Answer: $1800
Explanation:
Here is the correct question:
Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is p=140-2q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $20, which is the marginal cost his round imposes on the Club. What membership fee would maximize profit for the Club? The manager could have charged Joe a single price per round. How much extra profit does the Club earn by using two-part pricing? The profit-maximizing membership fee (F) is $nothing. (Enter your response as a whole number.)
Answer:
p = 140 - 2q
The profit-maximizing membership fee will be equal to total surplus
Therefore, the number of rounds that Joe played will be,
P = MC
20 = 140 - 2q
2q = 140 - 20
2q = 120
q = 120/2
q = 60
Total surplus = 1/2 × (vertical intercept of the demand curve - marginal cost) × the quantiy of rounds.
Total surplus = 1/2 × (140 - 20) × 60
= 1/2 × 120 × 60
= 3600
Therefore, the maximum membership fee will be = $3600.
If the firm charge Joe a single price , then the rounds provided will be such that MR = MC
Total revenue = price × quantity
TR = (140 - 2q) × q
TR = 140q - 2q²
MR = dTR/dQ = 140 - 4q
We then equate MR = MC
140 - 4q = 20
4q = 140 - 20
4q = 120
q = 120/4
q = 30
P = 140 - 2q
P = 140 - (2 × 30)
P = 140 - 60
P = 80
Therefore, the profit if a single price is charge will be:
= TR - TC = pq - MC×q = (P-MC)×Q
= (80-20) × 30
= $1800
Therefore, the increase in the profit by two-par pricing will be:
=Membership fee - Profit of single price charge
= $3600 - $1800
= $1800
The risk-free rate of interest, kRF, is 6 percent. The overall stock market has an expected return of 12 percent. Nutshell, Inc. has a beta of 1.2. What is the required return of Nutshell, Inc. stock? *
Answer:required return of Nutshell, Inc. stock = 13.2%
Explanation:The Required return also called Hurdle rate is the minimum return in percentage which an investor should receive from doing business or investing in a business to compensate for the risks associated with the business. The more risky the investment, the more high returns and the less risky investment, the lower the returns.
Required Rate of Return = Risk Free Rate + Beta x (Whole Market Return – Risk Free Rate)
given
risk-free rate = 6%
market return= 12 %
beta = 1.2
Required Rate of Return = Risk Free Rate + Beta * (Whole Market Return – Risk Free Rate
= 6% + 1.2 x (12% - 6%) = 6% + 1.2 x 6% = 0.06 + 1.2x 0.06= 0.06 + 0.072=0.132 x 100 = 13.2%
Ida Sidha Karya Company is a family-owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $880. Selected data for the company’s operations last year follow:Units in beginning inventory 0Units produced 280Units sold 240Units in ending inventory 40Variable costs per unit: Direct materials $ 115 Direct labor $ 335 Variable manufacturing overhead $ 35 Variable selling and administrative $ 25 Fixed costs: Fixed manufacturing overhead $ 63,000 Fixed selling and administrative $ 23,000 The absorption costing income statement prepared by the company’s accountant for last year appears below:Sales $ 211,200Cost of goods sold 170,400Gross margin 40,800Selling and administrative expense 29,000Net operating income $ 11,800Required:Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.
Answer:
Fixed manufacturing cost allocated to inventory= $9,000
Explanation:
Giving the following information:
Units in beginning inventory 0
Units produced 280
Units sold 240
Units in ending inventory 40
Fixed manufacturing overhead $63,000
The absorption costing method includes all costs related to production, both fixed and variable.
