Brickhouse is expected to pay a dividend of $3.65 and $2.66 over the next two years, respectively. After that, the company is expected to increase its annual dividend at 3.3 percent. What is the stock price today if the required return is 12.3 percent
Answer:
The stock price today is $ 29.56
Explanation:
Dividend for year 1, d₁ = $ 3.65
Dividend for year 2, d₂ = $ 2.66
Required rate = 12.3% = 0.123
Growth rate = 3.3% = 0.033
Value after year 2= (d₂ × Growth rate) ÷ (Required rate - Growth rate)
= (2.66 × 1.033) ÷ (0.123 - 0.033)
=30.5308889
Hence current price = Future dividend and value × Present value of discounting factor(rate%,time period)
= (3.65÷1.123) + (2.66÷[tex]1.123^2[/tex] ) + (30.5308889 ÷[tex]1.123^2[/tex] )
=$29.56
Metro Services, Inc. reported the following information for the year 2019. Based on the following information, calculate the rate of return on total assets for Metro Services, Inc. (Round the percentage to two decimal places.)Total Assets, December 31, 2019$599,000Total Assets, December 31, 2018$505,000For Year Ended December 31, 2019: Interest Expense$27,900 Net Income$67,100A. 7.78%B. 7.10%C. 11.20%D. 17.21%
Answer:
Option D,17.21% is correct
Explanation:
The total assets deployed in generating profit for the year is the average of the beginning assets of $599,000 and the closing assets of $505,000 which translated into $552,000 i.e ($599,000+$502,000)/2
The total return on assets is the profit before interest, hence the interest of $27,900 is added to net income of $67,100 to give total return on assets in dollar terms i.e $95,000($27,900+$67,100)
The return on total assets=total return/average assets=$95,000/$552,000=17.21%
Question Workspace Exhibit 3-5 Supply for Tucker's Cola Data Quantity supplied per week (millions of gallons) Price per gallon 6 $3.00 5 2.50 4 2.00 3 1.50 2 1.00 1 .50 Exhibit 3-5 shows the supply schedule for Tucker's Cola. Suppose there are four additional suppliers of cola in the market. When the price per gallon of cola is $1.50, the first supplier is willing to sell 10 million gallons, the second supplier is willing to sell 2 million gallons, the third supplier is willing to sell 5 million gallons, and the fourth supplier is willing to sell 0 gallons. The market quantity supplied of cola when the price is $1.50 is
Answer:
20 million gallons
Explanation
The market quantity supplied can be found by adding the quanirty supplied of the 5 suppliers.
When price is $1.5, tucker supplies 3 million gallons
3 + 10+2 + 5 + 0 = 20
I hope my answer helps you
Handy Home sells windows and doors in the ratio of 7:3 (windows:doors). The selling price of each window is $111 and of each door is $261. The variable cost of a window is $68.00 and of a door is $180.50. Fixed costs are $515,375.
Required:
1. Determine the selling price per composite unit.
2. Determine the variable cost per composite unit.
3. Determine the break-even point in composite units.
4. Determine the number of units of each product that will be sold at the breakeven point.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Handy Home sells windows and doors in the ratio of 7:3 (windows:doors).
Window:
Selling price= $111
Unitary variable cost= $68
Door:
Selling price= $261
Unitary variable cost= $180.5
Fixed costs are $515,375.
1) Selling price per composite unit:
Selling price= 0.7*111 + 0.3*261= $156
2) Composite variable cost:
Variable cost per unit= 0.7*68 + 0.3*180.5= 101.75
3) To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 515,375/ ( 156 - 101.75)
Break-even point in units= 9,500 units
4) Units for each product:
Windows= 0.7*9,500= 6,650
Door= 0.3*9,500= 2,850
During January 2018, the first month of operations, a consulting firm had following transactions: Issued common stock to owners in exchange for $20,000 cash. Purchased $5,000 of equipment, paying $1,000 cash and signing a promissory note for $4,000. Received $9,000 in cash for consulting services performed in January. Purchased $1,500 of supplies on account; all of the supplies were used in January. Provided consulting services on account in the amount of $16,000. Paid $750 on account. Paid $3,000 to employees for work performed during January. Received a bill for utilities for January of $3,400; the bill remains unpaid. What is the amount of total revenue to be reported on the income statement for the month of January?
Answer:
The total or gross revenue for this company on the income statement would be the sum of:
$9,000 received in cash for consulting services performed in January$16,000 worth of consulting services that will be paid on account.So the total revenue will be $25,000.
This is because revenue is different from cash: as long as the sales are made, they are counted as revenue even if they are on account, and no cash payment has been made.
