Answer:
If I was banking with my local town bank and it happens that Bank of Africa purchases it, there are cost and benefits associated with the merge. First, Bank of America is global, meaning that I will be able to access the Services such as ATM services at different points. Second, due to its area of coverage, the services are cheaper compared to the ones I got when it was in my local town. However, due to the monopoly of the bank, they might increase the charges making them more expensive than when the services in the local village. Additionally, it will be a challenge for average customers, such as farmers, to access big banks unless faithful people accompany them.
Explanation:
There are costs and advantages to the merger when my local town and the Bank of Africa acquire it. Bank of America is a multinational business, so one may get its capabilities, such as ATM services, from a variety of locations.
Who is the customer?"A customer can be defined as a person who buys a product or takes the services. For the product or the service, they pay the amount. A customer is one who demands the product which is supplied by the supplier."
Second, comparable to the service received when it covered his hometown, they are less expensive to its covering region. But, because of the bank's monopolies, they may raise the prices, resulting in a higher cost than using the products in the next hamlet.
It will also be difficult for regular clients, like farmers, to enter big banks unless dependable people go with them.
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You are responding to an RFP from a medium-sized company in another state. The RFP explains that the company wants to begin manufacturing wooden toys for children and brand them as "Trustworthy, Safe, and Made in the USA." The company is searching for an organization that can help it develop a five year strategic plan. Write a solicited proposal that details why your company should help it develop its plan.
Answer:
Overview
According to the RFP received, it is comprehended that the client wants to establish a business of manufacturing wooden toys for children. The key differentiator or unique selling point (USP) of the toys would be strong branding and marketing of the product. This will create a three value axis of Trust, Safety, and Identity.
The client is searching for strategic partner to establish the business to deliver and implement the strategic vision for the next five years. The following are the basic five essentials associated with strategic business plan:
• Mission statement
• Vision
• Strategic critical factors
• Objectives and strategic goals to be achieved.
• Implementation strategies
Approach:
Today, the toy market is overcrowded with many types of toys, each having a unique value proposition and targeting specific age brackets in children. Marketers treat children as a separate demographic segment. Hence, conduct detailed research on this segment to identify classifying the patterns buying behavior.
The especially planned framework would create our business plans for hyper competitive marketplaces. The approach to create the plan is shown below:
• Defining the scope of the product: It includes target marketing, selling channels and targeting demographics of children.
• Understand the market: the main 5 elements in this stage are competition in the market, existing suppliers, and purchasing power of buyers, substitute products, and entrance barrier.
• Positioning of brand: It includes segmentation, identification of potential market, targeting, positioning, communicating, and positioning.
• Manufacturing and distribution of products: it includes the acquisition of raw material, machinery, developing distribution channel, and supply chain management.
• Finance calculation and Human Resource: it includes calculation of revenue, profits, Return on investment, taxation, and other various measures.
Timeline:
According to RFP details, it is estimated time duration to create a business strategy is 8 months. The timeline is shown below:
• Defining the scope – 1 month
• Understand the market – 3 months
• Positioning of brand – 2 months
• Manufacturing and distribution of products – 1 month
• Finance calculation and Human Resource – 1 month
Introduction of business:
Our agency has been serving companies to succeed over years. We have functioned with multiple companies having wide range of experience in this sector. We have functioned with extensive clients and helped them to achieve a reliable growth rate. We are fully engaged with the client and facilitate them to develop designing of the business plan.
The experience and promise towards the success of our partners helped us grow. We have positioned as a medium-size business counseling firms. We help our clients to have clear goals. We help to grow the understandings and approach towards the business.
7. You are going to open a business making custom cabinets. You can sell each cabinet for $80. It takes a cabinetmaker approximately 45 minutes to make one cabinet. Each cabinetmaker works an 8-hour day earning $18 per hour. Each cabinet uses $25 in raw materials. You usually produce cabinets 20 days a month and can employ two cabinetmakers. You estimate that your fixed costs are $5,000 per month. a. What is your contribution margin
Answer:
Contribution Margin is 51.875%
Explanation:
Contribution Margin = Contribution/Selling Price × 100
Contribution
Contribution = Selling Price/ unit - Variable Costs/ Unit
Selling Price $80.00
Less Variable Costs
Raw Materials ($25.00)
Direct Labour (45mins/60mins×$18) ($13.50)
Contribution ($41.50)
Contribution Margin
$41.50/$80.00×100=51.875%
Required: a. Adams Company's production cycle starts in Department A. The following information is available for July: Work i process, July 1 (60% complete) Started in July Work in process, July 31 (30% complete) Units 73,000 350,000 42,000 Materials are added at the beginning of the process in Department A. Using the weighted-average method, what are the equivalent units of production for materials and conversion costs for the month of July, respectively?
O 423.000: 393.600
O 381,000, 350,000
O 350000, 362.600
O 423.000, 381000
O None of the above
Answer:
Explanation:
For materials:
Units transferred out 381,000*
Add:
Materials 42,000*100% = 42,000
Equivalent units 423,000
*Units transferred out = Units stated+Beg inv-End inv = 350,000+73,000-42,000 = 381,000
For conversion costs:
Units transferred out 381,000*
Add:
Conversion cost 42,000*30% = 12,600
Equivalent units 393,600
Correct answer is 423,000; 393,600
Using the weighted-average method, the equivalent units of production for materials and conversion costs for the month of July are 148,800 units each.
Explanation:The equivalent units of production for materials and conversion costs can be calculated using the weighted-average method. To do this, we need to consider the units that were started and completed during the period, as well as the units that are still in process at the end of the period.
In this case, we can calculate the equivalent units of production for materials by adding the units from the beginning work in process inventory (60% complete) to the units started during July and multiplying it by the percentage of completion for the units in ending work in process inventory (30% complete). Similarly, we can calculate the equivalent units of production for conversion costs using the same method.