First, we need to calculate the unitary fixed manufacturing cost:
unitary fixed manufacturing cost= 63,000/280= $225
Fixed manufacturing cost allocated to inventory= 40*225=$9,000
Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projects:
Year 0 1 2 3
Sales (Revenues) 100,000 100,000 100,000
- Cost of Goods Sold (50% of Sales) 50,000 50,000 50,000
- Depreciation 30,000 30,000 30,000
= EBIT 20,000 20,000 20,000
- Taxes (35%) 7000 7000 7000
= unlevered net income 13,000 13,000 13,000
+ Depreciation 30,000 30,000 30,000
- capital expenditures -90,000
1. The free cash flow for the first year of Epiphany's project is closest to:________
A. $43,000
B. $25,000
C. $13,000
D. $45,000
2. The NPV for Epiphany's Project is closest to:_______
A. $4,800
B. $39,000
C. $13,300
D. $20,400
Answer:
FCF years 1 is $43,000
NPV is $13,300
Explanation:
The free cash flow for the first year=net income+depreciation-Capital exp
net income is $13,000
depreciation is $30,000
capital exp for the first year is nil
the free cash flow=$13,000+$30,000+$0=$43,000
FCF year zero=-$90,000
the FCF for year1 applies to years 2 and 3 as well
NPV=-$90,000+$43,000/(1+12%)^1+$43,000/(1+12%)^2+$43,000/(1+12%)^3=
$13,278.74
The closest option is $13,300
Which of the following factors has not contributed to the trend towards outsourcing in recent decades: Group of answer choices
a. Increasing turbulence of the business environment.
b. Increasing emphasis on cost efficiency.
c. Increasing emphases on the need for competitive advantage based upon superior capabilities Increasing transaction costs
At March 31, Cummins Co. had an unadjusted balance in its cash account of $9,700. At the end of March, the company determined that it had outstanding checks of $950, deposits in transit of $620, a bank service charge of $25, and an NSF check from a customer for $210. What is the true cash balance at March 31
Answer:
$9,465
Explanation:
The computation of the true cash balance as on March 31 is shown below:
= Unadjusted cash balance as on March 31 - bank service charges - NSF check from a customer
= $9,700 - $25 - $210
= $9,465
These above two items are to be deducted
The other two items i.e outstanding checks and the deposit in transit are related to the bank balance and the same is not considered
A company issues a callable (at par) ten-year, 6% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $104 per $100 of face value. What is the yield to worst of this bond when it is released
Answer:
6.32%
Explanation:
This can be calculate using the YTC using the following equation:
YTC = (C + (CP - P) / t) / ((CP + P) / 2) .......................... (1)
Where:
YTC = YTW = yield to call or yield to worst = ?
C = annual coupon interest payment = bond interest rate * Bond price = 6% * $100 = $6
CP = call price of the bond = $104
P = price of the bond = $100
t = time in years remaining until the call date = 10 - 1 = 9 years
Substituting the values into equation (1), we have:
YTC = ($6 + ($104 - $100) / 9) / (($104 + $100) / 2) = 0.0632, or 6.32%
Howard Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Department S1 costs are allocated on the basis of number of employees, and Department S2 costs are allocated on the basis of space occupied expressed in square feet.
Data on direct department costs, number of employees, and space occupied are as follows:
S1
S2
P1
P2
Direct dept. costs
$7,500
$11,000
$27,500
$30,000
Number of employees
10
5
20
25
Space occupied (sq. ft.)
1,000
500
1,500
2,500
If Howard used the reciprocal method, the algebraic equation expressing the total costs allocated from S1 is
Select one:
a. S1 = $7,500 + 0.10S2.
b. S1 = $7,500 + 0.20S2.
c. S1 = $10,000 + 0.20S2.
d. S1 = $10,000 + 0.10S2.
Answer: S1 = $ 7500 + 0.20 S2
Explanation:
From the question, Howard Company has two support departments which are (S1 and S2) and two producing departments which are (P1 and P2). The department S1 costs are allocated on the basis of number of employees, and the department S2 costs are allocated on basis of space occupied expressed in square feet.
