Answer:
The value of the firm is $16,949
Explanation:
Value of the firm is the firm's economic value at a particular time. Winter Wear Company's value will be calculated by:
= [tex]\frac{EBIT(1-tax rate)}{Unlevered Cost of Capital}[/tex] + (Tax rate * Debt) =
Here given are,
EBIT = $3,800
Tax Rate = 35%
Unlevered Cost of Capital = 15.4%
Debt = $2,600
= [tex]\frac{3,800(0.65)}{0.154}[/tex] + (0.35 x $2,600)
= $16,039 + $ 910
= $16,949
Final answer:
The value of the Winter Wear Company is approximately $24,726.77, which is calculated by adding the value of the unlevered firm to the value of the tax shield from the debt.
Explanation:
To calculate the value of the Winter Wear Company, we need to consider both the value of the company without any leverage (unlevered) and the effects of the debt on the value of the company (levered).
Firstly, let's calculate the value of the unlevered firm. This is done by dividing the expected earnings before interest and taxes (EBIT) by the unlevered cost of capital. This will give us the value of the firm if it had no debt.
Unlevered Firm Value = EBIT / Unlevered Cost of Capital
Unlevered Firm Value = $3,800 / 0.154 = $24,675.32 approximately
Next, we can calculate the value of the tax shield that debt provides. This is the amount by which the tax deductible interest payments on the debt reduce the company's tax liability.
Tax Shield Value = Tax Rate x Debt x Coupon Rate
Tax Shield Value = 0.35 x $2,600 x 0.057 = $51.45
Finally, we add the value of the unlevered firm and the tax shield to get the total value of the levered firm.
Levered Firm Value = Unlevered Firm Value + Tax Shield Value
Levered Firm Value = $24,675.32 + $51.45 = $24,726.77 approximately
Thus, the value of the Winter Wear Company, considering debt and taxes, is approximately $24,726.77.
Scenario 13-6 Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce Refer to Scenario 13-6. An economist would calculate Ziva's total cost of farming to equal _____________.A. $300B. $250C. $130 D. $380
Answer:
The correct answer is:
$380 (D.)
Explanation:
The cost of production of a good or service is the amount used up or forfeited in the production of the good or service. In this scenario, from Ziva used 10 hours for farming and because she dedicated 10 hours, if she had been available for her consultancy service which paid her $25 per hour, she would have earned a total of $250 at the end of the 10 hours she used in farming. In addition, she also spend $130 on the seed that she used for planting, which is the direct cost of farming (production). Hence the total amount given up in the farming process will make up the total cost of farming, and this includes; the $250 given up for consultancy, and the $130 spent on seeds, hence, the total cost of production is;
= 250 + 130 = $380
On December 1, Bright Company receives a 6% interest-bearing note from Galvalume Company to settle a $20,000 account receivable. The note is due in three months.
At December 31, Bright should record interest revenue of (rounded to the nearest dollar):
a) $100. b) $600. c) $0. d) $200.
Answer:
a) $100
Explanation:
The adjusting entries are prepared at the end of the period and in this case, we assume that the adjusting entries are prepared on 31 December.
To calculate the interest revenue on the note, we need to understand that the rate that is 6% is the annual interest rate. Thus, the interest revenue for the year will be,
Interest = 20000 * 0.06 = $1200However, the note is only for 3 months starting from December and by the end of December, only one month's interest revenue is earned, then the interest revenue at 31 December will be,
Interest revenue = 1200 / 12 = $100The entry will be,
31 Dec Interest Receivable $100 Dr
Interest Revenue $100 Cr
Suppose that you own 1,000 shares of Nocash Corp. and the company is about to pay a 25% stock dividend. The stock currently sells at $100 per share. (LO17-1) a. What will be the number of shares that you hold after the stock dividend is paid? b. What will be the total value of your equity position after the stock dividend is paid? c. What will be the number of shares that you hold if the firm splits five-for-four instead of paying the stock dividend?
Answer:
a. 1250 shares
b. $125000
c. 1250 shares
Explanation:
A stock dividend refers to dividend payment by an entity in the form of stocks and not in cash, thereby increases the number of shares held.
Dividend Declared = 25% of $100 = $ 25 per share
Total dividend declared = $25 × 1000 shares = $25,000
Number of shares held after the stock dividend is declared = 1000 shares + [tex]\frac{25000}{100}[/tex] = 1250 shares
(b) Total value of equity position = $1250 shares × 100 = $125,000
(c) Number of shares held after stock split = 1000 shares × [tex]\frac{5}{4}[/tex] = 1250 shares
After the stock dividend, you will hold a total of 1,250 shares and the total value of your equity position will be $125,000. If the firm splits five-for-four, you will hold 1,250 shares.
Explanation:a. After the stock dividend is paid, the number of shares you will hold will increase by 25%. Since you initially own 1,000 shares, your new holdings will be 1,000 x 1.25 = 1,250 shares.
b. The total value of your equity position after the stock dividend is paid can be calculated by multiplying the new number of shares (1,250) by the stock price ($100 per share). Therefore, the total value will be 1,250 x $100 = $125,000.
c. If the firm splits five-for-four instead of paying the stock dividend, this means that for every four shares you own, you will receive five additional shares. Since you initially own 1,000 shares, and the split is five-for-four, you will receive 1,000 / 4 x 5 = 1,250 shares after the split.
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Four friends plan to form a corporation for purposes of constructing a shopping center. Charlie will be contributing the land for the project and wants more security than shareholder status provides.
He is contemplating two possibilities:
receive corporate bonds for his land or take out a mortgage on the land before transferring it to the corporation.
Comment on the choices Charlie is considering. What alternatives can you suggest?
Charlie is contemplating the degree of risk and security in either receiving corporate bonds or mortgaging the land before transferring it to the corporation. Both options have their pros and cons related to risk, cash flow, and personal financial responsibility. Another possibility for Charlie is to enter the corporation as a secured creditor by lending the corporation money secured by the land.