Using these calculations:
Equivalent units for materials = (Units in beginning work in process) + (Units started during July) × (Percentage of completion for units in ending work in process)
Equivalent units for conversion costs = (Units in beginning work in process) + (Units started during July) × (Percentage of completion for units in ending work in process)
Using the given information:
Units in beginning work in process: 73,000 units (60% complete)
Units started during July: 350,000 units
Units in ending work in process: 42,000 units (30% complete)
Equivalent units for materials = (73,000 × 0.6) + 350,000 × 0.3 = 43,800 + 105,000 = 148,800
Equivalent units for conversion costs = (73,000 × 0.6) + 350,000 × 0.3 = 43,800 + 105,000 = 148,800
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Firm A and Firm B have the same total assets, ROA and profit margin. However, Frim B has a higher debt ratio and interest expense then Firm A. Which of the following statements is correct? A.) Firm B must have a higher ROE than first A. B.) Firm B must have a higher capital intensity ratio then Firm A. C.) Firm B must have a higher fixed asset turnover than Firm A. D.) Firm B must have a lower ACP than Firm A.
Answer:
A.) Firm B must have a higher ROE than first A.
Explanation:
Debt ratio is defined as percentage of a company's assets that is made up of debt and so it is calculated as a ratio of debt to assets of a company.
Interest expense is the amount that is paid to service a loan.
This implies that company B has higher loan portfolio than Company A.
Considering the accounting formula
Equity= Asset- Debt
So an increase in debt will result in a decrease in equity.
Return on equity= Net income/Equity
It follows that as debt increases and equity reduces, the ROE will increase since a shrink in the ROE denominator (Equity) will lead to an increase in the ratio.
g 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:
At May 31, Austin's Tavern should recorded of $5,500 for the period January 1 through May 31 by the entry:
Debit Rent Expense $5,500
Credits Prepaid rent $5,500
Explanation:
On January 1, Austin's Tavern prepaid rent of $ 13 comma 200 for the full year. The company records the insurance as the prepaid Insurance:
Debit Prepaid rent $13,200
Credit Cash $13,200
On May 31, the last day of the following 5 months, the company records an adjusting entry that Credits Prepaid rent for $5,500 ($13,200 divided by 12 months times the 5 months that will be prepaid as of May 31) and Debits Rent Expense for $5,500
Debit Rent Expense $5,500
Credits Prepaid rent $5,500
5. Problems and Applications Q5 A senator wants to raise tax revenue and make workers better off. A staff member proposes raising the payroll tax paid by firms and using part of the extra revenue to reduce the payroll tax paid by workers. True or False: This arrangement would most likely make workers worse off because the tax wedge would be larger. True False
Answer:
True
Explanation:
This will not accomplish the senator's goal because payroll taxes work in the same way as taxes on goods. Labor is the good here and wage is the price that is being paid for it. Tax is a wedge between what firms pay and what workers receive. When a payroll tax is enacted the wage received by workers falls and that paid by firms rises. The payment of taxes will be made by the firm according to the legislation and the wages for the workers will decrease according to the elasticity of demand and supply of labor market and ultimately the tax paid by the firms and the workers will not change.
Answer: True
Explanation: The tax wedge here is the difference between the wages employees take home and how much employers actually pay to employ them. It is also the difference in the market forces of demand and supply due to imposing tax on goods and services.
Firstly, the burden of tax will not rest with firms but will be transferred to consumers through goods and services which will affect demand. Also increasing the payroll tax paid by employers will make employees worse off as the burden of payroll tax still rest on the employees, it will only decrease take home wages.
Identify how planned investment will change in each scenario. Please choose from the given below options.
1. Airwings, a commercial airline manufacturer, becomes optimistic about economic conditions after seeing reports of strong growth in consumer spending. Due to Airwings, planned investment _________.
2. The Federal Reserve announces an end to accommodative monetary policy, and is now implementing policy tools that will increase the real interest rate. Due to the Fed, planned investment __________.
3. In an effort to reduce constant budget deficits, Congress announces plans to increase the corporate income tax rate. Due to the Congress, planned investment __________.
Options:
O Increase
O Decrease
O will stay the same
Answer:
1. Airwings, a commercial airline manufacturer, becomes optimistic about economic conditions after seeing reports of strong growth in consumer spending. Due to Airwings, planned investment will increase.
2. The Federal Reserve announces an end to accommodative monetary policy, and is now implementing policy tools that will increase the real interest rate. Due to the Fed, planned investment will decrease.
3. In an effort to reduce constant budget deficits, Congress announces plans to increase the corporate income tax rate. Due to the Congress, planned investment will decrease.
Explanation:
1) Due to Airwings, planned investment will increase.
Since the business has a promising future, it will start capacity expansion to cater to consumer demand.
2) Due to the Fed, planned investment will decrease.
A higher real interest rate suggests that borrowing cost is higher for the firms and so that they will lessen the investment in response to that.
3) Due to the Congress, planned investment will decrease.
A lower tax implies that higher profits and firms can pass these benefits to consumers with lower prices, to employees with higher wages and the government with a tax on profit. However, if the rate of the tax itself has been increased then in that case corporate will see higher tax as a dampener in sentiments and they might curtail investment plans.
The planned investment of Airwings, the Federal Reserve, and Congress are likely to increase, decrease, and decrease respectively due to their respective economic and policy contexts.
Explanation:In each scenario, planned investment could change depending on the economic and policy situations. For option 1, Airwings is optimistic about future economic conditions due to strong growth in consumer spending. Because this optimism will likely lead to increased production and expansion, their planned investment will likely increase.
In the second scenario, the Federal Reserve is ending its accommodative monetary policy and increasing the real interest rate. Higher interest rates make borrowing for investment more expensive, so planned investment is likely to decrease.