The algebraic equation expressing the total costs allocated from S1 is calculated as follow:
S1 Direct Cost = $ 7500
The cost of S2 will be allocated to S1 based on the space occupied and the total space that is occupied is:
= 1000 + 1500 + 2500
= 5000 sq ft
Space occupied by S1 = 1000
S2’s cost allocated to S1 will be:
= (1000 / 5000) of S2 cost
= 0.20 S2
Therefore the correct option is:
S1 = $ 7500 + 0.20 S2
On January 1, Year 1, Li Company purchased an asset that cost $35,000. The asset had an expected useful life of five years and an estimated salvage value of $7,000. Li uses the straight-line method for the recognition of depreciation expense. At the beginning of the fourth year, the company revised its estimated salvage value to $3,500. What is the amount of depreciation expense to be recognized during Year 4
Answer:
The amount of depreciation expense to be recognized during Year 4 is $7,350
Explanation:
In order to calculate the amount of depreciation expense to be recognized during Year 4 we would have to calculate first the Depreciation as per straight line method as follows:
Depreciation as per straight line method=(Cost-Residual value)/Useful life
=($35,000-$7,000)/5=$5,600
Hence, book value as on beginning of the fourth year=$35,000-($5,600*3)=$18,200
Hence, depreciation revised for the 2 remaining years=($18,200-$3,500)/2
=$7,350
The amount of depreciation expense to be recognized during Year 4 is $7,350
The Melrose Corporation produces a single product, Product C. Melrose has the capacity to produce 90,000 units of Product C each year. If Melrose produces at capacity, the per unit costs to produce and sell one unit of Product C are as follows:
Direct materials $22.80
Direct labor $18.60
Variable manufacturing overhead $14.20
Fixed manufacturing overhead $16.00
Variable selling expense $12.80
Fixed selling expense $8.40
The regular selling price of one unit of Product C is $100.80. A special order has been received by Melrose from Moore Corporation to purchase 3,500 units of Product C during the upcoming year. If this special order is accepted, the variable selling expense will be reduced by 75%. Total fixed manufacturing overhead and fixed selling expenses would be unaffected except that Melrose will need to purchase a specialized machine to engrave the Moore name on each unit of product C in the special order. The machine will cost $6,300 and will have no use after the special order is filled. Assume that direct labor is a variable cost.
Assume that Melrose expects to sell 68,000 units of Product C to regular customers next year. At what selling price for the 3,500 units would Melrose be economically indifferent between accepting and rejecting the special order from Moore?
a. $59.10
b. $60.60
c. $81.10
d. $82.60
Answer:
Indifferent selling price =$67 per units
Explanation:
The selling at which Mel rose would be economically be indifferent between accepting and rejecting the special order from Moore is that that equates the relevant cost of making to the revenue from t
Relevant variable cost making
= 22.80 + 18.60 + 14.20 + (75%×12.80) = $65.2
$
Variable cost of special order (= $65.2 × 3,500)= 228,200
Cost of machine 6,300
Total relevant cost of special order 234,500
The price at which Melrose would be indifferent
= total relevant cost/ number of units
$234,500/3500 units
=$67 per units
Agency theory presents some important managerial considerations. Broadly speaking, governance mechanisms need to assure alignment of incentives between principals and agents. The text provides an example of financial institutions in the situation of profits remaining within the firm while losses are paid by the public as a description of:________.A) a board of directors' problem.B) a challenge of information symmetry.C) a moral hazard problem.D) a private information problem.E) an adverse selection problem.
Answer: a moral hazard problem
Explanation:
Agency theory is a principle used to explain and resolve the issues in the relationship that exists between business principals and their agents. The relationship is usually the one between the shareholders who act as the principals, and the company executives who act as the agents.
When banks are bailed out through public funds for the excessive risky mortgage obligations or undue risk taking, this lead to increase in moral hazard. The gains of successful risk taking will stay with the private firm and the risks would be shared with the other parties.
Terrel Gifts produces logo platters and cups bearing the name of the city in which the items will be sold to tourists. Indirect logo printing costs are allocated to platters and cups based on the amount of time spent on the logo machine. The company has budgeted logo costs of $4,224 per month and expects to spend 4,800 hours on the printing logos each month. Each platter uses 24 minutes and each cup spends 6 minutes on the logo machine. How much of the logo printing costs will be allocated to each platter?
Answer:
$0.3528
Explanation:
So, we are given the following data or parameters or information in the question above as:
=> " The company has budgeted logo costs = $4,224 per month."
=> "Time that is being expected to be spent = 4,800 hours on the printing logos each month. "
=> " Each platter uses 24 minutes and each cup spends 6 minutes on the logo machine."
The amount of money the logo printing costs will be allocated to each platter;
Thus, 0.0147 × 24 = 0.3528.
