Answer:
(a) Purchase the equipment
Annual worth (AW, $)
[tex]=-60,000 \mathrm{x} \mathrm{A} / \mathrm{P}(10 \%, 3)+23,000+[10,000 \mathrm{x} \mathrm{A} / \mathrm{P}(10 \%, 3) \mathrm{x} \mathrm{P} / \mathrm{F}(10 \%, 3)][/tex][tex]=-60,000 \times 0.4+23,000+[10,000 \times 0.4 \times 0.75][/tex]
= - 24,000 + 23,000 + 3,000
= 2,000
(b) Leasing
AW ($) = AW of cost of leasing + AW of annual benefits
[tex]=-21,000 \mathrm{x}(1.1) * *+23,000[/tex]
= - 23,100 + 23,000
= - 100
Since AW of savings from leasing option is negative and AW of benefits from purchase decision is positive, the equipment should be purchased.
**Since lease payments are at beginning of year, these are "annuity due" and annual lease payment is multiplied by (1 + MARR) to obtain AW.
To determine if the packaging equipment should be purchased or leased, we will calculate the Internal Rate of Return (IRR) of purchasing the equipment. If the IRR exceeds the Minimum Acceptable Rate of Return (MARR), it is more favorable to purchase the equipment. Otherwise, leasing may be the better option.
Explanation:Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of an investment equal to zero. To determine whether the packaging equipment for Xi Cling Wrap should be purchased or leased, we will calculate the IRR of purchasing the equipment and compare it to the MARR.
The initial cost of purchasing the equipment is $60,000. The net savings per year for 3 years is $23,000, and the market value of the equipment after 3 years is $10,000. We'll use these numbers to calculate the NPV of purchasing the equipment. Then, we'll calculate the NPV of leasing the equipment for 3 years at a cost of $21,000 per year.
After calculating the NPV for both purchasing and leasing, we'll compare the IRR of purchasing to the MARR of 10 percent/year to determine whether the packaging equipment should be purchased or leased.
Activity-Based Costing: Factory Overhead Costs The total factory overhead for Bardot Marine Company is budgeted for the year at $600,000, divided into four activities: fabrication, $204,000; assembly, $105,000; setup, $156,000; and inspection, $135,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The activity-base usage quantities for each product by each activity are as follows: Fabrication Assembly Setup Inspection Speedboat 2,000 dlh 1,000 dlh 300 setups 1,100 inspections Bass boat 1,000 2,000 100 400 3,000 dlh 3,000 dlh 400 setups 1,500 inspections Each product is budgeted for 250 units of production for the year.
Answer:
The question is not incomplete as it is missing the requirement below:
A) The activity rates for each activity and
B) The activity-based factory overhead per unit for each product.
Fabrication activity rate=$68 /dlh
Assembly activity rate =$35 /dlh
Setup activity rate =$390/setup
inspection activity rate=$90/inspection
Speed boat activity based factory overhead=$387000
Bass boat activity based factory overhead=$213000
Explanation:
Fabrication activity rate=$204,000/(2000+1000)=$68 /dlh
Assembly activity rate =$105000/(1000+2000)=$35 /dlh
Setup activity rate =$156000/(300+100)=$390/setup
inspection activity rate=$135000/(1100+400)=$90/inspection
Speed boat total overhead is computed thus:
fabrication $68*2000 136000
Assembly $35*1000 35000
setup $390*300 117000
inspection $90*1100 99000
Total 387000
bass boat total overhead is computed thus:
fabrication $68*1000 68000
Assembly $35*2000 70000
setup $390*100 39000
inspection $90*400 36000
Total 213000
The question requires allocating factory overhead costs to speedboats and bass boats using Activity-Based Costing. We calculate overhead cost per unit for each activity by dividing the activity's cost by its total usage and then by the number of units produced. The provided manufacturing data is utilized in this allocation process.
The question involves Activity-Based Costing (ABC), a system used to determine the cost of products or services more accurately. ABC assigns factory overhead costs to products based on their usage of activities, rather than using a traditional single overhead rate. For Bardot Marine Company, the total factory overhead is divided into four activities (fabrication, assembly, setup, and inspection) with respective costs.
To calculate the overhead cost per unit for each type of boat (speedboat and bass boat), we'll allocate each activity's cost based on the direct labor hours (dlh) and the number of setups and inspections required for each boat. After allocating the overhead costs, we could then determine the overhead cost per unit by dividing the total overhead costs by the number of units budgeted to be produced.
Let's break it down for the fabrication activity for speedboats as an example:
Total fabrication overhead cost: $204,000Total dlh for fabrication (speedboats and bass boats): 3,000 dlhSpeedboat fabrication usage: 2,000 dlhOverhead cost per dlh for fabrication: $204,000 / 3,000 dlh = $68 per dlhOverhead cost allocated to speedboat fabrication: $68 per dlh \\* 2,000 dlh = $136,000Number of speedboats produced: 250 unitsFabrication overhead cost per speedboat unit: $136,000 / 250 units = $544 per unitThis process would be repeated for each activity for both products to determine the total overhead cost per unit for each boat type.
Wiley Consulting purchased $7,800 worth of supplies and paid cash immediately. Which of the following general journal entrie will Wiley Consulting make to record this transaction? Assume the company's policy is to Initially record prepaid and unearned Items In balance sheet accounts. Multiple Choice Accounts
Accounts Payable 7,800
Supplies 7, 800
Answer: Debit Supplies and Credit Cash
Explanation: From the above question, Wiley paid cash for the supplies and in accounting you debit the receiver and credit the giver.
In the question above, the supplies account is receiving value while the cash is giving value. Then the right journal entry is to Debit supplies and credit cash.
The correct journal entry for Wiley Consulting's purchase of $7,800 in supplies with immediate cash payment is a debit to Supplies and a credit to Cash.
