Answer:
Break-even units= 6,260 units
Explanation:
Giving the following information:
Hagrid Company has a weighted average contribution margin per unit of $5.00.
Fixed costs are $104,332.
Sales volume next year:
Yoga Videos= 13,000 units
Yoga Equipment= 15,000 units
Yoga Mats= 12,000
Total Units= 40,000 units
First, we need to calculate the break-even point in units.
Break-even point= fixed costs/ contribution margin
Break-even point= 104,332/5= 20,866 units
Now, we can calculate the break-even point units for Yoga Mats:
Weighted participation in sales= 12,000/40,000= 0.3
Break-even units= 20,866*0.3= 6,260 units
Final answer:
To calculate the breakeven quantity for Yoga Mats specifically, we need individual product contribution margins or selling prices. However, given the provided information, we can only estimate the overall breakeven volume at 20,867 units and assume an even distribution across products, approximating 6,956 units for Yoga Mats.
Explanation:
To find the breakeven quantity for Yoga Mats for the next year, we need to calculate the total number of units that need to be sold to cover the fixed costs, taking into account the weighted average contribution margin per unit. Given that Yoga Company, Hagrid Company, has fixed costs of $104,332 and a weighted average contribution margin per unit of $5.00, we can use the breakeven point formula:
Fixed Costs / Contribution Margin per Unit = Breakeven Volume
So, $104,332 / $5.00 = 20,866.4 units. Since you cannot sell a fraction of a unit, we round up to the next whole number, resulting in 20,867 units being the overall breakeven volume for the Hagrid Company.
The question is about the breakeven quantity specifically for Yoga Mats. If the company sells the units evenly across the products, we can divide the total breakeven volume by the number of products. However, to find the exact breakeven quantity for Yoga Mats alone without additional information on the individual contribution margins or selling prices of each product is not possible.
If we assume that the units are sold evenly, that would be 20,867 total units / 3 products = approximately 6,956 units per product to reach breakeven. This assumption may not reflect the real dynamics but gives an approximate idea.
Your financial adviser recommends buying a 10-year bond with a face value of $1,000 and an annual coupon of $80. The current interest rate is 7 percent. What might you expect to pay for the bond (aside from brokerage fees)?
Answer:
I will pay $1070.24 for the Bond.
Explanation:
Coupon payment = = $80
Number of years = n = 10 years
Price of bond is the present value of future cash flows, to calculate Price of the bond use following formula:
Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]
Price of the Bond =$80 x [ ( 1 - ( 1 + 7% )^-10 ) / 7% ] + [ $1,000 / ( 1 + 7% )^10 ]
Price of the Bond = $80 x [ ( 1 - ( 1.07 )^-10 ) / 0.07 ] + [ $1,000 / ( 1.07 )^10 ]
Price of the Bond = $561.89 + $508.35
Price of the Bond = $1,070.24
To determine the price of the bond, you need to calculate the present value of the annuity and the present value of the face value at the end of the 10-year period using the given interest rate. Then, add these two present values together to find the price of the bond.
Explanation:To calculate the price of the bond, we need to find the present value of the future cash flows. The annual coupon payment of $80 can be viewed as an annuity with a 10-year duration. Using the formula for the present value of an annuity, we can calculate the present value of the coupon payments. Additionally, we need to calculate the present value of the face value of the bond at the end of the 10-year period. By discounting each cash flow using the 7 percent interest rate, we can determine the price of the bond.
Using the present value of annuity formula:
PV = C * [(1 - (1+r)^(-n))] / r
where PV is the present value, C is the annuity payment ($80), r is the interest rate (0.07), and n is the number of periods (10).
Using the present value of a single cash flow formula:
PV = F / (1+r)^n
where PV is the present value, F is the future value ($1,000), r is the interest rate (0.07), and n is the number of periods (10).
Calculating both the present value of the annuity and the present value of the single cash flow, we can add them together to find the price of the bond. The expected price of the bond, aside from brokerage fees, would be the sum of these two present values.
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Frankie's Chocolate Co. reports the following information from its sales budget: Expected Sales: July $ 90,000 August 110,000 September 120,000 Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:A) $ 78,000 B) $ 108,000 C) $ 120,000 D) $ 130,500
Answer:
B) $ 108,000
Explanation:
September cash sales
(25% * $120,000) = $ 30,000
August credit sales
(75% * $104,000) = $78,000
Cash collected in September is
$ 108,000
You are buying a home for $360,000. If you make a down payment of $60,000 and take out a mortgage on the rest at 8.5% compounded monthly, what will be your monthly payment if the mortgage is to be paid off in 15 years
Answer:
$2954.22
Explanation:
We are given a present value of $360000 which needs to be paid in the future for the mortgage of a house therefore we are further told that $60000 of down payment has been made so now we are required to pay $300000 as monthly installments for the next 15 years so this is a present value annuity problem as we will have future regular periodic payments that for a house mortgage so firstly to interpret this information properly we will use the present value annuity to find the monthly payments which the formula is as follows:
Pv = Cx[(1 -(1+i)^-n)/i]
where C is the periodic payment we are looking for.
Pv is the present value for the home which is $300000 as a down payment of $60000 was made.
i is the interest rate which is 8.5%/12 as we are told it is compounded monthly.
n is the number of periods the in which the mortgage payments are made which is 15 years X 12 months =180 payments.
now we will substitute in the above mentioned formula :
$300000 = Cx[(1-(1+8.5%/12)^-180)/(8.5%/12)] now we will divide both sides with what multiplies C in brackets to solve for C
$300000/[(1-(1+8.5%/12)^-180)/(8.5%/12)] = C
$2954.218674 = C now we round off to two decimal places
C= $2954.22 which will be the monthly payment for this mortgage for 15 years every month.
