Answer: All labor used exclusively by that department, but only if the labor is applied to the product itself.
Explanation: Process operation is a Manufacturing system that involves the production of products in a continuous flow or pattern. This type of manufacturing involves the use of interconnected sections and units through the use of conveyor belts,chains etc.
Direct labor is a labor that is used specifically for a particular process or activity.
IN A PROCESS OPERATION, THE DIRECT LABOR IS ALL THE LABOR THAT ARE EXCLUSIVELY USED BY THE DEPARTMENT FOR THE PRODUCTION OF THE PRODUCT ITSELF.
The direct labor in a process operation includes all labor used exclusively by that department, but only if it's involved in producing the product directly. For instance, in pizza making, the pizza maker's labor is a direct input into the production process.
Explanation:In a process operation, the direct labor of a production department includes all labor used exclusively by that department, but only if the labor is applied to the product itself.
For example, consider the process of pizza making. The inputs or factors of production in this scenario are the labor (pizzaiolo or pizza maker), raw materials (flour, water, yeast, tomatoes, spices, cheese, and other toppings), and the capital (tools like the peel--a shovel-like wooden tool).
These inputs are transformed into a finished product, the pizza, through the labor of the pizzaiolo.
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Bailey has $8,000 to invest. She has a 24% marginal tax rate and is planning to reinvest her dividends and leave the investment in place for three years. If she can invest the money in taxable securities that earn qualified dividends with a 6% rate of return before tax, how much will she have at the end of the third year?
Considering her 24% marginal tax rate, Bailey's effective return rate will be 4.56%. Using the formula for compound interest, she will have approximately $9328.68 at the end of three years if she starts with a capital of $8000.
Explanation:To start, we need to calculate the after-tax rate of return. Bailey's investments earn a 6% return but since they are taxable, the effective rate is reduced by her marginal tax rate of 24%. The after-tax rate of return is 6% * (1-0.24) = 4.56%.
Then, we calculate the total amount Bailey will have at the end of three years given her initial capital of $8000. This is calculated using the formula for compound interest which is A = P * (1 + r)^n where A is the amount of money accumulated after n years, including interest, P is the principal amount ($8000 in this case), r is the annual interest rate in decimal form (4.56% or 0.0456), and n is the number of years the money is invested or borrowed for (3 in this case).
So, by substituting the given values into the equation, we get A = $8000 * (1 + 0.0456)^3. Calculating this, Bailey will have approximately $9328.68 at the end of three years.
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The stockholders’ equity section of Creighton Company’s balance sheet is shown as follows. CREIGHTON COMPANY As of December 31, 2018 Stockholders’ equity Preferred stock, $10 stated value, 7% cumulative, 300 shares authorized, 50 issued and outstanding $ 500 Common stock, $10 par value, 250 shares authorized, 100 issued and outstanding 1,000 Common stock, class B, $20 par value, 400 shares authorized, 150 issued and outstanding 3,000 Common stock, no par, 150 shares authorized, 100 issued and outstanding 2,200 Paid-in capital in excess of stated value—preferred 600 Paid-in capital in excess of par value—common 1,200 Paid-in capital in excess of par value—class B common 750 Retained earnings 7,000 Total stockholders’ equity $ 16,250 Required Assuming the preferred stock was originally issued for cash, determine the amount of cash that was collected when the stock was issued. Based on the class B common stock alone, determine the amount of the company’s legal capital. Based on the class B common stock alone, determine the minimum amount of assets that must be retained in the company as protection for creditors. Determine the number of shares of class B common stock that are available to sell as of December 31, 2018. Assuming Creighton purchases treasury stock consisting of 25 shares of its no par common stock on January 1, 2019, determine the amount of the no-par common stock that would be outstanding immediately after the purchase. Based on the stockholders’ equity section shown above, can you determine the market value of the preferred stock? rev: 03_06_2018_QC_CS-120790
Answer:
a. $1,100
b. $3,000
c. $3,750
d. 250 shares
e. 75 shares
f. Cannot be found because the expected rate of return is not given
Explanation:
a. Amount of cash collected when preferred stock was issued
Stated Value = $500
Paid in Capital in excess of Stated Value = $600
Cash Collected = $(500 + 600) = $1,100
b. Amount of company's legal capital based on class B common stock alone
Issued shares = 150
Par value = $20
Company's legal capital amount = 150 * 20 = $3,000
c. Minimum amount of assets that must be retained in the company as protection for creditors based on the class B common stock alone
Stated value of common stock = $3,000
Paid in capital in excess of par value = $750
Minimum retain amount = $(3000 + 750) = $3,750
d. Number of shares of class B common stock that are available to sell as of December 31, 2018
Authorized shares = 400
Issued and outstanding = 150
Shares available to sell = 400 - 150 = 250 shares
e. Amount of the no-par common stock that would be outstanding immediately after the purchase of treasury stock as assumed
Shares before purchase = 100
Shares purchased = 25
Outstanding no-par common stock = 100 - 25 = 75 shares
f. Market value of preferred stock
The expected rate of return is required to calculate the market value of preferred stock, but since this is not given in the question, the market value of preferred stock cannot be calculated.
Assuming the required rate of return is 12%
And the dividend rate of preferred stock is 7%
Stated Value or par value = $10
Dividend amount = $10 * 7% = $0.7
Hence the market value of preferred stock = Dividend / Required Rate of Return
= $0.7/0.12 = $5.83
a. Calculation of Preferred stock
Particulars Amount
Issued & outstanding (50*$10) $500
Add: Paid-in capital in excess $600
Total cash collected when stock is issued $1,100
b. The legal capital means the total stated capital for that class of shares.