Finally, in the third case, Congress is planning to increase the corporate income tax rate. This increase will decrease net corporate profits available for reinvestment, leading to a likely decrease in planned investment.
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Starr Co. had sales revenue of $540,000 in 2014. Other items recorded during the year were:
Cost of goods sold $330,000
Salaries and wages expense 120,000
Income tax expense 25,000
Increase in value of company reputation 15,000
Other operating expenses 10,000
Unrealized gain on value of patents 20,000
Prepare a single-step income statement for Starr for 2014. Starr has 100,000 shares of stock outstanding. (Round earnings per share to 2 decimal places, e.g. 1.48.)
The single-step income statement for Starr Co. for 2014 shows total revenues of $560,000 and total expenses of $485,000, yielding a net income of $75,000. The earnings per share are $0.75.
Explanation:In order to prepare a single-step income statement for Starr Co. for the year 2014, you need to tally the total revenues and the total expenses.
Revenues include Sales Revenue of $540,000 and an unrealized gain on value of patents for $20,000, giving total revenues of $560,000.
Expenses include Cost of Goods Sold ($330,000), Salaries and wages expense ($120,000), Income tax expense ($25,000), and Other operating expenses ($10,000), giving total expenses of $485,000.
By subtracting total expenses from total revenues, we arrive at a Net Income of $75,000.
Finally, to determine earnings per share, you divide the Net Income by the number of outstanding shares. So, $75,000 divided by 100,000 shares gives an Earnings Per Share(EPS) of $0.75.
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Product focused processes: allow more customization, but are not very efficient. are desirable because resource needs increase slowly with the complexity of a process. are processes that are specialized for relatively few products or customer groups. apply only to service firms, not to manufacturers. are profitable because customers demand flexibility, not specialization.
Answer:
The correct answer is letter "C": are processes that are specialized for relatively few products or customer groups.
Explanation:
Product-focused processes are those that follow a market segmentation. Companies decide to what sector of the market they will drive their efforts towards and specializes in the manufacturing of a determined good.
Production tends to involve high volumes and low variety process but provides manufacturers relatively high facility utilization. Examples of product-focused processes are the production of light bulbs or bolts.
Product focused processes are operations tailored for relatively few products or clients, providing efficiency and specialization, but limited flexibility. These processes are applicable to both manufacturing and service companies. The profitability of these processes depends on the nature of the market demand.
Explanation:Product focused processes are specialized operations meant for producing relatively few products, or catering to a specific customer group. This method tends to be more efficient than process focused because individual processes are completed by specialized workers using dedicated machinery. However, such type of operations may not provide the same level of customization flexibility because changing the process for a new product or different version can be time-consuming and costly. These processes apply to both manufacturing and service firms.
The profitability of product focused processes depends on the demand of the market. If the market demands a specialized product not offered by many providers, a firm following a product focus strategy can command a higher price for its unique offering. On the other hand, if the market requires flexibility, a process-focused firm, which is generally capable of producing a wider array of products, might be more profitable.
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sells authentic Amish quilts on her website. Suppose Susy expects to sell 2 comma 000 quilts during the coming year. Her average sales price per quilt is $ 400, and her average cost per quilt is $ 300. Her fixed expenses total $ 100 comma 000. Compute her margin of safety a. in units (quilts). b. in sales dollars. c. as a percentage of expected sales.
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Expected sales= 2,000 units
Selling price= $400
Unitary variable cost= $300
Fixed costs= $100,000.
First, we need to calculate the break-even point both in units and dollars:
Break-even point= fixed costs/ contribution margin
Break-even point= 100,000/ (400 - 300)= 1,000 units
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 100,000/ (100/400)= $4,000,000
Now, we can calculate the margin of safety in units, dollars and as a percentage:
Margin of safety (units)= (current sales level - break-even point)
Margin of safety (units)= 2,000 - 1,000= 1,000 units
Margin of safety (dollars)= 8,000,000 - 4,000,000= $4,000,000
Margin of safety ratio= (current sales level - break-even point)/current sales level
Margin of safety ratio= 4,000,000/8,000,000= 0.5= 50%
Sheridan Corp. is a fast-growing company whose management expects it to grow at a rate of 26 percent over the next two years and then to slow to a growth rate of 20 percent for the following three years. If the last dividend paid by the company was $2.15.
a. What is the dividend for the 1st year? (Round answer to 3 decimal places, e.g. 15.250.)
b. What is the dividend for the 2nd year? (Round answer to 3 decimal places, e.g. 15.250.)
c. What is the dividend for the 3rd year? (Round answer to 3 decimal places, e.g. 15.250.)
d. What is the dividend for the 4th year? (Round answer to 3 decimal places, e.g. 15.250.)
e. What is the dividend for the 5th year? (Round answer to 3 decimal places, e.g. 15.250.)
f. Compute the present value of these dividends if the required rate of return is 14 percent. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)
Final answer:
a. The dividend for the 1st year is 2.7095. b. The dividend for the 2nd year is 3.41787. c. The dividend for the 3rd year is 4.101444. d. The dividend for the 4th year is 4.101444. e. The dividend for the 5th year is 4.101444. f. The present value of the dividends, with a required rate of return of 14 percent, is 14.09.
Explanation:
a. What is the dividend for the 1st year?
To calculate the dividend for the 1st year, we need to multiply the last dividend paid by the growth rate for the 1st year. The growth rate for the 1st year is 26%, so the dividend for the 1st year would be 2.15 * 1.26 = 2.7095.
b. What is the dividend for the 2nd year?
Similarly, to calculate the dividend for the 2nd year, we multiply the dividend for the 1st year by the growth rate for the 2nd year. The growth rate for the 2nd year is 26% as well, so the dividend for the 2nd year would be 2.7095 * 1.26 = 3.41787.
c. What is the dividend for the 3rd year?
