To advise Kyle on whether he should use the dealer financing or take the rebate and use the financing from the bank, we compare the costs of the two options. The adjusted APR for the dealer financing is 1.92%, which is lower than the financing from the bank. Therefore, Kyle should use the dealer financing option.
Explanation:To advise Kyle on whether he should use the dealer financing or take the rebate and use the financing from the bank, we need to compare the costs of the two options. Here's how we can calculate the adjusted APR for the dealer financing and determine which option is more advantageous:
Dealer Financing:Calculate the total cost of the loan from the dealer by multiplying the monthly payment by the number of months: $649 * 60 = $38,940.Calculate the effective loan amount by subtracting the down payment from the negotiated price: $38,000 - $1,000 = $37,000.Find the monthly interest rate by dividing the APR by 12: 2% / 12 = 0.1667%.Calculate the monthly interest paid by multiplying the loan amount by the monthly interest rate: $37,000 * 0.1667% = $61.67.Calculate the adjusted monthly payment by adding the monthly interest to the original monthly payment: $649 + $61.67 = $710.67.Calculate the adjusted APR by dividing the adjusted monthly payment by the effective loan amount: ($710.67 / $37,000) * 100 = 1.9219%.Bank Financing:Calculate the monthly interest rate by dividing the APR by 12: 4% / 12 = 0.3333%.Calculate the monthly interest paid by multiplying the loan amount by the monthly interest rate: $37,000 * 0.3333% = $123.32.Calculate the adjusted monthly payment by adding the monthly interest to the original monthly payment: $649 + $123.32 = $772.32.Based on the calculations, the adjusted APR for the dealer financing is 1.92%. Therefore, Kyle should use the dealer financing option as it offers a lower adjusted APR compared to the financing from the bank.
For a given class of similar-risk securities, what does each of the following yield curves reflect about interest rates: (a) downward sloping, (b) upward sloping, and (c) flat?
What is the "normal" shape of the yield curve?
Answer:
The slope of the yield curves predicts future interest rate changes and economic activity.
Explanation:
a) The Upward Sloping Curves indicates yields on longer-term bonds may continue to rise, predicting an economic expansion.
b) The downward sloping curves suggests yields on longer term bonds may continue to fall, predicting an economic recession.
c) The flat yield curve arise from normal or inverted yield curve and is in transitioning from recession to recovery.
The upward sloping curve is the normal shape of the yield curve
The interest charge is the price of money charged to a borrower at the time of loan sanction. The yield curve is a plot of interest rates and maturity.
For a given class of similar risk securities the following yield curves represents:
(a) Downward-sloping:
It indicates an economic slump and is inverted. In this, the brief-term interest rates exceed the high term rates.It may continue to fall.(b) Upward sloping:
In this type, the long term bonds may proceed to increase it symbolizes of economic development.It is also called a normal yield curve.(c) Flat:
It designates a similar yield over all the maturity.It arises from the inverted or the normal curve and transits from collapse to recovery.To learn more about yield curves follow the link:
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While personal selling can be an important way to communicate with customers, the problem with the sales orientation toward marketing is that _____________________________.
Answer:
The correct answer is letter "D": it focuses too much on tactics to get consumers to buy without considering what products consumers might need.
Explanation:
Sales orientation towards marketing implies following a set of steps to get to consumers methodically. The problem with this approach is that sets aside the human side of the customer. It does not focus on what the consumer needs but in how the sale process should be carried out.
Venus Company has developed the following flexible budget formula for annual indirect labor cost:
Total annual cost = $12,000 + $0.25 per unit
Operating budgets for the current month are based on 6,000 units.
Indirect labor costs included in this monthly planning budget are ____.
A. $1,250 B. $2,500 C. $3,200 D. $13,250
Answer:
B. $2,500
Explanation:
Given that
Total annual cost = $12,000 + $0.25 per unit
The $12,000 denotes the annual cost, so the monthly cost is
= $12,000 ÷ 12 months
= $1,000
And the number of units is 6,000
Now placing these values to the equation above
= $1,000 + 6,000 units × $0.25 per unit
= $1,000 + $1,500
= $2500
The indirect labor cost included in the monthly planning budget is $13,250.
The annual indirect labor cost included in this monthly planning budget can be calculated using the given flexible budget formula and the number of units in the monthly operating budget. The formula is: Total annual cost = $12,000 + $0.25 per unit.
So for the current month's operating budget based on 6,000 units, the indirect labor cost would be:
Indirect labor cost = $12,000 + ($0.25 * 6,000) = $12,000 + $1,500 = $13,500.
Therefore, the correct answer is D. $13,250.
Analysts and theorists have debated over the different factors that caused the subprime mortgage meltdown. According to your understanding of the crisis, which of the following factors led to the financial crisis? Check all that apply. a. Home buyers opted for traditional fixed-rate mortgages to avoid any payment delinquency b. Regulations were relaxed, leading to nonqualifying mortgages getting approved for loans. c. Real estate appraisers and rating agencies were lax d. Credit default swaps claimed to insure CDOs.
Answer:
b. Regulations were relaxed, leading to nonqualifying mortgages getting approved for loans.
c. Real estate appraisers and rating agencies were lax
d. Credit default swaps claimed to insure CDOs.
Explanation:
Home buyers actually never opted for traditional fixed-rate mortgages, since they chose adjustable rate mortgages and optional ARMs, which allowed them to make low coupon payments for the first two years and reset later. Whereas some borrowers didn't understand the payment structure while some thought that the home prices would go up and they would profit through refinancing or sale.
Factors that led to the financial crisis of 2008-2009 include relaxed regulations, lax real estate appraisers and rating agencies, and credit default swaps for CDOs.