The Issued & outstanding amount = 150*$20 par value
The Issued & outstanding amount = $3,000
c. The minimum amount of assets to be retained should be based on Class B common stock alone, that is, capital which is $3,000.
d. Number of shares that are available for sell
Particulars Unit
Total number of shares authorized to be issued 400
Less: Total no.of issued & outstanding 150
Number of shares that are available for sell 250
e. The number of no-par shares outstanding immediately after the re-purchase on Jan 1, 2019 is:
Particulars Unit
Number.of no-par common stock 100
Less: No.of no-par shares purchased for 25
treasury & issued but no more outstanding
No of no-par shares outst, after re-purchase 75
f. Calculation of the Market value of Preferred stock
Particulars Amount
Issued & outstanding (50*$10) 500
Add: Paid-in capital in excess 600
Total cash collected when the stock was issued $1,100
Number of shares issued & outstanding shares = 50
Market value at the time of issue = Total cash collected / Number of shares)
Market value at the time of issue = $1100/50
Market value at the time of issue = $22
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If a company is considering the purchase of a parcel of land that was acquired by the seller for $94,000 is offered for sale at $168,000, is assessed for tax purposes at $104,000, is considered by the purchaser as easily being worth $158,000, and is purchased for $155,000, the land should be recorded in the purchaser's books at:
Complete Question:
If a company is considering the purchase of a parcel of land that was acquired by the seller for $94,000, is offered for sale at $168,000, is assessed for tax purposes at $104,000, is recognized by the purchaser as easily being worth $158,000, and is purchased for $155,000, the land should be recorded in the purchaser's books at:
Multiple Choice
$155,000.
$104,000.
$158,000.
$156,500.
$168,000.
Answer:
Since the parcel of land is purchased by the company for $155,000, hence the land should be recorded in the purchaser's books at $155,000.
Explanation:
In case of a fixed asset, a debit of the property account, and a credit to cash or payable funds, or a note payable, based on whether it is a cash transaction, debt acquisition or default, are known as a balance sheet asset.
A provision on the register of deeds and other land rights. Also the preference between parties seeking rights in the same property is decided by a recording statute. See the state of the team, state of a note and status of a non-alert (3 key categories of recordings).
West Corp. issued 20-year bonds two years ago at a coupon rate of 8.6 percent. The bonds make semiannual payments. If these bonds currently sell for 107 percent of par value, what is the YTM
23.6
Explanation:
it become right answer
During the current year, Merkley Company disposed of three different assets. On January 1 of the current year, prior to the disposal of the assets, the accounts reflected the following:Asset Original Cost Residual Value Estimated Life Accumulated Depreciation (straight line)Machine A $21,000 $3,000 8 years $15,750 (7 years)Machine B 50,000 4,000 10 years 36,800 (8years)MachineC 85,000 5,000 15 years 64,000 (12 years)The machines were disposed of during the current year in the following ways:a. Machine A: Sold on January 1 for $5,000 cash.b. Machine B: Sold on December 31 for $10,500; received cash, $2,500, and an $8,000 interest-bearing (12 percent) note receivable due at the end of 12 months.c. Machine C: On January 1, this machine suffered irreparable damage from an accident. On January 10, a salvage company removed the machine at no cost.Prepare journal entries for the above transactions.
Answer:
See attached picture for detailed answer.
Explanation:
See attached picture.
Journal Entries for recording the Merkley Company's transactions are as follows:
January 1:
Debit Sales/Disposal of Assets $5,250
Debit Accumulated Depreciation $15,750
Credit Equipment (Machine A) $21,000
To transfer the assets and accumulated depreciation to Sales/Disposal Account.
Debit Cash $5,000
Credit Sales/Disposal of Assets $5,000
To record the cash receipts from the disposal.
December 31:
Debit Sales/Disposal of Assets $13,200
Debit Accumulated Depreciation $36,800
Credit Equipment (Machine B) $50,000
To transfer the assets and accumulated depreciation to Sales/Disposal Account.
Debit Cash $2,500
Debit Notes Receivable $8,000
Credit Sales/Disposal of Assets $10,500
To record the cash receipts and notes receivable from the disposal.
January 1:
Debit Sales/Disposal of Assets $21,000
Debit Accumulated Depreciation $64,000
Credit Equipment (Machine C) $85,000
To transfer the assets and accumulated depreciation to Sales/Disposal Account.
Data Analysis:
Asset Original Cost Residual Value Estimated Life Accumulated
Depreciation
(straight line)
Machine A $21,000 $3,000 8 years $15,750 (7 years)
Machine B 50,000 4,000 10 years 36,800 (8 years)
Machine C 85,000 5,000 15 years 64,000 (12 years)
Machine A on January 1:
Sales of Assets = $5,000 (cash)
Book value = $5,250 ($21,000 - $15,750)
Loss on sale = $250 ($5,250 - $5,000)
Sales/Disposal of Assets $5,250 Accumulated Depreciation $15,750 Equipment (Machine A) $21,000
Cash $5,000 Sales/Disposal of Assets $5,000
Machine B on December 31:
Sales of Assets = $10,500 (Cash $2,500 Notes Receivable $8,000)
Book value = $13,200 ($50,000 - $36,800)
Loss on sale = $2,700 ($13,200 - $10,500)
Sales/Disposal of Assets $13,200 Accumulated Depreciation $36,800 Equipment (Machine A) $50,000
Cash $2,500 Notes Receivable $8,000 Sales/Disposal of Assets $10,500
Machine C on January 1:
Sales of Assets = $0
Book value = $21,000 ($85,000 - $64,000)
Loss on sale = $21,000 ($21,000 - $0)
Sales/Disposal of Assets $21,000 Accumulated Depreciation $64,000 Equipment (Machine A) $85,000
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Retained Earnings at the beginning and ending of the accounting period was $850 and $1,800, respectively. If revenues were $3,300 and dividends paid to stockholders were $750, expenses for the period must have been:
A. $1,650.
B. $1,000.
C. $ 650.
D. $1,450.
Answer:
$1,600 (Not given in the options)
Explanation:
Retained earnings is the accumulated balance of an entity's net income over the years. Change between the opening retained earnings and the closing retained earnings of an entity is due to the net income/loss for the period and amount of dividend declared and paid during the period.
Opening retained earnings + net income - dividend = closing retained earnings
850 + net income - 750 = 1800 (all amounts are in $)
net income = 1800 + 750 - 850
= $1700
Net income is the difference between revenue and expenses.
Hence the expenses for the period
= $3,300 - $1,700
= $1,600
Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 each month. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. (Do not round intermediate calculations. Round "CM ratio" to the nearest whole percentage (i.e., 0.234 should be entered as "23") and other answers to the nearest whole number.)
Answer:
1. New CM RATIO = 0.4
2. BEP (unit sales) = 21,000 units
BEP (in dollars) = $630,000
Explanation:
The original data table is attached.
1. CM Ratio:
The contribution margin is what is left after all variable expenses is subtracted from sales.
The CM Ratio is that amount divided by sales. So we can say:
CM Ratio = (Sales - Var Expenses)/Sales
From the table, we see sales as 585,000 and variable expenses as 409,500
This is original data, but we are given that $3 variable expense per unit is LESS. So, we take that into account and find new variable expense.
Since 19,500 units accounts to variable expense of 409,500:
Var Exp Per Unit = 409,500/19,500 = 21
Now, $3 less per unit, so Var Exp Per Unit (NEW) = 21 - 3 = 18
So, total Var Exp (NEW) = 19,500 units * 18 per unit = 351,00
New CM RATIO = (585000 - 351000)/585000 = 0.4
2. BEP (units) and BEP (dollars)
The Break-Even Point has formula:
BEP (units) = Total fixed cost/ CM Per Unit
Fixed Cost previously was 180,000. Now, 72,000 increased because of automation. Hence,
Fixed Cost (NEW) = 180000 + 72000 = 252,000
Also:
CM Per Unit is Sale Price Per Unit - Var Cost Per Unit
We know Sale Price is $30 and NEW VAR COST PER UNIT is 18
So, CM Per Unit = 30 - 18 = 12
BEP (units) = 252,000/12 = 21,000 units
BEP (in dollars) = Total Fixed Cost/CM Ratio = 252000/0.4 = $630,000
81. In a lottery, there are 250 prizes of $5, 50 prizes of $25, and ten prizes of $100. Assuming that 10,000 tickets are to be issued and sold, what is a fair price to charge to break even
Answer:
the price of the ticket should be $0.35/ticket
Explanation:
since each ticket in a lottery are equally likely to be chosen, we define the random variable P= gains from the lottery .Then the expected gain is :
E(P) = probability of getting the $5 prize * $5/ticket + probability of getting the $25 prize * $25/ticket + probability of getting the $100 prize * $100/ticket = 250/10000 * $5/ticket + 50/10000 * $25/ticket + 10/10000 * $100/ticket = $0.35/ticket
then if all lottery tickets have the same prize ( the lottery tickets are not segmented according to the prizes, where more expensive ticket is associated with the highest prize), then in order to break even the cost of the ticket should be the same that the revenue we get from it , thus
Cost of the ticket = revenue of the ticket = $0.35/ticket
The fair price to charge to break even is 0.35.
The calculation is as follows:5 250 ÷ 10,000 = 0.0125 0.125
25 50 ÷ 10,000 = 0.005 0.125
100 10 ÷ 10,000 = 0.001 0.1
Price 0.35
Therefore we can conclude that The fair price to charge to break even is 0.35.
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Candice is a jewelry shop owner, specializing in beaded necklaces. For each of the following inputs, classify each item as a variable input or a fixed input in the long run.
i. Shipping
ii. Chairs
iii. Upper Managment salary
iv. Beads
v. Hourly Labour
vi. Computers
vii. 2 years Lease on office and rental space
This evaluation categorizes shipping, beads, and hourly labor as variable inputs, while chairs, upper management salary, computers, and 2 year lease on office and rental space are classified as fixed inputs in a jewelry shop's production.
Explanation:In the context of business and economics, variable inputs are those that can be adjusted or changed based on the production needs, while fixed inputs are those that remain constant regardless of the production level. In the long run, all factors of production are variable. However, for the exercise, we consider a certain level of fixedness.
Shipping - Variable Input (as it changes with the number of goods sold)Chairs - Fixed Input (since the number of chairs would likely remain constant regardless of production) Upper Management salary - Fixed Input (Salaries for permanent staff are usually considered fixed unless they work overtime or their salary is performance-based)Beads - Variable Input (as the quantity needed would vary with the number of necklaces being made)Hourly Labour - Variable Input (as it alters based on the hours of work needed)Computers - Fixed Input (as they are a one-time purchase and would not change with production)2 years Lease on office and rental space - Fixed Input (since it's a constant cost over its term, irrespective of production)Learn more about Fixed and Variable Inputs here:https://brainly.com/question/32601953
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Loyal Pet Company expects to sell 7 comma 000 beefy dog treats in January and 5 comma 000 in February for $ 2.00 each. What will be the total sales revenue reflected in the sales budget for those months?