For the 3rd year, we multiply the dividend for the 2nd year by the growth rate for the 3rd year, which is 20%. So the dividend for the 3rd year would be 3.41787 * 1.20 = 4.101444.
d. What is the dividend for the 4th year?
The dividend for the 4th year would be the same as the dividend for the 3rd year, as the growth rate for the 4th year is also 20%. So the dividend for the 4th year would be 4.101444.
e. What is the dividend for the 5th year?
Similarly, the dividend for the 5th year would be the same as the dividend for the 3rd and 4th years, as the growth rate for the 5th year is also 20%. So the dividend for the 5th year would be 4.101444.
f. Compute the present value of these dividends if the required rate of return is 14 percent.
To compute the present value of the dividends, we need to discount each future dividend to its present value. We can use the formula:
PV = D / (1 + r)t
Where:
PV = Present Value
D = Dividend
r = Required rate of return
t = Number of years
Using this formula, we can calculate the present value of each dividend and then sum them up to get the total present value. To calculate the present value for each dividend, we need to divide the dividend by (1 + r)t. For example, the present value of the dividend for the 1st year would be 2.7095 / (1 + 0.14)1 = 2.3696.
Repeating this calculation for each dividend and summing them up, we get the total present value. However, since the question specifies to round intermediate calculations and final answer to 2 decimal places, we'll round each present value to 2 decimal places and then sum them up. Using this method, the total present value of the dividends would be 2.37 + 3.82 + 3.15 + 2.60 + 2.15 = 14.09.
What stage of inventory includes goods that are ready to be sold to consumers?
The ________stage of inventory includes goods that are ready to be sold to consumers.
Answer:
Finished goods
Explanation:
There are four stages of inventory
1. Raw materials – materials and components scheduled for use in making a product.
2. Work in process, WIP – materials and components that have began their transformation to finished goods.
3. Finished goods – goods ready for sale to customers.
4. Goods for resale – returned goods that are salable.
So, we see here that the inventory stage that deals with goods ready for sale is FINISHED GOODS.
Answer:
Finished goods
Explanation:
Long-term debt outstanding: $300,000 Current yield to maturity (rdebt): 8% Number of shares of common stock: 10,000 Price per share: $50 Book value per share: $25 Expected rate of return on stock (requity): 15%
Calculate the company's cost of capital. Ignore taxes.
Answer:
Cost of capital=11.18%
Explanation:
First We will calculate the Equity of firm:
Equity= Number of share* Book value per share
Equity= 10,000* $25
Equity= $250,000
Long-term debt=$300,000
Expected rate of return=15%=0.15
Current yield to maturity (rdebt)=8%=0.08.
Value of firm=Equity+Long-term debt
Value of firm= $250,000+$300,000
Value of firm= $550,000
Formula:
[tex]Cost\ of \ Capital=\frac{Equity}{Value\ of\ firm}* Rate\ of\ return+\frac{Debit}{Value\ of\ firm}* yield\ to\ maturity[/tex]
[tex]Cost\ of\ Capital=\frac{\$250,000}{\$550,000}*0.15+\frac{\$300,000}{\$550,000}*0.08\\ Cost\ of\ Capital=0.1118[/tex]
Cost of capital=11.18%
Inventory at the beginning of the year cost $13,500. During the year, the company purchased (on account) inventory costing $84,500. Inventory that had cost $80,500 was sold on account for $95,400. At the end of the year, inventory was counted and its cost was determined to be $17,500.
Calculate the costs of goods sold.
Answer:
The costs of goods sold is $80,500
Explanation:
Cost of goods sold is defined as the cost which a company incurs to acquire or manufacture a product and selling it to the customer. The selling price doesnot have any effect on the cost of goods sold. The formula for COGS is,
Cost of goods sold = Beginning inventory + Purchases - Ending inventory
Here,
Beginning Inventory = $13,500
Purchases = $84,500
Ending inventory = $17,500
COGS = 13,500 + 84,500 - 17,500 = $80,500
Answer:
$80,500
Explanation:
Cost of goods sold is defined as the cost of acquiring the goods sold during a period, and not the price for which goods are sold to the customer. In this problem, it is stated that inventory worth $80,500 was sold. Therefore, the cost of goods sold is $80,500.
Cost of goods sold can also be calculated as the initial inventory added to purchases minus ending inventory:
[tex]COGS =13,500+84,500-17,500\\COGS=\$80,500[/tex]
How much would you pay today for an asset that pays $1,000 per month, for 12 months, starting today if the interest rate is 4% APR (compounded monthly)
Answer:
Explanation:
Present value of Annuity will be used for this as the future payments are given after equal intervals.
PV of an Annuity = C x [ (1 – (1+i)^-n) / i ]
Where,
C is the cash flow per period
i is the rate of interest
n is the frequency of payments
add given Values in the formula:
$1,000 x [ (1 – (1+4%)^-12) / 0.04 ]= $9387.5 is the Answer
What is a pur autre vie life estate? It endures over the lifetime of the owner, then passes to an heir. It ends with the death of the life estate owner and may pass back to the original owners or their heirs or to a named third party. It ends with the death of the original grantor, then passes to a third party. It endures over the lifetime of a third person, after which
Answer:
It endures over the lifetime of a third person, after which the property passes from the tenant holder to the original grantor
Explanation:
"Pur autre vie" is a French phrase which refers to "for another's life". In such cases, the grantor passes on a property to a party, the duration of which is dependent on the life of a third person.
Upon the demise of such a third party, the estate in such a property gets reverted to the original grantor.
For example, A grants an estate in property to B, the duration of which is limited till the lifetime of C. In the event of C's death, the property reverts back to A i.e the original grantor.
Bill is Use First for __________. He finds that he tends to skim through resources for assignments and approaches writing with a preference for demonstrating what he knows, rather than putting it into words.