Explanation:The factors that led to the financial crisis of 2008-2009 include:
Relaxed regulations: Regulations were relaxed, allowing nonqualifying mortgages to be approved for loans.Lax real estate appraisers and rating agencies: Real estate appraisers and rating agencies were lax in their evaluations, leading to inaccurate assessments of the risk associated with mortgage-backed securities.Credit default swaps for CDOs: Credit default swaps (CDS) claimed to insure collateralized debt obligations (CDOs), providing a false sense of security in the market.What are primary and secondary markets?
Answer:
Explanation:
The primary market is the market in which the new securities like bonds, stocks, etc are offered to the general public for the first time or we can say Initial public offer.
The initial public offer is an example of the primary market .
On the other hand, the secondary market is that market in which the securities are purchased or sold through the investors after offering to the general public.
Example - New York Stock Exchange (NYSE), etc.
A government contributes $20,000 to its pension plan for year 1. The actuarially-determined annual required contribution for year 1 was $27,000. The pension plan paid benefits of $16,400 and refunded employee contributions of $1,600 for year 1. What is the pension expenditure for the general fund for year 1?
Answer:
$20,000
Explanation:
Since the question is asking for the pension expenditure for the general fund in year 1 which is $20,000 only.
This above amount reflects the contribution amount towards the pension plan in year 1. The other amount reflects the benefits, required contribution, refunded employee contributions which are of no use for recording the pension expenditure for the general fund.
The amount which is actually paid is only recognized.
Hence, all other information which is mentioned is not relevant.
Global Travel uses the contribution margin income statement internally. Global's first-quarter results are as follows:
Sales revenue $525,000
Less: Variable expenses: 210,000
Contribution Margin $315,000
Less: Fixed Expenses 172,000
Operating Income $142,800
Global's relevant range is sales of between $120,000 and $630,000.
1. Prepare contribution margin income statements at sales levels of $230,000 and $400,000.
( Hint: Use the contribution margin ratio.)
2. Begin by preparing the contribution margin income statement at the $230,000.
Answer:
Contribution margin ratio = Contribution Margin / Sales
= $ 315,000 / $ 525,000
= 0.6 or 60%
Hence, contribution margin at $ 230,000 Sales = Contribution margin ratio * $ 230,000 ( Sales )
= 0.6 * 230,000 = $ 138,000 ( Part A )
Contribution margin at $ 400,000 Sales = 0.6 * $ 400,000
= $ 240,000 ( Part B )
At Sales level of $ 230,000
Sales revenue $ 230,000
- Variable expenses (Sales - Contribution margin) $ 92,000
Contribution Margin ( From Part A ) $ 138,000
- Fixed Expenses $ 172,000
Operating Income / Loss $ (34,000)
At Sales level of $ 400,000
Sales Revenue $ 400,000
- Variable expenses $ 160,000
Contribution Margin ( From part B ) $ 240,000
- Fixed Expenses $ 172,000
Operating Income / Loss $ 68,000
Explanation:
Refer to the answer.
A 1996 bill reforming the federal government's antipoverty programs limited many welfare recipients to only two years of benefits.
Which arrangement would provide the unemployed with greater incentives to look for jobs?
A) Welfare benefits last for only two years
B) Welfare benefits last forever
Under which arrangement would the economy be more efficient?
A)Welfare benefits last for only two years
B)Welfare benefits last forever
Answer:
Welfare benefits last for only two years
Explanation:
Limited welfare benefits are more likely to incentivize job searching and potentially contribute to a more efficient economy. However, this doesn't account for individual circumstances and challenges.
Explanation:Generally speaking, if welfare benefits are limited to two years (A option), it may provide a greater incentive for unemployed individuals to seek employment, because the temporary nature of the support encourages them to secure a job before the benefits end.
In contrast, if welfare benefits were to last forever (B option), there might be less urgency to find employment quickly.
Regarding economic efficiency, in theory, limiting welfare to two years may potentially lead to a more efficient economy. This is because as more people transition from welfare to work, it increases their productivity and subsequently contributes to the economy's growth.
On the other hand, if welfare benefits lasted indefinitely, it could potentially discourage people from seeking work and contributing to the economy's productivity.
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Aneta sold an apartment building for $713,470 in 2019. She purchased the building in 2013 for $600,000 and has taken $151,806 in depreciation on the building. Assuming Aneta is married with regular taxable income of $500,000 and in the 35% tax bracket, how is her gain taxed?
a. $113,470 at 0% and $151,806 at 28%.
b. $113,470 at 25% and $151,806 at 15%.
c. $151,806 at 28% and $113,470 at 15%.
d. $151,806 at 25% and $113,470 at 15%.
Answer:
(d). 151,806 at 25% and $113,470 at 15%
Explanation:
Book Value of apartment building = Cost of acquisition less accumulated depreciation claimed till date by the assessee
Cost Of Acquisition $600,000
Less: Depreciation till date ($151,806)
Book Value in 2019 448,194
Calculation of Long Term Capital Gain:
Sales Consideration $713,470
Less: Book value on date of sale ($448,194)
Long Term Capital Gain $265,276
The break up of above long term capital gain taxation would be as follows
$113470 at 15%
$ 151806 at 25%
For the first time in two years, Big G (the cereal division of General Mills) raised cereal prices by 4 percent. If, as a result of this price increase, the volume of all cereal sold by Big G changed by -2 percent, what can you infer about the own price elasticity of demand for Big G cereal?
a. elastic
b. inelastic
c. unit elastic
Can you predict whether revenues on sales of its Lucky Charms brand increased or decreased?
a. Yes - it increased.
b. No - you can't tell.
c. Yes - it decreased
Answer:
b. inelastic
c. Yes - it decreased
Explanation:
Elasticitiy of demand measures the responsiveness of quantity demanded to changes in price.
Elasticity of demand = percentage change in quantity demanded/ percentage change in price
= -2/4 = -0.5
The absolute value is 0.5
If the absolute value of the coffiecnet of elasticity of demand is less than one, demand is inelastic.
