"A cross-hedging strategy is most effective with currencies that are highly positively correlated; currency diversification is most effective with currencies that are not highly correlated."
Explanation:
Cross hedging is a idea that is used to mange risk. This is done by investing in two securities. Those two securities are correlated and that too positively. Which means their prices goes in the identical direction. It helps in minimizing the risks associated.
So,A cross hedging strategy is most efficient when currencies are positively correlated,
Currency diversification is a strategy where more than one currency is used in investment. It leads to less exchange rate risk. This strategy is most effective with currencies that are not highly correlated. Which means increase in one currency causes no increase in other currency.
Under a job order cost system, costs are accumulated for: Multiple Choice Each individual unit produced. Each job supervisor. Each batch of production, known as a job or lot. Each department in the production cycle.
Answer:
The correct answer is letter "C": Each batch of production, known as a job or lot.
Explanation:
Job order cost systems are used to accumulate the cost per unit of items that are different enough, each one having significant costs. Under this costing system each item produced is given its direct material costs, labor costs, and overhead. Clothing, food, and aircraft manufacturing companies use the job order cost system.
Unitary costs are accumulated per batch of productions under this type of costing system.
Final answer:
Costs in a job order cost system are accumulated for each job or lot, with total costs determined by the sum of all inputs multiplied by their factor payments. This system is suitable for tracking production costs of distinctive batches. Understanding economies of scale and the difference between fixed and variable costs is crucial in this context.
Explanation:
Under a job order cost system, costs are accumulated for each batch of production, known as a job or lot. This method is used to track the costs associated with producing a specific batch of products, rather than unit-by-unit or for entire departments. Each job may consist of a single item or a small batch of items, designed to be distinct from other jobs by its particular set of production requirements.
For every input, such as labor or materials, there's an associated factor payment, like wages or material costs. The total cost for producing a job is the sum of the amounts of each input required to produce that quantity of output multiplied by the respective factor payments.
In this context, understanding economies of scale is also necessary. As the quantity of output increases, the cost per unit typically goes down, which means larger production scales can be more cost-efficient.
When assessing costs, it's important to recognize the distinction between fixed costs, which are independent of output levels, and variable costs, which vary based on the production quantity.
Describe the actions of people and organizational leaders directly and indirectly involved with the tragedy. Specifically, address the ethical issues they faced
Explanation:
The ethical issues throughout the actions of these people and community members The first move was to provide help for the people affected when the disaster of Hurricane Andrew was resolved. The people in the affected areas and aid agencies have been involved. The treatment and ethics issue contributed to the offer of such relief. As far as the ethic of care is involved, individuals have a duty in respecting the health of others in distress. Thus, this kind of philosophy was followed in this situation by providing the resources to help those impacted by the hurricane with their welfare.
Homes were destroyed, and shelter was needed. Various organisations, however, were knowingly or unknowingly interested in providing food and clothing as well as other basic necessities for such men. However, the ethical issue was the main driving force behind search and rescue operations for those directly impacted by the incident.
An example is the Bahamas National Disaster Coordinator, who played a significant role in motivating their employees to ensure that they offered timely relief to the survivors. The local population was also mobilized as often as possible to support the crisis. It is also the nature of people to support if circumstances allow them to do it anyway face. Hurricane Andrew was a shocking event for the citizens of Bahamas and Louisiana, and therefore the care and compassion ethics had to inspire the local population and different organisations.
While massive property damage happened, the ethics have helped to reduce the number of victims significantly.
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,510,000. During 2021, costs of $2,170,000 were incurred with estimated costs of $4,170,000 yet to be incurred. Billings of $2,670,000 were sent, and cash collected was $2,420,000.
In 2022, costs incurred were $2,670,000 with remaining costs estimated to be $3,855,000. 2022 billings were $2,920,000 and $2,645,000 cash was collected. The project was completed in 2023 after additional costs of $3,970,000 were incurred. The company’s fiscal year-end is December 31. Arrow recognizes revenue over time according to the percentage of completion.
Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022, and 2023 using the percentage of completion method.
2a. Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred).
2b. Prepare journal entries for 2022 to record the transactions described (credit "various accounts" for construction costs incurred).
3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2021.
3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2022.
Revenue and gross profit or loss are calculated using the percentage of completion method based on costs incurred and estimated total costs for each of Arrow Construction Company's fiscal years (2021, 2022, 2023). Journal entries would reflect the progression of the construction costs, billings, and revenue recognition.
Explanation:Calculation of Revenue and Gross Profit/Loss
Using the percentage of completion method, the recognized revenue and gross profit or loss for each year would be calculated based on the costs incurred and the total estimated costs. Here's how to calculate it for each year:
2021:
Total costs incurred to date: $2,170,000
Total estimated costs: $2,170,000 + $4,170,000 = $6,340,000
Percentage of completion: $2,170,000 / $6,340,000 = 34.22%
Revenue recognized: 34.22% of $8,510,000 = $2,910,467
Gross profit: Revenue recognized - Costs incurred = $2,910,467 - $2,170,000 = $740,467
2022:
Total costs incurred to date: $2,170,000 + $2,670,000 = $4,840,000
Total estimated costs: $4,840,000 + $3,855,000 = $8,695,000
Percentage of completion: $4,840,000 / $8,695,000 = 55.68%
Revenue recognized: 55.68% of $8,510,000 = $4,736,028
Gross profit: Revenue recognized - Costs incurred to date = $4,736,028 - $4,840,000 = ($103,972) (loss)
2023:
Total costs incurred: $8,810,000
Total contract price: $8,510,000
Revenue recognized: $8,510,000 (full contract price as project is completed)
Gross profit: Revenue recognized - Costs incurred to date = $8,510,000 - $8,810,000 = ($300,000) (loss)
Journals entries for transactions and partial balance sheet presentations would follow the standard accounting format showing construction in progress, billings on construction contract, and construction costs, among other accounts.