Explanation:Charlie's deliberation between receiving corporate bonds for his land or taking out a mortgage on the land prior to its transfer to the corporation involves weighing different levels of security and risk. If Charlie opts for corporate bonds, he essentially exchanges his land for debt securities that can be monetized or held until maturity. This option has a predictable cash flow, though it may not increase in value. However, the risk is the corporation's solvency and bond coverage.
If he mortgages and then transfers the land, he can access immediate funds, retaining a sort of ownership on the property due to the lien. However, this increases his personal financial burden as he is legally obligated to repay the mortgage, even if the corporation fails.
An alternative suggestion might include entering the corporation as a secured creditor where instead of receiving shares, Charlie lends money to the corporation using the land as security for the loan. This could potentially offer more security than being just a shareholder.
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Bruno Company accumulates the following data converning a mixed cost, using miles as the activity level.
.......................Miles Driven......................Total Cost
January........... 8,000...................................$14,150
February..........7,500...................................$13,500
March..............8,500.................................. $15,000
April................. 8,200................................. $14,490
Compute the variable - and fixed-cost elemts using the high-low method.
Answer:
The answer is stated below:
Explanation:
Taking the highest and second lowest cost and miles driven as:
Cost = Highest - Lowest
Cost = $15,000 - $14,150
Cost = $850
Miles Driven = Highest - Lowest
Miles driven = 8,500 - 8,000
Miles Driven = 500
So,
= Cost / Miles driven
= $850 / 500
= $1.70
Total Cost would be 15,000 and 13,500
So, computing the variable cost as:
Variable cost of highest cost (VC) = Miles driven of $15,000 cost × $1.70
VC = 8,500× $1.70
VC = $14,450
Variable cost of lowest cost (VC) = Miles driven of $13,500 cost × $1.70
VC = 7,500× $1.70
VC = $12,750
Computing fixed cost as:
Fixed cost of highest cost = Total cost - VC
= $15,000 - $14,450
= $550
Fixed cost of lowest cost = Total cost - VC
= $13,500 - $12,750
= $750
Despite broad regulatory reforms after the Enron scandal over a decade ago, corporate boards still are not providing the oversight necessary to prevent ethical lapses, according to an article in the Harvard Business Review. Which of the following are likely areas of concern for corporations? Check all that apply.A) Corporations place too much emphasis on pleasing shareholders and not enough on meeting the needs of other stakeholders such as customers, employees, and members of the public.B) Executive bonuses are based on a number of qualitative and quantitative measures rather than just on stock price.C) Corporations focus on meeting short-term earnings goals rather than on creating long-term value.D) Executives’ pay exceeds their value to the organization, as indicated by historical measures.
Corporate governance still faces challenges in ensuring companies act ethically and in the long-term interest of not just shareholders but all stakeholders. The focus on short-term earnings, excessive executive pay, and inadequate attention to broader stakeholder needs are key areas of concern.
Explanation:Despite regulatory reforms post-Enron, the Harvard Business Review article indicates that corporate boards are still not sufficiently overseeing to prevent ethical lapses. Here are areas of concern for corporations:
Corporations place too much emphasis on pleasing shareholders and not enough on meeting the needs of other stakeholders such as customers, employees, and members of the public.Corporations focus on meeting short-term earnings goals rather than on creating long-term value.Executives’ pay exceeds their value to the organization, as indicated by historical measures.These areas highlight the ongoing challenges in corporate governance, despite the establishments like the board of directors, auditing firms, and outside investors designed to provide oversight.
Concerns A, C, and D are likely areas of concern for corporations regarding ethical lapses and corporate governance, as they touch upon issues related to stakeholder prioritization, short-term focus, and executive compensation practices. Option B, on the other hand, promotes a more balanced approach to executive bonuses, which is considered a positive practice.
The concerns highlighted in the Harvard Business Review article touch upon various aspects of corporate governance and ethics. Let's analyze each option to understand the likely areas of concern for corporations:
A) Corporations place too much emphasis on pleasing shareholders and not enough on meeting the needs of other stakeholders such as customers, employees, and members of the public: This is a valid concern. If corporations excessively prioritize shareholder interests over those of other stakeholders, it can lead to ethical lapses, such as neglecting employee welfare, customer satisfaction, or broader societal impact.
B) Executive bonuses are based on a number of qualitative and quantitative measures rather than just on stock price: This is a positive practice. Relying solely on stock price for executive bonuses can encourage short-term decision-making to boost stock value, potentially at the expense of long-term sustainability and ethical considerations. A more balanced approach, incorporating various measures, promotes a holistic view of performance.
C) Corporations focus on meeting short-term earnings goals rather than on creating long-term value: This is a significant concern. Short-term focus can lead to unethical practices, such as financial manipulation, to meet immediate goals at the expense of sustainable long-term value creation.
D) Executives’ pay exceeds their value to the organization, as indicated by historical measures: This is another potential concern. Overcompensation without corresponding value creation raises ethical issues. Executives should be fairly compensated based on their contribution to the organization, and excessive pay without commensurate performance can be seen as unjust.
The method used by managers when comparing unit costs with budgeted costs or other measures is broadly known as: Multiple Choice Account reconciliation. Sales management. Cost control. Employee evaluation.
Answer:
Option A, ACCOUNT RECONCILIATION.
Explanation:
Reconciliation is an accounting process that compares two sets of records to check that figures are correct and in agreement. Account reconciliation also confirms that accounts in the general ledger are consistent, accurate, and complete.
Account reconciliation is particularly useful for explaining the difference between two financial records or account balances.
* Sales management is a business discipline which is focused on the practical application of sales techniques and the management of a firm's sales operations.
* Cost control is the practice of identifying and reducing business expenses to increase profits, and it starts with the budgeting process.
* An employee evaluation is the assessment and review of a worker’s job performance.
The method used by managers when comparing unit costs with budgeted cost or other measures is broadly known as ACCOUNT RECONCILIATION.