Demand is inelastic if a change in price has no effect on quantity demanded .
We can tell that the quantity demanded fell because of the negative sign in front of the percentage change in quantity demanded.
I hope my answer helps you
Final answer:
The own price elasticity of demand for Big G cereal is inelastic since the percentage change in quantity demanded is less than the percentage change in price. It's indeterminate whether revenues for Lucky Charms increased or decreased without more information.
Explanation:
For the first time in two years, Big G (the cereal division of General Mills) raised cereal prices by 4 percent, and as a result, the volume of all cereal sold by Big G changed by -2 percent. We can infer that the own price elasticity of demand for Big G cereal is inelastic, because the percentage change in quantity demanded (-2%) is less than the percentage change in price (4%).
When analyzing the revenues on sales of its Lucky Charms brand after this price increase, we can't predict whether revenues increased or decreased without additional information. The demand for Lucky Charms could have a different price elasticity than the average for all cereals sold by Big G.
Which of the following are examples of a primary market transaction? a. A company issues new common stock. b. An investor asks his brother to purchase 1,000 shares of Boeing common stock. c. A company issues new bonds. d. Statements a and c are correct. e. Statements a and b are correct.
Answer:
d. Statements a and c are correct
Explanation:
The primary market is the market where for the first time the new securities such as shares, stocks, bonds, etc. are being sold to the general public or we can refer initial public offer. The initial public offer is an example of the primary market
On the other side, the secondary market is that market where the shares are bought or sold through the investors after the sale to the public at large.
The best example of primary market transactions is: statement a and statement c.
The primary market transaction is the transactions that take place when the firms or the corporate issues fresh and the new securities like shares, bions, debentures, and other bills for the stakeholders in the market.
The initial offering to the general public to become a member of the company purchasing the securities of the firm is the primary market transaction.
The other options that are mentioned in the context are related to the secondary market that is after the process of the issuance of the securities in the market for the public, the company takes the securities to the second optional market.
Therefore the correct option is d. Statements a and c are correct.
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Phillis and Trey are married and file a joint tax return. For 2018, they have $4,800 of nonbusiness capital gains, $2,300 of nonbusiness capital losses, $500 of interest income, and no itemized deductions. The standard deduction for married filing jointly is $24,000. Based on these transactions, to arrive at the NOL, Phillis and Trey's taxable income must be adjusted by $ _______.
Answer:
$21,000
Explanation:
NOL, Phillis and Trey's taxable income must be adjusted by:
= Standard deduction - (Interest income + Net non business capital gain)
= $24,000 - [$500 + ($4,800 - $2,300)]
= $24,000 - ($500 + $2,500)
= $24,000 - $3,000
= $21,000
Therefore, the NOL, Phillis and Trey's taxable income must be adjusted by $21,000.
Create a list of rules to help you collaborate as a team, including expectations about meetings, communication, course work, conflict resolution, and so on, based on other elements of this charter.
Answer:
Ground rules helps a team set a guiding course in achieving their team objectives and goals.
Ground rules helps team members to know what is acceptable and what is frowned at.
Example of grounds rules includes:
Lateness to meeting is unacceptable
Communication must be formal and documented
Conflict resolution must be done and addressed by the leadership of the team
Explanation:
Ground rules helps a team set a guiding course in achieving their team objectives and goals.
Ground rules helps team members to know what is acceptable and what is frowned at.
Example of grounds rules includes:
Lateness to meeting is unacceptable
Communication must be formal and documented
Conflict resolution must be done and addressed by the leadership of the team
Discuss the effectiveness of Red Bull sponsorships, advertisements, personal selling strategies, promotion, events, and public relations. Where should the company draw the line in terms of risk?
Final answer:
Red Bull's marketing strategies, including sponsorships of extreme sports and personalized promotions, are successful at targeting young adults and establishing a strong brand image. However, the company needs to carefully consider the risks associated with such high-adrenaline activities and balance aggressive marketing with responsible corporate behavior to avoid consumer backlash.
Explanation:
Effectiveness of Red Bull's Marketing Strategies
Red Bull is known for its aggressive and innovative marketing strategies that span multiple channels including sponsorships, advertisements, personal selling, promotions, events, and public relations. The effectiveness of these efforts can be seen in their ability to create a strong brand presence among young adults, who are the main target audience for energy drinks. They sponsor extreme sports events, athletes, and even has a media house to promote their brand, which aligns with their marketing slogan "Red Bull gives you wings." This strategy exemplifies the selling of optimism, where Red Bull associates their product with the exciting lifestyles of extreme sports athletes and adventurers.
Although these high-adrenaline sponsorships can be highly effective, Red Bull must also consider the risks. The company needs to draw the line when these sponsorships and events potentially endanger the lives of participants or convey irresponsible behavior. From a corporate responsibility perspective, they need to ensure that while they celebrate extreme sports and high achievement, they don't inadvertently promote recklessness.
Moreover, the company's advertising and promotion tactics need to remain authentic and respectful of social values, steering clear of over-commercialization that could lead to consumer push-back or a perception of insensitivity, which Naomi Klein critiques in her analysis of branding in No Logo. Ultimately, the balance between aggressive marketing to remain top-of-mind among consumers and maintaining responsible corporate behavior is essential for long-term success.
Last year Café Creations... Last year Café Creations, Inc. had an ROA of 25 percent, a profit margin of 12 percent, and sales of $4 million. What is Café Creations total assets? A. $12m B. $0.48m C. $1.00m D. $1.92m
Answer:
D. $1.92m
Explanation:
The formula to calculate ROA is:
ROA= Net income/Assets
From this formula, we can determine that the assets can be calculated by:
Assets=Net income/ROA
We have that ROA is 25% and we have to calculate the net income. We can do it using the profit margin as this indicates the percentage of revenue left after all expenses have been deducted from the sales twhich is the net income. So,
Net income= Sales*Profit margin
Net income= $4* 12%= $0,48 million
Then, we replace the values to find the assets:
Assets= $0,48/0,25= $1,92 million
The Café Creations total assets are $1,92 million.
