Answer:
a. The IRR for the option B will be 9.988%.
b. The company would accept option A and reject the option B
Explanation:
a. To calculate the IRR for option B we first need to determine the service life of the option A.
If R = 12.28%
Net annual benefits = 650-245=$405
Then, 1450= 405*(1-1/1.1228^n)/.1228
1/1.1228^n =1 - 1450*.1228/405 = .5603
1.1228^n = 1.7846
n = log(1.7846)/log(1.1228) = 5 years
Therefore, For option B
Let, IRR = R
Net annual benefit = 445-147 = $298
1130 = 298*(1-1/(1+R)^5)/R
At R = 9%
PV of cash inflows = $1159.12
At R = 10%
PV of cash inflows = $1129.65
As per the method of interpolation,
R = 9% + ((1159.12 - 1130)/( 1159.12-1129.65))*(10%-9%)
R = 9.988%
Thus, IRR for the option B will be 9.988%.
b. According to the given data to selection the any option, the value of IRR must be greater than or equal to the MARR. in this case, option A has the IRR of 12.28% that is greater than the MARR of 11%. But, it is not the case with option B whose IRR is only 9.988% and it is less than the MARR of 11%.
Thus, option A will be accepted and option B will be rejected.
You have been asked by management to explain the variances in costs under your inpatient capitated contract. The following data is provided. Use the following data to calculate the variances.
Budget Actual
Inpatient Costs $12,568,500 $16,618,350
Members 42,000 42,000
Admission Rate 0.070 0.095
Case Mix Index 0.90 0.85
Cost per Case (CMI = 1.0) $4,750 $4,900
Problem 1: What dollar amount of the total variance is attributed to Enrollment Variance?
Problem 2: What dollar effect did the increased admission rate have on cost?
Problem 3: The intensity of care delivered dropped from a budgeted case mix of 0.90 to an actual case mix of 0.85. What dollar effect did this have on actual costs?
Problem 4: Costs per case increased to $4,900 from a budgeted value of $4,750. This increased actual total costs by what amount?
a) $400,000
b) $570,000
c) $970,000
d) $600,000
e) cannot calculate with given information
Find the given attachment
The income statement and selected balance sheet information for Direct Products Company for the year ended December 31 are presented below. Income Statement Sales Revenue $ 48,600 Expenses: Cost of Goods Sold 21,000 Depreciation Expense 2,000 Salaries and Wages Expense 9,000 Rent Expense 4,500 Insurance Expense 1,900 Interest Expense 1,800 Utilities Expense 1,400 Net Income $ 7,000 Selected Balance Sheet Accounts Ending Balances Beginning Balances Accounts Receivable $ 560 $ 580 Inventory 990 770 Accounts Payable 420 460 Prepaid Rent 25 20 Prepaid Insurance 25 28 Salaries and Wages Payable 100 60 Utilities Payable 20 15 Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
Cash flow from Operating Activities
Cash Receipts from Customers $48,620
Cash Paid to Suppliers and Employees ($17,017)
Cash Generated from Operations $31,603
Interest Paid ($1,800)
Cash flow from Operating Activities $29,803
Explanation:
Cash flow from Operating Activities relate to cash movement as a result of trading in the course of business.
Cash Receipts from Customers Calculation :
Prepare a Total Trade Receivables T - Account as follows :
Debit :
Beginning Balance $ 580
Sales Revenue $ 48,600
Totals $49,180
Credit :
Ending Balance $ 560
Cash Receipt (Balancing Figure) $48,620
Totals $49,180
Cash Paid to Suppliers and Employees Calculation :
Cost of Goods Sold 21,000
Add Other Expenses
(Excluding Depreciation and Interest Expense)
Salaries and Wages Expense 9,000
Rent Expense 4,500
Insurance Expense 1,900
Utilities Expense 1,400
Increase in Inventory 220
Decrease in Accounts Payable 40
Decrease in Prepaid Insurance (3)
Increase in Prepaid Rent 5
Increase in Wages Payable (40)
Increase in Utilities Payable (5)
Cash Paid to Suppliers and Employees 17,017
A steel company manufactures heavy-duty brackets for the shelving industry. The company has budgeted for the production and sale of 1,000,000 brackets and has no beginning or ending inventory. Relevant operational, revenue, and cost data is as follows: Unit selling price of a bracket $22.50 Direct material required per unit 4 pounds Direct labor required per unit 0.15 hours Cost of material per pound $1.75 Direct labor cost per hour $9.00 Total variable selling costs $2,250,000 Total fixed costs $1,500,000 Based on the data provided, what is the unit contribution margin per bracket
Answer:
Contribution margin per unit = $11.90
Explanation:
Given:
Total unit sale = 1,000,000
Unit selling price of a bracket = $22.50
Direct material required = 4 pounds per unit
Direct labor required = 0.15 hours per unit
Cost of material per pound = $1.75
Direct labor cost per hour = $9.00
Total variable selling cost = $2,250,000
Find:
Contribution margin per unit = ?