1) Amount of Revenue and Gross profit or loss (2021,2022, and 2023) is $744,624, -$845,305 (Gross Loss), -$199,319 (Gross Loss)
2a) Journal entries for 2021 is (Record construction costs $2,170,000 , Record Billings $2,670,000 , Record cash collected $2,420,000)
2b) Journal entries for 2022 is (Record construction costs $2,670,000 , Record Billings $2,920,000, Record cash collected $2,645,000)
3a) Partial balance sheet for December 31, 2021 is $244,624
3b) Partial balance sheet for December 31, 2022 is $850,681
Percentage of Completion Method for Construction Contract:
Let's calculate the revenue and gross profit to be recognized in each year using the percentage of completion method:
1. Revenue and Gross Profit Calculation:
2021:
Cost Incurred to Date (2021) = $2,170,000Total Estimated Costs (incurred + yet to incur) = $2,170,000 + $4,170,000 = $6,340,000Percentage of Completion = $2,170,000 / $6,340,000 ≈ 34.24%Revenue Recognized = 34.24% of $8,510,000 ≈ $2,914,624Gross Profit = Revenue - Cost Incurred = $2,914,624 - $2,170,000 = $744,6242022:
Cost Incurred to Date (2021 + 2022) = $2,170,000 + $2,670,000 = $4,840,000Total Estimated Costs (updated) = $4,840,000 + $3,855,000 = $8,695,000Percentage of Completion = $4,840,000 / $8,695,000 ≈ 55.69%Revenue Recognized = 55.69% of $8,510,000 ≈ $4,739,319Revenue to be Recognized in 2022 = $4,739,319 - $2,914,624 ≈ $1,824,695Gross Profit = Revenue - Cost Incurred = $1,824,695 - $2,670,000 = -$845,305 (Gross Loss)2023:
Cost Incurred to Date (2021 + 2022 + 2023) = $4,840,000 + $3,970,000 = $8,810,000Total Estimated Costs (final) = $8,810,000Percentage of Completion = $8,810,000 / $8,810,000 = 100%Revenue Recognized = 100% of $8,510,000 = $8,510,000Revenue to be Recognized in 2023 = $8,510,000 - $4,739,319 ≈ $3,770,681Gross Profit = Revenue - Cost Incurred = $3,770,681 - $3,970,000 ≈ -$199,319 (Gross Loss)2. Journal Entries:
2021 Entries:
To record costs incurred:Construction in Progress $2,170,000Various Accounts $2,170,000To record billings:Accounts Receivable $2,670,000Billings on Construction Contract $2,670,000To record collections:Cash $2,420,000Accounts Receivable $2,420,000To recognize revenue and gross profit:Construction Expenses $2,170,000Construction in Progress $744,624Construction Revenue $2,914,6242022 Entries:
To record costs incurred:Construction in Progress $2,670,000Various Accounts $2,670,000To record billings:Accounts Receivable $2,920,000Billings on Construction Contract $2,920,000To record collections:Cash $2,645,000Accounts Receivable $2,645,000To recognize revenue and gross profit:Construction Expenses $2,670,000Construction in Progress -$845,305Construction Revenue $1,824,6953. Balance Sheet Presentation:
As of December 31, 2021:
Accounts Receivable: $250,000 ($2,670,000 - $2,420,000)Construction in Progress: $2,170,000 + $744,624 = $2,914,624Less: Billings on Construction Contract: ($2,670,000)Net: $244,624As of December 31, 2022:
Accounts Receivable: $525,000 ($2,670,000 + $2,920,000 - $2,420,000 - $2,645,000)Construction in Progress: $2,914,624 - $845,305 + $2,670,000 = $4,739,319Less: Billings on Construction Contract: ($2,670,000 + $2,920,000 = $5,590,000)Net: ($850,681)A firm's net working capital and all of its expenses vary directly with sales. The firm is operating currently at 96 percent of capacity. The firm wants no additional external financing of any kind.
1. Which one of the following statements related to the firm's pro forma statements for next year must be correct?
A. the firm cannot exceed its internal rate of growth.
B. The maximum rate of sales increase is 4 percent.C. The projected owners' equity will equal this year's ending equity balanceD. Total liabilities will remain constant at this year's value.E. Fixed assets must remain constant at the current level.
Answer:
A. the firm cannot exceed its internal rate of growth.
Explanation:
The internal growth rate is the highest level of growth that a business can achieve without any external financing. It is the level of business operations that the business can maintain on its own, and without issuing equity to gain funding.
The firm's working capital and expenses will vary directly with sales revenue.
This is a good measure of how start-ups can survive without outside funding.
Internal growth is used by businesses to maximise output from use of their processes. For example increasing efficiency of a companie's machinery to increase output.
The owner of a two-acre commercial site insists that her property has appreciated by at least 5% per year since she bought it four years ago. As the appraiser, you are asked to factor this into the appraisal or refute her contention. Research in this market revealed the following sales and reseals of comparable properties: Date Price Annual Appreciation Rate 1 Price 1 month ago
Answer:
Answer is 1.53%.
Explanation:
The annual depreciation rates are:
1 = 1.6%
2= 2.8 %
3= 0.12 %
4=1.6 %
(These are calculated through data given in the question).
Now the average annualized reconciles appreciation rate on straight line basis = [tex]\frac{1.6+1.6+2.8+0.12}{4}[/tex]
= [tex]\frac{6.12}{4}[/tex]
= 1.53 %
Hence the correct answer for the question is 1.53%.
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon US Treasury note with three years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 7.70%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:
Answer:
The value of the treasury note is $ 876,205.93
Explanation:
I simply discounted all relevant cash flows using the discount factor formula 1/(1+r)^N,where r is the yield to maturity divided by 2 as the interest is paid twice a year and N is the number of years of the bond 3, multiplied by number of interest payments in a year,2.