On July 10, Boogie Footware agrees to a contract to sell 800 pair of flapper shoes for $16,000 to Twenties, Inc. On September 1, after 500 pair of have been delivered, Boogie and Twenties modify the agreement to reduce the price of the remaining 300 pair of flapper shoes to $10 a pair. During September, Boogie delivers 200 pairs of shoes. How much revenue will Boogie recognize for the month of September?
Final answer:
Boogie Footware will recognize a revenue of $7,000 for the month of September.
Explanation:
To determine the revenue that Boogie will recognize for the month of September, we need to calculate the revenue from the delivery of 200 pairs of shoes and the revenue from the modification of the agreement for the remaining 300 pairs of shoes. The revenue from the delivery of 200 pairs of shoes can be calculated by multiplying the number of pairs (200) by the agreed price per pair ($16,000 for 800 pairs of shoes, so $16,000/800 = $20 per pair). Therefore, the revenue from the delivery of 200 pairs of shoes is 200 × $20 = $4,000.
For the remaining 300 pairs of shoes, the price was reduced to $10 per pair. Therefore, the revenue from these shoes is 300 × $10 = $3,000.
So, the total revenue that Boogie will recognize for the month of September is $4,000 + $3,000 = $7,000.
For the month of September, Boogie Footware will recognize revenue of $2,000, as they delivered 200 pairs of shoes at the modified price of $10 per pair.
To determine the revenue Boogie Footware will recognize for September, let's break down the situation:
Initially, the contract price was $20 per pair (800 pairs for $16,000).
By September 1, Boogie had already delivered 500 pairs, so the revenue from these pairs was: $20 * 500 = $10,000.
The contract was then modified to reduce the price of the remaining 300 pairs to $10 per pair.
In September, Boogie delivered 200 pairs at the new price of $10 per pair: 200 pairs * $10 = $2,000.
Hence, for the month of September, Boogie Footware will recognize revenue of $2,000.
the zero sum fallacy refers to a. You gaining only if someone else loses b. The allocation of the pieces of the total economic pie- if you eat the piece, I cannot consume it c. Ignores the possibility of the total pie growing itself d. All of the above
Answer:
The correct answer is letter "D": All of the above.
Explanation:
The zero-sum fallacy is an idea that states there is a fixed resource -usually, a compared to as a pie- implying the more on individual gets of that resource, the less other people will be able to get of the same resource. As a fallacy -false belief- the zero-sum discards the possibility of an individual sharing the resource by splitting it into different parts instead of exclusively using it. Thus, negotiation is left behind assuming the zero-sum fallacy.
nderson produces color cartridges for inkjet printers. Suppose cartridges are sold to mail-order distributors for $12 each and that manufacturing and other costs are as follows: Variable Cost per Unit Fixed Cost Per Month Direct material $4.00 Factory overhead $17,000 Direct labor 0.40 Selling and administrative 8,000 Factory overhead 0.50 Distribution 0.10 Total $5.00 Total $25,000 The variable distribution costs are for transportation to mail-order distributors. Also assume the current monthly production and sales volume is 20,000 and monthly capacity is 25,000 units. If the sales price per unit increases by $2.00 and unit sales decrease by 2,000 units, Anderson’s monthly profit would: Select one:
Answer:
Anderson's Profit is $112,800 after the change in Price and Volume, Although it was $90,000 before the changes.
Explanation:
Unit sold is 20,000 units
Unit Sales Price is $12
Therefore total Sales Value is $240,000
Cost of Production
Direct Material costs $4 x 20,000 = $80,000
Fixed Cost $17,000
Direct Labour costs $0.40 x 20,000 = $8,000
Factory Overhead $0.50 x 20,000 = $10,000
Total Production costs = $115,000
Total Margin = ($240,000 - $115,000) = $125,000
Variable Distribution Costs $5 x 20000 x 0.10 = $10,000
Other Distribution Costs $25,000
Total Distribution costs $35,000
Profit = ($125,000 - $35,000) = $90,000
***If Sales Price increases by $2/unit and Unit Sales drops by 2,000 units
Unit sold is 18,000 units
Unit Sales Price is $14
Therefore total Sales Value is $252,000
Cost of Production
Direct Material costs $4 x 18,000 = $72,000
Fixed Cost $17,000
Direct Labour costs $0.40 x 18,000 = $7,200
Factory Overhead $0.50 x 18,000 = $9,000
Total Production costs = $105,200
Total Margin = ($252,000 - $105,200) = $146,800
Variable Distribution Costs $5 x 18000 x 0.10 = $9,000
Other Distribution Costs $25,000
Total Distribution costs $34,000
Profit = ($146,800 - $34,000) = $112,800
To calculate the monthly profit, determine the new revenue and cost after the changes in selling price and unit sales, then subtract the cost from the revenue.
Explanation:To calculate the monthly profit, you need to first calculate the total revenue and the total cost. The total revenue is the selling price per unit multiplied by the number of units sold. The total cost is the sum of the fixed cost and the variable cost per unit multiplied by the number of units sold. Subtract the total cost from the total revenue to get the monthly profit.
For example, if the selling price per unit increases by $2 and the unit sales decrease by 2,000 units:
1. Calculate the new revenue: Revenue = (Selling price per unit + Increase in selling price) x (Current monthly production and sales volume - Decrease in unit sales)
2. Calculate the new cost: Cost = (Fixed cost per month + Variable cost per unit) x (Current monthly production and sales volume - Decrease in unit sales)
3. Calculate the new profit: Profit = Revenue - Cost
Plug in the values to calculate the new profit.
a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. At the end of January, $5,300 of accounts receivable are past due, and the company estimates that 35% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 3% will not be collected. c. Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31. d. Accrued income taxes at the end of January are $13,600. 3. Prepare an adjusted trial balance as of January 31, 2021.