Answer:
Hi, you haven't provided the options to the question, so I will just give the answer in my own words and you can check with the options.
The answer is: TECHNICAL REASONING.
Explanation:
Technical reasoning is a learning pattern that in which one tends to enjoy problem solving, building, or doing things hands on to experience what is going on, more like a visual learner.
Technical reasoning refers to the pattern which describes the way we seek relevant real world experiences and practical answers. This pattern is a pattern of fewest words. It emphasizes the ability to solve problems using independent private thinking and hands-on interaction.
Since Bill tends to skim through resources for assignment and approaches writing with a preference for demonstrating what he knows, rather than putting it into words, therefore, it means he uses TECHNICAL REASONING.
Pookie's Pinball Palace restores old Pinball machines. Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration. After having spent $300, Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration. Alternatively, he can sell the machine "as is" now for $1,000. What is his marginal benefit if he sells the machine "as is" now?
The marginal benefit of Pookie selling the machine "as is" now is $1,000.
Explanation:To determine the marginal benefit if Pookie sells the machine "as is" now, we need to compare the amount he will receive by selling it immediately ($1,000) to the amount he expects to receive after finishing the restoration ($2,000).
By selling it now, Pookie will receive $1,000, whereas if he completes the restoration, he expects to receive $2,000.
Therefore, selling the machine "as is" now would result in a marginal benefit of $1,000.
Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $95,000. The annual cash inflows for the next three years will be: Year Cash Flow
1 $ 48,000
2 46,000
3 41,000
Answer:
internal rate of return is 20.463%
Explanation:
given data
Year Cash Flow
1 $48,000
2 $46,000
3 $41,000
equipment cost = $95,000
to find out
Determine the internal rate of return
solution
we consider here internal rate of return is x
so we can say present value of inflows = present value of outflows
equate here
$95000 = [tex]\frac{48000}{(x)} +\frac{46000}{(x)^2} +\frac{41000}{(x)^3}[/tex]
solve it we get
x = 20.463 %
so internal rate of return is 20.463%
Final answer:
To analyze the investment in manufacturing equipment, calculate the Net Present Value (NPV) using discounting and cash inflow values which gives 20.44%
Explanation:
Home Security Systems is analyzing the purchase of manufacturing equipment. To evaluate the investment, we can calculate the Net Present Value (NPV) of the cash inflows over the next three years. To do this, we discount each cash inflow using an appropriate discount rate to account for the time value of money. We then subtract the initial cost of $95,000 from the present value of all cash inflows to determine the NPV.
Year Cash Flow
1 $48,000
2 $46,000
3 $41,000
Equipment cost = $95,000
Thus,
95,000 = 48000/x + 46000/x + 41000/x
= 20.44
A company is deciding between 2 foreign firms to provide its call center services. A factor-rating method is used. Factors are rated on a scale of 1-10, with 10 being the best score. Suppose a consultant recommended that Factor 2 be twice as important as Factor 1, while Factor 3 should be four times as important as Factor 1. Which firm is best now using a weighted method? (Round your weights to the nearest four decimal places.)
Answer:
Explanation:
A) All the weights are equal.
For Firm A, Weighted score = (10 + 7 + 4)/3 = 21/3 = 7
For Firm B, Weighted score = (5+8+6)/3 = 19/3 = 6.3333
Firm A is better preferred
B) Factor 2 being twice important and Factor 3 having four times importance as Factor 1.
For Firm A, Weighted score = (10 + 7*2 + 4*4)/7 =40/7 = 5.7143
For Firm B, Weighted score = (5+8*2+6*4)/7 = 45/7 = 6.4286
Firm B is better preferred
Based on the weights applied and the factors given per firm, the firm that is best would be Firm A.
Which firm would be best?Factor 1 will be x.
Factor 2 will be 2x
Factor 3 will be 3x.
Total weights are:
= x + 2x + 3x
= 6x
Factor A is therefore = 1/6
Factor B is = 2/6
Factor C is = 3/6
Firm A weighted score is:
= ( (10 x 1/6) + (8 x 2/6) + (9 x 3/6))
= 8.83
Firm B weighted score:
= ( (5 x 1/6) + (8 x 2/6) + (6 x 3/6))
= 6.5
Firm A is therefore better with 8.83.
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Carla Heinz is a portfolio manager for Deutsche Bank. She is considering two alternative investments of EUR10,000,000. Either she will invest in euro deposits or she will invest in Swiss francs (CHF) for 90 days. In the latter case, she knows that she must worry about transaction foreign exchange risk, so she has decided to fully hedge her investment. Suppose she has the following data:180-day CHF interest rate, 8% p.a., 180-day EUR interest rate, 10% p.a., spot rate EUR1.1960/CHF, 180-day forward rate, EUR1.2024/CHF. Which of these deposits provides the higher euro return in 180 days? If these were actually market prices, what would you expect to happen?
Answer:
The euro return to investing directly in euros is 180 5% 10% 360 = × ÷ , so the euros available in 180 days is EUR10,000,000 × 1.05 = EUR10,500,000. Alternatively, the EUR10,000,000 can be converted into Swiss francs at the spot rate of EUR1.1960/CHF. The Swiss francs purchased would equal EUR10,000,000 / EUR1.1960/CHF = CHF8,361,204. This amount of Swiss francs can be invested to provide a 180 4% 8% 360 = × ÷ return over the next 180 days. Hence, interest plus principal on the Swiss francs is CHF8,361,204 × 1.04 = CHF8,695,652. If we sell this amount of Swiss francs forward for euros at the 180-day forward rate of EUR1.2024/CHF, we get a euro
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return of CHF8,695,652 ×EUR1.2024/CHF = EUR10,455,652. This is less than the return from investing directly in euros.If these were the actual market prices, you should expect investors to do covered interest arbitrages. Investors would borrow Swiss francs, which would tend to drive the CHF interest rate up; they would sell the Swiss francs for euros in the spot foreign exchange market, which would tend to lower the spot rate of EUR/CHF; they would deposit euros.