Find attached for details.
Determine the number of cycles per day and the production quantity per cycle for this set of vehicles:
Product Daily Quantity
A 10
B 6
C 2
D 8
Number of cycles
Use the sequence A-B-C-D.
Product Daily Quantity Units per cycle
A 2
B 3
C 4
D 5
Answer:
Using the sequence A-B-C-D the production per cycle is A ( 1 )-B (1 )-C( 2 )-D ( 2 )
Explanation:
See the picture attached
A good that has a lot of substitutes, that is a luxury and is relatively inexpensive will most likely have a price elasticity of demand that is a. a little higher than 1 b. closer to 10 c. a little lower than 1 d. exactly 1
Answer:
The answer is A.
Explanation:
The price elasticity of demand is a little higher than 1.
This means it is price elastic. That is, the demand is sensitive to price. Why? -
1. The good has a lot of substitutes, meaning the bargaining power of buyers is high. Any increase in the price of the good will lead to customers switching to the substitutes.
2. Also, the good is also a luxury good and not a necessity. Luxury goods, unlike necessity goods are not essential. So an increase in price might see customers moving away.
If a demand is inelastic to price, price elasticity of demand will be less than one.
Given the following financial statements for GM, the return on assets is ______ percent? (Write your answer as a percentage, rounding to the nearest 100ths place value—e.g., 5.25. Omit the percent sign in your answer.)
Final answer:
The return on assets can be calculated by dividing the net income by the average total assets and expressing it as a percentage.
Explanation:
The return on assets can be calculated by dividing the net income by the average total assets and expressing it as a percentage.
Return on Assets (ROA) = Net Income / Average Total Assets
For General Motors (GM), to calculate the return on assets, you would need the net income and average total assets data from their financial statements.
Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Upton's balance sheet as of December 31, 2013, is shown here (millions of dollars):
Cash $3.5 Accounts payable $9.0
Receivables 26.0 Notes payable 18.0
Inventories 58.0 Line of credit 0
Total current assets $87.5 Accruals 8.5
Net fixed assets 35.0 Total current liabilities $35.5
Mortgage loan 6.0
Common stock 15.0
Retained earnings 66.0
Total assets $122.5 Total liabilities and equity $122.5
Sales for 2013 were $375 million and net income for the year was $11.25 million, so the firm's profit margin was 3.0%. Upton paid dividends of $4.5 million to common stockholders, so its payout ratio was 40%. Its tax rate is 40%, and it operated at full capacity. Assume that all assets/sales ratios, spontaneous liabilities/sales ratios, the profit margin, and the payout ratio remain constant in 2014. Do not round intermediate calculations.
If sales are projected to increase by $70 million, or 18.67%, during 2014, use the AFN equation to determine Upton's projected external capital requirements. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
Using the AFN equation, determine Upton's self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having to employ nonspontaneous external funds? Round your answer to two decimal places.
Use the forecasted financial statement method to forecast Upton's balance sheet for December 31, 2014. Assume that all additional external capital is raised as a line of credit at the end of the year and is reflected (because the debt is added at the end of the year, there will be no additional interest expense due to the new debt).
Assume Upton's profit margin and dividend payout ratio will be the same in 2014 as they were in 2013. What is the amount of the line of credit reported on the 2014 forecasted balance sheets? (Hint: You don't need to forecast the income statements because you are given the projected sales, profit margin, and dividend payout ratio; these figures allow you to calculate the 2014 addition to retained earnings for the balance sheet.) Round your answers to the nearest cent.
Upton Computers
Pro Forma Balance Sheet
December 31, 2014
(Millions of Dollars)
Cash $
Receivables $
Inventories $
Total current assets $
Net fixed assets $
Total assets $
Accounts payable $
Notes payable $
Accruals $
Total current liabilities $
Mortgage loan $
Common stock $
Retained earnings $
Total liabilities and equity $
Answer:
AFN (Additional Funds needed) is $ 11.59 Million, Growth rate is 6.87 %.
Explanation:
1) Additional Funds Needed or AFN can be calculated as below=
AFN = (Total Assets / Previous year sales) x Change in Sale -( Liabilities affected by sales / Previous year sales) x Change in Sale - (Projected net income x Retention ratio ) ----- (a)
According to given data in question
Total Assets= 122.5 million
Change in Sales = 70
Liabilities affected by sales = 17.5
Previous year sales = 375
Projected net income = 445
Putting the above values in equation (a)
AFN = (122.5 / 375) x 70 -( 17.5 / 375) x 70 - 445 x 0.030 x 0.60
AFN = 11.59 million
2) Growth rate : Growth rate formula is given below,
Growth rate = (Total Assets x g) - (Liabilities affected by sales x g ) - Previous year sales ( 1 +g) x 0.3 x 0.60
Growth rate = 6.87 %
3) Proforma Balance Sheet for Upton Computer is :
Cash 4.15 Million
Accounts Receivable 30.85 Million
Inventories 68.83 Million
Total Current Assets 103.84 Million
Net Fixed Assets 41.53 Million
Total Assets 145.37 Million
Line of Credit-AFN 11.59 Million
Accounts Payable 18 Million
Accruals 10.09 Million
Total Current Liabilities 50.36
Mortgage Loan 6 Million
Common Stock 15 Million
Retained Earning 74.01 Million
Total Current Liabilities & Equity --- 145.37 Million
The Pro-forma balance sheet is a table of forecasting that can assist your company in managing working capital now for better future performance.
It can guarantee that there will be no surprises in the future when it comes to paying your expenses, receiving investment returns, and maintaining your products in stock.
AFN (Additional Funds needed) is $ 11.59 Million, the Growth rate is 6.87 %.