Kindly note that the value; 0.0147 comes from the division of 4800 hours by 60 per each hour
Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access. Zisa deducts a 3% service charge for sales on its credit card and credits the bank account of Mayfair immediately when credit card receipts are deposited. Mayfair deposits the Zisa credit card receipts each business day. When customers use Access credit cards, Mayfair accumulates the receipts for several days before submitting them to Access for payment. Access deducts a 2% service charge and usually pays within one week of being billed. Mayfair completes the following transactions in June.
(The terms of all credit sales are 2/15, n/30, and all sales are recorded at the gross price.) June 4 Sold $650 of merchandise (that had cost $400) on credit to Natara Morris. 5 Sold $6,900 of merchandise (that had cost $4,200) to customers who used their Zisa cards. 6 Sold $5,850 of merchandise (that had cost $3,800) to customers who used their Access cards. 8 Sold $4,350 of merchandise (that had cost $2,900) to customers who used their Access cards. 10 Submitted Access card receipts accumulated since June 6 to the credit card company for payment. 13 Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts. The $429 balance in McKee’s account stemmed from a credit sale in October of last year. 17 Received the amount due from Access. 18 Received Morris’s check in full payment for the purchase of June 4.
Required:
Prepare journal entries to record the preceding transactions and events. (The company uses the perpetual inventory system.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
June 4 Sold $650 of merchandise (that had cost $400) on credit to Natara Morris.
June 4
Dr Accounts receivable 650
Cr Sales revenue 650
June 4
Dr Cost of goods sold 400
Cr Inventory 400
5 Sold $6,900 of merchandise (that had cost $4,200) to customers who used their Zisa cards.
June 5
Dr Accounts receivable 6,693
Dr Credit card fees 207
Cr Sales revenue 6,900
June 5
Dr Cost of goods sold 4,200
Cr Inventory 4,200
June 5, after Zisa transfers the money
Dr Cash 6,693
Cr Accounts receivable 6,693
6 Sold $5,850 of merchandise (that had cost $3,800) to customers who used their Access cards.
June 6
Dr Unbilled revenue 5,733
Dr Credit card fees 117
Cr Sales revenue 5,850
June 6
Dr Cost of goods sold 3,800
Cr Inventory 3,800
8 Sold $4,350 of merchandise (that had cost $2,900) to customers who used their Access cards.
June 8
Dr Unbilled revenue 4,263
Dr Credit card fees 187
Cr Sales revenue 4,350
June 8
Dr Cost of goods sold 2,900
Cr Inventory 2,900
10 Submitted Access card receipts accumulated since June 6 to the credit card company for payment.
June 10
Dr Accounts receivable 9,996
Cr Unbilled revenue 9,996
13 Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts. The $429 balance in McKee’s account stemmed from a credit sale in October of last year.
June 13
Dr Bad debt expense 429
Cr Allowance for doubtful accounts 429
17 Received the amount due from Access.
June 17
Dr Cash 9,996
Cr Accounts receivable 9,996
18 Received Morris’s check in full payment for the purchase of June 4.
June 18
Dr Cash 650
Cr Accounts payable 650
One advantage of the direct organizational plan is that it:________.
A. Results in more formal messages.
B. Positions the major news first.
C. Presents key topic sentences before subsequent ideas.
D. Arranges supporting details in order of priority.
E. Gives reasons up front to prepare the reader for negative news.
Answer:
B
Explanation:
One advantage of the direct organizational plan is that it positions the major news first.
The major news receives the most attention because of it importance,hence it is given proper analysis which in turn brings attention.
When the direct approachis used, the main idea (such as a recommendation, conclusion, or request) comes in as the top on the priority list of the document, followed by the evidence. This is a deductive argument. This approach is used when your audience will be neutral or positive about your message.
Alfred is saving up money for a down payment on a townhouse. He currently has $5016$ 5016, but knows he can get a loan at a lower interest rate if he can put down $5994$ 5994. If he invests the $5016$ 5016 in an account that earns 4.4%4.4% annually, compounded monthly, how long will it take Alfred to accumulate the $5994$ 5994? Round your answer to two decimal places, if necessary.