Colonial Furniture's net profits before taxes for 2019 totaled $354,000. The company's total retained earnings were $338,000 for 2018 year-end and $389,000 for 2019 year-end. Colonial is subject to a 21 percent tax rate. What was the cash dividend declared by Colonial Furniture in 2019?
The cash dividend declared by Colonial Furniture in 2019 is calculated by first finding the difference in retained earnings between 2019 and 2018, then subtracting the after-tax net profit from this amount. The resulting number is $228,660.
To calculate the dividend declared by Colonial Furniture in 2019, we start with the retained earnings at the end of 2019 and subtract the retained earnings at the end of 2018.
This difference is then reduced by the net profit after tax for 2019.
To find the net profit after tax, we take the total net profits before tax and subtract the company's tax (which is calculated as 21% of the net profits before tax).
So, first, we find the difference in retained earnings between 2019 and 2018, which is $389,000 - $338,000 = $51,000.
Then, we calculate the net profits after tax, which is $354,000 - ($354,000 * 0.21) = $279,660.
Now, we subtract this from the increase in retained earnings: $51,000 - $279,660 = -$228,660.
Because dividends reduce retained earnings and we're looking for a reduction in retained earnings, we take the absolute value of this number to find the declared dividend, which is $228,660.
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The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of remaining life. If kept, the steamer will have depreciation expenses of $650 for 5 years and $325 for the sixth year. Its current book value is $3,575, and it can be sold on an Internet auction site for $4,150 at this time. If the old steamer is not replaced, it can be sold for $800 at the end of its useful life.Gilbert is considering purchasing the Side Steamer 3000, a higher-end steamer, which costs $13,000, and has an estimated useful life of 6 years with an estimated salvage value of $1,300. This steamer falls into the MACRS 5-years class, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The new steamer is faster and would allow for an output expansion, so sales would rise by $2,000 per year; even so, the new machine's much greater efficiency would reduce operating expenses by $1,600 per year. To support the greater sales, the new machine would require that inventories increase by $2,900, but accounts payable would simultaneously increase by $700. Gilbert's marginal federal-plus-state tax rate is 40%, and its WACC is 13%.Required:A) Should it replace the old steamer?B) What is the NPV of the project? (Round your answer to the nearest dollar.)
Solution:
Purchase price -13,000
Sale of old machine 4150
Tax on sale of old machine -230
Change in net working capital -2200
Total investment 10,280
a. The market value reaches $4,150-$ 3,550= USD 600. Therefore, depreciation is offset by $600, and Taylor will continue to pay 0.40($600)= $240 in taxes
b. Net working capital shifts represent an increase of $2,900 in current assets versus a increase in $800 in accumulated liabilities totalling $2,200.
Examining the annual cash inflows:Sales increase 2,000
Cost decrease 1,900Increase in pre-tax revenues 3,900
After-tax revenue increase:$3,900(1-T) = $3,900(.60) = $2,340
Project cash flows:Initial outlay = -10,280
Year 1 = 3,040
Year 2 =3,616
Year 3 =3,002
Year 4 = 2,633
Year 5 = 2,633
Year 6 = 5,106
NPV of the project = $2,093.42 at WACC of 15%
The NPV of this incremental cash flow stream, when discounted at 15% is $2,083.51. Thus, the replacement should be made.
A) Gilbert should replace the old steamer because the NPV of the project is positive, indicating it's a financially favorable investment. B) The NPV of the project is approximately $2,024.
to determine whether Gilbert Instrument Corporation should replace the old steamer and calculate the NPV of the project.
Calculate the Annual Depreciation for the New Steamer (MACRS)
Using the MACRS depreciation rates, calculate the annual depreciation expenses for the new steamer:
Year 1: $13,000 * 20% = $2,600
Year 2: $13,000 * 32% = $4,160
Year 3: $13,000 * 19.20% = $2,496
Year 4: $13,000 * 11.52% = $1,496.32
Year 5: $13,000 * 11.52% = $1,496.32
Year 6: $13,000 * 5.76% = $748.80
Calculate Incremental Cash Flows for Each Year
Calculate the annual incremental cash flows for the new steamer:
Increased Sales: $2,000 per year
Reduced Operating Expenses: $1,600 per year
The depreciation expense provides a tax shield, which reduces the tax liability:
Tax Shield (Depreciation Expense x Tax Rate)
Year 1: $2,600 * 0.40 = $1,040
Year 2: $4,160 * 0.40 = $1,664
Year 3: $2,496 * 0.40 = $998.40
Year 4: $1,496.32 * 0.40 = $598.53
Year 5: $1,496.32 * 0.40 = $598.53
Year 6: $748.80 * 0.40 = $299.52
Calculate the incremental working capital requirement:
Increase in Inventories: $2,900
Increase in Accounts Payable: -$700 (a decrease in cash flow)
Calculate Incremental Cash Flows
For each year, calculate the incremental cash flow by summing up the changes:
Cash Flow Year 1 = Increased Sales - Reduced Operating Expenses - Tax Shield Year 1 + Incremental Working Capital Year 1
Cash Flow Year 2 = Increased Sales - Reduced Operating Expenses - Tax Shield Year 2 + Incremental Working Capital Year 2
Continue this process for each year (Year 3 to Year 6).
Calculate NPV
Using the calculated cash flows, calculate the NPV of the project by discounting each year's cash flow at the WACC (Weighted Average Cost of Capital) of 13%. Sum up the present values of all the cash flows to get the NPV.
NPV ≈ $2,024 (rounded to the nearest dollar)
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Ethan conducted multiple marketing research activities for the Protiviti global consulting firm. After he created reports highlighting his marketing findings he considered his next step.
What is the next step Ethan needs to take with sharing the information?
Answer: Implementation of Findings and Sharing Information gathered with decision-makers to aid implementation.
Explanation:
Marketing Research is a series of steps taken in gaining a better understanding of a company's goods and services in the market field, as well as, methods that can be employed to improve the distribution and value of the product.
The series of steps involved in marketing research include; Problem Identification, Enumeration of the research goals, Research Planning and design, Data collation, Data analysis, presentation of the report, and Implementation of findings.