Assume Walmart acquires a tract of land on January 1, 2009 for $100,000 cash.On December 31, 2009, the current market value of land is $150,000. On December 31, the current market value of land is $120,000. The firm sells the land on December 31, 2011 for $180,000 cash. Ignore income tax. Indicate the effects on the balance sheet and income statement of the preceding information for 2009, 2010, and 2011 under each of the following valuation methods (Part A-C). A. Valuation of the land at acquisition cost until sale of the land(Approach 1). B. Valuation of the land at current market value but including unrealized gains and losses in accumulated other comprehensive income until sale of land (Approach 2). C. Valuation of the land at current market value and including market value changes each year in net income (Approach 3). D. Why is retained earnings on December 31, 2011, equal to $80,000 in all three cases despite the reporting of different amount of net income each year?
Answer:
See abelownswers as explained
Explanation:
A)
In 2009,
Particular Amount($) Amount($)
Land A/c Dr. 100,000
To Cash A/c 100,000
In 2010,
No effect on Income Statement
In 2011,
Particular Amount($) Amount($)
Cash A/c Dr. 180,000
To Gain on Sale of land A/c 80,000
To land A/c 100,000
B)
For 2009,
Land to be shown in Balance Sheet as $150,000.
No effect on Income Statement.
Date Particular Amount($) Amount($)
1/1/2009 Land A/c Dr. 100,000
To Cash A/c 100,000
12/31/2009 Land A/c Dr. 50,000
To Unrealized Gain A/c 50,000
For 2010,
Particular Amount($) Amount($)
Unrealized Gain A/c Dr. 30,000
To land A/c 30,000
(Shown in Balance Sheet = $120,000)
For 2011,
Income Statement - Profit on Sale of Land = $80,000
Particular Amount($) Amount($)
Cash A/c Dr. 180,000
Unrealized Gain A/c Dr. 20,000
To land A/c 120,000
To Gain on Sale of land A/c 80,000
C)
For 2009,
Land shown in Balance Sheet = $150,000
Income Statement also increase by $50,000
Date Particular Amount($) Amount($)
1/1/2009 Land A/c Dr. 100,000
To Cash A/c 100,000
12/31/2009 Land A/c Dr. 50,000
To increase in market value of land A/c 50,000
For 2010,
Land shown in Balance Sheet = $120,000
Particular Amount($) Amount($)
Decrease in market value of land A/c Dr. 30,000
To land A/c 30,000
For 2011,
Particular Amount($) Amount($)
Cash A/c Dr. 180,000
To Land A/c 120,000
To Gain in sale of Land A/c 60,000
D. Earnings on December 31,2011 is equal to $80,000 in all the cases as retained earnings is the difference between sale value and acquisition cost. It has no effect on the retained earnings, if market prices go up and down. ,
acquisition cost is $100,000 and
Sale Value is $180,000.
amount of retained earnings is $180,000-100000
$80000
The valuation and accounting of land owned by Walmart will have different impacts on the financial statements under the three valuation methods, with retained earnings equaling $80,000 in all three cases due to the final sale price. The balance sheet and income statements are affected variably across the years, reflecting historic cost or market value adjustments depending on the approach taken.
The valuation and accounting of land for Walmart across different methods will have varying impacts on the balance sheet and income statement for the years 2009, 2010, and 2011. Under each valuation method, the effects on the balance sheet and income statement will differ as detailed below:
Approach 1 - Valuation of land at acquisition cost until sale of the land: The land remains on the balance sheet at the historical cost of $100,000 for all the years until it is sold. No effect on the income statement until 2011, when land is sold for $180,000, resulting in a gain of $80,000 in net income.Approach 2 - Valuation of land at current market value but including unrealized gains and losses in accumulated other comprehensive income until sale of land: The balance sheet reflects current market value changes, with equity increasing to $150,000 in 2009, decreasing to $120,000 in 2010, and then back to $150,000 in 2011. The income statement remains unaffected until the land is sold, showing an $80,000 gain.Approach 3 - Valuation of land at current market value and including market value changes each year in net income: The balance sheet reflects market value changes with corresponding entries in net income. There is a gain of $50,000 in net income in 2009, a loss of $30,000 in 2010, and a gain of $60,000 in 2011. Upon sale, an additional gain of $30,000 is recorded, matching the total sales price less the market value at the beginning of 2011.The reason retained earnings on December 31, 2011, would be equal to $80,000 in all three cases is because, regardless of when the gains or losses are realized or recognized, the total cash inflow from the sale of the land over the acquisition cost amounts to $80,000. This is the actual gain Walmart realized from the sale transaction, which ultimately is the amount added to retained earnings.
Alyssa: Thanks to recent financial crises, the concept of bailouts is a hot topic for debate among everyone these days. Tim: Indeed, it's gotten crazy! A government bailout of severely distressed financial firms is unnecessary because free markets will properly price assets. Alyssa: I don't know about that. Without a bailout of severely distressed financial firms, the economy will experience a deep recession.
The correct answer is; They are having differences in scientific judgments.
Further Explanation:
Upon researching this question, I found a crucial part that was left off. The question asked why were Alyssa and Tim having a disagreement. The disagreement was over each of their personal scientific judgments.
Both have learned different things in their area of expertise and disagree on the economy. They can resolve this issue by both researching the topics together and coming to a mutual understanding of the bailouts and free markets.
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Final answer:
Government bailouts are necessary interventions to prevent economic collapse, as seen in the $700 billion acquisition of mortgage-backed securities during the 2008 crisis. However, they also lead to consequences such as smaller bank failures and the criticism of socialistic measures, while raising debates on the efficacy of free market corrections in times of crisis.