Computation:
Direct material per unit = 4 pounds per unit × $1.75
Direct material per unit = $7
Direct labor per unit = 0.15 hours per unit × $9.00
Direct labor per unit = $1.35
Variable selling cost per unit = Total variable selling cost / Total unit sale
Variable selling cost per unit = $2,250,000 / 1,000,000
Variable selling cost per unit = $2.25
Contribution margin per unit = Sales per unit - Variable cost per unit
Contribution margin per unit = Sales per unit - [Direct material per unit + Direct labor per unit + Variable selling cost per unit]
Contribution margin per unit = $22.50 - [$7 - $1.35 - $2.25]
Contribution margin per unit = $22.50 - [$10.6]
Contribution margin per unit = $11.90
You plan to borrow money from your grandmother to start a new chocolate candy business. You agree to make one payment of $100,000 at the end of 6 years and negotiate an interest rate of 7%. Your grandmother has offered to reduce either the interest rate or the number of years before the $100,000. Assuming your grandmother will lend you the present value of the final payment and that you want to borrow as much as possible today, which option would you prefer?
Answer:
future payment $100,000 in 6 years
agreed interest rate 7%
the present value of the $100,000:
PV = $100,000 / (1 + 7%)⁶ = $66,634
if your grandmother really likes you and offers to either reduce the interest rate or the number of years, you should choose a reduction in the interest rate:
PV at 6% = $100,000 / (1 + 6%)⁶ = $66,634
PV at 5% = $100,000 / (1 + 5%)⁶ = $74,622
PV at 4% = $100,000 / (1 + 4%)⁶ = $79,031
PV at 3% = $100,000 / (1 + 3%)⁶ = $83,748
PV at 2% = $100,000 / (1 + 2%)⁶ = $88,797
PV at 1% = $100,000 / (1 + 1%)⁶ = $94,205
the less the interest rate, the higher the present value of the $100,000
The objectives of labor unions have Multiple Choice always placed the greatest emphasis on increasing wages and benefits. shifted with social and economic conditions. frequently taken global competition into account. consistently favored policies that would move the U.S. economy toward a command system.
You just agreed to a deal that will make you the proud new owner of a beautiful new convertible. The car comes with a three-year warranty. Please consider the purchase of the extended warranty which has a purchase price of $1,800, today (the day you purchased your NEW car). The extended warranty covers the 4 years immediately after the three-year warranty expires. You estimate that the yearly expenses that would have been covered by the extended warranty are $400 at the end of the first year of the extension, $500 as the end of the second year of the extension, $600 at the end of the third year of the extension, and $800 at the end of the fourth year of the extension. Assume that money during this time can earn interest at a rate of 7% compounded monthly. Will you decide to buy the warranty? Your formal solutions should include:______.1. The overall goal and/or purpose
2. The given information
3. A time-line for the expected repair costs covered by the warranty
4. The present value for each of the repair costs
5. The present value of the warranty and the expected profit for the warranty company
6. Your conclusion
Answer:
1. The overall goal and/or purpose
The overall goal of this analysis is to determine if you would actually save money by purchasing the extended warranty.
2. The given information
You can calculate this by determining the present value of the expected repair costs that will be covered by the warranty and determine which is higher; the warranty or the repairs
3. A time-line for the expected repair costs covered by the warranty
initial investment -$1,800cash flow year 4 = $400cash flow year 5 = $500cash flow year 6 = $600cash flow year 7 = $8004. The present value for each of the repair costs
the discount rate is 7%, so the present value of each repair cost is:
PV cash flow year 4 = $400 / 1.07⁴ = $305PV cash flow year 5 = $500 / 1.07⁵ = $356PV cash flow year 6 = $600 / 1.07⁶ = $400PV cash flow year 7 = $800 / 1.07⁷ = $498total $1,5595. The present value of the warranty and the expected profit for the warranty company
the present value of the warranty is $1,800, so the car company is making $1,800 - $1,559 = $241 in profits by selling you the warranty
6. Your conclusion
You shouldn't buy the extended warranty (negative NPV)
To a greater or lesser degree, many governments can be considered pragmatic nationalists when it comes to foreign direct investment (FDI); this means it has both benefits and costs. FDI can benefit a host country by bringing capital, technology, and jobs, and it can also have a negative effect on a country's balance of payments. Accordingly, government policies are shaped by a consideration of these costs and benefits of FDI.
Home countries can adopt policies designed to both encourage and restrict FDI. Host countries try to attract FDI by offering incentives and try to restrict FDI by dictating ownership restraints and requiring that foreign multinational enterprises (MNE) meet specific performance requirements.
Roll over each item on the left to read its description. Determine whether the scenario represents a benefit or cost to the home or host country, and then drag it to the appropriate place on the chart.
HOST-COUNTRY BENEFIT HOST-COUNTRY COST
HOME-COUNTRY BENEFIT HOME-COUNTRY COST
-outflow of earnings from a foreign subsidiary
a- loss of jobs
b-inflows of foreign earnings
c-substitute for imports
d-loss of economic independence
e-increase in direct and indirect empolyment
f-skills that can be leveraged internationally
g-loss of local entreprenurship
h-Host country limits profit expatriation
i-transfer of new technology
Answer:
Home Country Benefit
b - inflows of foreign earnings.
The Company operating in the Host Country will send some of it's profits back to it's Home Country and this will be treated as Foreign Earnings.
f-skills that can be leveraged internationally.
The Home Country will gain skills from their experience in the Host Country. These skills can then be used to be competitive on the global market.
Home Country Cost
a- loss of jobs
The Home Country would lose the jobs that it's companies created in the Host Country. These are jobs that could have employed people in the Home Country but now employ people in the Host Country.
h-Host country limits profit expatriation
In order that they don't lose too much money to the Home Country, the Host Country might come up with laws that limit the amount of money that can be taken out from the country this limiting the amount of foreign Earnings that the Home country gets.
Host Country Benefit
c-substitute for imports
The products that the companies founded by FDI are producing could have been products that the Host Country used to import. Now that the goods are being made in the Host Country, there will be no need for imports.
e-increase in direct and indirect employment
The companies founded by FDI in the Host Countries will create employment for people in the company which is direct employment. Many auxiliary services such as drivers and caterers as an example will also spring up to take care of these newly employed folk thereby creating indirect employment.
i-transfer of new technology
The Company formed from FDI will bring with them technology from the Home Country that could be very beneficial to the Host Country.
Host Country Costs.
- Outflow of earnings from a foreign subsidiary
The Companies established through FDI will send some of their profits back to their home Countries. This means that the earnings would leave the Host Country instead of being reinvested in them.
d-loss of economic independence
These FDI companies tend to get very influential and powerful in the Host Country and can sometimes dictate policies. This would mean the companies have significant control over the resources of the Host Country which will lead to a loss of Economic independence. This is the main reason most people believe that China is interested in Africa.
g-loss of local Entrepreneurship
These companies created by FDI will bring with them better technology and capital that will enable them to be very competitive in the local Economy. This will discourage local Entrepreneurs who do not have the economic nor the financial backing to challenge the companies without making huge losses.
James Company began the month of October with inventory of $19,000. The following inventory transactions occurred during the month:
A. The company purchased merchandise on account for $28,000 on October 12. Terms of the purchase were 3/10, n/30. James uses the net method to record purchases. The merchandise was shipped f.o.b. shipping point and freight charges of $540 were paid in cash.
2. On October 31, James paid for the merchandise purchased on October 12.
3. During October merchandise costing $18,600 was sold on account for $28,800.
4. It was determined that inventory on hand at the end of October cost $28,100.
Required:
1. Assuming that the James Company uses a periodic inventory system, prepare journal entries for the above transactions including the adjusting entry at the end of October to record cost of goods sold.
2. Assuming that the James Company uses a perpetual inventory system, prepare journal entries for the above transactions.
Answer:
1. Entries using periodic inventory system
October 12
J1
Purchases $28,000 (debit)
Trade Payable$28,000 (credit)
j2
Freight Charges $540 (debit)
Cash $540 (credit)
October 31
Trade Payable $28,000 (debit)
Cash $28,000 (credit)
October 31
Trade Receivable $28,800 (debit)
Revenue $28,800 (credit)
October 31
Inventory $28,100 (debit)
Cost of Goods Sold $28,100 (credit)
2. Entries using periodic inventory system
October 12
J1
Merchandise $28,000 (debit)
Trade Payable$28,000 (credit)
j2
Freight Charges $540 (debit)
Cash $540 (credit)
October 31
Trade Payable $28,000 (debit)
Cash $28,000 (credit)
October 31
J1
Trade Receivable $28,800 (debit)
Revenue $28,800 (credit)
J2
Cost of Sales $18,600 (debit)
Merchandise $18,600 (credit)
October 31
Merchandise $28,100 (debit)
Cost of Goods Sold $28,100 (credit)
Explanation:
1. Entries using periodic inventory system
With periodic system, inventory valuation is done at end of a specific period.
2. Entries using periodic inventory system
Perpetual system is the method of recalculating the value of goods held after each transaction
A company uses a process costing system. Its Welding Department completed and transferred out 100,000 units during the current period. The ending inventory in the Welding Department consists of 30,000 units (75% complete with respect to direct materials and 40% complete with respect to conversion costs). Determine the equivalent units of production for the Welding Department for direct materials and conversion costs assuming the weighted average method.
Answer and Explanation:
The computation of equivalent units of production for direct materials and conversion costs is shown below:-
Direct material Conversion
Completed 100,000 100,000
Ending Work in progress
Direct material 22,500
(30,000 × 0.75)
Conversion 12,000
(30,000 × 0.40)
Equivalent Units of
Production 122,500 112,000
So, to reach the equivalent units of production of direct material we simply added the completed and transferred out units with direct material and for conversion we added the completed and transferred out units with conversion units.
Sort the items below into two main categories: whether demand for each type of good is relatively elastic or relatively inelastic.
A. Goods that are narrowly defined.
B. Goods on which consumers spend a small share of their budget.
C. Consumers have a long time to adjust to a change in price.
D. Goods that have a large number of available substitutes.
E. Goods that are necessities.
Answer:
A. Relatively elastic
B. Relatively inelastic
C. Relatively elastic
D. Relatively elastic
E. Relatively inelastic
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes
Demand is inelastic if there's little or no change in quantity demanded when the price of the good changes.
If Consumers have a long time to adjust to a change in price, demand is usually elastic because consumers would have enough time to adjust to price changes. For example, if the price of the good has increased and the consumer has enough time to adjust to the price change, the consumer would have enough time to find cheaper suitable substitutes.
The elasticity of demand for necessities is usually inelastic because consumers have no choice but to buy the product. For example, water is considered a necessity. If the price of a bottle of water increases, consumers have no choice but to consume water so they would keep buying the bottle of water despite the increase in price.
Goods that have many substitutes usually have an elastic demand because the good can be easily replaced with the numerous substitutes available.
Goods on which consumers spend a small share of their budget usually have an inelastic demand. For example, if you earn $500,000 and you usually buy a product for 10 cents and the price increases to 15 cents, you would probably not stop purchasing the product as a result of the price increase since it constitutes a negligible part of your budget.
Goods that are narrowly defined have an elastic demand. For example, there are many substitutes for bread but there are no subsituites for food.
I hope my answer helps you
You purchase both potatoes and gasoline regularly. Your income decreases, and you purchase less gasoline. This means that: Gasoline is a normal good. Potatoes are inferior goods. Gasoline has a negative substitution effect. Gasoline is an inferior good.
Answer:
Gasoline is a normal good
Explanation:
Normal goods are goods that are goods whose demand increases when income increases and falls when income falls
Inferior goods are goods whose demand falls when income rises and increases when income falls.
Because the demand for gasoline falls when income falls, gasoline is a normal good.
I hope my answer helps you
Your Competitive Intelligence team reports that a wave of product liability lawsuits is likely to cause Baldwin to pull the product Bat entirely off the market this year. Assume Baldwin scraps all capacity and inventory this round, completely writing off those assets and escrowing the proceeds to a settlement fund, and assume these lawsuits will have no effect on any other products of Baldwin or other companies. Without Baldwin's product Bat how much can the industry currently produce in the Core segment
Answer:
11550
Explanation:
The computation of industry current produced in the core segment is shown below:
As there are five companies in the core segment i.e Abby, Brat, Bat, Cent , and Clack
First, we have to compute the total production capacity which is
Companies Primary Segment Capacity Next Round
Abby Core 2150
Brat Core 1250
Bat Core 1500
Cent Core 1098
Clack Core 1027
Total Capacity 7025
Now
segment without Brat.
So,
Production Capacity
= 7025 - 1250
= 5775
Moreover, the company work in two shifts
So, the production capacity is
= 5775 × 2
= 11550
Calculate the firm’s WACC (using 2018 numbers). (You will need to collect information on the long-term debt and common stock equity from the Balance Sheet. The firm has no preferred stock).
Use the WACC to calculate NPV and evaluate IRR for proposed capital budgeting projects. Assume the projects are mutually exclusive and the firm has the money available to fund the project
A 7.5% percent annual coupon bond with 20 years to maturity, selling for 104 percent of par. The bonds make semiannual payments. What is the before tax cost of debt? If the tax rate is 40%, what is the after-tax cost of debt?
The firm’s beta is 1.2. The risk-free rate is 4.0% and the expected market return is 9%. What is the cost of equity using CAPM?
Answer:
Before tax cost of debt is 7.12%
After tax cost of debt is 4.27%
Cost of equity is 10%
Explanation:
The before-tax cost of debt can be determined using excel rate formula as found below:
=rate(nper,pmt,-pv,fv)
nper is the number of semiannual payments the bond has i.e 20*2=40
pmt is the amount of semiannual payment=$1000*7.5%*6/12=$ 37.50
pv is the current price =$1000*104%=$1,040.00
fv is the face value of $1000
=rate(40,37.50,-1040,1000)=3.56%
The 3.56% is semiannual yield, hence 7.12% per year (3.56%*2)
After-tax cost of debt=7.12%*(1-t) where is the tax rate of 40% or 0.4
after-tax cost of debt=7.12%*(1-0.40)=4.27%
Cost of equity is determined using the below CAPM formula:
Ke=Rf+Beta*(Mr-Rf)
Rf is the risk free rate of 4%
Beta is 1.2
Mr is the market return of 9%
Ke=4%+1.2(9%-4%)=10.00%
Richard Palm is the accounting clerk of Olive Limited. He uses the source documents such as purchase orders, sales invoices and suppliers’ invoices to prepare journal vouchers for general ledger entries. Each day he posts the journal vouchers to the general ledger and the related subsidiary ledgers. At the end of each month, he reconciles the subsidiary accounts to their control accounts in the general ledger to ensure they balance. Discuss the internal control weaknesses and risks associated with the above process.
Answer:
The possible monitoring vulnerability in this case will be as follows:
• No division of service
• Too much dependence on the individual
• credibility and location of information, if any, are questionable
• The measurement errors are high
Throughout such a situation, the programme would be configured to include end-users as well as GL offices with a comprehensive checklist of journal coupons and accounts operation records throughout order to prepare for the possible harm.
At the beginning of July, CD City has a balance in inventory of $2,950. The following transactions occur during the month of July.July 3 Purchase CDs on account from Wholesale Music for $1,850, terms 2/10, n/30. July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $4,900, that had a cost of $2,550. July 15 Receive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,650, terms 2/10, n/30. July 22 Sell CDs to customers for cash, $3,750, that had a cost of $2,050. July 28 Return CDs to Music Supply and receive credit of $210. July 30 Pay Music Supply in full.Assuming that CD City uses a perpetual inventory system, record the transactions.
Answer and Explanation:
The Journal entries is shown below:-
1. Merchandise Inventory Dr, $1,850
To Accounts payable $1,850
(Being inventory is recorded)
2. Merchandise Inventory Dr, $110
To Cash $110
(Being cash paid is recorded)
3. Accounts payable Dr, $200
To Merchandise Inventory $200
(Being return inventory is recorded)
4. Accounts Payable Dr, $1,650 ($1,850 - $200)
Inventory Dr, $33 ($1,650 × 2%)
To Cash $1,617
(Being cash paid is recorded)
5. Accounts receivable Dr, $4,900
To Sales revenue $4,900
(Being sales revenue is recorded)
6. Cost of goods sold Dr, $2,550
To Merchandise Inventory $2,550
(Being cost of goods sold is recorded)
7. Cash Dr, $4,900
To Accounts receivable $4,900
(Being cash receipt is recorded)
8. Inventory Dr, $2,650
To Accounts payable $2,650
(Being inventory is recorded)
9. Cash Dr, $3,750
To Sales revenue $3,750
(Being cash receipt is recorded)
10. Cost of goods sold Dr, $2,050
To Merchandise Inventory $2,050
(Being cost of goods sold is recorded)
11. Accounts payable Dr, $210
To Merchandise Inventory $210
(Being inventory is recorded)
12. Accounts payable Dr, $2,440 ($2,650 - $210)
To Cash $2,440
(Being cash is recorded)
According to the Marketing Concept, a. Companies produce only what customers want. b. A company should produce only basic products. c. Managements primary task is to convince buyers to purchase what we produce. d. Management’s most important task is to keep production costs low. e. ALL OF THE ABOVE. f. NONE OF THE ABOVE
Answer:
The answer is A
Explanation:
Companies should produce what customers want based on the marketing concept. Companies and customers are dependent on each other. Companies should focus on producing goods which consumers/customers want. These companies should think of what consumers want and the prices they would pay since it is the consumer that creates demand for goods and services that are produced by the company.
Therefore companies should produce only what consumers want else they would produce goods and services with little demand.
Before year-end adjusting entries, Marigold Corp.'s account balances at December 31, 2020, for accounts receivable and the related allowance for uncollectible accounts were $1540000 and $91500, respectively. An aging of accounts receivable indicated that $123000 of the December 31 receivables are expected to be uncollectible. The accounts receivable amount expected to be collected after adjustment is
Answer:
1,417,000
Explanation:
$123000 of the December 31 receivables is to be subtracted from $1540000 of the related allowance for uncollectible accounts
= $1540000 - $123000
= $1,417,000.
The accounts receivable amount expected to be collected after adjustment is $1,417,000
Faber Products has $35 million of sales and $9.75 million of net income. Its total assets are $150 million. Assume the company’s total assets equal total invested capital, and its capital structure consists of 40% debt and 60% common equity. The firm’s interest rate is 4%, and its tax rate is 21%. What would happen if this firm used less leverage (debt)?
Answer:
If the firm uses less leverage, its ROE will decrease since the cost of equity is much higher than the cost of debt. If all debt is eliminated, then ROE will decrease to 7.764% from 10.83%.
Explanation:
net income = $9.75 million
capital structure:
$90 million equity$60 million debtinterest rate = 4% and tax rate = 21%
current return on equity (ROE) = $9.75 / $90 = 10.83%
current return of assets (ROA) = $9.75 / $150 = 6.5%
cost of debt = 4% x (1 - 21%) = 3.16%
if the company issues more equity to lower debt to 0, then:
net income = $9.75 + [$60 million x 4% x (1 - 21%)] = $9.75 + $1.896 = $11.646 million
return on equity (ROE) = $11.646 / $150 = 7.764%
return of assets (ROA) = $11.646 / $150 = 7.764%
True or False : When you are thinking of something you want to predict, measure, or change in your business, you are probably thinking of a dependent variable.
Answer:
True
Explanation:
Dependent variables are variables which are altered by the changes to the independent factors or variables.
The following are instances of dependent and independent variables:
Dependent Variable (DV): Profit, Product Quality, Staff Attrition during a recession.
Profit (DV) depends on sales, expenses, the economy, the proficiency of the sales staff, the quality of the product.
The Quality of the Product (DV) depends on the production process, product design, quality of raw materials etc
So, many of the factors highlighted above, which affect the dependent variables are called Independent variable.
Profit, for instance, can be forecasted or changed IF changes are made to sales.
It is possible to measure the quality of a product or service. It can also be altered by increasing or decreasing the quality of raw material input.
Cheers!
Executives at Barbco, a pharmaceutical manufacturer, are preparing to introduce Betatron, a new vitamin into the market. The following cost information pertains to new vitamin:Chemical compound $1.25/bottlePackaging/label $0.35/bottleDeveloper royalties $1.00 bottleAdvertising and promotion $675,000Barbco overhead $500,000Selling price per bottle to distributor $9.00Based on the above, answer the following three questions.Based on the information provided above:Dollar contribution per bottle?Based on the information provided above:Net profit if 1 million bottles are sold?Based on the information provided above:Necessary unit volume to achieve a $200,000 profit.
Answer:
$6.4
$ 5,225,000
214,844 units
Explanation:
Contribution per unit is the selling price per unit minus the variable cost
selling price per bottle is $9.00
variable cost=cost of chemical compound per bottle+ packaging/label+ cost of royalties
variable cost=$1.25+$0.35+$1.00=$2.6
Contribution per unit=$9.00-$2.60=$6.4
net profit of 1 million:
Sales ($9*1000,000) $9,000,000
variable cost($2.6*1,000,000) ($2,600,000)
contribution $6,400,000
Fixed costs($675,000+$500,000) ($1,175,000)
Net profit $ 5,225,000
Unit volume to achieve profit of $200,000=fixed cost+ target profit/contribution per unit=($1,175,000+$200,000)/6.4= 214,844
Restaurants do a large volume of business by credit and debit cards. Suppose Spring Garden Salads restaurant had these transactions on January 28, 2016: National Express credit card sales $10,500 ValueCard debit card sales 6,000 Requirements 1. Suppose Spring Garden Salads' processor charges a 3% fee and deposits sales net of the fee. Journalize these sales transactions for the restaurant. 2. Suppose Spring Garden Salads' processor charges a 3% fee and deposits sales using the gross method. Journalize these sales transactions for the restaurant.
Answer and Explanation:
The journal entries are shown below:
1. Processor charges - Credit card expense Dr ($10,500 × 3%) $315
Cash Dr $10,185
To Sales Revenue $10,500
(Being the credit card expense is recorded)
For recording this we debited the cash and expenses as it increased the asset and expenses and credited the sales revenue as it also increased the revenue
Processor charges - debit card expense Dr ($6,000 × 3%) $180
Cash Dr $5,820
To Sales Revenue $6,000
(Being the debit card expense is recorded)
For recording this we debited the cash and expenses as it increased the asset and expenses and credited the sales revenue as it also increased the revenue
2. Cash Dr $10,500
To Sales Revenue $10,500
(Being the cash receipt is recorded)
For recording this we debited the cash as it increased the asset and credited the sales revenue as it also increased the revenue
Cash Dr $6,000
To Sales Revenue $6,000
(Being the cash receipt is recorded)
For recording this we debited the cash as it increased the asset and credited the sales revenue as it also increased the revenue
Elegant Limited sells restored classic cars. Most of its customers are private buyers who buy cars for themselves. However, some of them are investors who buy multiple cars and hold them for resale. All sales of Elegant Limited are for cash.
Depict the association and cardinality for the sales of cars at Elegant Limited based on REA model. (10 marks, maximum 300 words)
Answer:
Elegant Limited
Depiction of the Association and Cardinality for the sales of cars:
1. Association: At Elegant Limited, for a car to be sold, a relationship must be established between Elegant Limited and some of its customers (private buyers and investors). A sale of car involve the exchange of economic resources. While Elegant Limited exchanges the cars for cash receipts, the customers exchange their cash for cars. Two economic resources are involved in the sale of cars, which are exchanged between two economic agents (Elegant Limited and customers) in a business event.
2. Cardinality: In each of the economic events involving the sale of cars to customers and the receipt of cash from customers, two elements are involved, which are the exchanges of resources. Cars and Cash are the elements that show their cardinality in the economic event. These elements are known as economic resources.
Explanation:
a) The REA Model is a tool for modelling business processes. In the sales process, one event would be the “sales of cars,” occasioning the giving of cars for “cash receipt,” the other event. These two events are linked as a cash receipt occurs in exchange for a sale, and vice versa. The REA Model was originally proposed in 1982 by William E. McCarthy as a generalized accounting model, and contained the concepts of resources, events and agents, according to wikipedia.com.
b) Association refers to the relationship existing when an event takes place. At least, two persons are impacted by any event, the giver and the receiver. For an economic event involving the exchange of resources to happen, two economic agents are involved. Otherwise, no transaction can take place. The seller of cars (Elegant Limited) and the buyers (Customers both private and investors).
c) Cardinality refers to the elements that make up an economic event, for example. The sale of cars and receipt of cash are economic events happening in a business relationship between Elegant Limited and Customers. The elements that make up the events are the resources (cars and cash), which are exchanged.
Porter's Five Forces framework has been around since the 1980's and has been very effective in evaluating industry attractiveness. Changes in the dynamic nature of industries has not impacted the usefulness of the tool. The tool has no limitations. Group of answer choices
Answer:
False
Explanation:
Porter's Five Forces framework is a list of factors which provide an explanation to the forces affecting competition in industries. These five forces include;
1. Competition in the industry
2. Potential of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products
Over the years, these five forces have been used in explaining the structure of certain industries. The framework however has limitations, some of which include,
1. It is not in terms with current realities, such as new advancements in technology which were not available as at the time the framework was formed.
2. Some companies operate different structures, whereas, the framework classifies each industry under one structure.
3. There is the possibility of industries to give equal consideration to all five factors, whereas in reality only some of the factors might be applicable to them.
4. Individual companies instead of industries now use the framework to make their business analysis which is not the real reason for the development of the framework. It was meant for industries as a whole.
A mine is for sale for $240,000. It is believed the mine will produce a profit of $65,000 the first year, but the profit will decline $5,000 a year after that, eventually reaching zero, whereupon the mine will be worthless. What rate of return would this $240,000 investment produce for the purchaser of the mine
Answer:
60.4%
Explanation:
Initial cost = $240,000
profit of first year = $65,000
this is reduced subsequently until it reaches zero
Note that this value reduces in an arithmetic progression from $65,000 , $60,000, ... , 0
the first term A1 = 65,000
the common difference d is 60,000 - 65,000 = -5000
the last term is An = 0
we calculate for number of terms
An = A1 + (n - 1)d
0 = 65,000 + (n - 1)(-5000)
0 = 65,000 - 5000n +5000
5000n = 70,000
n = 14
using the equation for summation of terms in an arithmetic progression Sn, we solve as
Sn = [tex]\frac{n}{2}[/tex][2A1 + (n - 1)d]
Sn = [tex]\frac{14}{2}[/tex][2(60,000) + (14 - 1)(-5000)]
Sn = 7[120,000 - 65,000]
Sn = 7 x 55,000
Sn = $385,000. This is the total profit on the mine
rate of return = (385,000 - 240,000)/240,000 = 145,000/240,000 = 0.604
i.e 60.4%
Winganon Company began 2020 with 6,500 units of its principal product. The cost of each unit is $8.25. Merchandise transactions for the month of January 2020 are as follows:
Purchases
Date of Purchase Units Unit Cost Total Cost
Jan. 7 9,000 $ 8 $ 72,000
Jan. 21 10,000 $ 9 $ 90,000
Totals 19,000 $ 162,000
Includes purchase price and cost of freight.
Sales
Date of Sale Units
Jan. 2 6,000
Jan. 13 9,000
Jan. 25 8,500
Total 23,500
required:
compute the number and total cost of unit available for sale in the year 2020?
Answer:
25,500 units
Cost of goods available for sale is $215,625.00
Explanation:
The available for sale units in the year is the sum of opening stock of inventory and purchases made in the course of the year as spelt below:
Quantity Price per unit $ total value $
Opening stock 6,500 8.25 53,625.00
Purchases(Jan7) 9,000 8.00 72,000.00
Purchases(Jan 21) 10,000 9.00 90,000.00
Total 25,500 215,625.00
The total number of goods available for sale is 25,500 units
The total cost of goods available for sale is $215,625
The cost of goods sold would then be the costs of goods available for sale less the value of closing stock of inventory
HAW, Inc. plans to pay a $1.10 dividend per share in 3 months and a $1.15 dividend in 6 months. HAW's share price today is $45.60 and the continuously compounded quarterly interest rate is 2.1%. What is the price of a forward contract, which expires immediately after the second dividend?
Answer:
$45.28
Explanation:
The computation of price of a forward contract is shown below:-
Cash flows Future Value Amount Amount
A $45.60 $45.6 × exponential(0.021 × 2) $47.55599
B $1.10 $1.10 × exponential(0.021 × 1) $1.123344
C $1.15 $1.15 × exponential(0.021 × 0) $1.15
So, The value of forwards contract = Amount of A - Amount of B - Amount of C
= $47.55 - $1.12334 - $1.15
= $45.28
The computer workstation furniture manufacturing that Santana Rey started in January is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs.
Job 602 Job 603 Job 604
Direct materials $ 1,500 $ 3,200 $ 3,100
Direct labor 1,000 1,520 2,300
Overhead 400 608 920
Job 602 was started in production in May, and these costs were assigned to it in May: direct materials, $400; direct labor, $250; and overhead, $100. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate based on direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. No raw materials are used indirectly in June. (Assume this company’s predetermined overhead rate did not change over these months.)
Required:
1. What is the cost of the raw materials used in June for each of the three jobs and in total?
2. How much total direct labor cost is incurred in June?
3. What predetermined overhead rate is used in June?
4. How much cost is transferred to finished goods inventory in June?
What is the cost of the raw materials used in June for each of the three jobs and in total?
Job 602 Job 603 Job 604 Total
May costs
June costs
Total
What predetermined overhead rate is used in June?
Predetermined overhead rate
How much total direct labor cost is
How much cost is transferred to finished goods inventory in June?
Job Raw Materials Direct Labor Overhead Applied Total Cost Cost transferred to finished goods Costs of Ending WIP
602
603
604
Total
incurred in June?
Job 602 Job 603 Job 604 Total
May costs
June costs
Total
Answer:
1. Cost of the raw materials $8200
2. Total Direct Labor In June $ 2520
3. Predetermined Overhead Rate 40%
4. Cost transferred to finished goods $ 8978
Costs of Ending WIP $ 6320
Explanation:
1. Cost of the raw materials $8200
Job 602 $ 1500
Job 603 $ 3200
Job 604 $3100
Total May Costs $400
Total Job Costs = Jobs, 602+ 603+ 604= $7800
2. Total Direct Labor In June $ 2520
Job 602 $1000
Job 603 $1520
3. Predetermined Overhead Rate= Overhead Cost/ Direct labor Cost
Job602 = 400/1000 *100= 40%
Job 603= 608/1520 *100 = 40%
4. Cost transferred to finished goods
Job 602 603 604
Raw Materials $ 1,500+400 $ 3,200 $ 3,100
Direct labor 1,000 +250 1,520 2,300
Overhead Applied 400+100 608 920
Total Cost 3650 5328 6320
Cost transferred to finished goods = 3650 + 5328= 8978
Costs of Ending WIP $ 6320
Completed jobs are sent to finished goods and incomplete job are in the ending work in process inventory.
Presented below is information related to Marin Company. Cost Retail Beginning inventory $103,820 $278,000 Purchases 1,402,000 2,152,000 Markups 93,600 Markup cancellations 13,900 Markdowns 34,600 Markdown cancellations 5,000 Sales revenue 2,206,000 Compute the inventory by the conventional retail inventory method.
Answer:
The ending inventory for Marin comapny is $1664460
Explanation:
Solution
An Inventory is computed by using the conventional retail inventory method. which is statted belwo:
Inventory computed for Marin Company
Cost Retail
Beginning of Inventory $103,820 $278,000
Purchases 1,402,000 2,152,000
Total 1505820 243,000
Add: Net Markups
Markups 93,600
Markup cancellations -13,900
79700
Total 1505820 2509700
Deduct: Net Markdown
Markdown 34,600
Markdown cancellation -5,000
29,600
Sales price of goods 2480100
Sales revenue 2,206,000
The retail ending is 274,100
Thus,
The retail cost ratio is = 1505820 /2509700 = 60%
Hence, the cost of Ending inventory becomes = 274,100 * 60%
= $1664460.
Which of the following comes closest to the value at the end of year 6 of investing $600 today (year 0) and then investing another $600 at the end of year 5 if the interest rate is 3%?
a. $ 1,434
b. $ 1,334
c. $ 1,542
d. $ 1,383
e. $ 1,487
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Investment= $600 today and $600 at the end of year 5
Interest rate= 3%
To calculate the final value, we need to apply the following formula on each investment:
FV= PV*(1+i)^n
FV= 600*(1.03^6)= $716.43
FV= 600*(1.03^1)= $618
Total FV= $1,334.43
Several studies indicate that the use of collaborative research agreement (between several firms, research centers, suppliers, competitors, universities, etc.) is increasing around the world. What are some reasons collaborative research is becoming more prevalent?
Answer & Explanation: Collaborative research refers to a research or study done by different independent bodies. Take for instance a scientist intends to undertake a study, he sorts the collaboration of a university.
Several benefits exist in collaborative research some of which includes;
1). It creates opportunity for an individual to develop as a scholarly author. This is because in working together the work gets more attention and recognition.
2). It makes the work to be done reduced. Considering the fact that people will handle different aspects of the research, the work per person will be less.
3). There will be variety of techniques. Having people work on same research enhances the research as different techniques are bound to be used to achieve result.
4). It gives room for more creativity. Because of the increased number of people working on the same tasks, diverse ideas will be brought forward, there will be knowledge sharing and this in turn will improve the creativity.