Ethan has just reached the concluding part of his marketing research where he now creates a report of his findings and proposes several actions.
His next step would be to take action. He should also be willing to share the information gathered from the findings with decision-makers in the organization as this would be a helpful guide to them in executing actions.
The following transactions for the month of March have been journalized and posted to the proper accounts. Mar. 1 The business received $7,000 cash and issued common stock to stockholders. Mar. 2 Paid the first month's rent of $700. Mar. 3 Purchased equipment by paying $3,000 cash and executing a note payable for $8,000. Mar. 4 Purchased office supplies for $700 cash. Mar. 5 Billed a client for $10,000 of design services completed. Mar. 6 Received $7,800 on account for the services previously recorded What is the balance in Cash on March 6?
The balance in the Cash account on March 6, after accounting for the listed transactions, is $10,400.
To calculate the balance in Cash on March 6, we need to account for all the cash inflows and outflows from March 1 through March 6, as per the transactions given. Here's a breakdown of the cash transactions:
Mar. 1: Cash inflow from issued common stock: +$7,000
Mar. 2: Rent payment: -$700
Mar. 3: Purchase of equipment by paying cash: -$3,000
Mar. 4: Purchase of office supplies: -$700
Mar. 5: No change in cash as it is billing on account.
Mar. 6: Received cash for services: +$7,800
Starting with the initial cash balance of $0 before March 1st, we can add and subtract these amounts to find the final cash balance.
Calculation:
Starting balance: $0
Add $7,000 (common stock issued)
Subtract $700 (rent)
Subtract $3,000 (equipment purchase)
Subtract $700 (office supplies)
Add $7,800 (cash received for services)
Final Cash balance on March 6 = $0 + $7,000 - $700 - $3,000 - $700 + $7,800 = $10,400.
Therefore, the balance in the Cash account on March 6 is $10,400.
Required information Accounts receivable are amounts due from customers for credit sales. A subsidiary ledger lists amounts owed by each customer. Credit sales arise from at least two sources: (1) sales on credit and (2) store credit card sales. Sales on credit refers to a company's granting credit directly to customers. Store credit card sales involve customers' use of store credit cards. Messing Company has their own credit card and makes a credit sale on February 1 to one of its customers for $5,000. Prepare the February 1 journal entry for Messing Company by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns
Answer:
Messing company Journal entries for Store Credit Card usage for a Customer
Explanation:
The Journal entries required includes
a. Recognition of the Bank credit advanced via usage of Credit Card (Liability)
b. Recognition of the Customer Account funded by this Credit line (Accounts receivable)
c. Recognition of the Sales created by this credit utilization
Kindly refer to attachment for detailed Journal entries
A credit sale of $5,000 made by Messing Company would create a journal entry where the Accounts Receivable is debited by $5,000 and Sales Revenue is credited by $5,000. These entries reflect the recognition of earned revenue and anticipations of future cash collection.
Explanation:When Messing Company makes a credit sale, two accounts are impacted: Accounts Receivable and Sales Revenue. Accounts Receivable is an asset account and is therefore increased with a debit entry. On the other hand, Sales Revenue, being an income account, increases with a credit entry. The journal entry for this $5,000 credit sale would be as follows:
Debit: Accounts Receivable - $5,000Credit: Sales Revenue - $5,000
This indicates that the company has earned revenue of $5,000 (even though the cash has not been received yet) by extending credit to a customer. The corresponding increase in Accounts Receivable reflects the company's expectation to collect this cash in the future.
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Morrow Corporation had only one job in process during May—Job X32Z—and had no finished goods inventory on May 1. Job X32Z was started in April and finished during May. Data concerning that job appear below:
Job X32Z
Beginning balance $ 7,000
Charged to the job during May
Direct materials $ 12,600
Direct labor $ 3,500
Manufacturing overhead applied $ 6,900
Units completed 250
Units in process at the end of May 0
Units sold during May 115
In May, overhead was overapplied by $450. The company adjusts its cost of goods sold every month for the amount of the overhead that was underapplied or overapplied.
Required:
1. Using the direct method, what is the cost of goods sold for May?
Cost of good sold: ______
2. What is the total value of the finished goods inventory at the end of May?
Total cost of ending finished good inventory: ______
3. What is the total value of the work in process inventory at the end of May?
Ending work in process inventory: _______
Answer:
1 Cost of goods sold $ 13,350
2. Value of finished goods ending inventory $ 16,200
3. Value of work in process inventory $ 0
Explanation:
Computation of cost of goods sold
Determination of per unit cost
Opening balance $ 7,000
Direct Materials $ 12,600
Direct Labour $ 3,500
Manufacturing overhead applied $ 6,900
Total cost of Job X32Z $ 30,000
Units completed 250
Cost per unit $ 120
Units sold 115 units
Cost of goods sold $ 120 * 115 $ 13,800
Add; Adjustment for over applied overhead $ ( 450)
Cost of goods sold $ 13,350
Computation of Finished Goods Inventory value
Units produced 250
Units sold 115
Units in ending inventory 135
Cost per unit $ 120 per unit
Value of ending inventory $ 120 unit * 135 units $ 16,200
Computation of Work in process inventory
There are no units in process at the end of May, so there is no work in process. so then value is $ 0
Final answer:
The cost of goods sold for Morrow Corporation in May was $29,100. The total value of the ending finished goods inventory was $34,155. Since Job X32Z was the only job and it was completed, the ending work in process inventory was $0.
Explanation:
Calculation of Cost of Goods Sold for May
Cost of goods sold (COGS) is the carrying value of goods sold during a particular period. Jobs are measured by the costs of direct materials, direct labor, and manufacturing overhead applied, and these costs must be adjusted for any overapplied or underapplied overhead to determine the accurate cost of goods sold.
In this scenario with Morrow Corporation, we calculate COGS for May by adding the beginning balance to the additional charges incurred during May and subtracting the overapplied overhead.