1) Calculation of the additional funds are:
AFN = [tex]\frac{\text{Total Assets}}{\text{Previous year sales}} \times \text{Change in Sale}[/tex] ---[tex]\frac{\text{Liabilities affected by sales}}{\text{Previous year sales}} \times\text{Change in Sale}[/tex] ---[tex](\text{Projected net income} \times \text{Retention ratio} )[/tex]
According to the given data in question
Total Assets= 122.5 million
Change in Sales = 70
Liabilities affected by sales = 17.5
Previous year sales = 375
Projected net income = 445
AFN = [tex]\frac{122.5}{375} \times 70 -\frac{17.5}{375} \times 70 - 445 \times 0.030 \times 0.60[/tex]
AFN = 11.59 million
2) Growth rate = [tex](\text{Total Assets} \times g) - (\text{Liabilities affected by sales} \times g ) - \text{Previous year sales} ( 1 +g) \times 0.3 \times 0.60[/tex]
Growth rate = 6.87 %
The pro-forma balance sheet has been attached below.
To know more about the calculation of the growth rate and the balance sheet, refer to the link below:
https://brainly.com/question/24520355
When a company has become proficient in modifying, upgrading, or deepening the company's resources and capabilities in response to its changing environment and market opportunities, it is called a______________.a. core competence. b. dynamic capability.c. strategic assessment.d. competitive strength matrix.e. distinct competence.
Answer:
b. dynamic capability
Explanation:
The competence described in the question is a company's dynamic capability because it represents the company's ability to change its internal functions according to the dynamics of external enviroment.
A company with a high dynamic capability is able to assess the changes that the market is going through, and adpat itself to those changes. A company that lacks dynamic capability can easily be swayed by market changes, and lose market share, or even, disappear completely.
Peter Company has gross property, plant and equipment totaling $1.5 million, depreciation expense this year of $250,000, and accumulated depreciation last year of $550,000. What is Peter's net property, plant and equipment?
Answer:
Peter's net property, plant and equipment is $700,000.
Explanation:
Net Property, plant, and equipment is the Carrying value of PPE. It is also known as the Book value of PPE. This is the value at which PPE is stated on the face of Statement of Financial Position.
The formula to calculate it as follows:
Cost - Accumulated Depreciation = Carrying Value
Simply put values:
1,500,000 - (250,000 + 550,000) = $700,000.
Thanks!
What is the standard cost of producing one 10-pound case of roasted coffee beans? First, select the formula to calculate the standard cost of input. Then calculate the standard cost of each input. Finally, calculate the total standard cost of producing one 10-pound case of roasted coffee beans.
Answer:
The question posted seems to be lacking in giving what the standard costing is in monetary value. However, the formula can be given.
The formula to calculate the standard cost of input:
standard cost of unit (monetary value) multiplied by the standard quantity per unit
For Example:
If the standard cost of unit is $10 then the standard cost of input will be:
$10 x 10 pounds per case
= $100 per case.
Explanation:
To calculate standard cost, you have to understand the definition of standard cost. Standard cost is the estimated cost of production for a business.
Apply the formula given to calculate the the standard cost of input. Once you have that value, you can then calculate the cost of producing a case of roasted coffee beans.
To calculate the standard cost of producing one 10-pound case of roasted coffee beans, we consider the standard quantities and prices of the main inputs - coffee beans, packaging materials, and energy costs. By applying the formula Standard Cost = Standard Quantity x Standard Price, we can determine the standard cost of each input. The total standard cost is the sum of the standard costs of all inputs.
Explanation:To calculate the standard cost of producing one 10-pound case of roasted coffee beans, we need to determine the standard cost of each input and then calculate the total standard cost. The formula to calculate the standard cost of inputs is:
Standard Cost = Standard Quantity x Standard Price
Let's consider the main inputs for producing roasted coffee beans:
1. Coffee beans: Assuming the standard quantity of coffee beans per 10-pound case is 10 pounds, and the standard price is $1 per pound, the standard cost of coffee beans would be 10 pounds x $1/pound = $10.
2. Packaging materials: Assuming the standard quantity of packaging materials per 10-pound case is $0.50, and the standard price is $0.10 per unit, the standard cost of packaging materials would be $0.50 x $0.10 = $0.05.
3. Energy costs: Assuming the standard quantity of energy per 10-pound case is 500 kilowatt-hours (kWh), and the standard price is $0.15 per kWh, the standard cost of energy would be 500 kWh x $0.15/kWh = $75.
Now, let's calculate the total standard cost by summing up the standard costs of all inputs:
Total Standard Cost = Standard Cost of Coffee Beans + Standard Cost of Packaging Materials + Standard Cost of Energy = $10 + $0.05 + $75 = $85.05
Suppose on January 1 Austin's Tavern prepaid rent of $ 13 comma 200 for the full year. At May 31, how much rent expense should be recorded for the period January 1 through May 31? At May 31, Austin's Tavern should record $ 3,300 of rent expense.
Answer:
Austin's Tavern should record $5,500 as rent expense at May 31.
Explanation:
When an amount is prepaid, it is recorded in the books by debiting prepaid expense (rent in this case) and crediting cash account. When the expense is incurred, the required entries are debit rent expense and credit prepaid rent.
If $13,200 was prepaid for the full year as at 1 January, as at May 31, expense incurred
= 5/12 × $13,200
= $5,500
Hence Austin's Tavern should record $5,500 as rent expense at May 31.
January budgeted selling and administrative expenses for the retail shoe store that Craig Shea plans to open on January 1, year 1, are as follows: sales commissions, $50,000; rent, $30,000; utilities, $10,000; depreciation, $5,000; and miscellaneous, $2,500. Utilities are paid in the month after they are incurred. Other expenses are expected to be paid in cash in the month in which they are incurred. Required Determine the amount of budgeted cash payments for January selling and administrative expenses. Determine the amount of utilities payable the store will report on the January 31 pro forma balance sheet. Determine the amount of depreciation expense the store will report on the income statement for year 1, assuming that monthly depreciation remains the same for the entire year.