Explanation:
Understanding Government Bailouts and Their Implications
During financial crises, government bailouts of financial institutions become a contentious topic, sparking debates about market functions and economic interventions. The actions taken by the Federal Reserve, Congress, and the president aimed to prevent a complete collapse of the financial sector that could lead to an economic downturn similar to the Great Depression. Despite these efforts, a severe recession and global economic slowdown followed. The acquisition of $700 billion worth of mortgage-backed securities in 2008 by the government was a pivotal decision reflecting the 'too big to fail' notion asserted by many economists.
The bailout led to consequences such as the collapse of smaller banks, criticisms regarding the socialistic nature of the bailouts, and further economic challenges. With the U.S. being the world's leading consumer, its recession had a domino effect on global economies, prompting trading partners to also enter into recessions or experience slowed growth. Many European countries provided financial assistance to their financial markets, and later faced challenges with high deficits leading them to adopt austerity measures. These included countries like Greece, Ireland, Spain, and Portugal, which were significantly impacted and had to enforce strict economic policies.
Nonetheless, the necessity of bailouts for maintaining economic stability is evident as financial markets are critical in bridging the gap between demanders and suppliers of financial capital. Without functioning financial institutions and markets, economies struggle to invest in new financial capital, leading to deepened economic difficulties. The ongoing debate over bailouts and free market responses reflects the complex nature of modern economies transitioning toward market capitalism, and the struggle to balance intervention with market dynamics.
Major Manufacturing Company has direct materials used of $50,000, beginning raw materials inventory of $10,000 and ending raw materials inventory of $8,000.
Compute the raw materials inventory turnover.
Answer:
5.55 times
Explanation:
The computation of the raw materials inventory turnover is shown below:
= Direct material used ÷ average raw material inventory
where,
Average inventory = (Opening balance of raw material inventory + ending balance of raw material inventory) ÷ 2
= ($10,000 + $8,000) ÷ 2
= $9,000
And, the direct material used is $50,000
So, the raw materials inventory turnover would be
= $50,000 ÷ $9,000
= 5.55 times
Final answer:
The raw materials inventory turnover ratio for Major Manufacturing Company is calculated to be 5.78, determined by dividing the cost of goods sold for raw materials by the average inventory.
Explanation:
To compute raw materials inventory turnover, we use the formula: Inventory Turnover = Cost of Goods Sold (COGS) / Average Inventory.
We need to first calculate the COGS for raw materials, which is Beginning Inventory + Purchases - Ending Inventory.
In this case, COGS for raw materials would be $10,000 + $50,000 - $8,000 = $52,000.
Next, we calculate the Average Inventory which is (Beginning Inventory + Ending Inventory) / 2.
The Average Inventory would then be ($10,000 + $8,000) / 2 = $9,000.
Finally, we divide the COGS by the Average Inventory to get the raw materials inventory turnover: $52,000 / $9,000 = approximately 5.78.
Therefore, the raw materials inventory turnover ratio for Major Manufacturing Company is 5.78.
What labor-related factors should be considered when deciding where to locate production?
Answer and explanation:
Labor is one of the main factors that can drive a company to success or failure. When deciding where to locate production the labor-related factors to take into account are labor skills (employees' knowledge), labor costs and productivity (wages and how their levels can affect employees' performance), and labor laws (employees' benefits according to where they work).
You are a producer of lithium batteries. Last month, a flood at your factory eliminated 50% of your firm’s production capability. At the same time, your compensation costs increased by 5% because of an annual pay raise. What is the consequence of these events?
Answer:
The flood shifts the supply to the left. The flood does not shift the demand curve. The increase in annual pay doesn't shift the demand curve. The increase in annual pay shifts the supply curve to the left.Reason – Due to changes, only supply of lithium batteries would be affected. A flood would decrease the output capabilities and hence, reduce the supply in the market for lithium batteries.
Moreover, an increase in compensation cost would reduce the profitability of the producer and hence, they would decrease the supply of lithium batteries.
The firm will face reduced productivity and increased operating costs due to the flood and pay raise, respectively. This will likely decrease profitability.
Explanation:As a producer of lithium batteries, experiencing a flood that eliminates 50% of your production capability will have immediate and direct consequences on your business operation. The reduced production capacity means you will manufacture and subsequently sell fewer units of your lithium batteries. At the same time, your costs of operating haven't decreased. In fact, they've further increased due to the 5% raise in compensation costs. Thus, you're facing increased costs coupled with decreased productivity. This combination is likely to reduce your overall profitability.
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Pursuant to a plan of reorganization adopted in the current year, Summit Corporation exchanged 1,000 shares of its common stock and paid $40,000 cash for Hansen Corporation's assets with an adjusted basis of $200,000 (fair market value of $300,000) Hansén Corporation was liquidated shortly after the exchange, with its shareholders receiving the Summit stock and cash. The 1,000 shares of Summit common stock had a fair market value of $260,000 on the date of the exchange. What is the basis to Summit of the assets acquired in the exchange? A. $200.000 B. $240,000 C. $260,000 D. $300.000
Answer:
A. $200.000
Explanation:
No gain or loss is recognized by the target corporation in the case of liquidation of target corporation or in case of distribution of stock and cash by it.
This is true even if cash or boot property is received by the target corporation. Hence, the basis is equal to the carryover to the acquiring corporation. Summit has a carryover basis in the assets of Hansen company as Hansen company liquidated and distributed the cash and stock to the shareholder.
Therefore, The Basis to Summit of the assets acquired in the exchange = $200000
Listed below are costs found in various organizations.
For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then whether it would be a selling cost, an administrative cost, or a manufacturing cost. If it is a manufacturing cost, indicate whether it is a direct cost or an indirect cost with respect to units of product.