The table gives a number of daily sales of cars by a local dealership, from a 0 minimum to a 6 maximum, and the number of days each sale happened during a 100 - day survey. That is. 0 cars were sold 6 days, 1 car 8 days, etc.
Car sales per day, X 0 1 2 3 4 5 6
Number of days 6 8 22 20 15 16 13
A) Give the probability density function of X.
B) Compute the expected value of A". Explain its meaning.
C) Compute the variance and standard deviation of X.
D) Find the expected value and variance of a function Y = 5 + 12X.
Answer: The answer has been provided and attached.
Explanation:
Based on the attached diagram, there will be 3.3 sales per day.
The variance will be 2.95.
Since standard deviation is the square root of variance, the standard deviation will be:
= ✓2.95
= 1.72
The expected value and variance of a function Y = 5 + 12X will be:
Expected value = 44.6
Variance = 424.8
"Donald is a 21-year-old full-time college student. During 2019, he earned $2,550 from a part-time job and $1,150 in interest income. If Donald is a dependent of his parents, what is his standard deduction amount
Answer:
His standard deduction amount would be of $ 2,900
Explanation:
In order to calculate his standard deducion amount If Donald is a dependent of his parents we would have to make the following calculation:
Since His earned income is more than $1,150, therefore, Standard Deduction would be= $2,550 + $350
Standard Deduction would be= $2,900
Therefore, If Donald is a dependent of his parents, his standard deduction amount would be of $ 2,900
Our company is growing fast, which always means changes and innovations. Because of this growth, the accounting department will be restructured. For the last five years, Paolo has served as chief manager with grace and dedication. However, because of the restructuring, Paolo’s position will no longer be needed. He will be working in the marketing department on the third floor, starting next Tuesday.In this message, the organizational pattern is used.Outlines give you a chance to organize your thinking before determining word choice and sentence structure. Which of the following will help you create a more effective outline?Avoid illustrations when supporting subpointsCombine subpoints whenever possiblePut the main idea in the titleUse one subpoint per main ideaUse evidence to support subpointsInclude 3 to 5 major components
Complete question
(1) ...In this message, the___organizatipn pattern is used.
(2) Which of the following will help youcreate a more effective outline?Check all that apply.
a) Put the main idea in the title,
b) Use one sub-point per main idea,
c) Use evidence to support sub-points,
d) Include 3 to 5 major components,
e) Combine subpoints whenever possible,
f) Avoid illustrations when supporting subpoints
Answer:
1. indirect organizational pattern
2. a, c, d
Explanation:
1. Since the nagative information was placed at the end of the message it follows an Indirect message pattern inorder to minimise negative feelings by the listeners.
2. A more effective outline is created when the main idea of the message is placed in the title, while also using supporting evidence to discuss the sub-points. And finally limiting the use of illustrations when supporting subpoints.
The Colson Company issued $407,000 of 9% bonds on January 1, 2014. The bonds are due January 1, 2020, with interest payable each July 1 and January 1. The bonds are issued at face value.
Prepare Colson’s journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.
Answer:
Dr cash $407,000
Cr bonds payable $407,000
July 1
Dr interest expense $ 18,315.00
Cr cash $ 18,315.00
December 31
Dr interest expense $ 18,315.00
Cr interest payable $ 18,315.00
Explanation:
The bond was issued at face value of $407,000 which means that cash of $407,000 was received which is to be debited to cash account and bonds payable account credited for the same amount.
On July1 ,interest coupon of $ 18,315.00 ($407,000*8%*6/12) was paid which means that interest expense is debited with $ 18,315.00 while cash is credited.
On 31 December ,interest coupon of $ 18,315.00 ($407,000*8%*6/12) was due which means that interest expense is debited with $ 18,315.00 while interest payable is credited.
Bonds payable-record issuance and premium amortization. Kaye Co. issued $1 million face amount of 11% 20-year bonds on April 1,2004. The bonds pay interest on an annual basis on March 31 each year.
Required:
a. Assume that market interest rates were slightly lower than 11% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain.
b. Independent of your answer to part a, assume that the proceeds were $1,080,000. Use the horizontal model (or write the journal entry) to show the effect of issuing the bonds.
c. Calculate the interest expense that Kaye Co. will show with respect to these bonds in its income statement for the fiscal year ended September 30, 2004, assuming that the premium of $80,000 is amortized on a straight-line basis.
Answer:
Cash proceeds would be higher than face amount.
Bond issuance:
Dr cash $1,080,000
Cr bonds payable $1,000,000
Cr premium on bonds payable($1,080,000-$1,000,000) $80,000
$57,400
Explanation:
If the market interest rate were slightly lower than 11% coupon rate,the cash proceeds from the bonds would be higher than face amount as a lower market rate is used as a discount rate in calculating the present value,in other words,the lower the discount rate,the higher the present value as further shown below.
Assume market rate is 10.5%
cash proceeds=-pv(rate,nper,pmt,fv)
rate is 10.5%
nper is 20 years
pmt =$1,000,000*11%=$110,000
fv is $1000,000
=-pv(10.5%,20,110000,1000000)=$1,041,154.54
amortization(annually)=$80,000/20=$4000
Amortization for six months=$4,000*6/12=$2,000
coupon=$1,080,000*11%*6/12=$ 59,400.00
Interest expense=coupon -premium amortization=$ 59,400.00-$2,000.00=$57,400
The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. Product Number of units Labor hrs per unit Machine hours per unit Blinks 1,000 4 5 Dinks 2,000 2 8 All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000. The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the Single Plantwide Factory Overhead Rate for Blinks? Group of answer choices $19.50 $37.45 $78.00 $56.00
Answer:
Single Overhead Absorption rate = $19.5 per hour
Explanation:
Overhead absorption rate = Estimate overhead /Estimated labor hours
Estimated overhead = $84,000 + $72,000= 156 000
Estimated labour hours= ( 1000×4) + (2000× 2)=8,000 hours
Overhead absorption rate = 156,000/8,000 hours =$19.5 per hour
Single Overhead Absorption rate = $19.5 per hour
At the beginning of the year, Bryers Incorporated reports inventory of $7,700. During the year, the company purchases additional inventory for $22,700. At the end of the year, the cost of inventory remaining is $9,700. Calculate cost of goods sold for the year.
Answer: $20,700
Explanation:
beginning inventory (X) = $7,700
purchased additional inventory (Y) = $22,700
ending inventory (Z) = $9,700
So first, we have to calculate Cost of goods available for sale (A), we add beginning inventory (X) and purchased additional inventory (Y)
A = X + Y
A = 7,700 + 22,700
Cost of goods available for sale (A) = 30,400
NOW to get our Cost of goods sold for the year (B), we subtract ending inventory (Z) from cost of goods available for sale (A)
B = A - Z
B = 30,400 - 9,700
B = 20,700
therefore the cost of goods sold for the year is $20,700
The Aberdeen Development Corporation (ADC) is considering an Aberdeen Resort Hotel project. It would be located on the picturesque banks of Grays Harbor and have its own championship-level golf course. The cost to purchase the land would be $1 million, payable now. Construction costs would be approximately $2 million, payable at the end of year 1. However, the construction costs are uncertain. These costs could be up to 20 percent higher or lower than the estimate of $2 million. Assume that the construction costs would follow a triangular distribution. ADC is very uncertain about the annual operating profits (or losses) that would be generated once the hotel is constructed. Its best estimate for the annual operating profit that would be generated in years 2, 3, 4, and 5 is $700,000. Due to the great uncertainty, the estimate of the standard deviation of the annual operating profit in each year also is $700,000. Assume that the yearly profits are statistically independent and follow the normal distribution. After year 5, ADC plans to sell the hotel. The selling price is likely to be somewhere between $4 and $8 million (assume a uniform distribution). ADC uses a 10 percent discount rate for calculating net present value. (For purposes of this calculation, assume that each year's profits are received at year-end.) Use Analytic Solver to perform 1,000 trials of a computer simulation of this project on a spreadsheet.
(a) What is the mean net present value (NPV) of the project?
(b) What is the estimated probability that the project will yield an NPV greater than $2 million?
(c) ADC also is concerned about cash flow in years 2, 3, 4, and 5. Generate a forecast of the distribution of the minimum annual operating profit (undiscounted) earned in any of the four years. What is the mean value of the minimum annual operating profit over the four years?
(d) What is the probability that the annual operating profit will be at least $0 in all four years of operation?
Novak Corporation is preparing its 2014 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2014 statement of cash flows.
Code Letter
Effect
A Added to net income in the operating section
D Deducted from net income in the operating section
R-I Cash receipt in investing section
P-I Cash payment in investing section
R-F Cash receipt in financing section
P-F Cash payment in financing section
N Noncash investing and financing activity
(a) Purchase of land and building.
AR-I and DR-IR-F and ADR-F and DP-FP-IR-FNR-I and A
(b) Decrease in accounts receivable.
R-F and AR-FNR-I and DR-I and ADR-F and DAP-FR-IP-I
(c) Issuance of stock.
R-FAR-IDP-FR-F and AP-IR-F and DNR-I and DR-I and A
(d) Depreciation expense.
R-IP-FP-IR-F and DR-FNR-F and AR-I and AR-I and DAD
(e) Sale of land at book value.
R-F and DP-IADR-FR-IP-FNR-I and DR-I and AR-F and A
(f) Sale of land at a gain.
DR-I and DNR-IR-FR-F and AR-I and AR-F and DP-IAP-F
(g) Payment of dividends.
R-I and AP-IP-FDNAR-I and DR-IR-FR-F and DR-F and A
(h) Increase in accounts receivable.
R-F and ANAP-FP-IR-FR-I and DR-IR-I and AR-F and DD
(i) Purchase of available-for-sale investment.
ADR-I and DR-I and AR-F and DR-F and AP-FR-FNR-IP-I
(j) Increase in accounts payable.
R-F and DDR-F and AAR-IP-IR-FNR-I and DP-FR-I and A
(k) Decrease in accounts payable.
R-I and DNP-FR-F and AR-IR-I and AR-F and DDAP-IR-F
(l) Loan from bank by signing note.
R-I and DR-I and ANP-IDP-FR-F and DR-F and AAR-IR-F
(m) Purchase of equipment using a note.
R-F and DP-IR-FR-I and ANR-F and AP-FR-IR-I and DAD
(n) Increase in inventory.
NR-IP-FR-FP-IDR-I and DR-I and AAR-F and AR-F and D
(o) Issuance of bonds.
AP-FR-F and DNR-I and DR-F and ADR-FR-IP-IR-I and A
(p) Redemption of bonds payable.
R-I and DR-I and AR-IR-F and DP-FR-F and ADP-IANR-F
(q) Sale of equipment at a loss.
R-F and DNR-F and AR-I and DADR-I and AR-FR-IP-IP-F
(r) Purchase of treasury stock.
Answer: The answers are provided below
Explanation:
a) Purchase of land and building = P-I
This will be a cash payment in investing section
b) Decrease in accounts receivable = A
This will be added to the net income in the operating section
c) Issuance of stock = R-F
This will be a cash receipt in financing section
d) Depreciation expense = A
This will be added to the net income in the operating section
e) Sale of land at book value = R-I
This will be a cash receipt in investing section.
f) Sale of land at a gain = R-I and D
This will be a cash receipt in investing section and deducted from the net income in the operating section
g) Payment of dividends = P-F
This will be a cash payment in financing section
h) Increase in accounts receivable = D
This will be deducted from net income in the operating section
i) Purchase of available-for-sale investment = P-I
This will be a cash payment in investing section
j) Increase in accounts payable = A
This will be added to the net income in the operating section
k) Decrease in accounts payable = D
This will be deducted from net income in the operating section
l) Loan from bank by signing note = R-F
This will be a cash receipt in financing section
m) Purchase of equipment using a note = N
This will be a noncash investing and financing activity
n) Increase in inventory = D
This will be deducted from net income in the operating section
o) Issuance of bonds = R-F
This will be a cash receipt in financing section
p) Retirement of bonds payable = P-F
This will be a cash payment in financing section
q) Sale of equipment at a loss = R-I and A
This will be a cash receipt in investing section and will be added to the net income in the operating section
r) Purchase of treasury stock = P-F
This will be a cash payment in financing section
Brett has almond orchards, but he is sick of almonds and prefers to eat walnuts instead. The owner of the walnut orchard next door has offered to swap this year's crop with him. Assume he produces 1,000 tons of almonds and his neighbor produces 800 tons of walnuts. If the market price of almonds is $100 per ton and the market price of walnuts is $110 per ton.
A. Should he make the exchange? The market value of the almond crop is _____.
B. Does it matter whether he prefers almonds or walnuts? Why or why not?
Answer:
(A) The almond market value is = 100,000 and the walnuts market value is 88,800. (B) His preferences are secondary, the most important choice is the market value of the profit and crop
Explanation:
Solution
Given that:
The first step to take is to find the almond crop market value which is stated as follows:
(A) The market value of almond is = 1000 * 100 = 100,000
Thus,
The walnuts market value is = 800* 111 = 88,800
he should not make the exchange because, the almond has more value
(B)His choice is not really important, the market value of the profit and crop should be of more importance.
What are the principles of logic and critical thinking?
A company would like to produce 5000 products per week for 30 weeks. The Direct Material Cost for the raw materials used in the product is $1.50 per product. After producing 500 products, the company must stop production to replace a filter on the machine (the filter is replaced after producing every 500 products). The filter costs $50.00. What is the Total Cost Per Product
Answer:
Total Cost Per Product is $1.60
Explanation:
From the question the following information are derived:
Direct raw material cost per product = $1.50
The cost of the filter for producing 500 products = $50
Hence, the cost of the filter per product = $(50 / 500) = $0.10
In this question, No cost of labor is given, we can now decide the following
Total Cost per product = $(1.50 + 0.10)
= $1.60
Total Cost Per Product in this account is $1.60
If a company would like to produce 5000 products per week for 30 weeks. The Direct Material Cost for the raw materials used in the product is $1.50 per product. The Total Cost Per Product is $1.60.
Using this formula
Total cost per product=Direct raw material cost per product +( Filter costs/Production)
Where:
Direct raw material cost per product = $1.50
Costs of filter =$50
Production=500
Let plug in the formula
Total cost per product=$1.50+($50 / 500)
Total cost per product=$1.50+$0.10
Total cost per product=$1.60
Inconclusion if a company would like to produce 5000 products per week for 30 weeks. The Direct Material Cost for the raw materials used in the product is $1.50 per product. The Total Cost Per Product is $1.60.
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On July 1, Year 1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.2. Journalize the entries to record the following:*A. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method.
B. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method.
3. Determine the total interest expense for Year 1.4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?5. Compute the price of $37,282,062 received for the bonds by using the present value tables
Answer:
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.
Dr Cash 37,282,062
Dr Discount on bonds payable 2,717,938
Cr Bonds payable 40,000,000
2. Journalize the entries to record the following:*A. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method.
Dr Interest expense 1,535,897
Cr Cash 1,400,000
Cr Discount on bonds payable 135,897
B. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method.
Dr Interest expense 1,535,897
Cr Cash 1,400,000
Cr Discount on bonds payable 135,897
3. Determine the total interest expense for Year 1.
Interest expense 1,535,897
4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?
Yes, when the bond's interest rate is lower than the market rate, the bonds will be sold at a discount (less than face value). The market rate applicable to this bond issuance is the one used for similar bonds, so the market rate can change depending on the bond.
5. Compute the price of $37,282,062 received for the bonds by using the present value tables
the value of the bonds = PV of face value + PV of coupons
PV of face value = $40,000,000 / (1 + 4%)²⁰ = $18,255,478PV of annuity = $1,400,000 x PV annuity 4% for 20 periods = $1,400,000 x 13.59033 = $19,026,462total value = $18,255,478 + $19,026,462 = $37,281,940
There is a small difference, $122, due to rounding errors from the annuity table. But the error is not significant, it represents only 0.0003% of the bonds' price.
Explanation:
issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062
coupon payment = $40,000,000 x 7% x 1/2 = $1,400,000
semiannual coupon paid December 31 and June 30
Discount on bonds payable $2,717,938 / 20 coupons = $135,896.90 ≈ $135,897 per coupon payment
In the real world, we find that dividends Group of answer choices Tend to be a lower percentage of earnings for mature firms. Are usually changed every year to reflect earnings changes. Usually exhibit greater stability than earnings. Are usually set as a fixed percentage of earnings. Fluctuate more widely than earnings.
Answer: Usually exhibit greater stability than earnings.
Explanation:
A dividend is a distribution of profits to the shareholders by a corporation. When a profit is earned by a corporation, the corporation pays a proportion of its profit as dividend to the shareholders.
Although dividends should be distributed in relation to the earnings for the year, that is, when earnings fall, the dividends should fall and vice versa. In real world, dividends are usually stable because a regular dividend paying company is seeen to be a better firm and also investor friendly. Therefore, even if the earnings fall, the dividend yield usually remain stable.
So, correct option is option 1) usually exhibit greater stability than earnings
Assume Zap industries reported the following adjusted account balances at year-end. 2019 2018 Accounts Receivable $ 1,690,200 $ 1,340,920 Allowance for Doubtful Accounts (92,000 ) (76,300 ) Accounts Receivable, Net $ 1,598,200 $ 1,264,620 Assume the company recorded no write-offs or recoveries during 2019. What was the amount of Bad Debt Expense reported in 2019
Answer:
amount of Bad Debt Expense for 2019 = $92,000
Explanation:
A bad debt expense is a uncollectible receivable amount incurred on a credit sale to a customer, who is no longer able to pay the debt, due to bankruptcy or other financial problems. Companies make provision for these kind of credit losses in the allowance for doubtful accounts, and hence records the amount used from the allowance for doubtful accounts as the bad debt expense.
In our example, the allowance for doubtful account for 2019 is $92,000, hence since it was used to settle part of the credit losses, this becomes the bad debt expense.
Segment Contribution Margin Analysis The operating revenues of the three largest business segments for Time Warner, Inc., for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in parentheses. Time Warner, Inc. Segment Revenues (in millions) Turner (cable networks and digital media) $75,100 Home Box Office (pay television) 43,200 Warner Bros. (films, television, and videos) 44,500 Assume that the variable costs as a percent of sales for each segment are as follows: Turner 27% Home Box Office 16% Warner Bros. 25% a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information given. Turner Home Box Office Warner Bros. Revenues $ $ $ Variable costs Contribution margin $ $ $ Contribution margin ratio (as a percent) % % % b. Does your answer to (a) mean that the other segments are more profitable businesses
Answer:
Time Warner, Inc.
a) Contribution Margin and Contribution Margin Ratio for each segment:
Turner Home Box Office Warner Bros.
Revenues $75,100 $43,200 $44,500
Variable costs 20,277 6,912 11,125 Contribution margin $54,823 $36,288 $33,375
Contribution margin ratio
(as a percent of Revenue) 73% 84% 75%
b) The answer in (a) does not mean that the two other segments are more profitable than Turner. The Contribution Margin Ratio is not enough to decide the profitability of each segment. It only shows the percentage of revenue that is left after deducting the variable costs. To determine profitability, fixed costs will be deducted from the contribution margin. Fixed costs refer to the periodic costs associated with running the different segments.
Explanation:
Segment Contribution Margin Analysis helps management to review the contributions made by each segment to the entity. It shows the difference between segmental revenues and segmental variable costs.
Specialization and the gains from trade make the economy PPF outward bowed because _______. A. a good is initially produced by producers with higher opportunity costs and eventually produced by producers with lower opportunity costs B. all producers have bowed-out PPFs, and the economy PPF is the horizontal sum of the individual PPFs C. as more of a good is produced, people are willing to pay less for each additional unit of the good D. a good is initially produced by producers with lower opportunity costs and eventually produced by producers with higher opportunity costs
Answer:
A. a good is initially produced by producers with higher opportunity costs and eventually produced by producers with lower opportunity costs
Explanation:
The production possibility frontier is a curve that shows the two combinations of goods and services produced in an economy.
Because of trade a country can specialise in the production of goods for which it has a lower opportunity cost in its production and import goods for which it has a higher opportunity cost.
This makes the ppf bowed out as the country produces more of the good for which it has a lower opportunity cost and less of the good for which it has a higher opportunity cost.
I hope my answer helps you
Miller Company's most recent contribution format income statement is shown below:sales (20,000 units)............300,000 15.00Variable expenses.............180,000 9.00CM ..............................120,000 6.00Fixed expense................. 70,000Net operating income......... 50,000Required:Prepare a new contribution format income statement under each of the following conditions (consider each case independently):1. The number of units sold increases by 15%.2. The selling price decreases by $1.50 per unit, and the number of units sold increases by 25%.3. The selling price increases by $1.50 per unit, fixed expenses increase by $20,000, and the number of units sold decreases by 5%.4. The selling price increases by 12%, variable expenses increase by 60 cents per unit, and the number of units sold decreases by 10%.
Answer:
Miller Company
New contribution format income statement under each of the following conditions (consider each case independently):
1. The number of units sold increases by 15%.
Sales (23,000 units) $345,000 ( unit price $15.00)
Variable expenses $207,000 ( unit cost $9.00)
Contribution Margin $138,000 ( unit $6.00)
Fixed expense $70,000
Net operating income $68,000
2. The selling price decreases by $1.50 per unit, and the number of units sold increases by 25%.
Sales (25,000 units) $337,500 ( unit price $13.50)
Variable expenses $225,000 ( unit cost $9.00)
Contribution Margin $112,500 ( unit $4.50)
Fixed expense $70,000
Net operating income $42,500
3. The selling price increases by $1.50 per unit, fixed expenses increase by $20,000, and the number of units sold decreases by 5%.
Sales (19,000 units) $313,500 ( unit price $16.50)
Variable expenses $171,000 ( unit cost $9.00)
Contribution Margin $142,500 ( unit $7.50)
Fixed expense $90,000 ($70,000 + 20,000)
Net operating income $52,500
4. The selling price increases by 12%, variable expenses increase by 60 cents per unit, and the number of units sold decreases by 10%.
Sales (18,000 units) $302,400 ( unit price $16.80)
Variable expenses $172,800 ( unit cost $9.60)
Contribution Margin $129,600 ( unit $7.20)
Fixed expense $70,000
Net operating income $59,600
Explanation:
a) Contribution Format Income Statement as per question:
Sales (20,000 units) $300,000 ( unit price 15.00)
Variable expenses $180,000 ( unit cost 9.00)
Contribution Margin $120,000 ( unit 6.00)
Fixed expense $70,000
Net operating income $50,000
b) The contribution format income statement can be prepared under different scenarios to account for different events as in the above. They are estimates of future occurrences under scenario planning and analysis which can help management to make informed decisions, knowing the outcome of each situation.
Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $112 for the skirt:
Store Travel Time Each Way (Minutes) Price of a Skirt (Dollars per skirt)
Local Department Store 15 103
Across Town 30 89
Neighboring City 60 63
Juanita makes $16 an hour at work. She has to take time off work to purchase her skirt, so each hour away from work costs her $16 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling.
Complete the following table by computing the opportunity cost of Juanita's time and the total cost of shopping at each location.
Store Opportunity Cost of Time (Dollars) Price of a Skirt (Dollars per skirt) Total Cost (Dollars)
Local Department Store 103
Across Town 89
Neighboring City 63
Assume that Juanita takes opportunity costs and the price of the skirt into consideration when she shops. Juanita will minimize the cost of the skirt if she buys it from the:_______
Answer:
Juanita should purchase the skirt at the neighboring city because the total economic cost will be lowest.
Explanation:
three options:
local store 15 minutes away and a price of $103across town 30 minutes away and a price of $89neighboring city 1 hour away and a price of $63Juanita makes $16 per hour at her work, and her purchase decision includes the opportunity cost of lost wages:
total economic cost:
local store = $103 + [1/4 hours x 2 (round trip) x $16] + (1/2 hour x $16) = $119across town = $89 + [1/2 hours x 2 (round trip) x $16] + (1/2 hour x $16) = $113neighboring city = $63 + [1 hour x 2 (round trip) x $16] + (1/2 hour x $16) = $103Juanita should purchase the skirt at the neighboring city because the total economic cost will be lowest ($103)
Opportunity costs are the benefits lost or extra costs incurred for choosing one activity or investment over another alternative. Economic costs include both accounting costs and opportunity costs.
Mystic Lake Inc. bottles and distributes spring water. On July 9 of the current year, Mystic Lake reacquired 60,000 shares of its common stock at $42 per share. On September 22, Mystic Lake sold 45,000 of the reacquired shares at $51 per share. The remaining 15,000 shares were sold at $40 per share on November 23.
Required:
A. Journalize the transactions of July 9, September 22, and November 23. Refer to the Chart of Accounts for exact wording of account titles.
B. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
C. For what reasons might Mystic Lake have purchased the treasury stock?
Answer:
A. Journalize the transactions
July 9, purchase of 60,000 treasury stocks
Dr Treasury stocks 2,520,000
Cr Cash 2,520,000
September 22, 45,000 treasury stocks sold
Dr Cash 2,295,000
Cr Treasury stocks 1,890,000
Cr Additional paid in capital 405,000
November 23
Dr Cash 600,000
Dr Additional paid in capital 30,000
Cr Treasury stocks 630,000
B. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
Additional paid in capital = $405,000 - $30,000 = $375,000
December 31 balance:
Additional paid in capital $375,000
C. For what reasons might Mystic Lake have purchased the treasury stock?
management believed that the stock was underpricedthey have excess cash and no immediate projects to invest init is a way to increase the price of stocks since lower equity with the same profits means that each remaining stock will earn more returnsSuppose the government is considering an increase in the toll on a certain stretch of highway from $.40 to $.50. At present, 50,000 cars per week use that highway stretch; after the toll is imposed, it is projected that only 45,000 cars per week will use the highway stretch. Assuming that the marginal cost of highway use is constant (i.e., the supply schedule is horizontal) and equal to $.40 per car, what is the change in social surplus attributable to the increase in the toll
Answer:
$250 is the change in social surplus attributable to the increase in the toll
Explanation:
Suppose the government increase in toll on a certain stretch of highways by this caused a dead-weight loss occur and then resulting full in the number of cars using the highway.
Dead-weight loss = (0.5) (0.50-0.40) (50,000-45,000)
Dead-weight loss = 0.5 * 0.10 * 5000
Dead-weight loss = $250
The increase paid by other remaining drivers (0.50-0.40)(40,000) can be viewed as transfer from drivers to the government.
Assume you are the president of Nuclear Company. At the end of the first year of operations (December 31), the following financial data for the company are available: Accounts Payable$33,000 Accounts Receivable 59,950 Cash 13,500 Common Stock 63,030 Dividends 230 Equipment 32,000 Notes Payable 1,500 Operating Expenses 61,700 Other Expenses 9,000 Sales Revenue 87,300 Supplies 8,450 Prepare a statement of retained earnings for the year ended December 31.