Answer:
1. The budgeted cash payment for January selling and administrative expenses is $82,500.
2. The amount of utilities payable is $10,000.
3. The amount of depreciation expense the store will report on the income statement for year 1 is $60,000
Explanation:
1. Determine the amount of budgeted cash payments for January selling and administrative expenses.
Budgeted cash payment = Sales commissions + Rent + Miscellaneous
= $50,000 + $30,000 + $2,500
Budgeted cash payment = $82,500.
Therefore, the budgeted cash payment for January selling and administrative expenses is $82,500.
2. Determine the amount of utilities payable the store will report on the January 31 pro forma balance sheet.
Since utilities are paid in the month after they are incurred, the amount of utilities payable is $10,000.
3. Determine the amount of depreciation expense the store will report on the income statement for year 1, assuming that monthly depreciation remains the same for the entire year.
Depreciation expenses for year 1 = $5,000 × 12 = $60,000.
Therefore, the amount of depreciation expense the store will report on the income statement for year 1 is $60,000.
Note that depreciation is not a cash expenses but just a recognition of the wear and tear of the asset. That is why it does not fall under any cash category above but to be reported in the income statement.
The budgeted cash payments for January selling and administrative expenses are $87,500. Utilities payable on the January 31 pro forma balance sheet is $10,000. Yearly depreciation expense is $60,000.
To determine the budgeted cash payments for January selling and administrative expenses, we sum up all the expenses except for utilities, which are paid in the month after they are incurred:
[tex]\[ Cash\ Payments = Sales\ Commissions + Rent + Depreciation + Miscellaneous \]\[ Cash\ Payments = \$50,000 + \$30,000 + \$5,000 + \$2,500 \]\[ Cash\ Payments = \$87,500 \][/tex]
So, the budgeted cash payments for January selling and administrative expenses are $87,500.
To determine the amount of utilities payable on the January 31 pro forma balance sheet, we simply take the utilities expense of $10,000 because it's paid in the month following its incurrence:
[tex]\[ Utilities\ Payable = \$10,000 \][/tex]
For the amount of depreciation expense the store will report on the income statement for year 1, assuming monthly depreciation remains the same for the entire year, we take the monthly depreciation and multiply it by 12:
[tex]\[ Yearly\ Depreciation\ Expense = Monthly\ Depreciation \times 12 \]\[ Yearly\ Depreciation\ Expense = \$5,000 \times 12 \]\[ Yearly\ Depreciation\ Expense = \$60,000 \][/tex]
So, the store will report $60,000 of depreciation expense on the income statement for year 1.
The process for converting present values into future values is called compounding. This process requires knowledge of the values of three of four time-value-of-money variables. Which of the following is not one of these variables?
a. The trend between the present and future values of an investment
b. The interest rate (I) that could be earned by deposited funds
c. The duration of the deposit (N)
d. The present value (PV) of the amount deposited
Answer:
The correct answer is letter "A": The trend between the present and future values of an investment.
Explanation:
Compounding is the process in which earnings of an investment are reinvested to earn more profits in a determined period of time. In other words, present values are used to convert them into future values expecting they will be higher. Compounding can also be defined as interest on interest.
To compute compounding figures it is necessary the interest rate that could be earned out of an investment and its duration and the present value of the investment in dollars quantity.
Thus, the trend between the present and future value of the investment remains useless for compounding.
a. The company provided $2,200 in services to customers that are expected to pay the company sometime in January following the company's year-end.
b. Wage expenses of $1,200 have been incurred but are not paid as of December 31.
c. The company has a $5,200 bank loan and has incurred but not recorded an 8% interest expense of $416 for the year ended December 31. The company will pay the $416 interest in cash on January 2 following the company's year-end.
d. The company contracted with a firm for lawn services to be provided at a monthly fee of $520 with payment occurring on the 15th of the following month. Payment for December services will occur on January 15 following the company's year-end.
e. The company has earned $220 in Interest revenue from investments for the year ended December 31. The interest revenue will be received on January 15 following the company's year-end.
f. Salary expenses of $920 have been earned by supervisors but not paid as of December 31.
Prepare year-end adjusting journal entries as of December 31, 2017, for each of the above separate cases.
Answer:
Year end journal entries are given below in explanation
Explanation:
a. Company provided service to customer which means that company has earned revenue
Account Dr Cr
Accounts Receivable 2200
Sales/Revenue 2200
b. Wages expense have incurred but are not paid yet. Thus, its Liability should be booked.
Wages Expense 1200
Wages payable / Liability 1200
c. The company has taken loan from the bank. Interest due on the loan is 416 but are not paid yet.
Interest Expense 416
interest Payable 416
d. The company had contract for lawn service. To book the expense of lawn service
Lawn Service Expense 520
Lawn Service Payable 520
e. The company has also made some investment. $ 220 is earned on that investment. to book the non operating income
Interest revenue receivable 220
Interest revenue - Non operating income 220
f. Salaries of Supervisor is due on 31 st December but are not paid yet.
Salaries Expense 920
Salaries payable 920
Answer:
You have to identify which account will affect each transaction and if the nature is Debit or Credit:
a. Sales (C) $ 2,200 and Accounts Receivable (D) $ 2,200
b. Wages expenses (D) $ 1,200 and Wages payables (C) $ 1,200
c. Interes expenses (D) $ 416 and Interes payable (C) $ 416
d. Sales (C) $ 520 and Accounts Receivable (D) $ 520
e. Interes income (C) $ 220 and Other Accounts Receivable (D) $ 220
f. Salary expenses (D) $ 920 and Salaries payables (C) $ 920
Find the cost of building a new fabrication plant that will be 33% bigger than a similar plant that cost $8 million to build. The appropriate capacity exponent is 0.90.