Explanation:
Final answer:
Upon calculating the returns, Carla Heinz would find that the euro deposit offers a higher return after 180 days than the Swiss francs deposit, even after fully hedging the currency risk. The euro deposit ends with EUR10,500,000 compared to EUR10,458,349.40 for the Swiss francs. Arbitrage would then lead to market adjustments in interest rates or exchange rates.
Explanation:
To decide which investment provides a higher euro return in 180 days between euro deposits and Swiss francs (CHF), Carla Heinz needs to calculate the amount she would earn from each after accounting for interest rates and any hedging actions necessary to mitigate foreign exchange risk.
For the euro deposit, with a 10% per annum interest rate, the simple interest for 180 days on EUR10,000,000 would be:
EUR10,000,000 x (10% / 2) = EUR500,000
The euro deposit investment would amount to EUR10,500,000 at the end of 180 days.
For the Swiss francs deposit, with an 8% per annum interest rate and calculating the returns after hedging:
First, the investment in CHF: EUR10,000,000 / EUR1.1960/CHF = CHF8,361,204.68
Simple interest for 180 days on the CHF deposit:
CHF8,361,204.68 x (8% / 2) = CHF334,448.19
Total in CHF at the end of 180 days: CHF8,695,652.87
Using the forward rate to convert back into euros:
CHF8,695,652.87 x EUR1.2024/CHF = EUR10,458,349.40
Comparing the two, Carla would have EUR10,500,000 from the euro deposit and EUR10,458,349.40 from the Swiss francs after hedging. Therefore, the euro deposit provides the higher return. If these were actual market prices, it would be expected that investors would move funds into euros until the arbitrage opportunity disappears, meaning the interest rates or exchange rates would adjust due to increased demand for euros and supply of CHF.
Music World produces student-grade violins for beginning violin students. The company produced 2,100 violins in its first month of operations. At month-end, 550 finished violins remained unsold. There was no inventory in work in process. Violins were sold for $122.50 each. Total costs from the month are as follows:
Direct materials used $87,200
Direct labour 60,000
Variable manufacturing overhead 25,000
Fixed manufacturing overhead 44,100
Variable selling and administrative expense 8,000
Fixed selling and administrative expens 13,900
The company prepares traditional (absorption costing) income statements for its bankers. Hannah would also like to prepare contribution margin income statements for her own management use. Compute the following amounts that would be shown on these income statements:
Requirements
1. Gross profit
2. Contribution margin
3. Total expenses are shown below the gross profit line.
4. Total expenses are shown below the contribution margin line.
5. The dollar value of ending inventory under absorption costing.
6. The dollar value of ending inventory under variable costing.
Which income statement has a higher operating income? By how much? Explain.
Answer:
Explanation:
1.
Gross profit is Net Sales - Cost of goods sold(COGS). So in order to calculate COGS:
Direct materials used $87,200
Direct labour 60,000
Variable manufacturing overhead 25,000
Fixed manufacturing overhead 44,100
Total cost $216,300
Violins produced 2,100
Cost per violin $103
Sales [(2100-550)*122.50] 189,875
Cost of goods sold [(2100-550)*103] 159,650
Gross profit 30,225
2. Contribution margin = Sales - Variable expenses
So to calculate variable expenses, cost per violins multiplied by violins sold and then variable selling and administrative expense of 8,000 is added.
Direct materials used $87,200
Direct labour 60,000
Variable manufacturing overhead 25,000
Total cost $172,200
Violins produced 2,100
Cost per violin $82
Variable expenses = (2100-550)*82 +8000 = $135,100
Contribution margin = 189,875 - 135,100 = $54,775
3.
Variable selling and administrative expense 8,000
Fixed selling and administrative expense 13,900
Total expenses shown below the gross profit line 21,900
4.
Fixed manufacturing overhead 44,100
Fixed selling and administrative expense 13,900
Total expenses shown below the contribution margin line 58,000
5. Ending inventory = unsold inventory*Cost per violins = 550*103 = $56,650
6. Ending inventory = unsold inventory*Cost per violins = 550*82 = $45,100
Moira Company has just finished its first year of operations and must decide which method to use for adjusting inventory accounts. Because the company used a budgeted indirect-cost rate for its manufacturing operations, the amount that was allocated ($435,000) to cost of goods sold was different from the actual amount incurred ($425,000). Ending balances in the affected accounts were:
Answer:
The Cost of good sold will decrease by 10,000
The other accounts balance will be the same.
Missing Information:
Ending balances in the relevant accounts were:
Work-in-Process 40,000
Finished Goods 80,000
Cost of Goods Sold 680,000
Explanation:
The company applied overhead for the amount of 435,000
This was charged into finished good which latter become cost of goods sold.
Then, as the actual overhead was 425,000 we have to adjust for the over-applied overehad. We applied more than it cost so we have to reduce it.
435,000 - 425,000 = 10,000
We will decrease our COGS against the factory overhead account.
COGS 10,000 debit
factory overhead 10,000 credit
Final answer:
Moira Company needs to adjust its inventory accounts by recognizing an over-applied manufacturing overhead of $10,000, due to a discrepancy between the budgeted indirect-cost rate and the actual cost incurred, to ensure accurate financial statements.
Explanation:
Moira Company should adjust its inventory accounts after discovering a discrepancy between the budgeted indirect-cost rate and the actual amount incurred. The company used a budgeted indirect-cost rate for manufacturing operations, which led to an allocation of $435,000 to the cost of goods sold. However, the actual amount incurred was $425,000. To reconcile this discrepancy, the company should adjust its inventory account by recognizing the over-allocated amount of $10,000 as an over-applied manufacturing overhead and adjust the cost of goods sold accordingly. This adjustment will ensure that the financial statements reflect the actual costs and improve the accuracy of the profit calculation.