Answer:
It will take Alfred to accumulate the $5994 annually 4.1367 and monthly 4.0557
Explanation:
In order to calculate how long will it take Alfred to accumulate the $5994 we would have to use the following formula:
A=P(1+r/n)∧n*t
P=$5,016
A=$5994
r=4.4%
n=1 annually
n=12 monthly
Therefore, t annually would be as follows:
5,994=$5,016(1+(4.4%/100)/1)∧1*t
t=4.1367
Therefore, t monthly would be as follows:
5,994=$5,016(1+(4.4%/100)/12)∧12*t
t=4.0557
It will take Alfred to accumulate the $5994 annually 4.1367 and monthly 4.0557
Your financial investments consist of U.S. government bonds maturing in 10 years and shares in a start-up company doing research in pharmaceuticals. How would you expect each of the following news items to affect the value of your assets?
a. Interest rates of newly issued government bonds rise
A. Stock and bond prices will rise
B. Stock and bond prices will fall
C. Stock prices will fall and bond prices could remain unchanged or rise
D. Stock prices will fall
E. Stock prices will increase
b. Inflation is forecasted to be much lower than previously expected in Recall the Fisher effect Assume for simplicity that this Information does not affect your forecast of the dollar value of the pharmaceutical company's future dividends and stock price
A. Stock prices will fall
B. Stock and bond prices will fall
C. Stock prices will increase
D. Stock and bond prices will rise
c. Large swings in the stock market increase mancalvestors concerns about market risk. (Assume that interest rates on neaty issued government bonds remain unchanged)
A. Stock and bond prices will fall
B. Stock and bond prices will rise
C. Stock prices will fall
D. Stock prices will increase
E. Stock prices will and bond prices could remam unchanged or rise
Answer: 1. B. Stock and bond prices will fall
2. D. Stock and bond prices will rise
3. E. Stock prices will fall and bond prices could remam unchanged or rise
Explanation:
1. When interest rates on Government bonds rise, this signifies a general rise in interest in the economy. When interest rates rise, consumers and companies such as the Pharmaceutical Research Company will have to cut back on spending because borrowing is now more expensive. This reduction in spending reduces Investment and therefore profits which will reduce the price of the company stock.
When interest rates rise, it is a standard principle that bond prices drop. This is because bonds pay a fixed rate therefore when interest rates rise, it signifies that bonds are not paying enough and so the demand reduces as people are always looking for better returns which leads to a drop in price.
2. As a result of inflation being less than previously thought, it means that bonds and stocks are providing a better return per dollar because inflation will not erode the value of the returns. When the market realises this they will flock to purchase both stocks and bonds which will lead to a price increase.
3. When there are large swings in the stock market, this signifies Market volatility. Market volatility signifies risk and when this happens risk averse investors will flee from the stock market which will have the effect of reducing the prices of stock as they are sold off. If interest rates on the newly issued Government bonds remain unchanged, people that are fleeing the stock market might invest in the bonds instead which will cause their price to rise as more are bought. However, there is a chance that the investors fleeing might not view the interest rates offered by the government bonds and so will not invest leading to the price of the bonds not changing dude to stable demand.
Harry agreed to pay $100 to rent a rooftop spot in Seattle to watch the New Year's Eve festivities. The festivities were canceled at the last minute due to many of the guests' concern over news of a potential terrorist attack in a different section of the city. Harry is likely:
Answer:
Not obligated to pay under the frustration of purpose doctrine
Explanation:
In this specific scenario, Harry is likely Not obligated to pay under the frustration of purpose doctrine. This doctrine states that an individual does not need to abide by his/her contractual duties if a later unforeseen event impedes the buyer's initial purpose for entering into the contract, if and only if the seller knew of the buyer's purpose at the time of entering the contract. Therefore since Harry entered into the agreement for the sole reason of watching the New Year's Eve festivities and it was cancelled due to an unforeseen event (terrorist threat) he does not have to pay.
The manager of the customer service division of a major consumer electronics company is interested in determining whether the customers who have purchased a Blu-ray player made by the company over the past 12 months are satisfied with their products. Which of the following will be a good frame for drawing a sample? a. telephone directory b. a list of potential customers purchased from a database marketing company c. voting registry d. the list of customers who returned the registration card
Answer:
D. The list of customers who returned the registration card
Explanation:
The list of customers who returned the registration card will be a good frame for drawing the sample because it will enable the company to easily and effectively known how good or bad the Blu-ray player was when used by the customers and the satisfaction the customers had from using the company products which is why checking through the record or list of customers who returned the registration card can be good frame from drawing the sample without error occuring because it will give the company the correct and accurate result of all what they need to know about how good or bad their Blue ray player was and the satisfaction their customers derived from using it.