Answer:
Trial Balance : Debit 15558 = 15558 Credit
Explanation:
b.) Noncollectable amount = $5300 * 35% = 1855
Entry: Dr bad debts expense 1855
Cr Allowance for bad debts 1855
(To record bad debts expense).
5300-1855= 3445 * 3% = $103 will not be collected.
Entry: Dr Bad debts expense 103
Cr Allowance for bad debts 103
( To record bad debts expense)
d.) Entry:
Dr Income tax expense 13600
Cr Income tax payable 13600
(To record accrued income tax expense).
Ledgers :
Bad debt expense = 1855+103 = 1958
Allowance for bad debts = 1855+103 = 1958
Income tax expense = 13600
income tax payable = 13600.
Trial balance:
_Dr__________________________________________________Cr____
Bad debt expense 1958 ----- 1958 Allowance for bad debts
Income tax expense 13600 ----- 13600 Allowance for bad debts
Total = 15558 ------- Total = 15558
On October 1, 2017, Sharp Company (based in Denver, Colorado) entered into a forward contract to sell 330,000 rubles in four months (on January 31, 2018) and receive $115,500 in U.S. dollars. Exchange rates for the ruble follow:Date Spot Rate Forward Rate (to January 31, 2018)October 1, 2017 $ 0.35 $ 0.39 December 31, 2017 0.38 0.41 January 31, 2018 0.40 N/ASharp's incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Sharp must close its books and prepare financial statements on December 31.
Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a 100,000 ruble receivable arising from a sale made on October 1, 2017. Include entries for both the sale and the forward contract.
Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a firm commitment related to a 100,000 ruble sale that will be made on January 31, 2018. Include entries for both the firm commitment and the forward contract. The fair value of the firm commitment is measured by referring to changes in the forward rate.
Solution:
Date Account tides Debit (S in ruble) Credit (S in ruble)
and Explanation
Oct 1 Accounts receivable 96,600
Sales
( 210,000 ruble x $0.46) 96,600
Dec 31 Accounts receivable
( 50.49-50.46) x (210,000 ruble) 6,300
Foreign Exchange gain 6,300
Loss on forward contract 2079,21
Forward Contract
(50.52-50.51) x 210,000 ruble =2,100
2,100 x 0.9901= $2079.21 2079.21
Jan31 Accounts receivable (LC U) 4,200
Foreign exchange gain
(50.51-50.49) x 210,000 ruble 4200
Foreign currency 107,100
Accounts receivable
(596.600-56,300-54,200) 107,100
Cash 107,100
Foreign cuuency (LCU)
($0.51 x210.000 ruble) 107,100
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Peacock is charging $200 per room per night. If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Peacockrises from 300 rooms per night to 400 rooms per night. Therefore, the income elasticity of demand ispositive , meaning that hotel rooms at the Peacock area normal good . If the price of a room at the Grandiose were to decrease by 10%, from $250 to $225, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Peacockfalls from 300 rooms per night to 250 rooms per night. Because the cross-price elasticity of demand isnegative , hotel rooms at the Peacock and hotel rooms at the Grandiose are substitutes . Peacock is debating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, you can see that this would cause its total revenue to decrease . Decreasing the price will always have this effect on revenue when Peacock is operating on theelastic portion of its demand curve.
The scenarios demonstrate the interplay of demand factors, price changes, and their impact on the number of rooms demanded and total revenue at the Peacock Hotel.
In the given scenarios:
An increase in average household income from $50,000 to $55,000 results in an increase in the quantity of rooms demanded at the Peacock from 300 to 400 rooms per night. This indicates a positive income elasticity of demand, classifying hotel rooms at the Peacock as normal goods.
If the price of a room at the Grandiose decreases by 10% from $250 to $225, and the quantity of rooms demanded at the Peacock falls from 300 to 250 rooms per night, it suggests a negative cross-price elasticity of demand. This implies that hotel rooms at the Peacock and the Grandiose are substitutes.
Peacock is contemplating reducing the price of its rooms to $175 per night. Given the initial demand conditions, this would lead to a decrease in its total revenue. This outcome occurs when Peacock is operating on the elastic portion of its demand curve.
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Peacock's rooms are normal goods with positive income elasticity. They are substitutes for Grandiose, with elastic demand, so price cuts reduce revenue.
In the given scenarios, we are analyzing the demand elasticity and market conditions for rooms at the Peacock hotel. Let's break down each scenario:
1. Income Elasticity of Demand: When average household income increases by 10% and the quantity of rooms demanded at the Peacock rises from 300 to 400 rooms per night, this indicates a positive income elasticity of demand. In other words, as consumers' incomes increase, they are willing to spend more on hotel rooms, considering them a normal good.
2. Price Elasticity of Demand for Peacock Rooms: When the price of a room at the Grandiose hotel decreases by 10% and the quantity of rooms demanded at the Peacock falls from 300 to 250 rooms per night, this suggests a negative cross-price elasticity of demand. Hotel rooms at the Peacock and Grandiose are substitutes, meaning that when the price of a substitute (Grandiose) decreases, demand for Peacock rooms decreases.
3. Price Reduction and Total Revenue: Peacock is contemplating decreasing the price of its rooms to $175 per night. Under the initial demand conditions, decreasing the price will lead to a decrease in total revenue. This is because Peacock is operating on the elastic portion of its demand curve.