When Wiley Consulting purchased $7,800 worth of supplies with cash, the correct journal entry to record this transaction, assuming the company uses a balance sheet approach for prepaid items, would be a debit to Supplies and a credit to Cash. This adheres to the double-entry accounting principle where every transaction affects at least two accounts. Since the purchase was for supplies and the payment was made immediately in cash rather than on credit, there is no need to use Accounts Payable in this transaction.
Overton Company has gathered the following information. Units in beginning work in process 21,200 Units started into production 178,800 Units in ending work in process 25,700 Percent complete in ending work in process: Conversion costs 60 % Materials 100 % Costs incurred: Direct materials $100,000 Direct labor $373,074 Overhead $186,600
(a) Compute equivalent units of production for materials and for conversion costs.
(b) Determine the unit costs of production.
(c) Show the assignment of costs to units transferred out and in process.
Answer:
(a) 200,000; 189,720
(b) $0.5; $2.95
(c) $601,335
Explanation:
(a) Units transferred out:
= Beginning work in process + Started into production - Ending work in process
= 21,200 units + 178,800 units - 25,700 units
= 174,300
Equivalent units of production for materials:
= Units transferred out + Work in process at April 30
= 174,300 + (100% × 25,700)
= 174,300 + 25,700
= 200,000 units
Equivalent units of production for conversion costs:
= Units transferred out + Work in process at April 30
= 174,300 + (60% × 25,700)
= 174,300 + 15,420
= 189,720 units
(b) Unit costs of production for material:
= Total material costs ÷ Equivalent units of production for materials
= $100,000 ÷ 200,000
= $0.5
Unit costs of production for conversion:
= Total conversion costs ÷ Equivalent units of production for conversion
= ($373,074 + $186,600) ÷ 189,720
= $559,674 ÷ 189,720
= $2.95
(c) Cost to units transferred out and in process:
= Units transferred out × Total cost per unit
= 174,300 × ($0.5 + $2.95)
= 174,300 × $3.45
= $601,335
To compute various production costs and assign them appropriately, we must calculate equivalent units for materials and conversion costs, determine the unit costs of production, and allocate the costs to units transferred out and in process based on their completion percentages and costs incurred. Materials are considered completely processed, while conversion costs are 60% complete for the ending work in process.
To answer the student's question, we need to calculate the equivalent units of production for materials and conversion costs, determine the unit costs of production, and then assign the costs to the units transferred out and in process.
Equivalent Units of Production
Materials: Since materials are 100% complete for units in ending work in process (WIP), equivalent units for materials = Units started into production + Units in beginning WIP - Units in ending WIP. Equivalent units for materials = 178,800 + 21,200 - 25,700 = 174,300 units.
Conversion costs: For conversion costs, consider the percentage completion. Equivalent units for conversion costs = (Units started into production + Units in beginning WIP - Units in ending WIP) + (Percent complete of ending WIP * Units in ending WIP). Equivalent units for conversion costs = (178,800 + 21,200 - 25,700) + (60% x 25,700) = 174,300 + 15,420 = 189,720 units.
Unit Costs of Production
Sum of direct materials, direct labor, and overhead costs = $100,000 + $373,074 + $186,600 = $659,674. Unit cost for materials = Total direct materials / Equivalent units for materials = $100,000 / 174,300 units = $0.57 per unit. Unit cost for conversion costs = Total conversion costs (direct labor + overhead) / Equivalent units for conversion costs = ($373,074 + $186,600) / 189,720 units = $2.95 per unit.
Assignment of Costs to Units Transferred Out and In Process
Units transferred out = Units started into production - Units in ending WIP. Assigned cost to units transferred out = (Units transferred out * Unit cost for materials) + (Units transferred out * Unit cost for conversion costs). Assigned cost to units transferred out = ((178,800 - 25,700) x $0.57) + ((178,800 - 25,700) x $2.95). Assigned cost to ending WIP = (Equivalent units for materials * Unit cost for materials) + (Equivalent units for conversion costs for ending WIP x Unit cost for conversion costs). Assigned cost to ending WIP = (25,700 x $0.57) + (15,420 * $2.95).
Consider an economy made up of 100 people, 60 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The number of unemployed persons is _____. a. 15 b. 10 c. 90 d. 40 e. 30
Answer:
The number of unemployed persons is 15 if we assume the person who are looking for work are NOT “unemployed”
The number of unemployed persons is 25 if we understand “looking for work” is “unemployed currently”
Explanation:
If we assume the person who are looking for work are NOT “unemployed” then:
Total 100 people = 60 of whom hold jobs + and 15 of whom are retired + 10 of whom are looking for work + unemployed persons
⇒ unemployed persons = 100 – 60 - 15 – 10 = 15
However, it’s better to understand “looking for work” is “unemployed currently”, then
Total 100 people = 60 of whom hold jobs + and 15 of whom are retired + unemployed persons (including whom looking for work)
⇒ unemployed persons = 100 – 60 - 15 = 25
Answer:
10
Explanation:
The total number of people that make up the economy is 100
60 people are employed
10 people are unemployed
15 people are retired and out of the labor force
Therefore the number of unemployed persons is 10
Listed below are several terms and phrases associated with inventory measurement. Pair each item from the list below with the item of the following list that is most appropriately associated with it.
1. Perpetual inventory system
2. Periodic inventory system
3. F.o.b. shipping point
4. Gross method
5. Net method
6.Cost index
7. F.o.b. destination
8. FIFO
9. LIFO
a. Legal title passes when goods are delivered to common carrier.
b. Goods are transferred to another company but title remains with transferor.
c. Purchase discounts not taken are included in inventory cost.
d. If LIFO is used for taxes, it must be used for financial reporting.
e. Assumes items sold are those acquired first.
f. Assumes items sold are those acquired last.
g. Purchase discounts not taken are considered interest expense.
h. Used to convert ending inventory at year-end cost to base year cost.
i. Continuously records changes in inventory.