COGS = Beginning Balance + Direct Materials + Direct Labor + Manufacturing Overhead Applied - Overapplied Overhead
COGS = $7,000 + $12,600 + $3,500 + $6,900 - $450
COGS = $29,550 - $450
COGS = $29,100
Total Value of Finished Goods Inventory at the End of May
The total cost of the ending finished goods inventory can be calculated by taking the total costs accumulated for the job and subtracting the cost of goods sold. Only 115 out of 250 units were sold, which means the remaining units are part of the finished goods inventory.
Total job cost = COGS (for units sold) + Cost of ending inventory
Since COGS for 115 units is $29,100, we need to find the cost per unit and then multiply it by the number of unsold units to find the ending inventory value.
Cost per unit = Total COGS for May / Units sold = $29,100 / 115
Cost per unit = $253
Cost of ending inventory = Cost per unit × (Total units completed - Units sold)
Cost of ending inventory = $253 × (250 - 115)
Cost of ending inventory = $253 × 135
Cost of ending inventory = $34,155
Value of Work in Process Inventory at the End of May
Ending work in process inventory refers to the costs associated with the production that has not been completed by the end of a period. Since Job X32Z was completed in May and there was no mention of any other jobs in process, the ending work in process inventory for Morrow Corporation would be $0.
A major purpose of SPIN (situation questions, problem questions, implication questions, and need-payoff questions) or ADAPT (assessment questions, discovery questions, activation questions, projection questions, and transition questions) is to help a salesperson identify the _____ of a product for a buyer.
Answer:
The correct word for the blank space is: confirmed benefits.
Explanation:
SPIN (situation questions, problem questions, implication questions, and need-payoff questions) is an approach used by salespeople to understand the current situation of consumers and through a series of four (4) questions help them understand the implications of the decision they will take thanks to the solution the salesperson is to provide.
ADAPT (assessment questions, discovery questions, activation questions, projection questions, and transition questions) as well as SPIN, aims to assess consumers in their decision-making. The difference relies on how the questions are formulated. ADAPT uses a sequence of questions starting from the broadest questions to end with the most specific, narrow inconvenience the consumer might have.
Both SPIN and ADAPT allow salespeople to find out what are the confirmed benefits of the product that should be offered to the clients.
Answer:
Comfirmed Benefits
Explanation:
I'm pretty sure it wrong, but why not try to answer it...
On April 1, 2018, On April 1, 2018, Shoemaker Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is hurting Shoemaker's business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle. Shoemaker agrees to lend $570,000 to its supplier using a 12-month, 11% note. Required: 1. The loan of $570,000 and acceptance of the note receivable on April 1, 2018. 2. The adjustment for accrued interest on December 31, 2018. 3. Cash collection of the note and interest on April 1, 2019. Record the above transactions for Shoemaker Corporation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)Shoemaker Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is hurting Shoemaker's business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle. Shoemaker agrees to lend $570,000 to its supplier using a 12-month, 11% note. Required: 1. The loan of $570,000 and acceptance of the note receivable on April 1, 2018. 2. The adjustment for accrued interest on December 31, 2018. 3. Cash collection of the note and interest on April 1, 2019. Record the above transactions for Shoemaker Corporation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Explanation:
1. April 1, 2018
Dr Notes Receivable 570,000
Cr Cash 570,000
2. Dec 31, 2018
Dr Interest Receivable 47,025
Cr Interest revenue 47,025
*Interest Revenue = Face value*Annual int. rate*Fraction of the year = 570,000*11%*9/12 = 47,025
3. April 1, 2019
Dr Cash 632,700
Cr Notes receivable 570,000
Cr Int receivable 47,025
Cr Int revenue 15,675
*Int revenue = 570,000*11%*3/12 = 15,675
Answer:
JOURNAL ENTRIES
1) Debit Note Receivable $570,000 Credit Bank $570,000
2) Debit Accrued Interest income $47,025 Credit Interest income $47,025
3) Debit Bank $632,700 Credit Note receivable $570,000 Credit Accrued interest income $47,025 Credit interest income $15,675
Explanation:
Interest income = $570,000 * 11% * 9/12 = $47025 for 2018
interest income for 2019 = $570,000*11%*3/12 = $15,675
When a foreman orders an assembly-line employce to carry out a task, which the employee perceives as unethical yet the employee feels compelled to complete, the foreman is exercising a. legitimate power. b expert power c. reward power d. contingent punishment power e. noncontingent reward behavior.
Answer:
The correct answer is option A,legitimate power.
Explanation:
Legitimate power refers to the power attained by virtue of formal position occupied by a superior that make subordinates believe in the legitimacy of his position and compelled to obey the instructions given by the superior.
When subordinates obey a superior as a result of wealth of knowledge, experience and skills set of the superior, such is said to be said expert power.
A manager might also offer some benefits or rewards in order to bring about obedience in the employee,this is known as reward power.
Contingent punishment power is a way to improve employee's performance by giving negative feedback inform of low appraisal score ,reprimands and so on
Non-contingent reward behavior implies giving rewards to employees which are not in any way related to employee's performance
What insight does ROI give into investment performance? Is it acceptable to lose profit on one product, if that product is vital to the sale of an extremely profitable product? Why?
Answer:
Explanation:
Return on investment (ROI) can be defined as a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of investments.
The ability to calculate return on investment is particularly valuable for any business regardless of its size or industry. by calculating ROI, an individual can understand how well their business is doing and which areas needs improvement.
Every business decision requires knowldge of ROI, so as to optimize profitability. Yes it is acceptable to loose profit of one product for the sale of a profitable product because the gain that would be derived by selling an extremely profitable products is better for the company that the gain one product will derive. Afterall, every company wants to increase profitability.
Final answer:
Return on Investment (ROI) offers crucial insights into the efficiency and performance of investments. It is acceptable to lose profit on one product if it supports the sale of another, more profitable product, as strategized through loss leaders to enhance overall profitability. This underscores the importance of strategic decision-making and understanding product interplay in business.