In summary, Peacock's rooms are considered normal goods, and they are in competition with Grandiose, with consumers viewing them as substitutes. To maximize revenue, Peacock should be cautious when reducing prices, especially when operating on the elastic portion of the demand curve, as it may lead to a decrease in total revenue.
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You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin patties, flopsicles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods.
Run-of-the-Mills provides your marketing firm with the following data:
When the price of penguin patties increases by 5%, the quantity of flopsicles sold decreases by 4% and the quantity of kipples sold increases by 5%. Your job is to use the cross-price elasticity between penguin patties and the other goods to determine which goods your marketing firm should advertise together.
Complete the first column of the following table by computing the cross-price elasticity between penguin patties and flopsicles, and then between penguin patties and kipples. In the second column, determine if penguin patties are a complement to or a substitute for each of the goods listed. Finally, complete the final column by indicating which good you should recommend marketing with penguin patties.
Relative to Penguin Patties Relative to Penguin Patties Recommend Marketing-
with Penguin Patties
Cross-Price Elasticity- Complement or Substitute
of Demand
Flopsicles
Kipples
Solution:
↑P_penguin patties 5 %
↓Q_flopsicles 4%
↑Q_kipples 5%
[tex]\frac{Change Quantity}{Change Price}[/tex] = Cross price elasticity
-0.04/0.05 = -0.8 penguin patties to flopsicle
A drop in demand for the second commodity shall be responded by a smaller amount.
This means that when penguin patties reduce prices, people make decisions to purchase them when they are flopsicle.
0.05/0.05 = 1
The price reduction produces more kipple length.
This is an additional link even though consumers buy kipples with the difference or use part of the saving for the purchase of kipples because while the price decline.
Final answer:
The cross-price elasticity of demand for penguin patties and flopsicles is -0.8, indicating they are complements, while penguin patties and kipples have a cross-price elasticity of 1.0, indicating they are substitutes. Run-of-the-Mills should market flopsicles and penguin patties together as they are complementary products.
Explanation:
To compute the cross-price elasticity of demand, we look at the percentage change in the quantity demanded of one product in response to a percentage change in the price of another product. When considering Run-of-the-Mills' products, we find that with a 5% increase in the price of penguin patties, the quantity of flopsicles sold decreases by 4%. This gives us a cross-price elasticity of demand formula (% change in quantity demanded of Product B)/(% change in price of Product A), which in this case is (-4%)/(5%) or -0.8 for flopsicles.
Similarly, a 5% price increase in penguin patties results in a 5% increase in the quantity of kipples sold, resulting in a cross-price elasticity of demand of (5%)/(5%) or 1.0 for kipples.
Since the cross-price elasticity of demand for penguin patties and flopsicles is negative, they are complements in consumption. For penguin patties and kipples, the positive cross-price elasticity indicates that they are substitutes. Based on this analysis, Run-of-the-Mills should market flopsicles and penguin patties together to capitalize on the complementary relationship, as consumers are likely to purchase them together.
g Assume that a 15-year, $1,000 face value bond pays interest of $37.50 every 3 months. If you require a simple annual rate of return of 12 percent, with quarterly compounding, how much should you be willing to pay for this bond
Answer:
I will pay $1,207.56 for this bond.
Explanation:
Price of the bond is the present value of all cash flows of the bond. Price of the bond is calculated by following formula:
According to given data
Coupon payment = C = $37.5
Number of periods = n = 4 x 15 years = 60 periods
Current Yield = r = 12% / 4 = 3% semiannually
Price of the Bond = $37.5 x [ ( 1 - ( 1 + 3% )^-60 ) / 3% ] + [ $1,000 / ( 1 + 3% )^60 ]
Price of the Bond = $37.5 x [ ( 1 - ( 1.03 )^-60 ) / 0.03 ] + [ $1,000 / ( 1.03 )^60 ]
Price of the Bond = $1,037.83 + $169.73
Price of the Bond = $1,207.56
Compare the established EOQ/ROP procedure(described in case Exhibit 2) with the one that Jake and Josh are using. Which system do you prefer? What improvements do you recommend?
Answer:
EOQ means Economic Order Quantity
Reorder point means ROP
Explanation:
EOQ means Economic Order Quantity is total units of inventory that a company should purchase so as to minimize the total costs of inventory which are holding costs, order costs, and shortage costs.
The reorder point (ROP) is the level of inventory that calls for replenishment of that stock. That is, the lowest point a company can go on a particular stock before ordering .
I prefer and would recommend ordering optimal order quantity the point at which holding cost equals ordering cost at the reorder level= safety stock +(usage rate+ lead time)
Holding cost=Average inventory level*Holding cost
Ordering cost= Average number of order* ordering cost
Safety stock is stock held in excess of expected demand
Usage rate is an estimate rate of usage
Lead time is time between placing an order and receiving it.
The traditional EOQ/ROP system optimizes stock quantities to minimize costs, whereas alternative methods like JIT align production with demand and may be preferred in scenarios with high variability. Improvements to EOQ/ROP could involve incorporating real-time data analytics or adopting JIT principles in certain contexts.
The established EOQ/ROP (Economic Order Quantity/Reorder Point) procedure is a traditional inventory management system that determines the optimal order quantity to minimize total costs related to ordering, receiving, and holding stock. Jake and Josh appear to be implementing an alternative inventory method, potentially more flexible and adapted to their business model, although specific details of their method are not provided.
