1000) / 4 = $2000
Depreciation expense each year would be $2000
Accumulated depreciation would increase each year by the depreciation expense, which is $2000.
Net book value in year 1 = $9000 - $2000 = $7000
Net book value in year 1 = $7000 - $2000 = $5000
Net book value in year 1 = $5000 - $2000 = $3000
Net book value in year 1 = $3000 - $2000 = $1000
B. Unit of production = (hours worked that year / total hours of the machine) x (Cost of asset - Salvage value)
Depreciation expense
Year 1 = (5,500 / 16,000) x ($9000 - $1000) = $2,750
Year 2 = (3,800 / 16,000) x ($9000 - $1000) = $1900
Year 3 = (3,200 / 16,000) x ($9000 - $1000) = $1600
Year 4 = (3,500 / 16,000) x ($9000 - $1000) = $1750
Accumulated depreciation in year 1 = $2750
Accumulated depreciation in year 2 = $2750 + $1900 = $4,650
Accumulated depreciation in year 3 = $4,650 + $1600 = $6,250
Accumulated depreciation in year 4 = $6,250 + $1750 = $8000
Book value in year 1 = $9000 - $2,750 = $6250
Book value in year 2 = $6250 - $1900 = $4,350
Book value in year 3 = $4,350 - $1600 = $2750
Book value in year 4 = $2750 - $1750 = $1000
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Depreciation factor = 2 x (1/useful life) = 2x (1/4 ) = 0.5
Depreciation expense in Year 1 = 0.5 x $9000 = $4500
Book value in year 1 = $9000 - $4500 = $4500
Depreciation expense in Year 2 = 0.5 x $4500 = $2250
Book value in year 2 = $4500 - $2250 = $2250
Depreciation expense in Year 3 = 0.5 x $2250 = $1125
Book value in year 3 = $2250 - $1125 = $1125
Depreciation expense in Year 4 = 0.5 x $1125 = $562.50
Book value in year 4 = $1125 - $562.50 = $562.50
Accumulated depreciation in year 1 = $4500
Accumulated depreciation in year 2 = $4500+ $2250 = $6,750
Accumulated depreciation in year 3 = $6,750 + $1125 = $7,875
Accumulated depreciation in year 4 = $7,875 + $562.50 = $8437.5
Prepare journal entries to record each of the following sales transactions of EcoMart Merchandising. EcoMart uses a perpetual inventory system and the gross method. Oct. 1 Sold fair trade merchandise for $2, 600, with credit teres n/30; invoice dated October 1. The cost of the nerchandise is $1,450 which had cost $145, is returned to inventory of the merchandise is $890 6 The customer in the October 1 sale returned $260 of fair trade merchandise for full credit. The merchandise, 9 Sold recycled leather merchandise for $1, 250, with credit terms of 1/10, n/30; invoice dated October 11 Received payment for the amount due from the October 1 sale less the return on 0ctober 6.
Answer:
Oct 1
Debit : Accounts Receivable $2,600
Debit : Cost of Sales $1,450
Credit : Sales Revenue $2,600
Credit : Merchandise $1,450
Oct 6
Debit : Sales Revenue $260
Debit : Merchandise $145
Credit : Accounts Receivable $260
Credit : Cost of Sales $145
Oct 9
Debit : Accounts Receivable $1, 250
Debit : Cost of Sales $1,450
Credit : Sales Revenue $1, 250
Credit : Merchandise $1,450
Oct 11
Debit : Cash $2,340
Credit : Accounts Payable $2,340
Explanation:
The perpetual method ensures that the cost of sales and inventory values are calculated after every transaction made.
Therefore, remember to show the cost of sale journal and the resulting decrease in inventory after every sale.