1. Direct labor
2. Executive salaries
3. Factory rent
4. Property taxes, factory.
5. Boxes used for packaging detergent produced by the company
6. Salespersons' commissions
7. Supervisor's salary, factory
8. Depreciation, executive autos.
9. Wages of workers assembling computers
10. Insurance, finished goods warehouses
11. Lubricants for production equipment.
12. Advertising costs
13. Microchips used in producing calculators.
1. Direct labor - Fixed - manufacturing cost 2. Executive salaries - Fixed - administrative cost 3. Factory rent - Fixed - administrative cost 4. Property taxes, factory - Fixed - administrative cost 5. Boxes used for packaging detergent produced by the company - Variable - manufacturing cost 6. Salespersons' commissions - Variable - selling cost 7. Supervisor's salary, factory - Fixed - administrative cost 8. Depreciation, executive autos - Variable - 9. Wages of workers assembling computers - Variable - administrative cost 10. Insurance, finished goods warehouses - Variable - administrative cost 11. Lubricants for production equipment - Variable - administrative cost 12. Advertising costs - Variable - selling cost 13. Microchips used in producing calculators - Variable - manufacturing cost
After identifying the knowledge, skills, attitudes, and other characteristics that impact your current performance, what is the next step?
The next step after identifying the knowledge, skills, attitudes, and other characteristics that impact your current performance is to identify the gaps and the concepts that are required for improved optimal performance on the job.
Undertaking this job analysis of one's knowledge, skills, attitudes, and other characteristics (KSAOs) is relevant for an employee to fulfill the responsibilities of a job role and to gain promotion. For the organization, it helps it to determine the capabilities that it possesses internally.
Thus, the next step of this job analysis is to improve one's knowledge, skills, attitudes, and other characteristics.
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Please, moderator, this is well-spaced with paragraphs. You are looking at the first answer provided by another student.
The comparative statements of Wahlberg Company are presented here:Wahlberg CompanyIncome StatementsFor the Years Ended December 3120202019Net sales $1,890,540$1,750,500Cost of goods sold 1,058,5401,006,000Gross profit 832,000744,500Selling and administrative expenses 500,000479,000Income from operations 332,000265,500Other expenses and losses Interest expense 22,00020,000Income before income taxes 310,000245,500Income tax expense 92,00073,000Net income $218,000$172,500Wahlberg CompanyBalance SheetsDecember 31Assets20202019Current assets Cash $60,100$64,200Debt investments (short-term) 74,00050,000Accounts receivable 117,800102,800Inventory 126,000115,500Total current assets 377,900332,500Plant assets (net) 649,000520,300Total assets $1,026,900$852,800Liabilities and Stockholders’ EquityCurrent liabilities Accounts payable $160,000$145,400Income taxes payable 43,50042,000Total current liabilities 203,500187,400Bonds payable 220,000200,000Total liabilities 423,500387,400Stockholders’ equity Common stock ($5 par) 290,000300,000Retained earnings 313,400165,400Total stockholders’ equity 603,400465,400Total liabilities and stockholders’ equity $1,026,900$852,800All sales were on account. Net cash provided by operating activities for 2019 was $223,000. Capital expenditures were $137,000, and cash dividends were $58,800.Compute the following ratios for 2020. (Round free cash flow to 0 decimal places, e.g. 5,275 and all other answers to 2 decimal places, e.g. 1.83 or 1.83%. Use 365 days for calculation.)(a) Earnings per share (b) Return on common stockholders’ equity (c) Return on assets (d) Current ratio (e) Accounts receivable turnover (f) Average collection period (g) Inventory turnover (h) Days in inventory (i) Times interest earned (j) Asset turnover (k) Debt to assets ratio (l) Free cash flow
Ratio analysis is the comparative or the relationship analytical tool between two components of the balance sheet and the income statement.
The answers to various parts of the question are as follows:
(a) Earnings per share
[tex]\begin{aligned}\text{Earning per share}&=\frac{\text{Total Earning after tax}}{\text{Number of shares}}\\&=\frac{\$313,400}{58,000}\\&=\$5.4\;\text{per share} \end{aligned}[/tex]
(b) Return on common stockholders’ equity
[tex]\begin{aligned}\text{Return}&=\frac{\text{ Earning Available to ordinary equity }}{\text{Total shareholders equity - preference shares}}\\&=\frac{\$290,000}{\$603,400-\$58,800}\\&=0.53 \end{aligned}[/tex]
(c) Return on assets
[tex]\begin{aligned}\text{Return on Asset} &= \frac{\text{Net income}}{\text{Average Total Asset}}\\&=\frac{\$218,000}{\$513,450}\\&=0.42 \end{aligned}[/tex]
(d) Current ratio
[tex]\begin{aligned}\text{Current Ratio}&=\frac{\text{Current Asset}}{\text{Current Liabilities}}\\&=\frac{\$377,900}{\$203,500}\\&=1.85 \end{aligned}[/tex]
(e) Accounts receivable turnover
[tex]\begin{aligned}\text{Account Receivable Turnover}&=\frac{\text{Annual credit sales}}{\text{Average Account Receivable}}\\&=\frac{\$1,890,540}{\$58,900}\\&=32.09 \end{aligned}[/tex]
(f) Average collection period
[tex]\begin{aligned}\text{Average Collection Period}&=\frac{\text{Average Account Receivable}}{\frac{\text{Annual Sales}}{365}}\\&=\frac{\$58,900}{\frac{\$1,890,540}{365}}\\&=11.37 \end{aligned}[/tex]
(g) Inventory turnover
[tex]\begin{aligned}\text{Inventory Turnover}&=\frac{\text{Cost of good sold}}{\text{Average Inventory}}\\&=\frac{\$1,058,540}{\$63,000}\\&=16.80 \end{aligned}[/tex]
(h) Days in inventory
[tex]\begin{aligned}\text{Days in Inventory}&=\frac{365}{\text{Inventory Turnover}}\\&=\frac{365}{16.80}\\&=21 \end{aligned}[/tex]
(i) Times interest earned
[tex]\begin{aligned}\text{Times interest earned }&=\frac{\text{Income before interest, income taxes}}{\text{Interest expense}}\\&=\frac{\$310,000}{\$92,000}\\&=3.36\end{aligned}[/tex]
(j) Asset turnover
[tex]\begin{aligned}\text{Asset Turnover}&=\frac{\text{Net Sales}}{\text{Average total assets}}\\&=\frac{\$1,890,540}{\$513,450} \\&=3.68\end{aligned}[/tex]
(k) Debt to assets ratio
[tex]\begin{aligned}\text{Debt to Asset Ratio}&=\frac{\text{Total Liabilities}}{\text{Total Asset}}\times100\\&=\frac{\$423,500}{\$1,026,900}\times100\\&=41.20\% \end{aligned}[/tex]
(l) Free cash flow
[tex]\begin{aligned}\text{Fre cash Flow}&=\text{Cash from operating Activities - Capital Expenditure}\\&=\$223,000-\$137,000\\&=\$86,000 \end{aligned}[/tex]
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Final answer:
The provided data from Wahlberg Company is used to compute financial ratios for 2020, which will include earnings per share, return on common stockholders' equity, current ratio, and other key metrics necessary for evaluating the company's financial performance.
Explanation:
The question presents Wahlberg Company's comparative statements for financial analysis and requires the computation of various financial ratios for the year 2020. For calculating ratios like earnings per share, return on common stockholders' equity, and others, you will use the provided income statement and balance sheet data.
For example, to calculate the earnings per share (EPS), divide the net income by the number of shares outstanding. To find the current ratio, divide total current assets by total current liabilities. Ratios like the accounts receivable turnover involve dividing net sales by the average accounts receivable to assess how effectively the company is managing its credit sales.
All these ratios are essential for investors and management to understand the company's operational effectiveness, financial stability, and profitability over the fiscal year.
Watch the excerpt from the movie "The Office / Broke." Respond to the following questions: 1. Explain the concepts of fixed cost, variable cost, and avoidable cost. 2. Assume a company has $200 in fixed costs, marginal costs are $10, and the company produces 100 units per year. How low can the price go before it is preferred to shut down
Answer:
Let's assume 100 units per year is the break even point (in units).
Break even point is that level of sales revenue which covers all of the costs involved i.e. fixed and variable costs both.
Hence, contribution = Fixed costs at Break Even Point
Contribution = Sales - Variable (Marginal) Costs - ( Part A )
Hence, Contribution = $ 200 i.e. fixed costs
Now,
$ 200 = Sales - $ 10 ( From Part A)
Sales = $ 210
Now, Shut down point is that that where the firm is just capable of meeting its variable costs from the sales it has earned (price earned).
Hence, the price can go till $ 10 from $ 210 i.e. $ 200 ( $ 210 - $ 10 ) below from the current level.
Hence, the price can go $ 200 down before it is preferred to shut down by the firm.
For 1st part answer refer to the Explanation.
Explanation:
(1) Fixed Costs
Fixed costs refer to the expenses which are always have to be incurred by the business irrespective of the level of output produced. For example, a firm has to pay rent on land on which it is operating , pay CEO's compensation for managing role in the organization (constant part), charge depreciation on production tools and equipments and pay cleaning staff fixed salaries , irrespective of the level of output produced.
(2) Variable ( Marginal costs)
Variable costs are the costs which have a direct relation with the level of output produced by the firm. For example, the more the no. of units produced the more the labour charges paid, more the raw material payments made and the more the manufacturing related expenses etc and vice-versa.
(3) Avoidable costs
Avoidable costs are the costs which can be controllable i.e. the costs incurring can be avoided by the management. For example, when there is slowdown in the economy, growth and expansion costs can be avoided and production related costs can be cut (variable costs) etc.
For Part 2 answer refer to the "Answer" at the top of the entire solution.
How will a new law mandating an increase in required levels of automobile insurance affect the equilibrium price and quantity in the market for new automobiles? Automobile insurance and automobiles are complements. An increase in automobile insurance rates will thus shift the demand curve for automobiles to the left. Some people Who would have bought new automobiles with the lower insurance rates choose not to have a new car.
Answer:
Price and quantity will fall
Explanation:
When a complement product/service gets more expensive or it simply becomes mandatory and unavoidable, the equilibrium price and quantity for the first product/service would fall. New consumers would be hindered to buy automobiles with the fact that they have to buy more insurance for that same car. This is the effect of the price change of a complement product/service.
On November 1, Year 1, Thomasson paid rent on its building for 2 years in the amount of $12,000. When the transaction was initially recorded, the full $12,000 was recorded as an expense using an alternative approach to record the prepayment. The adjusting journal entry on December 31, Year 1 requires a
Answer:
Credit input of $11,000 to Expense Account to reduce the expense account for year 1 to its right figure of $1,000
Explanation:
Step 1: Since the payment was made on November 1st, this means that by 31st December the end of the year 1 period, Thomasson had already paid two months for the present or current period (that is from November 1st to December 31st).
This means out of the 2 years (24 months) paid, 2 months rent have enjoyed while 22 months remaining will go into prepayments (asset yet to be enjoyed).
Step 2: Since, all were recorded as rent expense initially, the correction is that only two months worth will be rent expense, while 22 months will go to prepaid rent account.