The following list that is most appropriately associated with it:
1. Perpetual inventory system: Continuously records changes in inventory. Option i.
2. Periodic inventory system: Assumes items sold are those acquired last. Option d.
3. F.o.b. shipping point: Legal title passes when goods are delivered to a common carrier. Option a.
4. Gross method: Purchase discounts not taken are included in inventory cost. Option c.
5. Net method: Purchase discounts not taken are considered interest expense. Option g.
6. Cost index: Used to convert ending inventory at year-end cost to base year cost. Option h.
7. F.o.b. destination: Goods are transferred to another company but title remains with transferor. Option b.
8. FIFO: Assumes items sold are those acquired first. Option e.
9. LIFO: f. Assumes items sold are those acquired last. Option f.
Here are the pairs of terms and phrases associated with inventory measurement:
- A perpetual inventory system keeps a real-time, up-to-date record of inventory levels, making it ideal for tracking inventory on an ongoing basis.
- The periodic inventory system determines the cost of goods sold and the ending inventory by assuming that the items sold are the ones acquired most recently during the period.
- F.o.b. shipping point means that the buyer assumes ownership and responsibility for the goods as soon as they are shipped by the seller, typically when they are delivered to a common carrier.
- The gross method includes any purchase discounts not taken in the cost of inventory, assuming that the discounts will eventually be taken.
- The net method treats any purchase discounts not taken as interest expense rather than including them in the inventory cost.
- A cost index is used to adjust ending inventory from the current year's cost to the base year's cost for financial reporting purposes.
- F.o.b. destination means that the seller retains ownership of the goods until they reach the buyer's specified destination.
- FIFO (First-In-First-Out) assumes that the items sold are those acquired earliest in the inventory, leaving the most recently acquired items in the inventory.
- LIFO (Last-In-First-Out) assumes that the items sold are those acquired most recently, leaving the earliest acquired items in the inventory.
These pairings help clarify the relationships between the terms and their associated inventory measurement methods and principles.
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Unearned revenues refer to a(n)_____________.
a. Asset that will be used over time.
b. Expense incurred because a customer has paid in advance.
c. Liability that is settled in the future when a company delivers its products or services.
d. Increase in revenues as a result of delivering products or services to a customer.
e. Decrease in an asset.
Answer:
The answer is C.
Explanation:
Unearned revenue is a liability because the amount for the transaction has already been collected while the goods or services have not been delivered. Example of unearned revenue is magazine subscription fee for a year and the money for the subscription has been collected at the beginning of the year.
Revenue is only recognized as the service is being rendered, maybe monthly or quarterly while the unearned revenue (liability) in the balance sheet decreases by the same amount
Answer: c. Liability that is settled in the future when a company delivers its products or services.
Explanation: Firstly, liability an obligation, debt or responsibility owed to someone. They are a company's legal financial debts or obligations that are incurred during the course of business operations. Unearned revenues, a type of current liability (short term liability), defines a firm's liability to deliver goods and/or services at a future date after being paid in advance. The unearned revenue amount will be deducted in the future with an offsetting entry once the product or service is delivered.
Is anyone who worked in the infant formula companies responsible for the deaths of infants described in the United Nations study? Is there a line that companies could draw that emerges in this case?
Answer: All infants formula marketing Organisations are to be careful to ensure that they represent what are the real contents of their product. ANYONE OR COMPANY THAT MISREPRESENT THE CONTENTS OF THE INFANT FORMULAS IS RESPONSIBLE FOR THE NEGATIVE CONSEQUENCES WHICH COULD BE DEATH OF INFANTS
The line that can be drawn is that MARKETERS SHOULD BE TRUTHFUL AND HONEST IN MARKETING THE INFANT FORMULAS.
Explanation: Infant formulas are products that are made or processed as foods for infants,these products are specifically designed to enhance the health and wellbeing of the infants as their bodies are not fitted for consuming products made according to certain formulations.
THE MAJOR CAUSE OF DEATH OF INFANTS USING THE INFANT FORMULAS IS THE MISREPRESENTATION OF THE PRODUCT CONTENTS BY BOTH THE MANUFACTURING ENTITIES AND THE MARKETERS AND A LINE HAS TO BE DRAWN TO ENSURE THAT MANUFACTURING ENTITIES AND MARKETERS ARE TRUTHFUL AND HONEST IN THE MARKETING OF INFANT FORMULAS.
Consider this argument: "The kidnappers have taken eight people hostage and are holding them at a farmhouse just outside town. If the SWAT team assaults the farmhouse, the hostages could be killed. But if we give into the kidnappers' demands for ransom and safe passage out of the country, we'll only be encouraging more kidnappings of innocent people. What can we do
Answer:
all you have to do is surround the farm house next put c4 on the swat team let the people with c4 on them run in there and someone explodes him/her and save the dayExplanation:i did it before
Suppose that you are attempting to value an income-producing property using the direct capitalization approach. Using data from comparable properties, you have determined the overall capitalization rate to be 11.44%. If the projected first-year net operating income (NOI) for the subject property is $44,500, what is the indicated value of the subject using direct capitalization?
Answer:
Based on the calculation made, the indicated value is $3,889.86014
Explanation:
Using direct capitalization method, indicated value can be calculated using the formula below:
Value = Annual net operating income NOI/Capitalization rate
= $44500/11.44%
Value= $3,889.86014
Based on the calculation made above, the indicated value is $3,889.86014.
Dana wants to give Fleesum's employees more freedom to schedule when they begin and end their work days. Her plan still requires employees to work eight hours per day, but allows them to start as early as 7:00 a.m. or as late as 9:00 a.m., and leave as early as 4:00 p.m. or as late as 6:00 p.m. Her plan also requires all workers to be on the job between 9:00 a.m. and noon, and between 2:00 p.m. and 4:00 p.m. The type of plan Dana wants to implement is known as a:
Answer:
The correct answer is letter "B": flextime plan.