Sheridan Company uses a periodic inventory system. Details for the inventory account for the month of January, 2020 are as follows: Units Per unit price Total Balance, 1/1/20 200 $5.00 $1000 Purchase, 1/15/20 120 5.40 648 Purchase, 1/28/20 120 5.50 660 An end of the month (1/31/20) inventory showed that 160 units were on hand. If the company uses FIFO and sells the units for $8 each, what is the gross profit for the month
Answer:
$808
Explanation:
FIFO method assumes that the units to arrive first, will be sold first. This means that the Cost of Goods sold will be based on earlier (old) prices.
Also, the periodic inventory system ensures that the cost of sales and the ending inventory are determined at the end of the period. For this question, the end of period is monthly.
Step 1 : Determine Number of Units Sold
Units Sold = Units available for sale - Inventory Units
= (200 + 120 + 120) - 160
= 440 - 160
= 280 units
Step 2 : Determine Cost of Sales
Cost of Sales = 200 units x $5 + 80 units x $5.40
= $1,432
Step 3 : Determine Gross Profit
Gross Profit = Sales - Cost of Goods Sold
= ($8 x 280 units) - $1,432
= $2,240 - $1,432
= $808
Conclusion
The gross profit for the month is $808
A businessperson is setting up a new automatic car wash and is choosing between two fully automated machines. The first machine can process up to 2,000 cars per month at a marginal cost of $1 per car. The second machine can also process up to 2,000 cars per month but at a marginal cost of $0.50 per car. The monthly lease for the machine with the higher marginal cost is $1,200. The monthly lease for the machine with the lower marginal cost is $1,590 The car wash can sell car washes for $8 per car. 1. Suppose the businessperson chooses to lease the machine with the higher marginal cost for the first month and does indeed wash 2,000 cars that month. The businessperson earned profits of____________ $ in the first month. 2. Suppose now the businessperson chooses to lease the machine with the lower marginal cost for the second month and again washes 2,000 cars that month. The businessperson earned profits of __________$ in the second month. 3. The car wash would have to wash ____________cars or more per month in order to justify paying the higher-priced machine lease.
Answer:
i wil do it asap asap
Explanation:
asap asap
Assume that Simple Co. had credit sales of $248,000 and cost of goods sold of $148,000 for the period. Simple uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $2, 800. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $230. What amount of Bad Debt Expense would the company record as an end-of-period adjustment?
Answer: $2,570
Explanation:
Simple estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $2,800.
This account has a credit balance of $230.
The amount of Bad Debt expense is the amount that will take it to a balance of $2,800:
= 2,800 - 230
= $2,570
I tell you that if you rake all the leaves in my yard, I will show up to Business Law class next week. You immediately come over and start raking the leaves. Halfway through the job you decide to leave to do some extra Business Law reading for fun. I run after you and say, "you didn’t finish, I will sue you for this!" Your best defense is:
Answer: d. There was no valid consideration
Explanation:
Valid consideration is a clause in contract law that states that the contract cannot be valid if both sides did not make a promise to fulfil some duty to each other.
You made a promise that you would come to Business Law class if I raked the yard, however, I never made a promise that I would rake the yard if you came to class. There was therefore no valid consideration.
Pension Plan Entries Yuri Co. operates a chain of gift shops. The company maintains a defined contribution pension plan for its employees. The plan requires quarterly installments to be paid to the funding agent, Whims Funds, by the fifteenth of the month following the end of each quarter. Assume that the pension cost is $182,100 for the quarter ended December 31. Journalize the entry to record the accrued pension liability payment to the funding agent on January 15.