In other reading situations, such as in high variability or demand uncertainty contexts, different inventory management methods, like Just-In-Time (JIT) or demand-driven approaches, might be more appropriate. JIT, as described by Womack, Jones, and Roos (1990), emphasizes minimizing inventory and aligning production closely with demand, thus reducing holding costs and potentially increasing efficiency. This method could be particularly beneficial when quality is a critical concern. Improvements to the EOQ/ROP system could include integrating real-time data analytics to better forecast demand, enhancing the flexibility of the system, or adopting JIT principles in scenarios where they can provide substantial advantages over the traditional EOQ/ROP system.
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $220 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): 2018 2019 2020 Costs incurred during the year $ 40 $ 80 $ 50 Estimated costs to complete as of December 31 120 60 — Required: 1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion. 2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time. 3. Suppose the estimated costs to complete at the end of 2019 are $80 million instead of $60 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method.
Answer:
The solution to the problem is given below.
Explanation:
Requirement 1
Revenue recognition:
2018: [tex]\frac{40}{160}[/tex] = 25% * $220 = $55
2019: [tex]\frac{120}{180}[/tex] = (66.67% × $220) – $55 = $91.67
2020: $220 – ($55 + $91.67) = $73.33
Gross profit (loss) recognition:
2018: $55 – 40 = $15
2019: $91.67 – 80 = $11.67
2020: $73.33 – 50 = $23.33
Requirement 2
Year Revenue recognized Gross profit (loss) recognized
2018 0 0
2019 0 0
2020 $220 $50
Requirement 3
2019 Revenue recognition:
[tex]\frac{120}{200}[/tex] = (60% × $220) – $55 = $77
2019 Gross profit (loss) recognition using the percentage of completion:
[tex]\frac{120}{200}[/tex]= 60% × $20* = $12 – 15 = $(3) loss
A closed-end fund starts the year with a net asset value of $20. By year-end, NAV equals $20.90. At the beginning of the year, the fund is selling at a 4% premium to NAV. By the end of the year, the fund is selling at a 9% discount to NAV. The fund paid year-end distributions of income and capital gains of $2.30.
What is the rate of return to an investor in the fund during the year?
Answer:
2.5%
Explanation:
Price at the beginning = NAV at the beginning × (1 + premium)
= 20 × 1.04 = 20.8
Price at the end = NAV at the end × (1 - premium)
= 20.90 × 0.91 = 19.019
NAV increase by $0.90 but price decrease by 1.781
Returns = (0.91 × 20.90 - 1.04 × 20 + 2.30) ÷ 1.04 × 20
= 0.519 ÷ 1.04 × 20
= 0.0249
= 2.49%
= 2.5%
OR
Returns = change in P + distribution / start of year P
= -1.781 + 2.30 / 1.04 × 20
= 0.519/20.8
= 0.0249
=2.49%
= 2.5%
Of all customers purchasing automatic garage door openers, 75% purchase chain-driven model. Let X = the number among the next 15 purchasers who select the chain-driven model. a. What is the frequency function (pmf) of X?
Answer:
[tex]P(X=x)=C(15,x)\cdot(0.75)^x\cdot(0.25)^{(15-x)}[/tex]
Explanation:
The probability mass function (PMF), or frequency function, is the function that gives the probabilities that a discrete random variable take some values.
In this problem, it is requested the frequency function (PMF) for the number of purchasers, among the next 15, who select a chain-driven model.
Then , you need to find, the function that gives P(X=0), P(X=1), P(X=2), P(X=3), . . . up to P(X=15).
Such as any function, the frequency function can be presented as a formula, as a table, or as a graph.
Note that the statement represents a binomial disbribution in which success is that a customer select a chain-driven model and the fail is that a cusotmer does not select a chain-driven model.
The binomial probability for X = the number among the 15 purchasers who select the chain-driven model is given by the formula:
[tex]P(X=x)=C(n,x)\cdot(p)^x\cdot(1-p)^{(n-x)}[/tex]
Where:
[tex]C(n,x)=\dfrac{n!}{x!(n-x)!}[/tex] n is the number of times the experiment is performed: 15 in our problem p is the probability of succes: 0.75 in our problem1-p is the probability of fail: 0.25 in our problemThen, substitute:
[tex]P(X=x)=C(15,x)\cdot(0.75)^x\cdot(0.25)^{(15-x)}[/tex]
That is the frequency function.
If you want to give it as a table you must find P(X=1), P(X=2), P(X=3), . . . up to P(X=15) using that function. That is not part of the question.
A stock has an expected return of 11.9 percent, its beta is .94, and the risk-free rate is 5.95 percent. What must the expected return on the market be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Market expected return %
Answer:
The market expected return is 12.28%
Explanation:
According Miller and Modgliani Capital Asset Pricing Model,the expected return on a stock is given by the formula below:
Ke=Rf+Beta(Market expected return-Rf)
Rf is the risk free-rate of return
Ke=11.9%
Beta=0.94
risk-free rate of return=5.95%
11.9%=5.95%+0.94(MER-5.95%)
11.9%=5.95%+0.94MER-5.593 %
11.9%=0.357 %+0.94MER
11,9%-0.357%=0.94MER
11.543 %=0.94MER
MER=11.543%/0.94
MER=12.28%
The market expected rate having Miller and Modgiliani CAPM formula is 12.28%
What type of lien can be placed on homeowners who do not pay their home association fees? A security bail bond lien An HOA lien A municipal utility lien A vendor's lien
An HOA lien can be placed on homeowners who do not pay their home association fees. It is a legal claim against the property for the amount owed, and it can lead to restrictions on the sale or refinancing of the property.
The type of lien that can be placed on homeowners who do not pay their home association fees is known as an HOA lien.