Answer:
Ending retained earnings is $ 16,370.00
Explanation:
Before preparing the statement of retained earnings for the year ended December 31, the net income for the current year needs to be ascertained.
net income=sales revenue-operating expenses-other expenses
net income=$87,300-$61,700-$9000=$ 16,600.00
Statement of Retained earnings for the year ended 31 December:
Beginning retained earnings $0
net income $16,600
dividends ($230)
ending retained earnings $ 16,370.00
Entry for Jobs Completed; Cost of Unfinished Jobs The following account appears in the ledger prior to recognizing the jobs completed in January: Work in Process Balance, January 1 $10,100 Direct materials 82,110 Direct labor 88,580 Factory overhead 46,560 Jobs finished during January are summarized as follows: Job 210 $40,920 Job 224 $47,740 Job 216 25,010 Job 230 84,120 a. Journalize the entry to record the jobs completed. If an amount box does not require an entry, leave it blank. b. Determine the cost of the unfinished jobs at January 31. $
Answer:
a.Entry to record the jobs completed.
Job 210 $40,920 (debit)
Job 224 $47,740 (debit)
Job 216 $25,010 (debit)
Job 230 $84,120 (debit)
Work - In Process $197,790 credit)
b. $29,550
Explanation:
a.Entry to record the jobs completed.
Recognize the Cost of Manufacture in the Jobs completed and De-recognize the costs from the Work In progress Account
b. the cost of the unfinished jobs
The cost of the unfinished jobs = Opening Work-In process + Costs Added during the year - Finished Jobs at the end
Opening Work-In process $10,100
Add Manufacturing Costs :
Direct materials $82,110
Direct labor $88,580
Factory overhead $46,560 $217,240
Less Finished Jobs :
Job 210 $40,920
Job 224 $47,740
Job 216 $25,010
Job 230 $84,120 ($197,790)
Cost of the unfinished jobs $29,550
Light-emitting diode (LED) light bulbs have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.45 and lasts for 1,000 hours. A 7-watt LED, which provides the same light, costs $2.25 and lasts for 40,000 hours. A kilowatt-hour of electricity costs $.121, which is about the national average. A kilowatt-hour is 1,000 watts for 1 hour. However, electricity costs actually vary quite a bit depending on location and user type (you can get information on your rates from your local power company). An industrial user in West Virginia might pay $.04 per kilowatt-hour whereas a residential user in Hawaii might pay $.25. You require a 10 percent return and use a light fixture 500 hours per year. What is the break-even cost per kilowatt-hour?
Answer:
(A) For incandescent bulb, your break even cost is $32.67
(B) With LED bulb, your break even cost is $3.8115
Conclusion: It makes financial sense to use LED bulbs.
Explanation:
We start by checking the cost of your electricity bill when you use incandescent bulb and when you use LED bulb.
Since your answers are to be in kilowatt hour, we transform the watt measurement of the bulbs into kilowatt thus:
60watt incandescent bulb = 0.06kw
7watt led bulb = 0.007kw
National average cost of electricity per kilowatt hour is $1.21
Cost per kWh using incandescent bulb is 1.21 × 0.06 = $0.0726
Cost per kWh using led bulb is 1.21 × 0.007 = $0.00847
(A) WITH INCANDESCENT
0.06kw × 500hrs/year = 30kwhrs/year
Cost of electricity bill = 1.21 × 30 =$36.3
Your 10% return = $3.63
Break even cost per year, in kWh is = 36.3 - 3.63 = $32.67
(B) WITH LED
0.007kw × 500hrs/year = 3.5kwhrs/year
Cost of electricity bill = 1.21 × 3.5 = $4.235
Your 10% return = $0.4235
Break even cost per year in kWh is = 4.235 - 0.4235
(C) The incandescent bulb costs $0.45 but draws you a bill of $32.67 a year WHILE the led bulb costs $2.25 but draws you a bill of $3.8115
We conclude hence, that light-emitting diode bulbs make financial sense. Overlook the cost of purchasing the bulb because it uses less kilowatts per hour and draws you a very low bill, compared to the incandescent bulb!
Hewlett-Packard introduced its HP Tablet a few years after Apple launched its original iPad, about the same time Apple introduced its next-generation iPad2. HP Tablet sales were very disappointing, and Hewlett-Packard eventually killed the product. According to the text, the primary reason for the HP Tablet’s failure was due in large part to:_____
a. poor product quality
b. not satisfying customer needs on critical factors.
c. an insignifanct point of difference
d. bad timing
Answer:
d. bad timing
Explanation:
Remember the principle of first entry advantage which says that the first entrant to a market has better advantage of gaining more market share over late entrants.
This was true in the Tablet market which saw Apple's iPad been the very first commercially sold tablet devices. Because of wrong/late timing when Apple introduced its next-generation iPad2 the HP tablet came in struggling to get a part of the already captured tablet market by Apple's iPad.