Answer:
December 31
Dr Pension expense $182,100
Cr Unfunded pension Liabiltiy $182,100
January 15
Dr Unfunded pension Liabiltiy $182,100
Cr Cash $182,100
Explanation:
Preparation of the entry to record the accrued pension liability payment to the funding agent on January 15
December 31
Dr Pension expense $182,100
Cr Unfunded pension Liabiltiy $182,100
(Being to record quarterly pension Liabiltiy)
January 15
Dr Unfunded pension Liabiltiy $182,100
Cr Cash $182,100
( Being to record the accrued pension liability payment to the funding agent)
1. Suppose two types of firms wish to borrow in the bond market. Firms of type A are in good financial health and are relatively low risk. The appropriate premium over the risk-free rate of lending to these firms is 2%. Firms of type B are in poor financial health and are relatively high risk. The appropriate premium over the risk-free rate of lending to these firms is 6%. As an investor, you have no other information about these firms except that type A and type B firms exist in equal numbers. a. At what interest rate would you be willing to lend if the risk-free rate were 5%
Answer:
Type A is 7%, type b is 11%
Explanation:
We have these two firm's as type a and type b
For type A
Interest would be = risk Free rate of 2% + risk free rate of 5% = 7%
For type B
= Risk free rate of 5% + risk free rate of 6% = 11%
I would use the average of this two 9% as interest but this is not going to work for type A because this interest rate is too high. People won't want to pay this much.
At the beginning of 2021, Terra Lumber Company purchased a timber tract from Boise Cantor for $2,950,000. After the timber is cleared, the land will have a residual value of $670,000. Roads to enable logging operations were constructed and completed on March 30, 2021. The cost of the roads, which have no residual value and no alternative use after the tract is cleared, was $228,000. During 2021, Terra logged 570,000 of the estimated 5.7 million board feet of timber. Required: Calculate the 2021 depletion of the timber tract and depreciation of the logging roads assuming the units-of-production method is used for both assets
Answer:
depletion of the timber tract = $228,000 and
depreciation of the logging roads = $22,800
Explanation:
Timber tract
Depletion rate = (Cost - Residual Value) ÷ Estimated units
= ($2,950,000 - $670,000) ÷ 5,700,000
= $0.40
Depletion expense = Units used x Depletion rate
= 570,000 x $0.40
= $228,000
Logging Roads
Depreciation rate = (Cost - Residual Value) ÷ Estimated units
= ($228,000 - $0) ÷ 5,700,000
= $0.04
Depreciation expense = Units used x Depreciation rate
= 570,000 x $0.04
= $22,800
Nash Incorporated factored $156,000 of accounts receivable with Crane Factors Inc. on a without-recourse basis. Crane assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. Prepare the journal entry for Nash Incorporated and Crane Factors to record the factoring of the accounts receivable to Crane.
Answer:
Nash Incorporated,
Dr Cash $143,520
Dr Due from Factor $9,360
Dr Loss on Sale of Receivables $3,120
Cr Accounts Receivable $156,000
Crane Factors
Dr Accounts Receivable $156,000,
Cr Due to Customer Nash $9,360
Cr Interest Revenue $3,120
Cr Cash $143,520
Explanation:
Preparation of the journal entry for Nash Incorporated and Crane Factors to record the factoring of the accounts receivable to Crane.
Nash Incorporated,
Dr Cash $143,520
($156,000-$9,360-$3,120)
Dr Due from Factor $9,360
(6%*$156,000)
Dr Loss on Sale of Receivables $3,120
(2%*156,000)
Cr Accounts Receivable $156,000,
Crane Factors
Dr Accounts Receivable $156,000,
Cr Due to Customer Nash $9,360
(6%*$156,000)
Cr Interest Revenue $3,120
(2%*156,000),
Cr Cash $143,520
($156,000-$9,360-$3,120)
Southern Fields has an inventory of 838,000 pounds of sugar. The firm placed a partial hedge on this inventory by selling 6 futures contracts at 9.56. The futures contracts are based on 112,000 pounds and are quoted in cents per pound. At the time the firm sold the sugar, the spot rate was 9.63. How much profit did the firm lose because of the hedge
Ben and Molly are married and will file jointly. Ben generates $300,000 of qualified business income from his single-member LLC (a law firm). He reports his business as a sole proprietorship. Wages paid by the law firm amount to $40,000; the law firm has no significant property. Molly is employed as a tax manager by a local CPA firm. Their modified taxable income is $386,600 (this is also their taxable income before the deduction for qualified business income). Determine their allowable QBI deduction for 2020. $fill in the blank 1