Homeowners' associations have the authority to place a lien on a property if the homeowner fails to pay the required dues or assessments.
Unlike a municipal utility lien, which is related to unpaid utility bills to the municipality, or a vendor's lien, which involves a claim by someone who has provided labor or materials that improve the property and hasn't been paid, an HOA lien specifically relates to homeowners’ association dues. An HOA can typically enforce this lien by placing restrictions on the sale or refinancing of the property until the debt is paid.
Peterson Furniture Designs is preparing the annual financial statements dated December 31. Ending inventory information about the five major items stocked for regular sale follows:
Item Quantity Unit Cost Market Value LCM per Total LCM Recorded
on Hand When Acquired at Year Item Total Cost
(FIFO)
Alligator-
Armoires 70 $46 $41 $3,220
Bear-
Bureaus 85 80 80 6,800
Cougar-
Credenzas 10 90 92 900
Dingo-
Cribs 35 35 35 1,225
Elephant-
Dressers 400 15 12 6,000
Prepare the journal entry Peterson Furniture Designs would record on December 31 to write down its inventory to LCM/NRV.
Answer:
Journal entry
31 December Debit Inventory write_down (loss) 1550, Credit inventory 1550
Explanation:
Inventory is accounted for at the lower of cost or net realizable value. inventory write_ down is impairment a loss to the organisation
there can never be a gain when revaluing inventory, either it remains at cost or goes down with NRV
cost market write down
closing inventory calculation
Alligator ( 70 units) 3220 2870 350
Bear (85 units) 6800 6800 0
Cougar ( 10 units) 900 920 0
Dingo ( 35 units) 1225 1225 0
Elephant ( 400 units ) 6000 4800 1200
18145 16615 1550
COUGAR has a high market value so we value it at cost because it is the lower of the two.
The Journal entry will includes a Debit to Inventory write down (loss) for $1550 and Credit to inventory for $1550
What is Inventory?This is accounted for at the lower of cost or net realizable value.
The inventory write down is impairment and loss to the organisation
Particulars Cost Market Write down
Closing inventory calculation
Alligator (70 units) 3220 2870 350
Bear (85 units) 6800 6800 0
Cougar (10 units) 900 920 0
Dingo (35 units) 1225 1225 0
Elephant (400 units) 6000 4800 1200
Total 18145 16615 1550
In conclusion, the Journal entry will includes a Debit to Inventory write down (loss) for $1550 and Credit to inventory for $1550
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During finals week, students arrive randomly at the help desk of the computer lab. There is only one technician due to budget cuts, and the time required to provide service varies from student to student. The average arrival rate is 15 students per hour, and the average service rate is 20 students per hour. Arrival rates have been found to follow the Poisson distribution, and the service times follow the exponential distribution. What is the average time spent waiting in line for each student?"
Answer:
The average time spent waiting in line for each student is 2.25 students.
Explanation:
Use Lq with a single server formula.
λ = Avg arrival rate = 15 std/hr
μ= Avg server rate (individual server capacity) = 20 std/hr
Μ = # of servers/line (identical capacities)
= λ[tex]^{2}[/tex]/μ(μ- λ)
=15[tex]^{2}[/tex] / 20(20-15)
= 225/100
=2.25 students.
There are different kinds of calculations as regards to time. Note that average service rate increases, the shape of the negative exponential distribution of service times often is known to be less gently curved as it moves ever closer to the graph start up point.
Therefore , The average time spent waiting in line for each student is 2.25 students.
This calculated by:
λ refers to Avg arrival rate. This is denoted as
= 15 std/hr
μ refers to as Avg server rate. This is individual server capacity. It is denoted as
= 20 std/hr
Μ is known as number of servers/line or simply say identical capacities.
Therefore = λ/μ(μ- λ)
Input or fill up all numbers (values) into the equation above;
=15 / 20(20-15)
= 225/100
=2.25
Conclusively, The average time spent waiting in line for each student is 2.25 students.
See full options below
What is the average time spent waiting in line for each
student? What is the average number of students in the line?
a. 2.25 students
b. 5 students
c. 15 students
d. 20 students
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What are some of the primary reasons a company decides to expand internationally? Identify a company in the news that has recently built a new overseas facility. Which of the three motivations for global expansion described in the chapter do you think best explains the company’s decision? Discuss.
Answer:
Primary reasons a company would decide to expand internationally are as follows:
Expanding markets and increasing sales are one of the primary reasons. Companies get globalized in order to become a market leader. The company may choose to enter into international market in order to diversify a company's product line. Markets and investments would be protected by companies once they enter into international market and get engaged in an international business. Controlling the expenses is again one of the most important reasons. Company would buy the resources to gain cost advantage. For example, the company which is located in Canada gets most of their resources from China; the company would look forward to get situated near China. Another reason would be, to get protected from their competitors or to gain advantage over them; the company would decide to expand internationally.
The three motivational factors that induce a company to go global are as follows:
Economies of Scale — The advantage that a company gain through mass production to achieve the lowest possible production cost per unit. Economies of scope — The advantage that a firm gains by producing different varieties of products and services and at different regions. Low-Cost Production Factors — It is an opportunity to purchase the resources at the lower possible cost.Jaguar Land Rover decided to manufacture cars outside the UK for the first time. In recent years, it has rapidly expanded in its home UK and the company is planning to go to Brazil and implement the strategies that they had implemented in India.
Jaguar Land Rover moves to other countries to gain the opportunity of producing at a lower price and to gain economies of scale.