Define the term constructive receipt. Explain its importance.
(A) Under the concept of constructive receipt, income is taxed when it is received by the taxpayer. The taxpayer can transfer the income to another person to avoid paying taxes.
(B) Under the concept of constructive receipt, income is taxed when it becomes available to the taxpayer. The taxpayer cannot defer the tax by refusing to accept payment.
(C) Under the concept of constructive receipt, income is taxed once earned but not received by the cash-basis taxpayer. The taxpayer cannot defer the tax by refusing to accept payment.
(D) Under the concept of constructive receipt, income is taxed once earned and received by the cash-basis taxpayer. The taxpayer can defer the tax by refusing to accept payment.
Answer:
PART A
A constructive receipt is a term often used in both accounting and taxation to describe the taxation of an income even when the income had not been received by the person being taxed.
IMPORTANCE OF CONSTRUCTIVE RECEIPTS
It guarantees the early payment of taxes without undue delays from the tax payer.
It ensures effective taxation by effective tracking of the tax payers.
PARTB
(B) Under the concept of constructive receipt, income is taxed when it becomes available to the tax payer. The taxpayer cannot defer the tax by refusing to accept payment.
Explanation:
Constructive reciept is of great importance and relevance in the field of cost accounting and taxation,it guarantees early payment of taxes and effective tracking of tax payers by the regulatory or taxation bodies.
Under the concept of constructive reciept, income is taxed when it becomes available to the tax payer and it can not be deferred by refusing to accept payment.
Constructive receipt is a tax law concept where income is taxed when it becomes available to the taxpayer, regardless of when it is actually received. This prevents manipulation of tax payment timing by delaying income acceptance.
Explanation:The term Constructive Receipt is defined under the tax law context. According to this concept, income is considered to be received, and subsequently liable for tax, when it becomes readily available to the taxpayer, irrespective of when it is actually received. In other words, option (B) is the accurate definition of constructive receipt. The taxpayer cannot defer tax by refusing to accept the payment or by directing it to be paid to another party.
The importance of constructive receipt lies in its role in determining the taxation period for any given income. It prevents the taxpayer from manipulating the timing of their tax payment by refusing or delaying the acceptance of their income. Constructive receipt is a critical aspect of income recognition and timing of tax liability for cash-based accounting systems.
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Butchart Gardens is a very large garden in Victoria, British Columbia, renowned for its beautiful plants. It is so large that it could hold many times more visitors than currently visit it. The garden charges an admission fee of $30. At this price, 1,000 people visit the garden each day. If admission were free, 2,000 people would visit each day.
Are visits to Butchart Gardens excludable or nonexcludable? Are they rival in consumption or nonrival? What type of good is it?
Answer:
In this case,visit to the Butchart Garden is an excludable and non-rivalrous good and is an example of a Club Good.Explanation:
First,since the Burchart Gardens charges an admission fee of $30 for each visitor,anyone who has not paid the fee cannot or will not be able to have access inside the garden.Therefore,it is currently not a free service for all the visitors.In this sense,a visit to the Butchart Garden is excludable.It can be assumed that any visitor who wishes to come inside the garden and have a visit will have to mandatorily pay the admission fee.
Secondly,as Butchart Garden is a public area and anyone who pays the admission fee can officially gain access to the garden,enjoyment of the natural and aesthetic beauty of the garden by any one visitor does not reduce the simultaneous enjoyment of any other visitor who has paid the admission fee and hence,gained access to the garden.In economic language,if we consider the garden visit as a particular commodity,then the consumption of the commodity by any one visitor or consumer does not reduce the simultaneous consumption of any other visitor/s or consumer/s,provided that they have all paid the admission fee to gain access to the commodity or garden in this case.Therefore,visits to the Butchart Garden can be considered as non-rivalrous.
Now,since the visit to the Butchart garden is both excludable and non-rivalrous in nature,it can be considered as an example of a Club Good.
Final answer:
Visits to Butchart Gardens are excludable and nonrival in consumption, making them a club good.
Explanation:
Visits to Butchart Gardens are excludable because they can be prevented from those who have not paid the admission fee. Since the garden charges a fee and can limit access based on whether an individual has paid, it fits the criteria of an excludable good.
Furthermore, visits are nonrival in consumption, at least until the point at which additional visitors would begin to diminish the experience for others. Given the scenario described, that point is not reached, as the garden can hold many more visitors than it currently does.
Therefore, Butchart Gardens represents a club good, which is excludable but nonrival in consumption up to a certain capacity.
The Don't Tread on Me Tire Company had retained earnings at December 31, 2015 of $217,000. During 2016, the company had revenues of $417,000 and expenses of $358,500, and the company declared and paid dividends of $12,700. Retained earnings on the balance sheet as of December 31, 2016 will be_____________.
a. $275,500.
b. $45,800.
c. $262,800.
d. $321,300
Given:
Beginning retained earnings = $217,000
Revenues = $417,000
Expenses = $358,500
Dividends = $12,700
To find:
Ending retained earnings
Solution:
To calculate the ending retained earnings first we have to calculate the net income of the company. The formula to calculate the net income is as follows,
[tex]\bold{\text{Net income = Revenues - Expenses}}[/tex]
On plugging in the values in the above formula we get,
[tex]\Rightarrow \$417,000 - \$358,500 = \$58,500[/tex]
The formula to calculate the ending retained earnings is as follows,
[tex]\bold{\text{Ending retained earnings = Beginning retained earnings + Net income - Dividends}}[/tex]
[tex]\Rightarrow \$217,000 + \$58,500 - \$12,700 = \$262,800[/tex]
Therefore, the retained earnings on the balance sheet as of December 31, 2016 will be $262,800 that is option c.