Answer:
A. $8,000
B. $14,400
Explanation:
A. Calculation to determine their tentative QBI based on the W-2 Wages/Capital Investment Limit
First step is to calculate the Applicable Percentage
Applicable percentage= 100%-($386,600 - $326,600)/100,000
Applicable percentage=40%
Now let Calculate the tentative QBI based on the W-2 Wages/Capital Investment Limit
GREATER OF BELOW:
Tentative QBI based on the W-2 Wages/Capital Investment Limit=50% of W-2 wages ($40,000 × 50% × 40%)
Tentative QBI based on the W-2 Wages/Capital Investment Limit=$8,000
OR
Tentative QBI based on the W-2 Wages/Capital Investment Limit=[ W-2 wages of ($40,000 × 25% × 40%)]+ [Unadjusted basis of qualified property of ($0 × 2.5% × 40%)]
Tentative QBI based on the W-2 Wages/Capital Investment Limit=$4,000+$0
Tentative QBI based on the W-2 Wages/Capital Investment Limit=$4,000
Therefore their tentative QBI based on the W-2 Wages/Capital Investment Limit will be $8,000
2. Calculation to Determine their allowable QBI deduction for 2020
First step is to calculate the General QBI deduction
General QBI deduction [($300,000 × 20%)× 40%]
General QBI deduction=$24,000
Second step is to calculate the Reduction Ratio
Reduction ratio= ($386,600 - $326,600)/100,000
Reduction ratio=$60,000/100,000
Reduction ratio= 60%
Now let calculate the allowable QBI deduction for 2020
General QBI deduction $24,000
Less Reduction of W-2 Wages/Capital Investment Limit ($9,600)
[($24,000-$8,000)*60%]
2020 Allowable QBI deduction $14,400
($24,000-$9,600)
Therefore their allowable QBI deduction for 2020 will be $14,400
This activity is important because marketing students should be aware of career opportunities in sales, how sales people create value for customers, and how the sales function contributes to the overall success of the organization.
Mark will be a junior in college this fall, but is undecided about his major. Over the summer, he visited with an old family friend, Brad Donavan, who has had a lengthy and successful career selling business software and services. He suggests that sales might be a great match for Mark’s personality, interests, and lifestyle. Mark is encouraged and begins looking at job listings and responsibilities associated with various types of sales positions advertised in his area.
The goal of this exercise is to assist Mark by categorizing each of the eight (8) listed job descriptions into one of five sales job category types: (1) new business salesperson, (2) order-taker, (3) missionary salespeople, (4) sales management and support, and (5) other.
Select the appropriate sales job category for each example.
2. The goal of the Channel Sales Manager (CSM) position is to create and manage successful revenue-generating relationships with reseller partners who affect the movement of our products to end user customers.
(Click to select) New Business Salespeople Order-Takers Missionary Salespeople Sales Management and Support Other
4. A primary responsibility of the Route Sales Representative will be to drive a company vehicle to deliver coffee, tea, and other products to customers in assigned territory.
(Click to select) New Business Salespeople Order-Takers Missionary Salespeople Sales Management and Support Other
8. The Key Account Manager is responsible for nurturing key customer relationships and the development of account-specific promotional activities.
(Click to select) New Business Salespeople Order-Takers Missionary Salespeople Sales Management and Support Other
Answer:
Sales Careers and Examples
Example Career
2. Channel Sales Manager (CSM) Sales Management and Support
4. Route Sales Representative Order-Takers
8. The Key Account Manager Missionary Salespeople
Explanation:
Fives Sales Job Categories:
(1) New business salesperson identifies prospects and sells to them.
(2) Order-taker fulfills orders without trying to acquire new ones.
(3) Missionary salespeople do not make actual sales but initiate the process with decision-makers.
(4) Sales management and support render management and support services to salespeople.
(5) Others include salespeople who do not fall into the above categories.