Answer:
January:
Sales revenue= $14,000
February:
Sales revenue= $10,000
Explanation:
Giving the following information:
Sales:
January= 7,000 units
February= 5,000 units
Selling price= $2
The sales revenue reflected in the sales budget is the result of multiplying the number of units sold with the selling price.
January:
Sales revenue= 7,000*2= $14,000
February:
Sales revenue= 5,000*2= $10,000
Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine-hours best explain the company's utilities cost. The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,200 machine-hours, with the following data being available for the first six months of the year:
Month Utilities Machine Hours
January $8,700 800
February $8,360 720
March $8,950 810
April $9,360 920
May $9,625 950
June $9,150 900
Using the high-low method, the utilities cost associated with 1,110 machine hours would be _____.
Answer:
The utilities cost associated with 1,110 machine hours will be $10,505.
Explanation:
High Low method is a way to calculate the variable and fixed cost element of total cost using lowest level of activity and its cost and highest level of activity and its cost.
In this example The Highest activity of Machine hour is in the month of May and Lowest activity is in February.
Using high low method:
Variable cost = ( Highest activity cost - Lowest activity cost ) / ( Highest activity - Lowest activity )
Variable cost = ( Cost in May - Cost in February ) / ( Machine hours in May - Machine Hours in February)
Variable cost = ( $9,625 - $8,360 ) / ( 950 - 720 )
Variable cost = $1,265 / 230
Variable cost = $5.50 per machine hour
Fixed Cost = $8360 - ( 720 x $5.5) = $8360 - $3960 = $4,400
Utility cost of 1110 units = $4,400 + ( 1,110 x 5.5 ) = $4400 + $6,105 = $10,505
Olivia deposited $800 at her local credit union in a savings account at the rate of 6.2% paid as simple interest. She will earn interest once a year for the next 7 years. If she were to make no additional deposits or withdrawals, how much money would the credit union owe Olivia in 7 years?
Answer:
$1,147.20.
Explanation:
The total amount accrued for principal plus interest in the calculation simple interest
= principal * (1+ rate * number of years)
= $800 *(1+ 6.2% * 7)
= $1,147.20.
A restaurant is considering adding fresh brook trout to itsmenu. Customers would have the choice of catching theirown trout from a simulated mountain stream or simply ask-ing the waiter to net the trout for them. Operating thestream would require $11,925 in fixed costs per year.Variable costs are estimated to be $6.80 per trout. The firmwants to break even if 900 trout dinners are sold per year.
What should be the price of the new item?
Answer:
Selling price = $20.05
Explanation:
The break even point is the level of activity where the total cost of is exactly equal to the total revenue. At this point, the business makes no profit and no loss, because the total contribution is also equal to the total fixed costs.
Contribution is the excess of sales revenue over variable cost
Total contribution = (S.p - VC per unit) × unit sold
So we can determine the selling price per unit by equating the total contribution to the the total fixed cost as follows:
Step 1
Determine the total contribution
= ( S.P - 6.80) × 900
Step 2
Equate the total contribution to the total fixed cost and solve for S.P
(S.P - 6.80) × 900 = 11,925. Lets substitute S.P with x
(X-6.80) × 900 = 11,925
900X -6,120 = 11,925
900X = 11,925 + 6,120
900X = 18045
X = 18,045/900
X = $20.05
Selling price = $20.05
Elaine is a secretary for a business. One day a customer comes in to file a new contract while Elaine is seated at her boss’s desk. The customer assumes Elaine is a person of authority, and Elaine is knowledgeable enough to help the customer file the contract.
Which response aligns best with this situation?
a) Enforceable via factor agent
b) Enforceable or unenforceable - no agency
c) Enforceable via employee agent
d) Enforceable or unenforceable w/ agency
Answer:
The answer is c:
Enforceable via employee agent
Explanation:
The definition of agency law deals with agent-principal relationships; that is a relationship where one party has the legal authority to act in place of another. Relationships that are commonly associated with agency law include employer-employee, administrator-decedent or executor, and guardian-ward.
Agreements that result in the formation of agency-type relationships can be implied or express, and both the principal and the agent can be an entity (such as partnership or corporation) or individual.
Here in the given situation, since, Elaine is an employee of the business and knowledgeable enough to deal with the contract filing, it is implied that she is acting as an employee agent, that she can help the customer in filing the contract.
Final answer:
The contract is enforceable via Elaine as an employee agent, since she acted within the scope of her employment and the customer reasonably assumed she had the authority to file the contract on behalf of the company.
Explanation:
Considering the situation where Elaine, a secretary, is assumed to be a person of authority by a customer and helps the customer file a contract, the response that aligns best with this situation is enforceable via employee agent. As an employee of the company who is knowledgeable and has acted within the scope of her employment by helping a customer file a contract, it is implied that Elaine has the authority to perform such tasks. In legal terms, this concept is known as the 'apparent authority' or 'ostensible authority' where the actions of the employee bind the employer because the customer reasonably believed Elaine had the authority to act on behalf of the company.
Requirement 4. Zeke's top management is deciding whether to embark on a $ 190 comma 000 advertising campaign. The marketing firm has projected annual sales volume to increase by 18% as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on the company's annual operating income?
Answer: It will increase the company's annual operating income by 18%.