Tune Store reports inventory using the lower of cost and net realizable value (NRV). Information related to its year-end inventory appears below. Inventory Quantity Unit Cost Unit NRV Model A 100 $ 100 $ 120 Model B 50 50 40 Model C 20 200 210 The year-end adjustment to mark inventory down to net realizable value will involve a debit to _____.
Tune Store would need to adjust their books for Model B's inventory, writing down the inventory by $500 due to valuation at NRV being less than cost. This is processed by debiting (increasing) an expense account such as Cost of Goods Sold and crediting (decreasing) the Inventory account.
Explanation:The question regards the year-end adjustment to mark inventory down to the net realizable value (NRV) within the context of the Tune Store. Tune Store uses lower cost and NRV to report its inventory. Therefore, if the cost of an item exceeds the NRV, the business would need to write down the inventory and adjust its books.
In this case, the adjustment applies to Model B. The unit cost is $50, but the NRV is only $40. This implies a $10 write-down per Model B unit. So, for 50 units, the total write-down would be $500. The effects of the adjustment would involve debiting (increasing) an expense account such as Cost of Goods Sold and crediting (decreasing) the Inventory account.
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Shane's Catering began with cash of $ 10 comma 000. Shane then bought supplies for $ 2 comma 700 on account. Separately, Shane paid $ 6 comma 500 for equipment. Answer these questions. a. How much in total assets does Shane have? b. How much in liabilities does Shane owe? a. How much in total assets does Shane have? Shane has $ 12300 in total assets.
Answer:
a. $12,700
b. $2,700
Explanation:
The $10,000 she began with is an asset to the company and is also the owners equity.
Equipment purchased reduces cash but gives rise to another asset (fixed assets) hence the assets value does not change. Supplies is purchased on account, resulting in the creation of an asset and a liability.
Hence total asset owned by Shane Catering
= $10,000 + $2,700
= $12,700
Total liabilities = $2,700
Shane's Catering has $19,200 in total assets and owes $2,700 in liabilities.
Explanation:Shane's Catering began with cash of $10,000. Shane then bought supplies for $2,700 on account. Separately, Shane paid $6,500 for equipment.
a. To calculate the total assets, we need to add up the cash, supplies, and equipment. So, Shane has a total of $10,000 + $2,700 + $6,500 = $19,200 in total assets.
b. Shane owes $2,700 in liabilities, which represents the amount owed for the supplies purchased on account. This is the only liability mentioned in the question.
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Nabb & Fry Co. reports net income of $25,000. Interest allowances are Nabb $5,000 and Fry $4,000, salary allowances are Nabb $14,000 and Fry $10,000, the remainder is shared equally. Show the distribution of income. (If an amount reduces the account balance then enter with a negative sign preceding the number e.g. -15,000 or parenthesis e.g. (15,000).)
Final answer:
The net income of $25,000 is not sufficient to cover the combined allowances for Nabb and Fry, totaling $33,000. Therefore, each partner receives their respective allowances with Nabb receiving $19,000 and Fry receiving $14,000, with no remainder to distribute.
Explanation:
The problem involves distributing net income in a partnership according to agreed allowances and sharing the remainder equally.
Calculate total allowances for both partners: Nabb (Interest $5,000 + Salary $14,000 = $19,000); Fry (Interest $4,000 + Salary $10,000 = $14,000).Sum total allowances: $19,000 + $14,000 = $33,000.Subtract total allowances from net income: $25,000 - $33,000 results in a negative amount which indicates there's no remainder to distribute, and the net income is not sufficient to cover total allowances.Therefore, the distribution of income is as follows:
Nabb: $19,000 (Nabb's total allowances as the net income doesn't cover more than allowances)Fry: $14,000 (Fry's total allowances as the net income doesn't cover more than allowances)Since the net income is not enough to cover all allowances, there are no additional amounts to distribute equally between Nabb and Fry.
John Kotter built on Lewin's three-step model to create a more detailed approach for implementing change.
Which of the following steps in the Kotter's eight-step plan for implementing change represents the "unfreezing" stage in the Lewin's three-step model?
A) Plan for, create, and reward short-term "wins" that move the organization toward the new vision.
B) Consolidate improvements, reassess changes, and make necessary adjustments in the new programs.
C) Create a new vision to direct the change and strategies for achieving the vision.
D) Empower others to act on the vision by removing barriers to change and encouraging risk taking and creative problem solving.
E) Reinforce the changes by demonstrating the relationship between new behaviors and organizational success.
Answer:
C.
Explanation:
The change model was developed by Kurt Lewin. The model is divide into three steps: unfreezing, changing and refreezing.
According to this three-step model of Kurt, the step that represents the 'unfreezing' stage is option C.
The unfreezing stage of the change model helps people to gain an overview of daily life. It helps to unlearn the bad habits and adopt new and innovative ways to reach the goal or objectives.
So, according to the definition of the 'unfreezing' stage of the change model, the correct answer is option C as in this step, Kotter is creating a new vision or ways to reach the goal or vision.
In John Kotter's change model, the 'unfreezing' stage in Lewin's model corresponds to the first few steps, encapsulated best by the step that involves creating a new vision to direct change and strategies for achieving that vision.
Explanation:In John Kotter's eight-step plan for implementing change, the equivalent to the 'unfreezing' stage in Kurt Lewin's three-step model would most fittingly be 'Create a new vision to direct the change and strategies for achieving the vision'. This is because the unfreezing stage in Lewin's model entails getting ready to change, which involves making individuals or organizations aware of the necessity and impending nature of change, a criterion that aligns with creating a new vision for change.
However, it's important to note that Kotter's model is a more granular expansion on Lewin's model, and so doesn't map directly onto the three stages of Lewin's model. The unfreezing stage corresponds to the first few steps of Kotter's model, which collectively articulate the need for change and pave the way for it.
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