Explanation:
The question "What insight does ROI give into investment performance? Is it acceptable to lose profit on one product, if that product is vital to the sale of an extremely profitable product? Why?" delves into concepts central to business operations, specifically related to Return on Investment (ROI), and strategic decision-making around product profitability.
ROI provides insight into the efficiency of an investment, comparing the gain from an investment relative to its cost. It is a crucial metric for evaluating the financial performance of business decisions, allowing business owners and managers to assess the relative profitability of various investments.
Regarding the acceptability of incurring losses on one product to benefit another, this strategy can be considered viable from a business perspective. This approach is often evident in scenarios where a loss leader—a product sold at a loss to stimulate other profitable sales—is employed. The rationale is that the overall profitability from the sale of associated products or the cultivation of customer loyalty justifies the initial loss.
For example, a company may sell printers at a loss but profit significantly from the sale of ink cartridges. Here, the printer serves as the loss leader, drawing customers in with a low initial price, but the real profits are made on the recurring purchases of ink. This illustrates a strategic use of product mix and pricing to maximize overall profitability, even if it means accepting losses on certain items.
In summary, while ROI provides crucial insight into the performance of specific investments, understanding the broader strategic context—such as the interplay between different products and services in a company's portfolio—is essential for making informed business decisions.
When no-par stock is issued, the entire proceeds are credited to Capital Stock and this amount is viewed as legal capital not subject to withdrawal. True or False True False
Answer:
True
Explanation:
If there is no-par stock is issued, the entire proceeds are credited to Capital Stock. Also, the amount we get in for this capital amount can not be legally withdrawn for any purposes. It also reduces any responsibility faced from payable by the issuance of no face value. The journal entry will be as follows:
Cash Debit
Common stock Credit
The statement is true. When no-par stock is issued, the entirety of proceeds is credited to Capital Stock, which then becomes viewed as legal capital not subject to withdrawal. Always verify with local laws.
Explanation:The statement is true. When no-par stock is issued, the entire proceeds do indeed become credited to Capital Stock. This consequently becomes the legal capital, which is not subject to withdrawal. In essence, legal capital serves as a company's equity cushion and is calculated as the total number of shares issued multiplied by the par value per share. However, different rules may exist depending on jurisdiction, and this should always be checked with local laws and regulations.
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Given a 3 percent interest rate, compute the year 6 future value of deposits made in years 1, 2, 3, and 4 of $1,550, $1,750, $1,750, and $2,050. (Do not round intermediate calculations and round your final answer to 2 decimal places.)
You are looking to buy a car. You can afford $360 in monthly payments for four years. In addition to the loan, you can make a $1,900 down payment. If interest rates are 9.25 percent APR, what price of car can you afford? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Answer: a) total value of deposits becomes $18,332
b) price of car affordable is $17716.93364
Explanation:detailed calculation and explanation is shown in the image below
Final answer:
You can calculate the future value of deposits made in different years and determine the maximum price of a car you can afford based on monthly payments and down payment with a given interest rate.
Explanation:
Future Value of Deposits:
Year 1: $1,550(1.03)^5 = $1,818.35Year 2: $1,750(1.03)^4 = $1,932.73Year 3: $1,750(1.03)^3 = $1,868.13Year 4: $2,050(1.03)^2 = $2,121.32Car Affordability Calculation:
Monthly payment for 4 years: $360, Down payment: $1,900, Interest rate: 9.25%
Using the loan payment formula, you can afford a car priced at approximately $15,338.43.
Using the graph, complete the table that follows by indicating whether each statement is true or false. Statement True False a. Curve MM is more elastic between points A and C than curve NN is between points A and D.b. Between points A and B, curve LL is unit elastic. c. Between points A and D, curve NN is inelastic.
Answer:
a. Curve MM is more elastic between points A and C than curve NN is between points A and D: TRUE
b. Between points A and B, curve LL is unit elastic: FALSE
c. Between points A and D, curve NN is inelastic: TRUE
Explanation:
Elasticity is the responsiveness of quantity demanded or quantity supplied to a change in the price. There are five categories of elasticities:
1. Perfectly elastic: Quantity changes even without a change in price. Curve is a horizontal line.
2. Elastic: Change in price is smaller than a change in quantity. Curve has a smoother slope.
3. Unit elastic: Change in price causes a proportionate change in quantity. Curve is a rectangular hyperbola.
4. Inelastic: Change in price causes a smaller change in quantity. Curve is a steep slope.
5. Perfectly inelastic: Change in price causes no change in quantity. Curve is a vertical line.
To interpret statements about price elasticity of demand, consider that elastic demand corresponds to a more horizontal demand curve, unit elastic demand suggests a straight line with a negative slope through the origin, and inelastic demand corresponds to a steeper curve. Without the graph, we cannot definitively label statements a, b, and c as true or false.
Explanation:Without the graph, it's not possible to definitively determine the truth of these statements. However, I can provide some clarification about the concepts in question:
Price Elasticity of Demand is a measure of the responsiveness of quantity demanded to a change in price. Elastic demand means that quantity demanded is highly responsive to changes in price. This would likely correspond with a more horizontal, or less steep, demand curve. Thus, if curve MM is more horizontal than curve NN between points A and C and A and D respectively, statement a would be true.
Unit elastic demand means that the percentage change in quantity demanded is equal to the percentage change in price. In this case, the total revenue remains constant. If curve LL is a straight line with a negative slope through the origin from A to B, it may indicate unit elasticity. However, without the graph, it's not possible to be sure.
Lastly, inelastic demand means that quantity demanded is relatively unresponsive to price changes. If the curve NN is steeper between points A and D, it indicates inelastic demand, thus making statement c true.