Answer:
D. The list of customers who returned the registration card
Explanation:
The list of customers who returned the registration card will be a good frame for drawing the sample because it will enable the company to easily and effectively known how good or bad the Blu-ray player was when used by the customers and the satisfaction the customers had from using the company products which is why checking through the record or list of customers who returned the registration card can be good frame from drawing the sample without error occuring because it will give the company the correct and accurate result of all what they need to know about how good or bad their Blue ray player was and the satisfaction their customers derived from using it.
The Accounts Receivable balance for Bach Consulting is $4,400,000 as of May 31, 2020. Before calculating and recording the month’s bad debt expense, there is a credit balance in the Allowance for Doubtful Accounts of $80,000. The May 2020 net sales were $30,000,000. In the past several years, 1% of net sales have proven uncollectible. An aging of accounts receivable results in a $360,000 estimate for the Allowance for Doubtful Accounts as of May 31, 2020.
PART A: PERCENT OF SALES METHOD
Assume that Bach Consulting uses the percent of sales method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $___________
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $___________
PART B: ANALYSIS OF RECEIVABLES METHOD
Assume that Bach Consulting instead uses the analysis of receivables method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $___________
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $___________
Problem 3
Use PVH Corp.’s financial statement information to answer the following questions.
Provide the following account balances for PVH:
February 2, 2020
February 3, 2019
Accounts Receivable (gross)
Allowance for Doubtful Accounts
Accounts Receivable, net
Which of the above numbers represents the amount of its February 2, 2020 Accounts Receivable balance that PVH expects to collect in the subsequent year(s)?
Which of the above numbers represents that amount that PVH believes it will not collect from its customers as of February 2, 2020?
Which of the above numbers represents the total amount PVH is owed by customers as of February 2, 2020?
Provide the journal entry (both accounts and amounts) that PVH must have made to record its estimate of Bad Debt Expense in fiscal year 2019.
Provide the journal entry (both accounts and amounts) that PVH must have made to record Accounts Receivable writeoffs in fiscal year 2019.
Answer:
Assume that Bach Consulting uses the percent of sales method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
Dr Bad debt expense 300,000 (= $30,000,000 x 1%)
Cr Allowance for doubtful accounts 300,000
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $4,100,000 (= $4,400,000 - $300,000)
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $300,000
Assume that Bach Consulting instead uses the analysis of receivables method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
Dr Bad debt expense 280,000 (= $360,000 - $80,000)
Cr Allowance for doubtful accounts 280,000
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $4,120,000
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $280,000
Use PVH Corp.’s financial statement information to answer the following questions.
Provide the following account balances for PVH:
February 2, 2020 February 3, 2019
Accounts Receivable (gross) $762,000,000 $800,000,000
Allowance for Doubtful Accounts $21,000,000 $22,000,000
Accounts Receivable, net $741,000,000 $778,000,000
Which of the above numbers represents the amount of its February 2, 2020 Accounts Receivable balance that PVH expects to collect in the subsequent year(s)?
$741,000,000
Which of the above numbers represents that amount that PVH believes it will not collect from its customers as of February 2, 2020?
$21,000,000
Which of the above numbers represents the total amount PVH is owed by customers as of February 2, 2020?
$762,000,000
Provide the journal entry (both accounts and amounts) that PVH must have made to record its estimate of Bad Debt Expense in fiscal year 2019.
Dr Bad debt expense 22,000,000
Cr Allowance for doubtful accounts 22,000,000
Provide the journal entry (both accounts and amounts) that PVH must have made to record Accounts Receivable writeoffs in fiscal year 2019.