Solution:
Let the size of old plant be x
New plant is 33% bigger than the old plant.
So,
Size of the new plant [tex]=x+(0.33 * x)[/tex]
= x + 0.33x = 1.33x
Cost of the old plant = $8 million
Capacity exponent = 0.90
Calculate the cost of new plant -
Cost of new plant = Cost of old plant * (Size of new plant/Size of old plant)capacity exponent
Cost of new plant =[tex]=\$ 8 \text { million } *(1.33 \mathrm{x} / \mathrm{x})^{0.90}[/tex]
Cost of new plant =[tex]\text { S8 million } *(1.33)^{0.90}[/tex] = $10.34 million
Thus,
The cost of building new plant is $10.34 million.
Final answer:
To find the cost for a fabrication plant 33% larger than a plant costing $8 million, the new plant capacity is calculated as $10.64 million. Due to the capacity exponent of 0.90, the cost increase is less than the capacity increase, resulting in a new cost of $10.248 million.
Explanation:
To find the cost of building a new fabrication plant that is 33% bigger than a similar plant that cost $8 million to build, we start by recognizing that this is a math problem involving economies of scale and the specific capacity exponent, which is 0.90 in this case. The capacity exponent is often used to determine how costs scale with production capacity.
First, we calculate the new size of the plant by increasing the similar plant size by 33%. Since the original plant cost $8 million, we find the increased capacity:
New Capacity = Original Capacity x (1 + Percentage Increase)
New Capacity = $8 million x (1 + 0.33)
New Capacity = $8 million x 1.33
New Capacity = $10.64 million
However, due to the capacity exponent of 0.90, the cost increase will be less than proportional to the increase in capacity:
New Cost = Original Cost x (New Capacity / Original Capacity) ^ Capacity Exponent
New Cost = $8 million x (1.33) ^ 0.90
New Cost = $8 million x 1.281
New Cost = $10.248 million
The estimated total manufacturing overhead cost is $200,000. The estimated total amount of the allocation base is 40,000 direct labor-hours. The actual total manufacturing overhead cost for the period is $220,000 and the actual direct labor hours worked on all jobs during the period is 41,000 hours. The total under-applied (over-applied) overhead for the period is:a. $20,000 under-appliedb. $20,000 over-appliedc. $15,000 under-appliedd. $15,000 over-applied
Answer:
$15,000 under applied
Actual overhead of $220,000 minus applied overhead of $205,000 (200,000/40,000 direct labor hours • 41,000 actual hours worked) equals 15,000 under applied
Explanation:
Suppose that you enter into a long contract to buy July silver for $13.57 per ounce on NYMEX. The size of the contract is 5000 ounces. The initial margin is $4,029 per contract, and the maintenance margin is $3,224 per contract. At what price are you going to receive a margin call
Answer:
price rise = $13.731 or above will be margin call
Explanation:
given data
per ounce = $13.57
maintenance margin = $3,224 per contract
initial margin = $4,029 per contract
maintenance margin = $3,224 per contract
solution
we get loss from margin that is
loss = $4,029 - $3,224
loss = $805
and here price for july silver future contract increase as
silver future contract increase = [tex]\frac{805}{5000}[/tex]
silver future contract increase = $0.161
so when price rise to $13.57 + $0.161
price rise = $13.731 or above will be margin call
Vistakon, the maker of Acuvue brand contact lenses, is working on a new product launch. They are best known for their Acuvue 2 contact lenses, but are planning to launch Acuvue 3, which will provide 40% more moisture than Acuvue 2. The extra moisture will make the lenses more comfortable and cause less irritation. Vistakon has been in the new product planning process for a year. Currently, they are trying to determine the cannibalization rate of Acuvue 3. They believe that 30% of Acuvue 3 sales will come from Acuvue 2. Which stage of the new product planning process are they in?
a. Business Analysis
b. Concept Testing
c. Sales Strategy
d. Feasibility Screen
e. New Product Strategy
Answer:
a. Business Analysis
Explanation:
Business analysis is the fourth stage a business undertakes when they are developing a product. It is at this stage that financial projections are made to see how feasible the product will be in the market. Marketing strategies are developed to effectively drive sales of the new product.
In this stage there is definition of the different requirements that needs to be met to achieve business goals and objectives.
Vistakon, the maker of Acuvue brand contact lenses, is working on a new product launch of Acuvue 3, which will provide 40% more moisture than Acuvue 2. They are projecting that 30% of Acuvue 3 sales will come from Acuvue 2.
Answer:
a. Business Analysis
Explanation:
Business analysis is a step in the different steps of a new product development process where the business attractiveness of the product is evaluated. This involves reviewing the sales, costs and profit projections for the new product.
Vistakon is trying trying to determine the cannibalization rate of Acuvue 3, this means they are trying to determine the percentage of acuvue 3's sales that represents a loss of sales of Acuvue. This therefore indicates they are reviewing the sales projections of Acuvue 3, which is a process of Business analysis.
Assume that the Assembly Department allocates overhead using a plantwide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 2.5 machine hours in the Assembly Department, and 3.5 direct labor hours and 0.5 machine hours in the Finishing Department?
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Assume that the Assembly Department allocates overhead using a plantwide overhead rate based on machine hours.
The first thing that we need is the predetermined overhead rate. We weren't provided with this information, but I will give the formula and a small example to guide an answer:
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
For example:
Estimated overhead= $200,000
Estimated machine hours= 35,000
Estimated manufacturing overhead rate= 200,000/35,000= $5.71 per machine hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Because it is a plantwide overhead rate, we need to sum the total machine hours required:
Machine hours= 2.5 + 0.5= 3 machine hours
Allocated MOH= 5.71*3= $17.13 per unit
Final answer:
To calculate the total overhead assigned to the product, the overhead rates for the Assembly and Finishing Departments are determined based on their respective allocation bases. These rates are then applied to the product's usage of machine hours and labor hours, resulting in a total overhead of $13.985.