Explanation: Operating income is an accounting and finance term which is known as the total amount generated by a business Organisation after the total costs that are associated with the operations and the tax have been deducted from the total revenue generated during the period under review.
AN OPERATING INCOME CAN BE CALCULATED YEARLY OR ANNUALLY (ANNUAL OPERATING INCOME).
The higher the operating income the higher the profit margin earned by the business Organisation.
Final answer:
An advertising campaign increasing sales by 18% would boost the company's operating income to $16,400 from $15,000.
Explanation:
To determine the effect of the advertising campaign on the company's annual operating income, we need to consider the increase in sales volume and its impact on revenue, as well as any associated costs.
First, we calculate the increase in revenue resulting from the increase in sales volume:
Increase in revenue=Initial sales × Percentage increase
Then, we calculate the impact of the advertising campaign on the operating income:
Impact on operating income =Increase in revenue −Advertising campaign cost
Impact on operating income=Increase in revenue−Advertising campaign cost
Profit = Revenue - Costs
Given: Existing Profit = $15,000, Increase in Sales = 18%
New Profit after Advertising = Existing Profit + (18% * Existing Profit) - $190,000
Therefore, the company's annual operating income would be $16,400.
Naomi would like to reorder the worksheets in a workbook. What is the easiest method of doing this?
Answer and Explanation:
In Microsoft Office Excel, changing the order of the worksheets in a workbook only takes to left-click on the page the user wants to move, hold the left click and drag it to the position of the workbook desired. The user can also right-click on the worksheet and select "Move or copy" from the window dialog displayed then select where the worksheet should be placed.
Answer:
A) drag and drop
Explanation:
To rearrange the order of the sheets in a workbook, simply click on the workbook, hold, and drag it to its desired location.
It costs Bonita Company $17.9 of variable costs and $8.0 of fixed costs to produce its product that sells for $39. Carla Vista Company, a foreign buyer, offers to purchase 3800 units at $23.1 each. If the special offer is accepted and produced with unused capacity, net income will:__________
Answer:
Decrease by $10,640
Explanation:
The unused capacity ordinarily will not change the fixed component of cost but will increase the variable cost hence the net income increase or decrease is know as net contribution margin. However, given the fixed cost as a unit cost, it will be affected by the offer of accepted.
Net income is the result of sales less cost where the cost is made of the fixed and variable portions.
Net income increase/(decrease)
= 23.1 (3800) - 3800(17.9 + 8)
=3800( 23.1 - 25.9)
= ($10,640)
Accepting the offer will result in a decrease in net income
A customer wants to implement a wireless network in a historic location, but is concerned about the structural and aesthetic impact to the facility. Which benefit of using wireless mesh addresses these concerns?
A. Power is required only at the installation location.
B. The APs do not have LED lights.
C. More wireless channels can be supported.
D. APs do not need network connections.
Answer:
D-APs do not need network connections.
Explanation:
The benefit of using wireless mesh which addresses the concerns of the
customer who wants to implement a wireless network in a historic location, but is concerned about the structural and aesthetic impact to the facility is that APs do not need network connections because it is easily set up and does not required an access point.
Assume Oliver wants to earn a return of 10.50% and is offered the opportunity to purchase a $1,000 par value bond that pays a 8.75% coupon rate (distributed semiannually) with three years remaining to maturity. The following formula can be used to compute the bond’s intrinsic value:
Intrinsic ValueIntrinsic Value = A/(1+C)^1+A/(1+C)^2+A/(1+C)^3+A/(1+C)^4+A/(1+C)^5+A/(1+C)^6+B/(1+C)^6
Based on this equation and the data, it is _______ (unreasonable/reasonable) to expect that Oliver’s potential bond investment is currently exhibiting an intrinsic value less than $1,000.
Now, consider the situation in which Oliver wants to earn a return of 11.75%, but the bond being considered for purchase offers a coupon rate of 8.75%. Again, assume that the bond pays semiannual interest payments and has three years to maturity. If you round the bond’s intrinsic value to the nearest whole dollar, then its intrinsic value of _______ (rounded to the nearest whole dollar) is _______ (equal to/greater than/less than) its par value, so that the bond is ______ (trading at premium/par/discount).
Answer and Explanation:
1.
A is semi annual coupon=43.75
B is par or face value=1000
C is semi annual required return=5.25%
2.
Reasonable because coupon rate is less than ytm
3.
=(8.75%*1000)/11.75%*(1-1/(1+11.75%/2)^6)+1000/(1+11.75%/2)^6=925.95
4.
Less than
5.
Discount
For variable A
coupon rate = 8.75%
semiannually = [tex]\frac{8.75}{2}[/tex] = 4.375%
Semiannual coupon rate = 4.375% * 1000
= $43.75
For variable B
Bond par value = 1000
For variable C
Coupon rate = 10.5% annually
Semiannually = [tex]\frac{10.5}{2} =5.25[/tex]%
She wants a rate of 11.75% annually
Semiannually = [tex]\frac{11.75}{2} = 5.875%[/tex]
The time to maturity = 3 years
Semi annual period rate to maturity = 5.25
[tex]\frac{43.75}{1.05875} +\frac{43.75}{1.05875^2} +\frac{43.75}{1.05875^3} +\frac{43.75}{1.05875^4} +\frac{43.75}{1.05875^5} +\frac{43.75}{1.05875^6} +\frac{1000}{1.05875^6}[/tex]
= 41.32+39.029+36.8634.82+32.88+31.07+709.9
= 925.948
From the data and the calculation above we can see that the intrinsic value is $925.9 which is less than the par value of $1000.
This is reasonable given that the coupon rate is lower. Rounding up the intrinsic value we see that it is lower than the par value. Therefore this is a discount.
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Depreciation represents The consumption of capital in the production process. A loss of productive capability as a result of the inefficient use of resources. Wasted capital. Gross investment plus net investment.
Answer:
The consumption of capital in the production process.
Explanation:
Depreciation can be defined as the decrease of the recorded cost of a fixed asset in a systematic way until the value of the asset becomes zero or negligible.
Depreciation is referred to as 'consumption of physical capital'. It is the difference that exists between gross investment and net investment.
Examples of fixed assets include: buildings, furniture, office equipment, machinery. A land is the only oddity. A land cannot be depreciated as the value of land appreciates with time.
Final answer:
Depreciation is the loss of value in capital goods due to wear and tear or obsolescence. It's measured as the cost of production and subtracted from gross investment to determine net investment, impacting the overall capital stock of an economy. Depreciation also represents a significant percentage of Gross Domestic Income.
Explanation:
Depreciation is an important concept in economics and accounting that refers to the wear and tear or obsolescence of capital goods like machinery and buildings during the production process. As capital is utilized, it gradually loses value due to factors such as physical deterioration and technological advancements. This reduction in value is calculated as depreciation and is reported by entities such as the Commerce Department as the "consumption of fixed capital".
The concept of gross and net investment relates directly to depreciation. Gross investment represents the total amount invested in new capital, while net investment is obtained by subtracting depreciation from gross investment. Positive net investment indicates that the capital stock of an economy is growing, while negative net investment signals a decline in the capital stock.
Depreciation is not just a measure of the decline in value; it also represents the cost of production, as it is part of the price for goods and services. Thus, it contributes to the income generated in the production process. In macroeconomic terms, depreciation helps to understand the lifespan of various capital goods, and it accounted for about 13% of Gross Domestic Income (GDI) in 2008.
Heath Food Corporation’s bonds have 7 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 8%. They pay interest annually and have a 9% coupon rate. What is their current yield?
Answer:
8.55%
Explanation:
For computing the current yield first we have to determine the present value by applying the present value formula which is shown below:
Given that,
Future value = $1,000
Rate of interest = 8%
NPER = 7 years
PMT = $1,000 × 9% = $90
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
After solving this, the present value is $1,052.06
Now the current yield is
= PMT ÷ PV
= $90 ÷ $1,052.06
= 8.55%
The current yield of the bond is 8%.
Explanation:The current yield is the annual interest payment of a bond divided by its current market price. In this case, the bond has a coupon rate of 9% and a face value of $1,000. The yield to maturity is 8%. Since the bonds pay interest annually, the annual interest payment is -
= $1,000 * 9%
= $90.
To find the current yield, we need to determine the current market price of the bond. We can use the following formula:
Current yield = Annual interest payment / Current market price.
Rearranging the formula, we get:
Current market price = Annual interest payment / Current yield.
Substituting the values, we have:
Current market price
= $90 / 8%
= $1125.
Therefore, the current yield of the bond is $90 / $1125, which equals 8%.
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You hold a diversified portfolio consisting of a $10,000 investment in each of 15 different common stocks (i.e., your total investment is $150,000). The portfolio beta is equal to 1.2 . You have decided to sell one of your stocks which has a beta equal to 1.4 for $10,000. You plan to use the proceeds to purchase another stock which has a beta equal to 1.3 . What will be the beta of the new portfolio? Show your answer to 2 decimal places.
Answer:
1.19
Explanation:
The beta of a portfolio can be simply determined by a weighted average of each individual investment's beta. Thus, the portfolio beta after selling $10,000 of a stock with beta equal to 1.4 is:
[tex]B_1 = \frac{150,000*1.2-10,000*1.4}{140,000}\\B_1 =1.185714[/tex]
The beta of a new portfolio after purchasing $10,000 worth of a new stock with beta equal to 1.3 is:
[tex]B_2 =\frac{1.185714*140,000+1.3*10,000}{150,000}\\B_2=1.1933[/tex]
The beta of the new portfolio is 1.19.
Eckelberger Products Inc. makes high-speed recorders with high-speed scanning. The small company has been growing at an average rate of 70% per year for the past 4 years. The CEO asked you to convert the past growth rate into a daily rate for its annual report. If the past growth rate was an effective rate, what was the effective growth rate daily
Answer:
The effective growth rate daily is 0.1455%
Explanation:
The effective growth rate daily can be computed using the below daily growth rate formula:
effective daily rate=(1+annual rate)^1/365-1
annual growth rate as given in the question is 70%
effective daily growth rate=(1+0.70)^(1/365)-1
effective daily growth rate =1.001454833 -1
effective daily growth rate=0.001455
effective daily growth rate=0.145483327 %
effective daily growth rate =0.1455% approximately
The fact that the business is growing at this rate on daily basis is good indicator of business success which must be leveraged upon in the future in order to take the business even to greater heights.
However,the validity of the annual rate of 70% is also very important,whatever parameters used in arriving at 70% needs to be rechecked in order to be on the safe side.
To convert the past growth rate into a daily rate, we divide the average annual growth rate by the number of days in a year. The effective daily growth rate is approximately 0.51%.
Explanation:To convert the past growth rate into a daily rate, we need to divide the average annual growth rate by the number of days in a year.