Explanation:
A flextime plan consists in linking production hours with the availability of the individuals involved in a project or work. The different timeframes of availability do not affect the operations' peak hours either the total amount of hours those individuals must work in day or week.
The flextime plan aims to provide individuals the flexibility to choose the working schedule that matches better with their personal activities which may increase their commitment to the firm and productivity.
Accountants and Economists differ in their calculations of profits in that; a. economists consider sunk costs b. accountants consider implicit costs only c. accountants consider explicit costs only d. all of the above
Answer:
The correct answer is letter "C": accountants consider explicit costs only.
Explanation:
Explicit costs are those necessary for the operations of the company such as wages, rent or raw materials. Implicit costs are the opportunity costs companies as a result of giving up factors such as purchases or qualified employee hires.
The accounting profit of a company is calculated by subtracting the explicit costs from the firm's total revenue. The economic profit is computed by subtracting the result of adding the explicit and implicit costs from the company's total revenue.
Accountants and economists differ in their calculations of profits. Economists consider sunk costs, while accountants consider explicit and implicit costs.
Explanation:Accountants and economists differ in their calculations of profits. Economists consider sunk costs, which are costs that have already been incurred and cannot be recovered. Accountants, on the other hand, consider both explicit costs (actual out-of-pocket expenses) and implicit costs (opportunity costs or the value of the next best alternative forgone).
For example, let's say a business invested $10,000 in a project that turned out to be unsuccessful. Economists would consider the $10,000 as a sunk cost and exclude it from their calculation of profits. Accountants, however, would consider it as an explicit cost and include it in their calculation of profits.
Therefore, the correct answer to the question is d. all of the above. Accountants consider both explicit and implicit costs, while economists consider sunk costs.
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Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices�one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company�s most recent year is given below:
Office
Total Company Chicago Minneapolis
Sales $ 450,000 100 % $ 150,000 100 % $ 300,000 100 %
Variable expenses 225,000 50 % 45,000 30 % 180,000 60 %
Contribution margin 225,000 50 % 105,000 70 % 120,000 40 %
Traceable fixed expenses 126,000 28 % 78,000 52 % 48,000 16 %
Office segment margin 99,000 22 % $ 27,000 18 % $ 72,000 24 %
Common fixed expenses not
traceable to offices 63,000 14 %
Net operating income $ 36,000 8 %
1-a. Compute the companywide break-even point in dollar sales.
1-b. Compute the break-even point for the Chicago office and for the Minneapolis office.
1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?
Explanation:
1. The computation of the company wide break-even point in dollar sales is shown below:
Break even point = (Traceable fixed expenses + Common fixed expenses ) ÷ (Profit volume Ratio)
where,
Contribution margin = Sales - Variable expenses
= $450,000 - $225,000
= $225,000
And, Profit volume ratio = (Contribution margin) ÷ (Sales) × 100
= ($225,000) ÷ ($450,000) × 100
= 50%
So, the company wide break even point in dollar sales is
= ($126,000 + $63,000) ÷ (50%)
= $378,000
b. For Chicago
Break even point = (Traceable fixed expenses) ÷ (Profit volume Ratio)
where,
Contribution margin = Sales - Variable expenses
= $150,000 - $45,000
= $105,000
And, Profit volume ratio = (Contribution margin) ÷ (Sales) × 100
= ($105,000) ÷ ($150,000) × 100
= 70%
So, the company wide break even point in dollar sales is
= ($78,000) ÷ (70%)
= $111,429
For Minneapolis
Break even point = (Traceable fixed expenses) ÷ (Profit volume Ratio)
where,
Contribution margin = Sales - Variable expenses
= $300,000 - $180,000
= $120,000
And, Profit volume ratio = (Contribution margin) ÷ (Sales) × 100
= ($120,000) ÷ ($300,000) × 100
= 40%
So, the company wide break even point in dollar sales is
= ($48,000) ÷ (40%)
= $120,000
c. The company wide break even point in sales dollars is $378,000 and the total is $111,429 + $120,000 = $231,429
So, the company wide break even point is greater than the sum of the Chicago and Minneapolis break-even points due to the common fixed expenses
The company-wide break-even point in dollar sales is $378,000, and for the Chicago office and for the Minneapolis office it will be $111,429 and $120,000.
What is break even-point?
The break even-point is defined as the market condition where there is no profit and no loss to the seller. The producer of any product is just cover up the cost of their product.
Computation of break even-point in the given cases:Calculation of the company's dollar sales break-even point:
Break even point = Fixed Cost ÷ (Profit volume Ratio)
Now, according to the given information,
Fixed Cost = Traceable fixed expenses + Common fixed expenses.
Fixed Cost = $126,000 + $63,000
Fixed Cost = $189,000.
Then, there is a need to find out the Profit volume ratio, this can be computed as:
Profit volume ratio = (Contribution margin) ÷ (Sales) × 100
Now, the contribution margin can be computed as:
Contribution margin = Sales – Variable expenses
Contribution margin = $450,000 – $225,000
Contribution margin = $225,000.
Then, Profit volume ratio = ($225,000) ÷ ($450,000) × 100
Profit volume ratio = 50%
Therefore, the company-wide break even point in dollar sales are:
Break even point sales = $189,000÷ (50%)
Break even point sales = $378,000.