In an economy with no government and no foreign sector, autonomous consumer spending is $250 billion, planned investment spending is $350 billion, and the marginal propensity to consume is 2/3. What is the income-expenditure equilibrium GDP (i.e. Y*)
Answer: $1800 billion.
Explanation:
Based on the information given, the consumption function will be given as:
= a + bY
= 250 + 2/3Y
Then, aggregate expenditure will be:
= 250 + 2/3Y + 350
= 600 + 2/3Y
Then, the income-expenditure equilibrium GDP (i.e. Y*) will be at the point that the real GDP is equal to the aggregate expenditure. This will be:
Y = 600 + 2/3Y
Y - 2/3Y = 600
1/3Y = 600
Y = 3 × 600
Y = 1800
Therefore, the income-expenditure equilibrium GDP is $1800 billion.
Shining Cookie Company, Inc., in Murfreesboro, TN bought a new ice cream maker at the beginning of the year at a cost of $12,000. The estimated useful life was four years, and the residual value was $960. Assume that the estimated productive life of the machine was 9,200 hours. Actual annual usage was 3,680 hours in year 1; 2,760 hours in year 2; 1,840 hours in year 3; and 920 hours in year 4.
Required:
1. Complete a separate depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.)
a. Straight-line.
b. Units-of-production (use four decimal places for the per unit output factor).
c. Double-declining-balance.
Answer:
a. Straight Line :
Year 1 : $2760
Year 2 : $2760
Year 3 : $2760
Year 4 : $2760
b. Units of production :
Year 1 : $4416
Year 2 : $3312
Year 3 : $2208
Year 4 : $1104
a. Double Declining Balance :
Year 1 : $6000
Year 2 : $3000
Year 3 : $1500
Year 4 : $560
Explanation:
a. Straight Line Depreciation:
( Cost of Ice cream maker - Residual Value ) / Useful life in years
( $12,000 - $960 ) / 4 = $2760
b. Units of production :
( Cost of Ice cream maker / Total Productive machine hours ) * Annual Usage
Year 1 ($12,000 / 9200 ) * 3680 = 4416
Year 2 ($12,000 / 9200 ) * 2760 = 3312
Year 3 ($12,000 / 9200 ) * 1840 = 2208
Year 4 ($12,000 / 9200 ) * 920 = 1104
c. Double declining method :
Year 1: $12,000 * 50% = $6000
Year 2 : $12,000 * 25% = $3000
Year 3 : $12,000 * 12.5% = $1500
Year 4 : $12,000 * 6.25% = $560
A sales representative lives in Bloomington and must be in Indianapolis next Thursday. On each of the days Monday, Tuesday, and Wednesday, he can sell his wares in Indianapolis, Bloomington, or Chicago. From past experience, he believes that he can earn $12 from spending a day in Indianapolis, $16 from spending a day in Bloomington, and $17 from spending a day in Chicago. Where should he spend the first three days
Answer:
Bloomington.
Explanation:
Since a sales representative lives in Bloomington and must be in Indianapolis next Thursday, and on each of the days Monday, Tuesday, and Wednesday, he can sell his wares in Indianapolis, Bloomington, or Chicago, and from past experience, he believes that he can earn $ 12 from spending a day in Indianapolis, $ 16 from spending a day in Bloomington, and $ 17 from spending a day in Chicago, to determine where he should spend the first three days, the following calculation must be performed:
Indianapolis: 12 x 3 = 36
Bloomington: 16 x 3 = 48
Chicago: 17 x 3 = 51
Thus, in principle, the representative should spend his 3 days in Chicago, but if the cost of travel is discounted, he should spend those 3 days in Bloomington, since he will earn more money than if he moves in advance to Indianapolis.
Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow. Regular Super Total Units 10,000 3,700 13,700 Sales revenue $ 240,000 $ 740,000 $ 980,000 Less: Cost of goods sold 180,000 481,000 661,000 Gross Margin $ 60,000 $ 259,000 $ 319,000 Less: Selling expenses 60,000 134,000 194,000 Operating income (loss) $ 0 $ 125,000 $ 125,000 Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $20 per unit for Super. Variable selling expenses are $4 per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed. Omar Industries wants to drop the Regular product line. If the line is dropped, company-wide fixed manufacturing costs would fall by 10% because there is no alternative use of the facilities. What would be the impact on operating income if Regular is discontinued
Answer:
Omar Industries
If Regular product line is dropped, the operating income will be reduced by $31,600 to $93,400.
Explanation:
a) Data and Calculations:
Regular Super Total
Units 10,000 3,700 13,700
Sales revenue $ 240,000 $ 740,000 $ 980,000
Less: Cost of goods sold 180,000 481,000 661,000
Gross Margin $ 60,000 $ 259,000 $ 319,000
Less: Selling expenses 60,000 134,000 194,000
Operating income (loss) $ 0 $ 125,000 $ 125,000
Fixed manufacturing costs $3 per unit $20 per unit
Variable selling expenses $4 per unit $20 per unit
Variable manufacturing 150,000 407,000 557,000
Variable selling expenses 40,000 74,000 114,000
Total variable costs 190,000 481,000 671,000
Fixed manufacturing costs 30,000 74,000 104,000
Fixed selling expenses 20,000 60,000 80,000
Total fixed costs 50,000 134,000 184,000
Income Statement, using contribution margin approach:
Regular Super Total
Units 10,000 3,700 13,700
Sales revenue $ 240,000 $ 740,000 $ 980,000
Variable costs 190,000 481,000 671,000
Contribution margin 50,000 259,000 309,000
Fixed costs 50,000 134,000 184,000
Operating income/(loss) $0 $125,000 $125,000
Elimination of Regular:
Super
Units 3,700
Sales revenue $ 740,000
Variable costs 481,000
Contribution margin 259,000
Fixed costs 165,600
Operating income/(loss) $93,400
You've graduated from college and are now working in an investment firm where you advise clients on investment decisions. Here is the information on a proposed project. Up-front cost: $300,000 Next year's revenue: $15,000 Real interest rate: 8% Depreciation rate: 10% How much profit does the project yield, and should your client invest in the project
Answer:
-$285,000
Client should not invest in the project
Explanation:
Up-front cost : $300,000
Next year's revenue : $15,000
Real interest rate : 8%
Depreciation rate : 10%
Determine how much profit the project will yield
Profit = Revenue - cost
= 15,000 - 300,000
= - $285,000
No the Client should not invest in the project
Yoyodyne is a multinational communications and information technology corporation. Its principal products are mobile telephones and tablets. It recently announced on its website that customers can suggest ideas for its upcoming product model. Contributors of short-listed ideas will be adequately rewarded. In this case, Yoyodyne is using ________ to generate new product ideas.
Answer:
b) crowdsourcing
Explanation:
Analyzing the information about the issue, it is correct to say that the multinational Yoyodyne is using the crowdsourcing model, which is a practice of recruiting volunteers to generate new ideas. This practice can confer many advantages for organizations, such as problem solving and innovation from a new perspective and at a lower cost, which can contribute to the success of an organizational campaign. Another advantage of the application of crowdsourcing is the engagement of your target audience, who feel part of an important project and increase their perception of the brand, generating greater loyalty and satisfaction.
On January 1, 2019, Lightfoot Corporation issues 10%, 5-year bonds with a face value of $275,000 when the effective interest rate is 9%. Interest is to be paid semiannually on June 30 and December 31. Prepare calculations to prove that the selling price of the bonds is $285,880.07. Click here to access the tables to use with this exercise. Round your answers to two decimal places, if necessary.