Companies expand internationally to seek new markets, achieve economies of scale, and utilize cheaper labor and materials. The motivation behind setting up an overseas facility could be to capitalize on differences in technology, demand, or government trade policies.
Explanation:Primary Reasons for International Expansion
Companies decide to expand internationally for several key reasons, including the pursuit of new markets, economies of scale, and the need for access to raw materials or cheaper labor. These factors can lead to horizontal integration in the business's value chain. A recent example in the news could be a tech company opening a new overseas facility to utilize local talent and reduce production costs due to cheaper labor in the region.
Technology advancements and globalization have allowed businesses to operate seamlessly across borders, which can lead to cultural and societal changes within host communities. A company's motives for expansion may align with aims to exploit differences in technology, resource endowments, consumer demand, or to take advantage of the presence of government policies that favor trade.
Ultimately, the motivations for a company to build a new overseas facility may include accessing new customer bases, achieving cost efficiencies, or gaining a competitive advantage in the industry. Whether a company’s decision is most influenced by technological benefits, economic strategies such as economies of scale, or strategic market positioning, it largely depends on the unique goals and circumstances surrounding the international expansion.
Suppose that a government that is skeptical of efforts to regulate prices charged by private companies is nevertheless concerned that an electric utility company is taking advantage of consumers with unfair pricing policies.
Which of the following policy options might most effectively enable the government to achieve its objectives in this situation?
a. Regulate the firm's pricing behavior.
b. Turn the company into a public enterprise.
c. Use antitrust laws to increase competition.
d. Do nothing at all.
Answer: Option B -- Turn the company into a public enterprise.
Explanation: Public enterprise can be defined as the type of organization, establishment or business that is fully or partly owned by the government but controlled by the public body/authority. Therefore, if the government wants to regulate the price of private company, which is duly imposed on the consumer, it's a must they go for public enterprise by turning the company into a public enterprise.
Suppose the government is trying to find out the private company that is taking advantage of the pricing policy and wants to control the pricing then it has to adopt certain measures.
The company is charging unfair pricing has to be turned into a public enterprise as in order to benefit the government and the people. The monopoly of the company will be destroyed and will get a public tag.Hence the option B is correct.
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On April 1, 2018, Paul sold a house to Amy. The property tax on the house, which is based on a calendar year, was due September 1, 2018. Amy paid the full amount of property tax of $2,500. Calculate both Paul and Amy’s allowable deductions for the property tax. Assume a 365-day year. (Do not round your intermediate calculations. Round your final answers to two decimal places.)
Answer:
Paul = $616.44
Amy = $1883.56
Explanation:
Given
Full Amount = $2,500
There are 90 days between January 1, 2018 and April.
Calculating the amount generated by Paul;
Paul = $2,500 * 90/365
Paul = $616.4383561643835
Paul = $616.44 ---- Approximated
There are (365-90)days left after April 2, 2018 till December 31, 2018
Calculating Amount Generated by Amy
Amy = $2,500 * (365-90)/365
Amy = $2,500 * 275/365
Amy = $1883.561643835616
Amy = $1883.56 --- Approximated
That is the total allowable deduction for Paul and Amy
The Nelson Company has $1,312,500 in current assets and $525,000 in current liabilities. Its initial inventory level is $375,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can Nelson’s short-term debt (notes payable) increase without pushing its current ratio below 2.0? What will be the firm’s quick ratio after Nelson has raised the maximum amount of short-term funds? Ehrhardt, Michael C.. Corporate Finance: A Focused Approach (MindTap Course List) (p. 130). Cengage Learning. Kindle Edition.
Answer:
Explanation:
Current ratio = Current assets/current liabilities
Quick ratio = Current assets-Inventories/current liabilities
Current ratio = 1,312,500/525,000 = 2.5
If the firm wants to raise funds as additional note payable without icreasing its current ratio of 2:
Current ratio = (Current assets+NP)/(Current liab.+NP)
2 = (1,312,500+NP)/(525,000+NP)
NP = 262,500; Additinal Note payable can be maximum of 262,500
Quick ratio = (1,312,500-(375,000+262,500))/787,500 = 1.19
Barr Mfg. provided the following information from its accounting records for 2017: Expected production60,000 labor hours Actual production56,000 labor hours Budgeted overhead$900,000 Actual overhead$970,000 How much is the overhead application rate if Barr bases the rate on direct labor hours?A. $15.54 per hour
B. $15.00 per hour
C. $14.50 per hour
D. $16.07 per hour
Answer:A - $15.00 per hour
Explanation:from the information given above, we are making use of the expected production and budgeted overhead.
= $900,000/60,000 labour hours
= $15.00 per labour hours
The overhead application rate for Barr Mfg. is calculated by dividing the budgeted overhead of $900,000 by the expected labor hours of 60,000. This results in an overhead application rate of $15 per hour.
Explanation:The overhead application rate is computed by dividing the budgeted overhead by the expected production in terms of labor hours. In this case, Barr Mfg. had a budgeted overhead of $900,000 and expected to produce with 60,000 labor hours.
So, the overhead application rate would be $900,000 / 60,000 labor hours = $15 per hour (option B).
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In the market for reserves, an open market _____ shifts the supply curve to the _____, lowering the federal funds interest rate. a. sale; left b. sale; right c. purchase; right d. purchase; left
purchase; right
Answer: Option C.
Explanation:
When the economy is operating in an open market and there is purchase of the reserves, the supply curve will shift towards the right which means that the supply of the reserves in the market will increase.
With the increase in the supply of the reserves which is caused by shifting of the supply curve towards the right direction, the interest rate of the federal funds will shift downwards from the original position of the interest rate of the federal fund.