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g suppose that bigbucks company pays a dividend this year of $7 per share. You expect the dividend to grow by 2% per year, so you discount bigbucks dividend at 4%. What is the most youwould be willing to pay for a share of stock in bigbucks
Answer:
$357
Explanation:
The price that g would pay for the stock of the bigbucks shall be determined through the following mentioned formula:
Price of stock of big bucks=[D(1+g)/(r-g)]
In the given question
D=dividend paid by the Big bucks this year=$7
g=growth rate in dividend=2%
r=discount rate=4%
Price of stock of big bucks=[7(1+2%)/(4%-2%)]
=$357
Brown Company incurred costs of $20,000 for material, $10,000 for labor, and $16,000 for factory Overhead. There was no beginning or ending work in process. 5,000 units were completed and transferred out. The unit cost for material is:
Answer:
Unit cost of material is $4
Explanation:
Cost of production is the cost incurred during production of goods and services. Production cost is made up of the direct cost which include cost of material, and indirect cost such as labour and factory overhead. Total cost are then allocated to units produced to get the total amount spent per unit of the product.
However we were asked to calculate the unit cost of material, which is the direct input used in this production process.
Unit cost of material= Cost of material/number of units
Unit cost of material= 20,000/5,000
Unit cost of material = $4
The unit cost for material at Brown Company, with a total material cost of $20,000 for producing 5,000 units, is calculated to be $4 per unit. This calculation is critical for understanding cost distribution in production.
Explanation:In this scenario, the Brown Company is calculating the unit cost for material used in the production of 5,000 units, where the total material cost is $20,000. To find the unit cost for material, you must divide the total material cost by the number of units produced. This calculation represents a fundamental concept in cost accounting, emphasizing the importance of understanding how individual costs contribute to the total production cost.
Now, let's perform the calculation:
Total Material Cost = $20,000Number of Units Produced = 5,000 unitsUnit Cost for Material = Total Material Cost / Number of Units ProducedUnit Cost for Material = $20,000 / 5,000 unitsUnit Cost for Material = $4 per unitThis example illustrates how dividing the total cost by the number of units gives us a per-unit breakdown of the costs, which is essential for pricing, budgeting, and financial analysis within a company.
The average elasticity for steeper demand curves are _____ elastic than flatter curves because percentage changes in ____ tend to be smaller and percentage changes in _____ tend to be larger.
Answer:
Explanation:
The average elasticity for steeper demand curves are less elastic than flatter curves because percentage changes in price tend to be smaller and percentage changes in quantity tend to be larger.
The following is a listing of all of the income statement accounts for Mulberry Street Sportswear as they appear on the adjusted trial balance as of December 31 Advertising Expense $11,100 Cost of Goods Sold 88,000 Delivery Expense 4,300 Insurance Expense 1,100 Income Tax Expense 6,560 Rent Expense 12,000 Interest Expense 1,400 Sales Revenue 162,000 Sales Discounts 9,100 Sales Returns and Allowances 18,600 a. Prepare a multistep income statement.b. Compute the gross profit percentage.
a. The Gross Profit is = 46300
b. Then the Gross Profit Percentage is 34.48 %.
Computation of the Gross profit
a.) When Multi-Step income statement separately shows operating and also non-operating revenues and then Expenses.
Then Advertising Expense = 11000
Cost of Goods Sold = 88000
Delivery Expense is = 4300
Then Insurance Expense = 1100
Income Tax Expense = 6560
Rent Expense is = 12000
Then Interest Expense = 1400
Sales Revenue is = 162000
Sales Return & Allowance is = 18600
Sales Discount is = 9100
Computation
Sales Revenue 162000
Sales Discount -9100
Sales return & allowance -18600
Net Sales revenue 134300
Cost of goods sold -8800
Gross Profit 46300
Operating Expenses
Selling Expenses
Advertising Expense -11000
Delivery Expense 4300
Administrative Expenses
Rent Expense -12000
Insurance Expense -1100
Operating income 17900
Non-Operating Revenues % Expense
Interest Expense -1400
Net Income Before Tax 16500
Income Tax Expense -6560
Net Income After Tax 9940
b. When the Gross Profit Percentage is = (Gross Profit / Net Sales ) x 100
Gross Profit %age is = (46300/134300) x 100 = 34.48 %
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To prepare a multistep income statement, start with sales revenue and subtract sales discounts and returns/allowances. Then subtract cost of goods sold and other expenses to get operating income. Finally, subtract income tax expense to get net income. The gross profit percentage is calculated by dividing gross profit by net sales and multiplying by 100.
Explanation:a. Multistep Income Statement:To prepare a multistep income statement, we need to break down the various components of revenue and expenses. Here's how we can do it:
Start with Sales Revenue: $162,000Subtract Sales Discounts: $9,100Subtract Sales Returns and Allowances: $18,600This gives us Net Sales: $134,300Subtract Cost of Goods Sold: $88,000This gives us Gross Profit: $46,300Subtract other expenses: Advertising Expense ($11,100), Delivery Expense ($4,300), Insurance Expense ($1,100), Rent Expense ($12,000), and Interest Expense ($1,400)This gives us Operating Income: $16,400Finally, subtract Income Tax Expense: $6,560This gives us Net Income: $9,840b. Gross Profit Percentage:
To compute the gross profit percentage, divide Gross Profit ($46,300) by Net Sales ($134,300) and multiply by 100:
Gross Profit Percentage = (Gross Profit / Net Sales) * 100 = ($46,300 / $134,300) * 100 = 34.5%
Your father's employer was just acquired, and he was given a severance payment of $365,000, which he invested at a 7.5% annual rate. He now plans to retire, and he wants to withdraw $35,000 at the end of each year, starting at the end of this year.
a. How many years will it take to exhaust his funds, i.e., run the account down to zero?
Answer: 21.07
Explanation:
investment an aural rate= 7.5%
severance payment = $365,000
PMT= $35,000
Answer = 21.07
The following accounts are taken from Equilibrium Riding, Inc., a company that specializes in occupational therapy and horseback riding lessons, as of December 31.
Account Name Debits Credits
Cash 69,600
Accounts Receivable 5,200
Prepaid Insurance 5,000
Equipment 78,750
Land 26,550
Accounts Payable 32,600
Unearned Revenue 2,100
Notes payable (long-term) 66,000
Common stock 5,000
Retained Earnings 51,815
Dividends 0
Service Revenue 33,500
Wages Expense 4,800
Repairs and Maintenance-
Expense 830
Office Expenses 285
Totals 191,015 191,015
(a) Using the unadjusted trial balance provided, create an Income Statement for Equilibrium Riding, Inc., for the year ended December 31.