Answer:
Value of bond = Present value of coupon payments + Present value of maturity or par value
Present value of coupon payments:
Coupon is semi annual = 275,000 * 10% * 1/2
= $13,750
Interest = 9%/ 2 = 4.5%
Duration = 5 * 2 = 10 semi annual periods
Present value will be that of an annuity as this cash flow is fixed:
= 13,750 * (1 - (1 + 4.5%)⁻¹⁰) / 4.5%
= $108,799.87
Present value of par value:
= 275,000 / ( 1 + 4.5%)¹⁰
= 177,080.11
Value of bond:
= 108,799.87 + 177,080.11
= $285,879.98
= $285,880
Proven.
Difference due to rounding errors.
Jamison Company purchased the assets of Booker Company at an auction for $5,600,000. An independent appraisal of the fair value of the assets is listed below: Land $1,900,000 Building 2,800,000 Equipment 2,100,000 Trucks 3,400,000 Assuming Jamison allocates the purchase price on the basis of the relative fair values, what amount would be allocated to the Trucks?
Answer:
$1,866,667
Explanation:
Express the Fair Value of Truck as a parentage of Total Fair Value and multiply by Total Purchase Price
Fair Value of Truck = $3,400,000
Total Fair Value = $1,900,000 + $2,800,000 + $2,100,000 + $3,400,000 = $10,200,000
Cost of Truck = $3,400,000 / $10,200,000 x $5,600,000 = $1,866,667
The amount that would be allocated to the Trucks is $1,866,667
A coffee manufacturer is interested in whether the mean daily consumption of regular-coffee drinkers is less than that of decaffeinated-coffee drinkers. A random sample of 50 regular-coffee drinkers showed a mean of 4.35 cups per day. A sample of 40 decaffeinated-coffee drinkers showed a mean of 5.12 cups per day. Assume the population standard deviation for those drinking regular coffee is 1.20 cups per day and 1.36 cups per day for those drinking decaffeinated coffee. Perform an appropriate test at the 1% level of significance. Use the critical value approach.Compute the p-value.
Answer:
The P-Value ≅0 (zero).
Explanation:
From the given data we have
Regular coffee drinkers sample size = n1 = 50
Decaffeinated-coffee drinkers sample size = n2= 40
Regular coffee drinkers sample mean= x1 = 4.35
Decaffeinated-coffee drinkers sample mean = x2= 5.12
Regular coffee drinkers population standard deviation = σ1 = 1.2
Decaffeinated-coffee drinkers population standard deviation = σ2= 1.36
1) Formulate null and alternate hypothesis
H0: u1≥ u2 Ha: u1 < u2
The null hypothesis is that the mean of the regular coffee drinkers is greater or equal to the mean of decaffeinated-coffee drinkers
against the claim
the mean daily consumption of regular-coffee drinkers is less than that of decaffeinated-coffee drinkers.
2) The test statistic is
z= x1-x2/ sqrt( σ1 ²/n1 + σ2²/n2)
Putting the values
z = 4.35- 5.12/ sqrt( 1.44/50 + 1.8496/40)
z= -5.44
3) The significance level is 0.01
The critical region is Z < -2.33
4) Since the calculated value of z= -5.44 is less than the z ∝= -2.33 we reject H0.
5) the P-value can be calculated using the calculator.
The P-Value is < 0.00001.
P= 0
Which means that the claim is accepted that the mean of the regular coffee drinkers is less than the mean of decaffeinated-coffee drinkers.
A company normally sells it products for $20 per unit, which includes a profit margin of 25%. However, the
selling price has fallen to $15 per unit. This company's current inventory consists 200 units purchased at $16
per unit. Replacement cost has now fallen to $13 per unit. Calculate the value of inventory at the lower of
cost or market.
Answer:
$2,600
Explanation:
The computation of the inventory value is shown below:
Market value = 200 units × $16
= $3,200
And, the cost is
= 200 units × $13
= $2,600
So the lower of cost or market value would be considered
Since $2,600 would be lower so the same would be equivalent to the inventory amount
Question 2 (Multiple Choice Worth 5 points)
(05.02 LC)
The smallest, most local type of economy is a
O market economy
O traditional economy
O mixed economy
command economy
Traditional economy is the smallest. most local type of economy.