Computation of break even-point for Chicago:This can also be computed as the formula of case 1:
Break even point = (Traceable fixed expenses) ÷ (Profit volume Ratio)
Contribution margin = Sales – Variable expenses
Contribution margin = $150,000 – $45,000
Contribution margin = $105,000
And, Profit volume ratio = (Contribution margin) ÷ (Sales) × 100
Profit volume ratio = ($105,000) ÷ ($150,000) × 100
Profit volume ratio = 70%
Then, the company-wide break even point in dollar sales are:
Break even point sales = ($78,000) ÷ (70%)
Break even point sales= $111,429
For Minneapolis:
Contribution margin = $300,000 – $180,000
Contribution margin = $120,000
And, Profit volume ratio = ($120,000) ÷ ($300,000) × 100
Profit volume ratio = 40%
Therefore, the company-wide break even point in dollar sales is
Break even point sales= ($48,000) ÷ (40%)
Break even point sales= $120,000
In sales dollars, the company's break even point is $378,000, for a total of $111,429 + $120,000 = $231,429As a result of the common fixed expenses, the company's break-even point is greater than the sum of the break-even points in Chicago and Minneapolis.
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In 2017, Concord Corporation, issued for $103 per share, 93500 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Concord's $20 par value common stock at the option of the preferred stockholder. In August 2018, all of the preferred stock was converted into common stock. The market value of the common stock at the date of the conversion was $25 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock?
Answer:
The value to be credited as additional Paid in Capital from Common stock however, will be the Par Value of $5,610,000.
Explanation:
Number of Convertible Preferred Stock issued = 93,500
Conversion ratio is one preferred stock for 3 common stock = 3
At 100% conversion in August 2018,
The admissible new number of common stock added = 93,500 x 3 = 280,500
Par Value of these holdings is $20 Per Share = $5,610,000
The Market Value however is $25 Per Share = $7,012,500
The value to be credited as additional Paid in Capital from Common stock however, will be the Par Value of $5,610,000.
This is because Paid in Capital is recognized at Par and premium is only a basis of Stock issuance above Par Value, in this case the $5 extra valuation is an external Valuation which should flow in through the retained earnings of the Business in an ideal situation.
Place in order the events that start with the right institution being put in place and end with growth.
a. More investment in production facilities occurs.
b. Future prices of physical capital and raw goods become more predictable, as does the cost of borrowing money.
c. More production takes place.
d. A new government adopts tighter inflation controls.
Answer:
d. A new government adopts tighter inflation controls.
b. Future prices of physical capital and raw goods become more predictable, as does the cost of borrowing money.
a. More investment in production facilities occurs.
c. More production takes place.
Explanation:
The process flow for implementing the right policy to resultant growth is shown above.
First the government adopts tighter inflation controls, institutionalising the policy that will bring growth.
As a result of the policy prices become more predictable.
Confidence of investors grow as they can forecast future profits. More investment in production occurs.
Finally more production takes place. Growth is achieved.
A causal-explanatory study is one that _______. Multiple Choice attempts to reveal why or how one variable produces changes in another provides repeated measures over an extended period of time discovers answers to the questions of who, what, when, where, or how much attempts to capture a population's characteristics by making inferences from a sample's characteristics and testing resulting hypotheses emphasizes a full contextual analysis of a few events or conditions and their interrelations
Answer:
The correct answer is letter "A": attempts to reveal why or how one variable produces changes in another.
Explanation:
Causal-explanatory research is conducted to identify cause-effect relationships between variables. This study focuses on analyzing events or specific problems to determine relationships with their effects.
In business, for instance, causal-explanatory research is useful to determine the influence of direct investment over a foreign country, the impact of re-branding in consumer's loyalty, or the impact of changing the current method of manufacturing in employees.
Final answer:
A causal-explanatory study aims to determine how one variable produces changes in another, establishing a cause-and-effect relationship through controlled experiments and causal mechanisms.
Explanation:
A causal-explanatory study is one that attempts to reveal why or how one variable produces changes in another. This kind of study is integral in establishing a cause-and-effect relationship between variables, allowing researchers to draw more definitive conclusions about causal relationships. In order to achieve this, an experimental research design must be utilized. Experiments are designed to test hypotheses in a controlled setting, with the goal to explain how certain factors or events produce outcomes. These experiments manipulate one variable (the independent variable) to observe changes in another (the dependent variable), establishing a causal link.
Experimental studies introduce a suspected causal factor to subjects and observe if the effect occurs, thereby ruling out other explanations for the correlation. This method is contrasted with correlational studies which can only establish a relationship between variables but cannot confirm causation. In causal case studies that employ causal mechanisms, the context is meticulously reviewed to understand how a hypothesized cause, in a given context, contributes to a particular outcome, strengthening the causal inference.
The following income statement and additional year-end information is provided. SONAD COMPANY Income Statement For Year Ended December 31 Sales $ 1,858,000 Cost of goods sold 910,420 Gross profit 947,580 Operating expenses Salaries expense $ 254,546 Depreciation expense 44,592 Rent expense 50,166 Amortization expenses—Patents 5,574 Utilities expense 20,438 375,316 572,264 Gain on sale of equipment 7,432 Net income $ 579,696 Accounts receivable $ 18,800 increase Accounts payable $ 10,900 decrease Inventory 20,200 increase Salaries payable 3,550 decrease
Answer:
Statement of Cash Flows (partial)
Cash flows from operating activities
Net income 579,696
Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash
Depreciation expense 44,592
Amortization expense—Patents 5,574
Gain on sale of equipment -7,432
Changes in current operating assets and liabilities
Increase in accounts receivable -47,700
Increase in inventory -15,650
Decrease in accounts payable -13,550
Decrease in salaries payable -3,500
Net cash provided by operating activities 5,42,030
The accounting profit of Sonad Company can be calculated by subtracting explicit costs from total revenue. Net operating income is also computed, by subtracting operating expenses from gross profit. Both these values are found to be equivalent when the gain on sale is considered in net income.
Explanation:The question pertains to the income statement of the Sonad Company. Based on the data, we can calculate both the accounting profit and net operating income. Accounting profit is determined by subtracting explicit costs from total revenue. In this case, the total revenue is the Sales ($1,858,000) and the explicit costs are the Cost of Goods Sold ($910,420) and Operating Expenses ($375,316). Hence, the Accounting Profit is $1,858,000 - ($910,420 + $375,316) = $572,264.
The net operating income is computed by subtracting all operating expenses from gross profit. Therefore, the net operating income = Gross profit - Operating expenses = $947,580 - $375,316 = $572,264. The Net income provided ($579,696) includes the gain from the sale of equipment ($7,432). So,the operating income and net income figures align when the gain on sale is considered.
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The owner’s equity isa. added to assets and the two are equal to liabilities b. added to liabilities and the two are equal to assets c. subtracted from liabilities and the net amount is equal to assets d. subtracted from owner’s equity and the net amount is equal to net income
Answer:
The correct answer is letter "B": added to liabilities and the two are equal to assets.
Explanation:
Owner’s equity mostly known as the shareholders' equity is a measure of a company's net worth. Shareholder's equity is calculated using the following formula:
Shareholders' Equity = Total Assets - Total Liabilities
Thus:
Shareholders' Equity + Total Liabilities = Total Assets
Shareholders' equity comes from two pots of money: the first port has money that was initially invested in the company, and any subsequent investments. The second pots contain retained earnings that are the gains the company holds on to and do not pay out as dividends to its shareholders.
Owner's equity is added to liabilities and the total is equal to assets according to the basic accounting equation: Assets = Liabilities + Owner's Equity. This means, the total value of a company's assets must always be equal to the sum of its liabilities and equity.
Explanation:The correct option is that owner's equity is added to liabilities and the two are equal to assets. This reflects the basic accounting equation, which is Assets = Liabilities + Owner's Equity. This equation is the core of double-entry bookkeeping method which means, at all times, the total value of a company's assets must equal the sum of its liabilities and equity. For example, if a business has $100,000 in assets such as cash, equipment etc, and it's financed by $60,000 liabilities (like loans) and $40,000 equity (owner's contribution), the equation holds, as liabilities + Equity ($60,000 + $40,000) equals assets ($100,000).
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Knowledge Check 01 Complete each sentence by selecting the correct term using the drop-down list. Abbey Company completed the annual count of its inventory. During the count, certain items were identified as requiring special attention. Decide how each item would be handled for Abbey Company's inventory.
Answer:
The items are:
Goods in transit to Customers warehouse
Goods loaded in Trucks but not shipped as at stock Count
Explanation:
Annual stock count is meant to help determine our closing stock position as well as complete our revenue recognition processes in line with the IFRS.
Where Goods are in transit to Customers warehouse; we would consider if the risk and reward have been passed to the Customer or not based on the contract agreed to
A. if the Risk and reward have been passed from the point the stock was loaded based on Contract with customer then the stock should not be added to the stock physically counted in the warehouse; if otherwise, we should add the stock to that counted in the warehouse and deduct it from Sales as Goods in transit.
B.Because these goods are loaded but haven't been shipped, Abbey company still holds the full risks and rewards of these stock. thus, we have to add back the Quantity on truck to that in the warehouse.
A firm practicing direct price discrimination will charge a higher price to a. Consumers known to have an inelastic demand b. All consumers c. Consumers known to have a unitary elastic demand d. Consumers known to have an elastic demand
Answer:
c) Consumers with an inelastic demand
Explanation:
When the price increase, the demand for the product will decrease. The increase in price makes the customer look for a product substitute with cheaper price. Substitutes will keep the demand elastic since it can change easily.
But some customer has an inelastic demand, which means that their demand does not easily change when the price is increased. This type of customer can't substitute and have no choice but to keep buying even at a higher price.
Direct price discrimination occurs when a firm charges different prices to different groups of customers based on their price elasticity of demand. Consumers with an inelastic demand are charged a higher price as they are less likely to switch to substitute goods if the price increases. Examples of direct price discrimination include senior citizen or student discounts and variable utility rates.
Explanation:Direct price discrimination occurs when a firm charges different prices to different groups of customers based on their price elasticity of demand. In this case, a firm practicing direct price discrimination will charge a higher price to consumers known to have an inelastic demand.
This is because consumers with an inelastic demand are less likely to switch to a substitute good if the price increases and are more likely to pay the higher price, allowing the firm to increase its profits.
Examples of direct price discrimination include senior citizen or student discounts, different rates for weekdays and weekends, and variable utility rates.
Are budgets part of the performance measurement system or the performance reward system? a. Part of both the performance measurement system and the performance reward system b. Part of the performance measurement system only c. Part of neither the performance measurement system nor the performance reward system d. Part of the performance reward system only
Answer:
The correct answer is letter "A": Part of both the performance measurement system and the performance reward system.
Explanation:
Budgets are estimates a company outlines at the beginning of a period to determine the expenditures that must be incurred during the operations of the firm for the whole year. Part of the managers' work is evaluated based on how close the actual expenses match the budgeted estimates.
In case the company's expenses are higher, investors may not consider the performance of the executives and the overall firm as appropriate. If the expenses are below the budget estimate at the productivity level desired, investors could be interested in maintaining or improving the current business process and being the rewards for managers higher.
Answer:
b. Part of both the performance measurement system and the performance reward system
Explanation:
From the From the dropdown box beside each numbered balance sheet item, select the option of its balance sheet classification. If the item should not appear on the balance sheet, choose the option "No item required" from the selection choices. box beside each numbered balance sheet item, select the option of its balance sheet classification. If the item should not appear on the balance sheet, choose the option "No item required" from the selection choices.
Answer:
The table has been shown in the attachment and the classifications indicated below it
Explanation:
Accurate balance sheet classification is essential. Current assets like cash, accounts receivable, and inventory are vital, while long-term assets, liabilities, and equity require proper placement.