(b) Using the unadjusted trial balance provided, create a Statement of Retained Earnings for Equilibrium Riding, Inc., for the year ended December 31.
(c) Using the unadjusted trial balance provided, create a classified Balance Sheet for Equilibrium Riding, Inc., for the year ended December 31.
Answer:
Part a) Net Income for the year $27,585
Part b) Balance of Retained Earnings for the year $79,400
Part c) Total Assets as the December 31 $185,100
Explanation:
Part a)
Equilibrium Riding Inc.
Income Statement for the year ended as of 31 December
Service Revenue $33,500
Less Expenses
Wages Expense $4,800
Repairs and Maintenance Expense $830
Office Expenses $285
Net Revenue $27,585
Part b)
Equilibrium Riding Inc.
Statement of changes in Equity for the year ended as of 31 December
Retained Earnings at the beginning of the period $51,815
Add: Net income for the year $27,585
Less Dividends $0
Retained earnings at the end of the period $79,400
Part c)
Equilibrium Riding Inc.
Balance Sheet as at 31 December
Assets
Non-Current Assets
Equipment $78,750
Land $26,550
Current Assets
Accounts Receivable $5,200
Cash $69,600
Prepaid Insurance $5,000
Total Assets $185,100
Equity and Liabilities
Owners Equity
Common Stock $5,000
Retained Earnings $79,400
Non Current Liabilities
Notes Payable (long-term) $66,000
Current Liabilities
Accounts Payable $32,600
Unearned Revenue $2,100
Total Equity and Liabilities $185,100
Answer:
Please find the answer below
Explanation:
1. Equilibrium, Inc
Income statement for the year ended December 31
($)
Service revenue 33, 500
Other income 0
Gross Income 33, 500
Expenses:
Wages expense 4, 800
Repairs and maintenance 830
Office expenses 285
Total Expenses (5, 915)
Net Income 27, 585
2. Equilibrium, Inc
Statement of retained earnings
for the year ended December 31
($)
Retained earnings, 1 Jan 51, 815
Dividends (0)
Net profit 27, 915
Retained earnings , Dec 31 79, 400
3. Equilibrium, Inc
Balance sheet
for the year ended December 31
($)
Non-Current assets
Equipment 78, 750
Land 26, 550
Total Non-current assets 105, 300
Current Assets
Cash 69, 600
Accounts Receivable 5, 200
Prepaid insurance 5, 000
Total non-current assets 79, 800
TOTAL ASSETS 185, 100
Equity
Common stock 5, 000
Retained earnings 79, 400
Total equity 84, 400
Liabilities
Notes payable (long-term) 66, 000
Unearned revenue 2, 100
Accounts payable 32, 600
Total liabilities 100, 700
TOTAL EQUITY AND LIABILITIES 185, 100
Jerome was preparing to host a graduation party for his friends and relatives when he suddenly realized that he did not have a blender to mix certain beverages that he knew his guests would like. Having never purchased a blender before, Jerome felt that he needed to shop carefully and enlist in the help of friends for advice. After visiting several stores and examining numerous models, Jerome settled on a Kitchen-Aid model that cost nearly $100.
(Scenario 5-5) Jerome mentions to someone else shopping at the store that low-quality blenders are made of plastic and high-quality blenders have a stainless steel base. This comment represents Jerome’s
beliefs.
brand loyalty.
brand attitude.
habits.
Answer:
The correct answer is letter "A": beliefs.
Explanation:
Beliefs are preconceived ideas individuals have based on their thoughts and experiences. Some beliefs could be wrong moreover when the individual experience is little or insignificant about a topic. Beliefs tend to be subjective most of the time and represent a true for individuals that can be confirmed or corrected.
Under CARD, colleges and universities must: a. disclose financial relationships with the credit card companies. b. provide debt counseling for students. c. limit locations for student solicitation for credit cards. d. do all of these.
Answer: D. do all of these.
Explanation:CARD(credit card accountability, responsibility and disclosure) act is a set of guidelines and rules which guides consumers and help them to better understand their credit cards and reduce and control unfair practices from credit card companies, those rules, also concerns college students.
ALL THE OPTIONS ARE CORRECT REGARDING CARD RULES AND GUIDELINES FOR COLLEGE STUDENTS.
The Sonny Bono Copyright Extension Act: a. does not apply to individual copyright ownership. b. does not apply to corporate copyright ownership. c. does not provide protection for movies. d. extended the time for the federal copyright protection to 70 years beyond the life of the creator/author. e. none of the above
Answer:
The correct answer is letter "D": extended the time for the federal copyright protection to 70 years beyond the life of the creator/author.
Explanation:
The Sonny Bono Copyright Extension Act mostly known as the Copyright Term Extension Act (CTEA) is a regulation passed in 1998 to extend the length of copyrights. It is an amendment to the Copyright Act of 1976 where copyrights granted exclusiveness over inventions for 50 years after the decease of the author if individual or 75 years for corporate creations.
With the CTEA copyrights are granted to be used by individual creators only for until 70 years after their decease or 120 years for corporate authorship.
Martinez Manufacturing incurred $ 4 comma 000 for indirect labor in Department III. The journal entry to record indirect labor utilized, but not paid is ________. Process costing is used. A. debit Accounts Payable, $ 4 comma 000; credit Manufacturing Overhead, $ 4 comma 000 B. debit Wages Payable, $ 4 comma 000; credit Manufacturing Overhead, $ 4 comma 000 C. debit Manufacturing Overhead, $ 4 comma 000; credit Accounts Payable, $ 4 comma 000 D. debit Manufacturing Overhead, $ 4 comma 000; credit Wages Payable, $ 4 comma 000
Answer: B. debit Wages Payable, $ 4 comma 000; credit Manufacturing Overhead, $ 4 comma 000
Explanation: