Answer:
open-book management or it can also be called a boundaryless organization.
Explanation:
Open-book management
This is simply the act of sharing with employees at all levels of an organization some vital information that is somehow or previously meant for too management staff only. It also involves opening a company's financial statements to all employees and giving them the education that will enable them to understand how the company makes money and how their actions affect its success and bottom line.
Boundaryless organization
This is simply known as a form of organization structure in which there are no barriers to information flow. Boundaryless designs include barrier-free, modular and virtual organizations. An organization without barriers has permeable internal and external boundaries and requires higher level of trust and shared interests, a shift in philosophy from executive development to organizational development, greater use of teams etc.
Find the price a purchaser should be willing to pay for the given bond. Assume that the coupon interest is paid twice a year. $30,000 bond with coupon rate 4.4% that matures in 7 years; current interest rate is 6.8%.
Answer:
Bond Price= $26,042.12
Explanation:
Giving the following information:
Coupon= (0.044/2)*30,000= $660
YTM= 0.068/2= 0.034
Time to maturity= 7*2= 14 semesters
Face value= $30,000
To calculate the price of the bond, we need to use the following formula:
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond Price= 660*{[1 - (1.034^-14)] / 0.034} + [30,000 /(1.034^14)]
Bond Price= 7,256.14 + 18,785.98
Bond Price= $26,042.12
A peach farmer must decide how many peaches to harvest for the world peach fair. He knows that there is a 25 percent chance that the world price will be $3, a 50 percent chance that it will be $3.50, and a 25 percent chance that it will be $4. His cost function is C(Q) = 0.05Q2. The farmer's maximum expected profit is:
a. $61.25.
b. 0.
c. $122.50.
d. None of the answers are correct.
Answer:
The correct option is a. $61.25.
Explanation:
Note: The correct cost function of the farmer is as follows:
C(Q) = 0.05Q^2 ……………….. (1)
Differentiating equation
MC = C’(Q) = 0.1Q
P = Expected price = (25% * $3) + (50% * $3.50) + (25% * $4) = $3.50 ……. (2)
Since profit is maximized when MC = P, we equate equations (1) and solve for Q which is the expected profit-maximizing quantity as follows:
0.1Q = 3.50
Q = 3.50 / 0.1 = 35
Substituting Q = 35 into equation (1), we have:
C(Q) = 0.05 * 35^2 = $61.25
R(Q) = Maximum expected revenue = P * Q = $3.50 * 350 = $122.50
The farmer's maximum expected profit = R(Q) - C(Q) = $122.50 - $61.25 = $61.25
Therefore, the correct option is a. $61.25.
The farmer's maximum expected profit is d. None of the answers are correct.
Data and Calculations:
The Probability that the world price will be $3 = 25%
The Probability that the world price will be $3.50 = 50%
The Probability that the world price will be $4 = 25%
Therefore, the expected world price = $3.50 ($3 x 25% + $3.50 x 50% = $4 x 25%)
Sales Revenue = S(Q) $3.50Q
Cost function = C(Q) = 0.05Q²
The farmer's Maximum Profit is given by the profit function, P(Q) = 3.50Q - 0.05Q²
Thus, the farmer's maximum expected profit is d. None of the answers are correct.
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What is the IRR for the following project if its initial after-tax cost is $5,000,000 and it is expected to provide an after-tax operating cash outflow of $(1,300,000) in year 1, followed by inflows of $2,900,000 in year 2, $2,700,000 in year 3, and $2,300,000 in year 4?
a) 15.57%.
b) 17.55%.
c) 13.57%.
d) 15.75%.
e) none of the above.
Answer:
e) none of the above.
Explanation:
The internal rate of return is the rate of return that equates the present value of cash outflows to the present value of inflows, in essence, a rate of return that gives a zero net present value.
The IRR can be determined using the excel IRR function as shown below:
=IRR(values)
the values are the cash flows arranged from the earliest in year 0 to the latest in year 4 as shown in the attached file.
Consider the market for orange juice. Suppose two events occurred last week. During the course of this past week, the price of oranges (used in the production of orange juice) decreased. At the same time, the price of coke (a substitute for orange juice) doubled. What are the likely effects of these TWO events on the equilibrium quantity Q* and price P* of orange juice
Answer:
these two events would lead to an increase in equilibrium quantity and have an indeterminate effect on equilibrium price
Explanation:
As a result of the decrease in the price of oranges which is use in the production of orange juice, there would be a rightward shift of the supply curve for orange juice. A a result, the supply of orange juice would increase and price of orange juice would fall
Substitute goods are goods that can be used in place of another good.
The doubling of the price of coke would lead to a decrease in the demand for coke and an increase in the demand for orange juice. This would shift the dead curve for orange juice to the right. As a result, both equilibrium price and quantity increases
these two events would lead to an increase in equilibrium quantity and have an indeterminate effect on equilibrium price
of 20 >
Which of the statements concerning retirement accounts is true?
A.)Since Roth IRAs are funded with post-tax dollars, they are never as attractive as pre-tax traditional IRAs.
B.)Contributions to personal retirement accounts remain the property of the individual or heirs, but Social Security
payments are transferred to others.
C.)Individuals can allocate the funds in IRAs, 401(k)s, Roth IRAs, and Social Security accounts according to their risk preferences.
D.)Individuals do not pay income tax on Social Security contributions, but there are no tax benefits tied to personal
retirement accounts.
B. Contributions to personal retirement accounts remain the property of the individual of heirs, but SS payments are transferred to others.
Contributions to personal retirement accounts remain the property of the individual or heirs, but Social Security payments are transferred to others. Thus, option B is correct.
What is retirement?Retirement can be termed as when a person leaves an active work life and takes the decision of not returning to work. people usually tend to take retirement at the age of 50 to 60. they may take full, partial, or temporary retirement.
Retirement accounts are basically created by people to have a saving, a tax-free income, and that act as social security.
If you have a retirement account, then the amount that is in the account remains with the account holder itself, but the amount of social security gets transferred to the others. Therefore, option B is the correct option.
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You are considering the purchase of a machine out of your evaluation among four new ones. They have differing initial and ongoing costs and differing lives. Whichever machine is purchased will be replaced at the end of its useful life. Under such circumstances, you should choose the machine to purchase based on the ___________________.
Answer:
Lowest equivalent annual cost.
Explanation:
Considering the above scenario, it is more advantageous to choose the machine that has the lowest equivalent annual cost. As the newly acquired machine will be replaced at the end of its useful life, it is more advantageous for it to have a higher performance and lower annual cost among others, as the cost of depreciation of machinery and equipment must be considered as a fixed cost that will also directly impact a company's accounts.
National Chemical Company manufactures a chemical compound that is sold for $52 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new variant, the selling price would be $73 per gallon. National expects the market for the new compound variant to be 8,800 gallons initially and determines that processing costs to refine the basic compound into the new variant would be $132,000. Required: a. What would be the effect on total profit if National produces the new compound variant
Answer: $52,800
Explanation:
The effect on profit is:
= (Difference in selling price - Incremental cost per unit of producing the new variant) * Number of gallons of new gallons to be produced
= ((73 - 52) - (132,000 / 8,800) ) * 8,800
= ( 21 - 15) * 8,800
= $52,800
Profit is positive so they should produce the new variant.
The Assembly Department produced 1,000 units of product during March. Each unit required 1.25 standard direct labor hours. There were 1,300 actual hours used in the Assembly Department during March at an actual rate of $12 per hour. The standard direct labor rate is $12.5 per hour.
Required:
Assuming direct labor for a month is paid on the fifth day of the following month, journalize the direct labor in the Assembly Department on March 31.
Answer:
Debit Work in process for $15,625
Debit Direct labor time variance for $625
Credit Direct labor rate variance for $650
Credit Wage payable for $15,600
Explanation:
Before preparing the journal, the following calculations are done first:
Wage payable = Actual hours * Actual rate per hour = 1,300 * $12 = $15,600
Direct labor time variance = (Actual hours - Standard hours) * Standard direct labor rate = (1,300 - (1,000 * 1.25)) * $12.50 = $625 Unfavorable
Note: Direct labor time variance is Unfavorable because Actual hours is greater than Standard hours.
Direct labor rate variance = (Actual rate - Standard rate) * Actual hours = ($12 - $12.50) * 1,300 = -$650 Favorable
Note: Direct labor rate variance if Favorable because Actual rate is lower than the Standard rate.
Work in process = Wage payable + Absolute value of direct labor rate variance - Direct labor time variance = $15,600 + $650 - $625 = $15,625
The journal entries will now look as follows:
Date Particulars Debit ($) Credit ($)
Mar. 31 Work in process 15,625
Direct labor time variance 625
Direct labor rate variance 650
Wage payable 15,600
(To record the direct labor in the Assembly Department.)
Ayayai Corporation reported net cash provided by operating activities of $345,000, net cash used by investing activities of $145,000, and net cash provided by financing activities of $75,000. In addition, cash spent for capital assets during the period was $200,000. No dividends were paid. Calculate free cash flow.
Answer:
the free cash flow is $145,000
Explanation:
The computation of the free cash flow is given below:
The free cash flow is
= cash flow from operating activities - capital expenditures
= $345,000 - $200,000
= $145,000
hence, the free cash flow is $145,000
The same should be considered and relevant
A company purchased $2,300 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $450 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:
Answer:
Dr Accounts payable 1850
Cr Merchandise inventory $37
Cr Cash $1813
Explanation:
Preparation of the journal entry to record the payment on July 12 Using the gross method,
JOURNAL ENTRY
Jul-12
Dr Accounts payable ($2300-450) 1850
Cr Merchandise inventory ($1850*2%) $37
Cr Cash $1813
($1850-$37)
(Being entry recorded for payment to supplier)
Your team is working hard to develop a strategy to serve a new client. Which of the following actions is most important to ensuring an effective strategy is chosen?
a. Suggest that each proposed strategy be evaluated against a set of key objectives.
b. Invite the client into a meeting to shape the strategy.
c. Conduct a benchmarking survey of similar clients to determine best strategy.
d. Ask the team member with the most industry-related experience to lead the process.
Answer:
b. Invite the client into a meeting to shape the strategy.
Explanation:
It is very important when we invited the client for meeting so that we are able to share the strategy as the open and loose could be discussed in a proper way and in easy way also the suggestions are also welcome. In addition to this, the strategy should be taken place as per the preferences, requirements and choices of the clients
Therefore the option b is correct
Borland, Inc. issues 25-year semi-annual bonds that have a face value of $1,000 and a coupon rate of 7.5%. The current market price for the bonds is $950.00. If your required rate of return is 8.5%, what is the value of one of these bonds to you
Answer: $897.03
Explanation:
You can use Excel to calculate this.
The bond is a semi-annual bond so you need to adjust the variable for this first.
Number of periods = 25 * 2 = 50 semi-annual periods
Coupon = 7.5% * 1,000 * 0.5 semi-annual adjustment = $37.50
Yield = 8.5% / 2 = 4.25%
Value to you = $897.03
Use the following information to compute the cost of direct materials used for the current year. Assume the raw materials inventory account is used only for direct materials. (Assume no indirect materials.)
January 1 December 31
Inventories Raw materials inventory $6,700 $11,000
Work in process inventory 12,400 11,600
Finished goods inventory 10,900 7,500
Activity during current year Materials purchased $127,000
Direct labor 103,200
Factory overhead 47,700
Answer:
Direct material used= $122,700
Explanation:
Giving the following information:
January 1 December 31
Inventories Raw materials inventory $6,700 $11,000
Activity during current year Materials purchased $127,000
To calculate the direct material used, we need to use the following formula:
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 6,700 + 127,000 - 11,000
Direct material used= $122,700
Lap Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 80,000 units, 100% complete with respect to materials and 25% complete with respect to conversion costs. The total dollar value of this inventory was $226,000. During the month, 150,000 units were transferred out of the department. The costs per equivalent unit for the month were $2.00 for materials and $3.50 for conversion costs. The cost of the units completed and transferred out of the department was:
Answer:
Lap Corporation
The cost of the units completed and transferred out of the department was:
= $825,000.
Explanation:
a) Data and Calculations:
Beginning work in process inventory = 80,000 units
Degree of completion = 100% materials and 25% conversion
Cost of beginning work in process = $226,000
Units transferred out = 150,000
Materials Conversion Total
Costs per equivalent unit $2 $3.50
Cost of units transferred out $300,000 $525,000 $825,000
= (150,000 * $2) (150,000 * $3.50)
If a firm has a market beta of 0.9. is subject to an income tax rate of 35 percent, has a risk-free rate of 6 percent, a market risk premium of 7 percent, and has a market value of debt to market value of equity ratio of 60 percent, what does the market expect the firm to generate in terms of equity returns using CAPM?
a) 12.3%
b) 7%
c) 6%
d) 13%
Answer:
A
Explanation:
According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)
risk free + (beta x market premium)
6 + (0.9 X 7) = 12.3%
Beginning inventory for the month contained 3,000 units that were 35% complete with respect to materials. 57,000 units were completed and transferred out during the month. 5,500 units were in ending inventory, 10% complete with respect to materials. The weighted average equivalent units of production for materials for the month would be
Answer: 57,550 units
Explanation:
When using the weighted average method, the units completed and transferred out are assumed to include the opening inventory.
The weighted average equivalent units are therefore:
= Units completed and transferred out + Equivalent ending units
= 57,000 + (10% * 5,500)
= 57,000 + 550
= 57,550 units
Compute the following ratios: i. Current Ratio ii. Accounts receivable turnover iii. Average Collection period iv. Inventory Turnover v. Days in Inventory vi. Profit Margin vii. Debt to Total Assets viii. Return on Asset ix. Asset Turnover x. Payout Ratio
Answer:
i know only 3 ratio
i.current ratio=current assets
iv.inventory turnover=cost of goods sold
v.days in inventory=inventory turnover ratio /365 days
state and explain five (5) challenges you will encounter as a service marketer.
Explanation:
1.Not finding your market segment
2.Not knowing how to explain the product or dervice you want to sell
Some of the challenges a service marketer faces are:
It being harder to sell a service than a product. The fact that services are perishable. Services being variable which means that others can offer it. Customers being rude. Finding it difficult to find a niche.A service marketer will find it harder to sell a service than a good because services are perishable which means that they cannot be stored like goods. People might therefore not want to buy because they can only use the service once.
Services are also variable which means that several people can offer it at reduced prices which makes it difficult to make a profit. Customers can also be rude.
Some services are also applicable to certain people and finding those people can be difficult to a service marketer.
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Which of the following statements about transportation costs are correct?
A. When transportation costs rise, markets tend to substitute goods that are from closer locations.
B. Transportation costs have declined due to technological improvements for transporting goods.
C. International transportation costs are increasing everywhere in the world except in the United States.
D. Since the 1960s, transportation costs, as a percentage of the value of all U.S. imports, increased twofold.
E. The decline in the U.S. relative cost of international transportation has contributed to a higher volume of trade.
Answer:
A. When transportation costs rise, markets tend to substitute goods that are from closer locations. B. Transportation costs have declined due to technological improvements for transporting goods. E. The decline in the U.S. relative cost of international transportation has contributed to a higher volume of trade.Explanation:
When transportation costs increase, people will try to save on these costs by buying goods from nearby locations instead as these would require less transport.
In general, transportation costs have declined as technological improvements in transport have improved with better rail lines and air shipping routes. In the U.S. this has led to an increase in trade volume because people are able to buy from markets far away from them knowing that they will not have to pay exorbitant prices.
(a) A lamp has two bulbs of a type with an average lifetime of 1800 hours. Assuming that we can model the probability of failure of these bulbs by an exponential density function with mean μ = 1800, find the probability that both of the lamp's bulbs fail within 2000 hours.
(b) Another lamp has just one bulb of the same type as in part (a). If one bulb burns out and is replaced by a bulb of the same type, find the probability that the two bulbs fail within a total of 1000 hours.
Answer:
a) 0.45
b) 0.11
Explanation:
A) P( both bulbs fail within 2000 hours ) = 0.45
Given data:
Average lifetime of bulbs = 1800 hours
mean μ = 1800
b) P( both bulbs fail within 1000 hours ) =
Attached below is a detailed solution of the given question
Moccasin Company manufactures cotton shirts. 18,000 shirts are produced during the first week of July. The unit quantity standard is 3 meters cloth per shirt and the actual quantity used was 0.50 meters per shirt. Determine the quantity of cloth that should be used for the actual output of 18,000 shirts.
Answer: 54,000 meters
Explanation:
When determining the quantity of cloth t be used in the making of the shirts, it is best to use the standard quantity because this is what the company thinks that it needs to be able to produce a shirt.
Quantity of cloth for 18,000 shirts:
= Number of shirts * standard quantity per shirt
= 18,000 * 3
= 54,000 meters
Darius Miller is seeking to accumulate $50,000 in six years to invest in a real estate venture. He can earn 6.35 percent annual interest with monthly compounding in private investment. How much will he have to invest today to reach his goal? (Round to the nearest dollar.)
Answer:
$34193
Explanation:
Given :
Final amount, A = $50000
Interest, rate, r = 6.35% compounded monthly
Period, t = 6 years
n = number of compounding times per period, monthly = 12 times per period
Amount to be invested, P = principal
Using the relation :
A = P(1 + r/n)^n*t
50,000 = P(1 + 0.0635/12)^(12*6)
50000 = P(1 + 0.0052916)^72
50000 = P(1.0052916)^72
50000 = 1.4622779P
P = 50000 / 1.4622779
P = $34193.226
Amount to be invested today in other to have compounded $50000 in 6 years is $34193.226
To the nearest $ = $34193
Your firm has net income of $245 on total sales of $1,080. Costs are $610 and depreciation is $120. The tax rate is 30 percent. The firm does not have interest expenses. What is the operating cash flow
Answer:
the operating cash flow is $365
Explanation:
the computation of the operating cash flow is shown below:
operating cash flow is
= Net income + depreciation expense
= $245 + $120
= $365
hence, the operating cash flow is $365
We simply added the net income and the depreciation expense to determine the operating cash flow
Refer to the supply and demand data for a certain elective surgical procedure. Without health insurance, the equilibrium price and quantity would be: Group of answer choices $3,000 and 7,000. $2,000 and 11,000. $5,000 and 2,000. $4,000 and 4,000.
Answer:
$3,000 and 7,000
Explanation:
Please find attached the table used in answering this question
Equilibrium price is the price at which quantity demand equal quantity supplied.
Equilibrium quantity is the quantity that equates quantity demand with quantity supplied.
Above equilibrium price there is a surplus - quantity supplied exceeds quantity demanded. As a result of the surplus, price would fall until equilibrium is reached.
Below equilibrium price there is a shortage - quantity demanded exceeds quantity supplied. As a result of the shortage, price would rise until equilibrium is reached
The unit quantity standard of a product is 3 pounds per package, and the unit quantity standard for machine hours is 0.40 hours per package. During August, 190,000 packages were produced. 430,000 pounds and 77,000 hours were used in production. How many pounds and how many machine hours should have been used for the actual output
Answer:
Standard pounds= 570,000 pounds
Standard hours= 76,000 hours
Explanation:
Giving the following information:
Standard pounds= 3 pounds per package
Standard hours= 0.40 hours per package.
During August, 190,000 packages were produced.
To calculate the standard quantity of pounds and hours that should have been used, we need to multiply the standard rate whit the actual output.
Standard pounds= 190,000*3= 570,000 pounds
Standard hours= 0.4*190,000= 76,000 hours
A farmer purchased a module builder for $50,000. The bank is willing to loan him $37,000. The terminal value of this investment is $15,000. There is a marginal tax rate of 25%, a growth rate of 2%, and a discount rate of 10%. What is the after tax terminal value of this investment
Answer:
the after tax terminal value would be $14,500
Explanation:
Selected current year company information follows:
Net income $15,953
Net Sales 712,855
Total liabilities, beginning-year 83,932
Total liabilities, end-of-year 103,201
Total stockholders' equity, beginning-year 198,935
Total stockholders' equity, end-of-year 121,851
Total asset turnover is:________.
a. 2.24 times
b. 2.81 times
c. 3.64 times
d. 4.67 times
e. 6.28 times
Answer:
b. 2.81 times
Explanation:
Calculation to determine Total stockholders' equity, end-of-year 121,851
Total asset turnover is:
First step is to calculate the Total assets
Beginning Ending
Total liabilities $83,932 $103,201
Total equity 198,935 121,851
Total assets $282,867 $225,052
Now let determine the Total asset turnover
Total asset turnover = $712,855/[($282,867 + $225,052)/2]
Total asset turnover= 2.81 Times
Therefore Total stockholders' equity, end-of-year 121,851
Total asset turnover is:2.81 Times
Hixson Company manufactures and sells one product for $34 per unit. The company maintains no beginning or ending inventories and its relevant range of production is 20,000 units to 30,000 units. When Hixson produces and sells 25,000 units, its unit costs are as follows:
Amount Per Unit
Direct materials $8.00
Direct labor $5.00
Variable manufacturing overhead $1.00
Fixed manufacturing overhead $6.00
Fixed selling expense $3.50
Fixed administrative expense $2.50
Sales commissions $4.00
Variable administrative expense $1.0
Required:
1. For financial accounting purposes, what is the total amount of product costs incurred to make 25,000 units? What is the total amount of period costs incurred to sell 25,000 units?
2. If 24,000 units are produced, what is the variable manufacturing cost per unit produced? What is the average fixed manufacturing cost per unit produced?
3. If 26,000 units are produced, what is the variable manufacturing cost per unit produced? What is the average fixed manufacturing cost per unit produced?
4. If 27,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production?
5. What total incremental manufacturing cost will Hixson incur if it increases production from 25,000 to 25,001 units?
6. What is Hixson’s contribution margin per unit? What is its contribution margin ratio?
7. What is Hixson’s break-even point in unit sales? What is its break-even point in dollar sales?
8. How much will Hixson’s net operating income increase if it can grow production and sales from 25,000 units to 26,500 units?
9. What is Hixson’s margin of safety at a sales volume of 25,000 units?
10. What is Hixson degree of operating leverage at a sales volume of 25,000 units?
Answer:
Hixson Company
1. Total amount of product costs incurred to make 25,000 units is:
= $500,000
Total amount of period costs incurred to sell 25,000 units is:
= $187,500
2. Variable manufacturing cost per unit of 24,000 units is:
= $14.00
The fixed manufacturing cost per unit is:
= $6.25
3. The variable manufacturing cost per unit is:
= $14.00
The fixed manufacturing cost per unit produced is:
= $5.77
4. If 27,000 are produced, the total amounts of direct and indirect manufacturing costs incurred to support this level of production are:
Direct manufacturing costs = $378,000
Indirect manufacturing costs = $150,000
5. The total incremental manufacturing cost that Hixson will incur if it increases production from 25,000 to 25,001 units is:
= $14.
6. Contribution margin per unit is:
= $15
Contribution margin ratio is:
= 44%
7. Break-even point in unit sales is:
= 20,000 units
Break-even point in dollars sales = $300,000/44.1176%
= $680,000
8. The net operating income will increase to $97,500 ($15 * 6,500)if it can grow production and sales from 25,000 to 26,500.
9. Hixson's margin of safety at sales volume of 25,000 units is:
= $170,000
10. Degree of operating leverage at a sales volume of 25,000 units is:
= 3.85
Explanation:
a) Data and Calculations:
Selling price per unit = $34
Production and sales unit = 25,000 units
Unit costs at 25,000 units
Per Unit
Direct materials $8.00
Direct labor $5.00
Variable manufacturing overhead $1.00
Fixed manufacturing overhead $6.00
Fixed selling expense $3.50
Fixed administrative expense $2.50
Sales commissions $4.00
Variable administrative expense $1.00
Total cost per unit $31.00
Product costs (financial accounting):
Per Unit
Direct materials $8.00
Direct labor $5.00
Variable manufacturing overhead $1.00
Fixed manufacturing overhead $6.00
Total product costs per unit $20.00
Period costs:
Fixed selling expense $3.50
Sales commissions $4.00
Total selling period costs per unit $7.50
1. Total amount of product costs incurred to make 25,000 units is:
= $500,000 ($20 * 25,000)
Total amount of period costs incurred to sell 25,000 units is:
= $187,500 ($7.50 * 25,000)
2. Variable manufacturing cost per unit of 24,000 units is:
= $14.00
The fixed manufacturing cost per unit is:
= $6.25 ($6 * 25,000/24,000)
3. The variable manufacturing cost per unit is:
= $14.00
The fixed manufacturing cost per unit produced is:
= $5.77 ($6 * 25,000/26,000)
4. If 27,000 are produced, the total amounts of direct and indirect manufacturing costs incurred to support this level of production are:
Direct manufacturing costs = $378,000 ($14 * 27,000)
Indirect manufacturing costs = $150,000 ($6 * 25,000)
5. The total incremental manufacturing cost that Hixson will incur if it increases production from 25,000 to 25,001 units is $14.
Contribution margin per unit:
Selling price = $34
Variable costs = 19
Contribution = $15
6. Contribution margin per unit is $15 ($34 - $19).
Contribution margin ratio is 44% ($15/$34 * 100)
7. Break-even point in unit sales = FC/CM per unit
= $300,000/$15
= 20,000 units
Break-even point in dollars sales = $300,000/44.1176%
= $680,000 (20,000 * $34)
8. The net operating income will increase to $97,500 ($15 * 6,500)if it can grow production and sales from 25,000 to 26,500.
9. Hixson's margin of safety at sales volume of 25,000 units is:
= $170,000 ($850,000 - $680,000)
10. Degree of operating leverage at a sales volume of 25,000 units is:
= Contribution margin/net operating income
= $375,000/$97,500
= 3.85
and Associates, a law firm, paid $30000 for 12 months' rent in advance on October 1 of the current year. The company's fiscal year-end is December 31. Prepare the journal entries for the rent payment on October 1 and the necessary adjusting journal entry on December 31. Omit explanations
Answer and Explanation:
The journal entries are shown below:
On Oct 1
Rent expense Dr $30,000
to cash $30,000
(being cash paid)
Here rent expense is debited as it increased the expense and credited the cash as it decreased the assets
On Dec 31
Rent expense Dr ($30,000 × 9 ÷ 12) $22,500
To prepaid rent $22,500
(being rent expense is recorded)
Here ent expense is debited as it increased the expense and credited the prepaid rent as it decreased the assets
A small component is purchased for the use in the production of a major product. The standard price of the component is $0.85. During a recent period, 7,800 units were purchased and 6,800 were actually used. The standard quantity of units allowed for the actual output of the period was 6,540 units. What was the materials quantity variance
Answer:
See below
Explanation:
Given the above information,
Material quantity variance is computed as;
= (Actual quantity - Standard quantity of units allowed for the actual output )
Actual quantity = 6,800 units
Standard quantity = 6,540 units
= 6,800 - 6,540
= 260 units
Therefore, the materials quantity variance is 260 Unfavourable.
It is unfavourable because the standard is higher than the actual