First, we need to calculate the effective annual growth rate. Since the company has been growing at an average rate of 70% per year for the past 4 years, we can use the compound interest formula:
Effective rate = (1 + Growth rate) ^ Number of years - 1
Using the formula, we can find the effective annual growth rate:
Effective rate = (1 + 0.70) ^ 4 - 1 = 2.8704 - 1 = 1.8704
Next, we divide the effective annual growth rate by the number of days in a year (365) to find the effective daily growth rate:
Effective daily growth rate = 1.8704 / 365 = 0.0051166 (approximately 0.51%)
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In an attempt to improve the product, a company that manufactures screwdrivers discusses the modification of each attribute, such as replacing the wooden handle with plastic, providing torque power, adding different screw heads, and so on. This creativity technique is called ________.
A) attribute listing
B) mind mapping
C) morphological analysis
D) lateral analysis
E) reverse analysis
Answer:
The correct answer is letter "C": morphological analysis.
Explanation:
Morphological analysis is a mathematical approach consisting of solving problems using all variables possible which are to be combined and analyzed. When it comes to business, morphological analysis is helpful to outline several possible outcomes given a product so after combining those variables the best result can be selected. Often, more than one result is chosen to increase the diversity of products from where consumers can select.
In an attempt to improve the product, a company that manufactures screwdrivers discusses the modification of each attribute, such as replacing the wooden handle with plastic, providing torque power, adding different screw heads, and so on. This creativity technique is called attribute listing.
The creativity technique described in the question is called attribute listing. This technique involves brainstorming by listing all the various attributes of a product and then considering how each attribute can be improved or modified.
For example, in the context of manufacturing screwdrivers, the company could list attributes such as the handle material, screw head types, and additional functionalities like torque power.
By evaluating and changing each attribute, they aim to enhance the overall product.
In its income statement for the year ended December 31, 2022, Blossom Company reported the following condensed data.
Salaries and wages expenses $567,300
Loss on disposal of plant assets $101,870
Cost of goods sold 1,204,140
Sales revenue 2,696,200
Interest expense 86,620
Income tax expense 30,500
Interest revenue 79,300
Sales discounts 195,200
Depreciation expense 378,200
Utilities expense 134,200
Prepare a multiple-step income statement. (List other revenues before other expenses.)
Answer:
Explanation:
Sales revenue = 2696200
less: sales discount = (195200)
Net sales 2501,000
Less: Cost of goods sold = (1204,140)
Gross profit 1296860
Less: Operating expense
salaries & wages expense 567300
Utilities expense 134200
Depreciation expense 378200
=(1079700)
Profit before interest and taxes 217160
Less: Interest expense = (86620)
130540
Less: tax expense =(30500)
Profit after interest and taxes 100040
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To prepare a multiple-step income statement, categorize revenue and expenses and calculate the gross profit, operating income, and net income.
Explanation:To prepare a multiple-step income statement for Blossom Company, we need to categorize the revenue and expense items into different sections. First, we calculate the gross profit by subtracting the cost of goods sold from the sales revenue. Then, we subtract the operating expenses such as salaries and wages expenses, depreciation expense, and utilities expense from the gross profit. Next, we add the interest revenue and subtract the interest expense to calculate the operating income. Finally, we subtract the income tax expense and any other non-operating expenses, such as the loss on disposal of plant assets, to arrive at the net income.
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Campus Theater adjusts its accounts every month. The company's unadjusted trial balance dated August 31, current year, appears as follows. Additional information is provided for use in preparing the company’s adjusting entries for the month of August. (Bear in mind that adjusting entries have already been made for the first seven months of current year, but not for August.)
CAMPUS THEATER
UNADJUSTED TRIAL BALANCE
AUGUST 31, CURRENT YEAR
Cash $ 24,000
Prepaid film rental 37,440
Land 144,000
Building 201,600
Accumulated depreciation: building $16,800
Fixtures and equipment 43,200
Accumulated depreciation: fixtures and equipment 14,400
Notes payable 216,000
Accounts payable 5,280
Unearned admissions revenue (YMCA) 1,200
Income taxes payable 5,688
Capital stock 48,000
Retained earnings 55,932
Dividends 18,000
Administrative Revenue 366,240
Concessions revenue 17,220
Salaries expense 82,200
Film rental expense 113,400
Utilities expense 11,400
Depreciation expense: building 5,880
Depreciation expense: fixtures and equipment 5,040
Interest expense 12,600
Income taxes expense 48,000
$ 746,760 $746,760
Other Data
Film rental expense for the month is $18,240. However, the film rental expense for several months has been paid in advance.
The building is being depreciated over a period of 20 years (240 months).
The fixtures and equipment are being depreciated over a period of five years (60 months).
On the first of each month, the theater pays the interest that accrued in the prior month on its note payable. At August 31, accrued interest payable on this note amounts to $1,800.
The theater allows the local YMCA to bring children attending summer camp to the movies on any weekday afternoon for a fixed fee of $600 per month. On June 28, the YMCA made a $1,800 advance payment covering the months of July, August, and September.
The theater receives a percentage of the revenue earned by Tastie Corporation, the concessionaire operating the snack bar. For snack bar sales in August, Tastie owes Campus Theater $2,700, payable on September 10. No entry has yet been made to record this revenue. (Credit Concessions Revenue.)
Salaries earned by employees, but not recorded or paid as of August 31, amount to $2,040. No entry has yet been made to record this liability and expense.
Income taxes expense for August is estimated at $5,040. This amount will be paid in the September 15 installment payment.
Utilities expense is recorded as monthly bills are received. No adjusting entries for utilities expense are made at month-end.
Required:
For each of the numbered paragraphs, prepare the necessary adjusting entry.
Answer:
Debit Rental expense $18,240 Credit Prepaid Rent expense $18,240
Debit depreciation$840 Credit Accumulated depreciation on Building $840
Debit depreciation $720 Credit Accumulated depreciation on fixtures and equipment $720
Debit Interest expense $1,800 Credit Accrued interest payable $1,800
Debit Unearned admission Revenue $600 Credit Revenue $600
Debit Accounts Receivable $2,700 Credit Concession Revenue $2,700
Debit Salaries expense $2,040, Credit Salaries Payable $2,040
Debit Income tax Expense $5,040 Credit Current Tax Payable $5,040
Debit Utility expense $12,600 Credit Utility bills $12,600
Explanation:
Depreciation : Building = 201,600/240 = $840
The necessary adjusting entries for Campus Theater's accounts for the month of August are provided.
Explanation:To prepare the necessary adjusting entries, we need to consider the additional information provided. Here are the adjusting entries for each numbered paragraph:
To record the film rental expense for the month of August, we need to debit Film Rental Expense and credit Prepaid Film Rental for $18,240.To record the monthly depreciation expense for the building, we need to debit Depreciation Expense: Building and credit Accumulated Depreciation: Building for $728.To record the monthly depreciation expense for the fixtures and equipment, we need to debit Depreciation Expense: Fixtures and Equipment and credit Accumulated Depreciation: Fixtures and Equipment for $840.Learn more about Adjusting entries here:https://brainly.com/question/28867174
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Gregory Trout has just received a memo explaining that because of his department's success with the newly developed Trout, Inc., that his request for three new employees has been approved. Gregory now faces the challenge of working with the areas of human resource management in recruiting, selecting, training and maintaining effective employees.
In recruiting and selecting employees for the new positions, Gregory will apply which human resourcemanagement goal?
a.Implementing strategies
b.Managing talent
c.Maintaining an effective workforce
d.Finding the right people
e.Controlling strategies
Answer:
Right choice: d.
Explanation:
As the George's area of expertise had effectively fulfilled the requirements of the new evolved Trout , Inc. IT may happen that work will be expanded. This will require Goerge to build the workforce those are having ranges of abilities that coordinates the Trout, Inc. needs. Hence, while enlisting and selecting for the new position Georgy will apply HRM objective of finding the correct arrangement of individuals for the necessary undertaking.
Consider a $2,700 deposit earning 6 percent interest per year for 9 years. How much total interest is earned on the original deposit (excluding interest earned on interest)?
Answer:
Total interest earned on the original deposit=$403.593
Explanation:
Total Interest earned after 6 years using compound Interest:
[tex]FV=PV(1+i)^n[/tex]
Where:
PV is the deposit amount
i is the interest Rate
[tex]FV=\$2,700(1+0.06)^9[/tex]
FV=$4561.593
Total Interest earned after 6 years=FV-PV
Total Interest earned after 6 years=$4561.593-$2,700
Total Interest earned after 6 years=$1861.593
Total Interest earned after 6 years using single Interest:
Total Interest=$2,700*0.06*9
Total Interest =$1458
Total interest earned on the original deposit=Total Interest earned after 6 years-Total Interest
Total interest earned on the original deposit=$1861.593-$1458
Total interest earned on the original deposit=$403.593
You have just leased a car that has monthly payments of $385 for the next 5 years with the first payment due today. If the APR is 7.32 percent compounded monthly, what is the value of the payments today?
Answer:
Total Value =5563.131709
Explanation:
using the annuity formula to find out the present value of lease rentals
p=R*(1-(1+i)^-n)/i
Total rental monthly =5*60 = 60
I=7.32% monthly
R=385$ monthly
Since we have:
Value of the first is same i.e $385
Value of remaining 59 payments as follows
P=385*(1-(1+7.32%)^-59)/7.32%
P=385*(1-0.015482491 )/7.32%
P=385* 0.984517509 /7.32%
P=385*13.44969275
P=5178.131709
Value of 59 rental = 5178.131709
Add: Value of 1st rental = 385
Total Value =5563.131709
4. Consider the following information for a closed economy. Y = $12 trillion, C = $8 trillion, G = $2 trillion, Spublic = $-0.5 trillion and T = $2 trillion. 1. What is private savings for this economy? 2. What is investment spending for this economy? 3. What are the transfer payments for this economy? 4. Is there a government budget deficit or surplus for this economy? PreviousNext
Answer:
a. Private savings= $2.5 trillion
b. Investment = $2 trillion
c. Transfer payment = $0.5 trillion
d. The economy has a budget deficit of $0.5 trillion.
Explanation:
Y = $12 trillion
C = $8 trillion
G = $2 trillion
Spublic = $-0.5 trillion
T = $2 trillion
(a) Private Savings =Y + TR -C - T., where Y is GDP, TR is Transfer Payment, C is consumption expenditure and T are taxes.
Private savings = 12 + 0.5 - 8 -2
Private savings = $2.5 trillion.
(b) Investment= Y - C - G
= 12 - 8 - 2
Investment= $2 trillion.
(c) Solve for Transfer payment(TR) by rearranging public saving: T-G-TR = S(public).
TR = T - G - S(public)
= 2 - 2 - (-.5)
= 0.5 trillion
The transfer payment is 0.5 trillion dollar.
(d) To know whether there's budget surplus or not, we find the budget balance = T - G - TR
= 2 - 2 - 0.5
= -0.5 trillion.
This shows that there's a budget deficit of 0.5 trillion dollar.