In financial accounting, accurate classification of balance sheet items is vital for transparent financial reporting. Cash and cash equivalents, representing liquid assets, are classified as current assets. Accounts receivable, money owed by customers, is also a current asset. Inventory, goods ready for sale, falls under current assets too. Property, plant, and equipment, long-term assets like buildings and machinery, are non-current assets.
Accounts payable, money owed to suppliers, is a current liability, while long-term debt, loans payable over several years, is a non-current liability. Shareholder's equity, representing the owners' residual interest, is placed under equity. It's important to choose "No item required" for entries that don't belong on the balance sheet, ensuring a precise and comprehensive presentation of the company's financial status.
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Ever since the organization began a group incentive program, John has noticed that his team appears more loyal to one another than they were before the group incentive program began.
This illustrates which advantage of group incentives?
a. promotes better teamwork
b. broadens individual outlook
c. requires less supervision
d. is easier to develop than individual incentive programs
Answer:
The correct answer is letter "A": promotes better teamwork.
Explanation:
Group incentives represent all the efforts managers make to keep their subordinates motivated collectively. This is achieved by different methods such as introducing a new bonus to the team that performs better allowing teams to take more decisions on their duties. By doing so, members of a group are likely to improve their engagement with other coworkers in the pursuit of achieving an objective.
Teamwork is highly promoted by incentivizing groups compared to motivating individuals separately.
Coca-Cola acquired its bottlers and created a national vertically integrated business operation in 2010. After spending 12.3 billion USD to acquire Coca-Cola Enterprises, its largest bottling partner, it reversed course in 2015 and sold off all its bottling operations. This is an example of a failed diversification effort.
Coca-Cola acquired its bottlers and created a national vertically integrated business operation in 2010. After spending 12.3 billion USD to acquire Coca-Cola Enterprises, its largest bottling partner, it reversed course in 2015 and sold off all its bottling operations. This is an example of a failed diversification effort.
Explanation:
Diversification efforts are taken by the organizations to achieve desired outcomes but sometimes they fail in it. The following are the reason for failure of diversification effort:
- failing to integrate acquisitions
- unable to understand how the acquired organization’s assets would fit with their own lines of business
- paying high premium for the target's common stock
- not acting in best interest of shareholders
The diversification strategy is adopted by many organizations to develop its business. In the above scenario, Coca-Cola Enterprises adopted diversification effort but failed in it.
Brian works for Magnira Labs and is conducting research on a certain topic. For the research, he needs $50,000, but the private agency funding the research is willing to give only $30,000. In this scenario, the restraint on the budget is an example of a _____.
Answer: Budget Constraint
Explanation: Because from the Question we can see that brain needs $50,000 for his research but was dropped to $30,000 , so the $20,000 not given is the budget constraint .
Answer:
Limitation in research
Explanation:
Limitation are those factors that are capable of influencing the conduct of the research which the researcher cannot control. They are the shortcomings, conditions or influences that cannot be controlled by the researcher that place restrictions on your methodology and conclusions.
In the this scenario Brian is faced with the limitation in funding that will have a drastic effect on the conduct of his research. The limitation is this case is due to limited resources in terms of fund that could be provided by the private agency funding the research.
However, Brian can overcome this minimize the effect the limitation on his research by cutting down the research budget.
Problem 12-04A a-b At April 30, partners’ capital balances in Ivanhoe Company are G. Donley $48,000, C. Lamar $48,000, and J. Pinkston $15,000. The income sharing ratios are 5 : 4 : 1, respectively. On May 1, the PDLT Company is formed by admitting J. Terrell to the firm as a partner.
Answer:
Question is incomplete Complete question is given below
Explanation:
Problem 12-04A a-b At April 30, partners’ capital balances in Ivanhoe Company are G. Donley $48,000, C. Lamar $48,000, and J. Pinkston $15,000. The income sharing ratios are 5 : 4 : 1, respectively. On May 1, the PDLT Company is formed by admitting J. Terrell to the firm as a partner.
a. Journalize the admission of Terrell under each of the following independent assumptions.
(1) Terrell purchases 50% of Pinkston's ownership interest by paying Pinkston $15,400 in cash.
(2) Terrell purchases 33 1/3% of Lamar's ownership interest by paying Lamar $15,600 in cash.
(3) Terrell invests $60,200 for a 30% ownership interest, and bonuses are given to the old partners.
(4) Terrell invests $41,400 for a 30% ownership interest, which includes a bonus to the new partner.
b. Lamar's capital balance is $38,200 after admitting Terrell to the partnership by investment. If Lamar's ownership interest is 20 % of total partnership capital, what were (1) Terrell's cash investment and (2) the bonus to the new partner?
Solution
a. Journal Entries:
No. Account Titles Debit Credit
1 Pinkson, Capital 7,500
Terrell, Capital 7,500
2 Lamar, Capital 16,000
Terrell, Capital 16,000
3 Cash 60,200
Terrell, Capital 51,360
Donley, Capital 4,420
Lamar, Capital 3,536
Pinkston, Capital 884
4 Cash 41,400
Donley, Capital 2,160
Lamar, Capital 1,728
Pinkston, Capital 432
Terrell, Capital 45,720
Computation:
a.(1) Capital of Terrell = $15000 x 0.50 =$ 7500
a.(2) Capital of Terrell = $48,000 x 1/3 = $16,000
a.(3) Capital of Terrell = $171,200 x 0.30 = $51,360
Old Partners bonus = $60,200 - $51,360 = $8,440
Capital of Donley = $8,440 x 5/10 = $4420
Capital of Lamar = $8,840 x 4/10 = $3,536
Capital of Pinkston = $8,840 x 1/10 = $884
a.(4) Terrel Capital = $152,400 x 0.30 = $45,720
New Partner Bonus = $45,720 - $41,400 = $4,320
Donley Capital = $4,320 x 5/10 = $2,160
Lamar Capital = $4,320 x 4/10 = $1,728
Pinkston Capital = $4,320 x 1/10 = $432
b.(1) Total Capital after Admission = $38,200 / 0.20 = $191,000
Total Capital before Admission = $48000 + $48000 + $15000 = $110,000
Cash Investment by Terrell = $191,000 - $111,000 = $80,000
b.(2) Decrease in Lamar's Capital = $48,000 - $38,200 = $9,800
Bonus to New Partner = $9,800 / 0.40 = $24,500
Assume the company is considering a reduction in the selling price by $10 per unit and an increase in advertising budget by $5,000. This will increase sales volume by 50%.