Bernie just started a business and is trying to raise capital. He has both accredited and non-accredited investors investing in the company. What constraints on investments for new businesses apply here?
Answer:
I can see that there are no choices.
Liquidity Constraint and Time Horizon Constraint
Explanation:
"Investment constraints" refer to the factors which restricts the investor into accessing some investment options. This could be classified into two: internal and external.
Liquidity Constraint is common for businesses and this is related to the "cash outflows." Since he is just starting a business, it would be better if he considers this so he'd value assets which can be converted into cash, without affecting the value of the portfolio.
Time Horizon Constraint is necessary because Bernie needs to know the time for the returns of investment. This classifies the investments into short-term or long-term.
New businesses face constraints when raising capital, especially from non-accredited investors, due to SEC regulations. Common sources of start-up capital include personal savings, angel investors, and venture capital. Established firms secure loans more easily due to their financial history.
Bernie just started a business and is trying to raise capital. He has both accredited and non-accredited investors investing in the company. New businesses face several constraints when raising capital, particularly from non-accredited investors.
According to SEC regulations, companies can only raise a limited amount of money from non-accredited investors, and there are specific disclosure requirements to protect these investors.
Accredited investors, on the other hand, have fewer restrictions because they meet certain income or net worth thresholds.
Start-up firms commonly raise financial capital through various means:
Personal Savings: The business owner may use personal savings or other personal financial resources.Angel Investors: Wealthy individuals may invest in early-stage companies in exchange for equity.Venture Capital: These firms invest large sums in exchange for partial ownership and influence over company decisions.Relying solely on profits is not feasible initially because new firms often lack sufficient income to cover significant upfront costs. Well-established firms find it easier to secure loans because they have a proven track record and financial stability.
Michael's Yoga Studio have been entering bills for their purchases as they come in. They pay multiple bills once a week. They use Bank Feeds to record these transactions, posting to Cost of Goods Sold. They are an accrual-based company. What is best practice to remedy this with a minimum amount of work
Answer: They could either use the Income and expenditure or purchases journal too.
Explanation: Because its a Yoga Studio, lots of expenses will be made and appropriate postings are to be entered on time.
Answer:
By using the purchase journal.
Explanation:
A purchase journal is an accounting journal used to keep record of items ordered through the use of account payable. Simply put, a purchase journal is the primary entry book used in recording credit transactions.
A purchases journal is the record of every acquisition made on credit at a particular period. It is a journal used for tracking the requests placed using accounts payable or vendor credit including the current balance indebted each vendor.
A purchase journal has different columns for recording the date, vendor's name, invoice number, invoice date, particulars, vendor's account, credit terms, and total.
If interest rates are at the zero lower bound:A. the effectiveness of monetary policy increases. B. monetary policy is not very effective. C. automatic stabilizers don't work. D. monetary policy is more effective than fiscal policy
Answer:
B. monetary policy is not very effective
Explanation:
The zero lower bound is similar; lower bounds and is macroeconomic problems and this occurs when the short terms nominal interest rate is an at the near top the liquidity trap and is issues of the paper currency by the government and effective guarantee zero of normal interest rates acting as an interest rate floor. The Zero interest rate is also referred to as the lower limit of the 0% for a short term rate beyond which monetary policy is not very effective.What annual rate of return is earned on a $1,000 investment when it grows to $2,300 in six years? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
14.89%
Explanation:
Present value: $1,000
Future value: $2,300
Tenor = 6 years
FV = PV * (1+ rate) ^tenor
⇔2,300 = 1,000 * (1 + rate) ^6
⇔(1+rate)^6 = 2300/1000 = 2.3
⇔ 1+ rate = 2.3^(1/6) = 1.1489
=> Rate = 1.1489-1 =0.1489 = 14.89%
Final answer:
To find the annual rate of return on a $1,000 investment that grows to $2,300 in six years, the formula for compound interest is used. The calculation reveals that the investment earns an annual rate of return of 18.00%, rounded to two decimal places.
Explanation:
The question asks what annual rate of return is earned on a $1,000 investment when it grows to $2,300 in six years. To solve this, we will use the formula for compound interest: A = P(1 + r)^n, where A is the amount of money accumulated after n years, including interest, P is the principal amount (initial investment), r is the annual interest rate, and n is the number of years.
Plugging in the given values into the formula, $2,300 = $1,000(1 + r)^6, we need to solve for r. Re-arranging the formula gives us 1 + r = ($2,300/$1,000)^(1/6). This simplifies down to 1 + r = 2.3^(1/6).
Calculating the sixth root of 2.3 and subtracting 1 gives us the value of r, which is the annual rate of return. After solving, r = 0.18 or 18.00% when rounded to two decimal places.
Classify each of the following based on the macroeconomic definitions of saving and investment.
A.Ginny buys new bulldozers for her construction firm.
B.Eric purchases a certificate of deposit at his bank.
C.Kenji takes out a mortgage for a new home in Detroit.
D.Lucia purchases stock in Pherk, a pharmaceutical company.
Answer and explanation:
Saving implies setting an amount of money of your income aside and put it into a bank account or store it somewhere considered safe. If deposited in a bank the money gains interest, thus, there will be a relative increase in the initial sum deposited.
Investing implies providing money to a third party or using that money personally to start up a venture. In such cases, there is a risk that the investment could be lost.
Thus:
A) Ginny buys new bulldozers for her construction firm. (Investment)
B) Eric purchases a certificate of deposit at his bank. (Saving)
C) Kenji takes out a mortgage for a new home in Detroit. (Investment)
D) Lucia purchases stock in Pherk, a pharmaceutical company. (Saving)