Explanation:
To calculate the total overhead assigned to the product, we need to determine the overhead rates for both the Assembly and Finishing Departments and then apply these rates to the product's resource usage.
The Assembly Department allocates overhead based on machine hours (MH), while the Finishing Department allocates based on direct labor hours (DLH).
First, we calculate the overhead rates:
Assembly Department overhead rate = Overhead costs / Machine hours = $330,000 / 300,000 MH = $1.10 per MHFinishing Department overhead rate = Overhead costs / Direct labor hours = $450,000 / 140,000 DLH = $3.21 per DLHNext, we apply these rates to the product's use of department resources:
Assembly Department overhead for the product = 2.5 MH x $1.10 per MH = $2.75Finishing Department overhead for the product = 3.5 DLH x $3.21 per DLH = $11.235The total overhead assigned to the product is the sum of the overheads from both departments.
Therefore, Total Overhead = Assembly Overhead + Finishing Overhead = $2.75 + $11.235 = $13.985.
Cramer Corporation has an immediate need for large group of workers to fulfill project. Although it allowed its normal hiring processes in some cases short cuts were taken in the interest of getting the workers on board as quickly as possible. As a result, Cramer inadvertently hired some worker without proper documentation. Which of the following best describes Cramer’s liability I this situation?
a. There is no liability for Cramer. If the undocumented workers are discovered the consequences are for them and not for the company
b. Cramer is liable for failure to obtain proper documentation showing that the workers were eligible to work in the US. Further corporate officers of Cramer can be held personally liable for failure to satisfy these requirements. Civil and criminal penalties may apply
c. Cramer didn’t’ know that the workers weren’t eligible to work in the US therefore it cannot be held liable
d. Only the person in charge of hiring at Cramer will be held accountable for bringing in undocumented aliens
Answer:
(B) Cramer is liable for failure to obtain proper documentation showing that the workers were eligible to work in the US. Further corporate officers of Cramer can be held personally liable for failure to satisfy these requirements. Civil and criminal penalties may apply.
Dave's Duds reported cost of goods sold of $1,600,000 this year. The inventory account increased by $210,000 during the year to an ending balance of $455,000. What was the cost of merchandise that Dave's purchased during the year? Multiple Choice $1,810,000. $1,390,000. $1,145,000. $2,055,000.
Answer:
$1,810,000
Explanation:
Given that,
Cost of goods sold = $1,600,000
Inventory increases by = $210,000
Ending balance in inventory = $455,000
Opening Balance of Inventory:
= Ending balance in inventory - Inventory account increased Compare to Beginning
= $455,000 - $210,000
= $245,000
Cost of Inventory purchased:
= Cost of Goods Sold + Ending Balance of Inventory - Opening Balance of Inventory
= $1,600,000 + $455,000 - $245,000
= $1,810,000
Consolidation Eliminating Entries, Date of Acquisition and Two Years Later Plaza Hotels acquired a 90 percent interest in Stardust Casinos on January 1, 2020 for $51,100,000. The fair value of the 10 percent noncontrolling interest at the date of acquisition was $2,900,000. Stardust’s date-ofacquisition reported net assets were carried at amounts approximating fair value, except for these items: • Plant and equipment, 10-year life, straight-line, is overvalued by $6,000,000. • Previously unrecorded limited-life identifiable intangibles, 4-year life, straight-line, were valued at $8,000,000. Stardust’s equity accounts at the date of acquisition were as follows: Capital stock $300,000 Retained earnings 1,650,000 Accumulated other comprehensive income 50,000 Total $2,000,000 Stardust reports net income of $4,000,000 and other comprehensive loss of $10,000 for 2021. Stardust reported net income of $2,800,000 and other comprehensive income of $25,000 in 2020. Stardust did not declare any dividends in either year. Goodwill from this acquisition is impaired by $200,000 during 2021, but was not impaired in 2020. Required a. Calculate the original goodwill for this acquisition and its allocation to controlling and noncontrolling interests. In what ratio is goodwill allocated between controlling and noncontrolling interests? Enter your answers in thousands ($51,100,000 equals $51,100 in thousands). Enter your ratio answers in percentages.
Answer:
a. AT ACQUISITION DATE TOTAL Parent NCI
Capital stock 300 270 30
retained earnings 1650 1485 1650
goodwill 52050 46845 5205
investment 54000 51100 29000
b.Goodwill is allocated at 9:1 ratio
90% ; 10% given
Explanation:
The difference in these amounts is big, suspicions of error in typing amounts in the question. Even after the answer is in thousands
Original goodwill is calculated using the fair value of the consideration transferred plus the fair value of the noncontrolling interest, less the adjusted net assets at acquisition. It amounted to $50,000,000 for the Plaza Hotels acquisition of Stardust Casinos, with allocations of $45,000,000 to the controlling interest and $5,000,000 to the noncontrolling interest, following a ratio of 90:10.
Calculation of Original Goodwill and Its Allocation
The calculation of original goodwill in the context of a business combination, such as an acquisition, takes into account the fair value of the consideration transferred, the fair value of the noncontrolling interest, and the fair value adjustments for identifiable net assets of the acquire.
When Plaza Hotels acquired a 90 percent interest in Stardust Casinos, the goodwill was calculated based on the acquisition price, the fair value of the noncontrolling interest, and fair value adjustments.
The original purchase price for the 90% interest was $51,100,000, and the fair value of the noncontrolling interest for the remaining 10% was $2,900,000, leading to a total fair value of the business of $54,000,000 ($51,100,000 + $2,900,000).