2 months rent (2/22) x 12,000= $1,000
22 months prepayment (22/22)x 12,000= $11,000
Therefore, to reverse the error of debiting the expense account with the entire $12,000,Year 1 expense account will be credited by the prepaid rent of $11,000. This will bring the rent expense for the first year back to its right figure of $1,000
During 2014, Raines Umbrella Corp. had sales of $790,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $610,000, $85,000, and $190,000, respectively. In addition, the company had an interest expense of $52,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)
a. What is Raines’s net income for 2014? (Do not round intermediate calculations. Input the amount as a positive value.) $
b. What is the company's operating cash flow? (Do not round intermediate calculations.) Operating cash flow $
Answer:
(a) -$147,000
(b) $95,000
Explanation:
(a) EBIT:
= Sales - Cost of goods sold - Administrative and selling expenses - Depreciation expense
= $790,000 - $610,000 - $85,000 - $190,000
= -$95,000
EBT = EBIT - Interest expense
= -$95,000 - $52,000
= -$147,000
Net Income = EBT - Tax expense
= -$147,000 - $0
= -$147,000
(b) company's operating cash flow:
= EBIT + Depreciation Expense
= -$95,000 + $190,000
= $95,000
Raines's net income for 2014 is a loss of $147,000. The operating cash flow, however, is positive at $43,000.
Explanation:Firstly, to calculate Raines's net income for 2014, you deduct all the expenses from the sales. Here's how you go about it: Sales ($790,000) - Cost of goods sold ($610,000) - Administrative and selling expenses ($85,000) - Depreciation expenses ($190,000) = $-95,000. Then subtract the interest expense which is $52,000. This gives a pre-tax income of $-147,000. Since the pre-tax income is a loss, the company doesn’t owe any taxes so the tax payment is $0. Hence, Raines's net income for 2014 = Pre-tax income + Tax payment = $-147,000 + $0 = $-147,000.
Secondly, Raines's operating cash flow can be calculated by adding back the non-cash expense (depreciation) to the net income. So, Operating cash flow = Net income + Depreciation = $-147,000 + $190,000 = $43,000.
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Suppose that the term structure is currently flat so that bonds of all maturities have yields to maturity of 10%. Currently a 5-year coupon bond with annual coupons (with the first one due in 1 year) and face value of S1,000 is selling at par (a) What is the current price of the 5-year bond? What are the annual coupons in dollar terms? (b) A year from now interest rates will depend on the stance of monetary policy. If monetary policy is "tight" the yields to maturity on all bonds will be 12%. If monetary policy is "loose" the yields to maturity on all bonds will be 8%. If you sell the bond a year from now when monetary policy is tight what will be the return to your investment over the year? If you sell the bond a year from now when monetary policy is loose what will be the return to your investment over the year?
Answer:
Explanation:
a) PV=$1000
As price is equal to face value then the Coupon rate will be equal to its YTM, 10%.
Annual Coupons = 10% * 1000 = $100
b.) We have purchased the bond for $1000, so our investment is $1000
At the end of the year 1, we get a coupon of $100 and the selling price.
1st CASE - When monetary policy is tight.
New YTM = 12%
Time left to maturity (n) = 4 years
Coupon payment = $100
Price = Coupon payment X PVAF(YTM, n) + Face Value X PVF(YTM, n)
[USE TABLES or Financial calculator]
Price = 100 X PVAF(12%, 4) + 1000 X PVF(12%, 4) = 100 X 3.307 + 1000 X .636 = 303.7 + 636 = $939.7
If we sell the bond, Return = (Coupon Received + Selling price - Purchase price ) \div Purchase price
= (100 + 939.7 - 1000) \div 1000 = .0397 or 3.97%
Scenario 2 - When monetory policy is loose
New YTM = 8%
Time left to maturity (n) = 4 years
Coupon payment = $100
Therefore, Price = Coupon payment X PVAF(YTM, n) + Face Value X PVF(YTM, n)
Price = 100 X PVAF(8%, 4) + 1000 X PVF(8%, 4) = 100 X 3.312 + 1000 X .735 = 331.2 + 735 = $1066.2
If we sell the bond, Return = (Coupon Received + Selling price - Purchase price ) \div Purchase price
= (100 + 1066.2 - 1000) \div 1000 = .1662 or 16.62%
The current price of a 5-year coupon bond selling at par with a 10% yield is $1,000, with annual coupons of $100. Returns vary with changes in monetary policy; with 'tight' policy, the yield will fall below par due to higher rates, whereas with 'loose' policy, the yield will increase above par due to lower rates. These scenarios involve capital gains or losses in addition to coupon payments, affecting the total return.
Explanation:The question pertains to the pricing and yields of a 5-year coupon bond in a flat term structure market where all maturities have yields of 10%. The current price of a bond selling at par with a face value of $1,000 is, by definition, $1,000. To determine the annual coupons, we can use the yield to maturity (YTM) which is given as 10%. Using this yield and the par value, the annual coupon payment can be calculated by multiplying the par value by the YTM. Therefore, the annual coupon payment in dollar terms is $100 (10% of $1,000).
If monetary policy is tight and yields rise to 12% after one year, the bond price will typically decrease. Conversely, if policy is loose and yields fall to 8%, the bond price will increase. If sold after one year when policy is tight, the return on investment would include the received coupon payment and the capital loss due to the increased discount rate. When policy is loose, the return would include the received coupon payment and the capital gain from the decreased discount rate. This demonstrates that the yield, or total return, reflects interest payments and capital gains or losses depending on interest rate movement.
Consider the game in extensive form above. In the backward induction solution to this game Player 1 plays strategy and Player 2 plays strategy (Please, label Player 1's strategies by A, B, and C, and Player 2's strategies as df, dg, ef, and so forth)
Answer:
answer can be seen in the attached file
Explanation:
Consider the game in extensive form above. In the backward induction solution to this game Player 1 plays strategy and Player 2 plays strategy (Please, label Player 1's strategies by A, B, and C, and Player 2's strategies as df, dg, ef, and so forth)
What is Game Theory?
This is a mathematical modelling that deals with the analysis of strategies for dealing with competitive situations where the result of a participant's choice of action depends critically on the actions of other participants. Game theory has been applied to in war, business, and biology, sport.
In Game theory, outcome is dependent on the contributions of competing parties