What is the net operating income after the changes?
a. $5,000
b. $60,000
c. $25,000
d. $35,000
Answer:
Net Operating income after change is $25,000
Explanation:
Increase in price will increase the sales value, it will increase the contribution margin as well. Increase in advertisement expense will be added to fixed cost. which will decrease the net profit by $5000. Net effect will be $5000 of profit.
Increase in Price = $110 + $10 = $120
Fixed Cost = $30,000 + $5,000 = $35,000
Sales $120,000 1000 units @ $120 100 %
Variable expenses $60,000 1000 units @ $60 50 %
Contribution margin $60,000 1000 units @ $60 50 %
Fixed expenses $35,000
Net operating income $25,000
* Data for the question was missing following data has been used from the similar question
Selling price $110,000 1000 units @ $110 100 %
Variable expenses $60,000 1000 units @ $60 55 %
Contribution margin $50,000 1000 units @ $50 45 %
Fixed expenses $30,000
Net operating income $ 20,000
g The company took out a loan from the bank (this transaction was already recorded). It was a 90-day, 9% note for $7,200 taken out on December 1, 2014. Record the accrued interest expense for the month of December.
Answer:
1. Dr Interest expense 54
Cr Accrued interest 54
( To record interest expense )
Explanation:
Interest expense = 7200 * 9% = $648 * 1 /12 = $54 for the m/o dec
On April 5, 2019, Kinsey places in service a new passenger automobile that cost $60,000. The car is used 100% for business in each tax year. Kinsey uses the MACRS 200% declining-balance method of cost recovery (the auto is a 5-year asset).
assume Kinsey elects any available additional first-year depreciation. the max depreciation allowed for 2019 and 2020 are?
Answer:
60,000
Explanation:
The section 179 for depreciaiton considers a requirement that the assets should be used more than 50% for business purposes during the tax year. Also ther eis a cap at $1,000,000 to depreciate
and 2,000,000 for purchases
Kinsey meet the percentage of business use and she doesn't exceeds the caps therefore it can depreciate the entire 60,000 of the car in the first year.
Even if Cajun opens company-owned restaurants in a foreign country, it may have to buy local food products to supplement the menu; in fact, it may have to buy chicken from local producers for the standard menu. In doing so, the company would be engaged in _____.
Answer: The company would be engaged in Outsourcing.
Explanation:
Outsourcing is the practice whereby a company hires a party outside the company to perform services that could have been performed by the company's employees. Outsourcing is usually undertaken by companies to reduce cost such as labor costs, technology costs.
Outsourcing is also used by firms to focus on the main aspects of the business and give the less critical operations of the business to outside organizations. Outsourcing can include different functions ranging from purchases to recruitment to customer services. Buying chickens from local producers means the company is engaging in outsourcing.
Even if Cajun opens company-owned restaurants in a foreign country, it may have to buy local food products to supplement the menu; in fact, it may have to buy chicken from local producers for the standard menu. In doing so, the company would be engaged in import substitution. The correct term to fill in the blank is import substitution.
When a company like Cajun opens company-owned restaurants in a foreign country, it may need to purchase local food products to supplement its menu. This could include buying chicken from local producers for the standard menu. This practice is known as import substitution. Import substitution is an economic policy and strategy that advocates replacing foreign imports with domestic production. It is often implemented in an attempt to diversify the economy, reduce dependence on foreign trade, and improve the balance of trade.
In the context of Cajun's operations, by sourcing chicken locally instead of importing it from its home country, the company is substituting a local product for an imported one. This can have several benefits:
1. Cost Reduction: Local sourcing can reduce transportation costs and tariffs associated with imports.
2. Supply Chain Stability: Relying on local suppliers can make the supply chain more resilient to international disruptions.
3. Cultural Adaptation: Using local ingredients can make the menu more appealing to local tastes and cultural preferences.
4. Economic Contribution: Purchasing from local producers contributes to the local economy and can improve community relations.
5. Environmental Impact: Reducing the need for long-distance transportation can lower the company's carbon footprint.
By engaging in import substitution, Cajun is adapting its business model to the local context, which can be a key factor in the success of international operations. It also aligns with the broader economic goals of the host country by fostering local industry growth and reducing reliance on foreign goods.
Brandon Consulting Company is headquartered in Atlanta and has branch offices in Nashville and Birmingham. Brandon uses an activity-based costing system. The Atlanta office has its costs for Administration and Legal allocated to the two branch offices. Brandon has provided the following information: Activity Cost Pool Cost Driver Costs Administration % of time devoted to branch $700,000 Legal Hours spent on legal research $138,000 % of time devoted to branch Hours spend on legal research Nashville 80% 18,000 Birmingham 20% 6,000 How much of Atlanta’s cost will be allocated to Nashville? $628,500 $663,500 $670,400 None of these answer choices are correct
Answer:
The Atlanta's cost allocated to Nashville will be $663,500.
Explanation:
Administration: $700,000 x 80% = $560,000
Legal: $138,000 x [18,000 ÷ (18,000 + 6,000)] = $103,500
Solution: $560,000 + $103,500 = $663,500.