The book value of Stardust's equity was $2,000,000, but adjustments were needed for items not reflected at fair value.
Plant and equipment were overvalued by $6,000,000 and needed to be reduced, while the previously unrecorded intangible assets valued at $8,000,000 were added.
Adjusted net assets of Stardust at acquisition were:
Book value of equity: $2,000,000
Less overvaluation of plant and equipment: $6,000,000
Addition for intangibles not previously recorded: $8,000,000
Adjusted net assets = $4,000,000 ($2,000,000 - $6,000,000 + $8,000,000). Original goodwill can then be calculated as follows:
Total fair value of Stardust ($54,000,000) - Adjusted net assets ($4,000,000) = $50,000,000.
This total goodwill is then allocated between the controlling and noncontrolling interests based on their ownership percentages:
Goodwill attributed to controlling interest (Plaza Hotels): 90% x $50,000,000 = $45,000,000
Goodwill attributed to noncontrolling interest: 10% x $50,000,000 = $5,000,000
The ratio of goodwill allocation between controlling and noncontrolling interests is 90:10.
Which of the following is an element of related and supporting industries? media exposure of products existence of supplier clusters sophistication of consumers intensity of competition aggregation of markets
Answer:
Existence of supplier clusters
Explanation:
Clusters increase productivity. This is because clusters include companies in the same industry or technology areas that share suppliers and distribution network. Meaning that companies withing their sphere can compete.
Several clusters serve as a driving force in regional economies. This clustering concept was popularized by Micheal Porter. A strong cluster can include the suppliers of raw materials and distributors and also primary producers, specialized services in finance, marketing, education, trade associations etc. Clusters can result in a lot of benefits such as increased productivity, rapid innovation and new business formation.
Which of the following describes the degree to which a consumer perceives a new product as providing superior benefits? A. Relative advantage B. Trialability C. Compatibility D. Complexity E. Observability
Answer:
The correct answer is letter "A": Relative advantage.
Explanation:
American Professor E.M. Rogers (1931-2004) in his book "Diffusion of Innovation" (1962) defined Relative Advantage like the degree to which a consumer observes a new product enhanced than its substitute. Nowadays the concept of relative advantage denotes the degree in which customers perceive the benefits of a new product higher than existing competitors.
The adoption of new products will rely on the relative advantage they can provide to consumers.
Hazardous Materials (HazMat) are regulated by several different government agencies. The five main federal agencies involved in HazMat regulation are the Pipeline and Hazardous Materials Safety Administration (PHMSA), Occupational Health and Safety Administration (OSHA), Nuclear Regulatory Commission (NRC), Environmental Protection Agency (EPA), and ___________.
Answer:
Department of transportation (DOT)
Explanation:
HazMat(hazardous materials) are hazardous substances in quantities that may pose a high risk to health, property, and the environment. HAZMATs include substances such as as toxic chemicals, fuels, nuclear waste products, and biological, chemical, and radiological agents.
HazMat is a substance that may pose serious threat to property, life or the environment if such substances are not well stored, shipped or handled.
Members of a general partnership have a _______________ relationship to each other; that is, each owes the other due care in actions associated with the partnership.
Answer:
Fiduciary.
Explanation:
A fiduciary is known as a person or organization that acts on behalf of another person or persons to manage assets. Essentially, a fiduciary owes to that other entity the duties of good faith and trust. The highest legal duty of one party to another, being a fiduciary requires being bound ethically to act in the other's best interests.
A fiduciary might also be responsible for general well-being, but often the task involves finances, managing the assets of another person, or of a group of people, for example. Money managers, financial advisors, bankers, accountants, executors, board members, and corporate officers all have fiduciary responsibility.
At December 31, John Photography Supplies estimated that approximately 5 % of merchandise sold will be returned. Sales Revenue for the year was $ 90 comma 000 with a cost of $ 58 comma 000 . Journalize the adjusting entries needed to account for the estimated returns.
Answer:
Date Description Debit Credit
31st Dec Sales Revenue $4,500
Refunds Payable $4,500
31st Dec Inventory Estimated Returns $2,900
Cost of Goods Sold $2,900
Explanation:
First, the obvious facts about the question
Estate of returned merchandise = 5%
Sales revenue for the year = $90,000
Cost of goods sold = $59,000
Step 1: Sales Revenue is already $90,000 Credit entry (it is an income) and as such any return will have a debit entry to reduce the revenue as follows
Return = 0.05 x $90,000 = $4,500
This same refunds will also go into the refunds payable account as a current liability (credit entry)
Step 2: The returns will also affect the inventory and cost of sales as follows
0.05 x $58,000 = $2,900
This will increase the inventory 9debit side and reduce cost of sales credit side.
Journal Entries
Date Description Debit Credit
31st Dec Sales Revenue $4,500
Refunds Payable $4,500
31st Dec Inventory Estimated Returns $2,900
Cost of Goods Sold $2,900
The entry in the Journal to account for estimated returns from sales of merchandise will require adjustments of Sales Returns and Allowances and the Cost of Goods Sold. This is done by estimating 5% of the sales and 5% of the COGS which result to $4,500 and $2,550 respectively.
Explanation:At the end of the year, John Photography Supplies estimated that 5% of the $90,000 worth of sold merchandise will be returned. This implies that the return is expected to be $4,500 (5% of $90,000). The Cost of Goods Sold (COGS) is $58,000 for the year. When accounting for the estimated returns, we would have two adjusting entries:
Sales Returns and Allowances: Debit $4,500, and Credit Sales Revenue: $4,500Inventory: Debit $2,550 (5% of COGS), and Credit COGS: $2,550This adjust the sales revenue and the COGS downwards, thereby estimating the impact of the goods that are expected to be returned.
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