Dr Allowance for doubtful accounts 22,000,000
Cr Accounts receivable 22,000,000
Explanation:
Accounts receivable = $4,400,000
beginning balance Allowance for doubtful accounts = $80,000
May's net sales = $30,000,000
1% of net sales are uncollectible
aging of accounts receivable results in a $360,000 estimate for the Allowance for doubtful accounts as of May 31, 2020
Cullumber Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used in each of its systems. Based on an annual production of 40,780 timers, the company has calculated the following unit costs. Direct fixed costs include supervisory and clerical salaries and equipment depreciation. Direct materials $12 Direct labor 7 Variable manufacturing overhead 3 Direct fixed manufacturing overhead 8 (30% salaries, 70% depreciation) Allocated fixed manufacturing overhead 8 Total unit cost $38 Clifton Clocks has offered to provide the timer units to Cullumber at a price of $32 per unit. If Cullumber accepts the offer, the current timer unit supervisory and clerical staff will be laid off. Warning Don't show me this message again for the assignment Ok Cancel Collapse question part (a1) Correct answer. Your answer is correct. Calculate the total relevant cost to make or buy the timer units. (Round answers to 0 decimal places, e.g. 5,275.) Assume that if Cullumber Water accepts Clifton’s offer, the company can use the freed-up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sell 93,050 of the new lights each year at a price of $12. Variable costs of the lights are expected to be $9 per unit. The timer unit supervisory and clerical staff would be transferred to this new product line. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer.
Answer:
If Cullumber accepts the offer, the current timer unit supervisory and clerical staff will be laid off.
If Cullumber accepts the offer its net profits will decrease by ($309,928)If Cullumber accepts the offer, and uses the freed-up manufacturing facilities to manufacture a new line of growing lights.
Cullumber's net profits will decrease by ($30,778)Explanation:
annual production of 40,780 timers
Direct materials $12
Direct labor $7
Variable manufacturing overhead $3
Direct fixed manufacturing overhead $8 (30% supervisory and clerical salaries, 70% equipment depreciation)
Allocated fixed manufacturing overhead $8
total cost per unit = $38 per unit x 40,780 = $1,549,640
40,780 timers have been offered at $32 per timer = $1,304,960
scenario 1: Cullumber accepts the offer and lays off personnel:
Keep producing Purchase Differential
clocks clocks amount
Production costs $995,032 $995,032
(unavoidable fixed
costs not included)
Purchase costs $1,304,960 ($1,304,960)
total costs $995,032 $1,304,960 ($309,928)
If Cullumber accepts the offer its net profits will decrease by $309,928
relevant costs / revenues related to accepting the offer:
93,050
scenario 1: Cullumber accepts the offer and uses the freed-up manufacturing facilities to manufacture a new line of growing lights.
Keep producing Purchase Differential
clocks clocks amount
Production costs $995,032 $995,032
(unavoidable fixed
costs not included)
Purchase costs $1,304,960 ($1,304,960)
Revenue from ($279,150) $279,150
production of lights
(contribution margin
x 93,050 units)
total costs $995,032 $1,025,810 ($30,778)
Anson Jackson Court Company (AJC) The Anson Jackson Court Company (AJC) currently has $200,000 market value (and book value) of perpetual debt outstanding carrying a coupon rate of 6%. Its earnings before interest and taxes (EBIT) are $100,000, and it is a zero growth company. AJC's current cost of equity is 8.8%, and its tax rate is 40%. The firm has 10,000 shares of common stock outstanding selling at a price per share of $60.00. Refer to the data for the Anson Jackson Court Company (AJC). Now assume that AJC is considering changing from its original capital structure to a new capital structure with 50% debt and 50% equity. If it makes this change, its resulting market value would be $820,000. What would be its new stock price per share?
Answer:
The new stock price per share would be $62
Explanation:
In order to calculate the new stock price per share we would have to calculate first the value of the firm as follows:
value of the firm=value of equity+value of debt
value of the firm=(60*10,000)+$200,000
value of the firm=$800,000
If the company makes 50% debt and 50% equity, the market value will increase to $820,000 that is value of equity=$820,000-$200,000=$620,000
Therefore, new stock price per share will be=$620,000/10,000
new stock price per share=$62
A travel agent wants to determine how much the average client is willing to pay for a weekend at an all-expense paid resort. The agent surveys 30 clients and finds that the average willingness to pay is $2,500 with a standard deviation of $840. However, the travel agent is not satisfied and wants to be 95% confident that the sample mean falls within $150 of the true average. What is the minimum number of clients the travel agent should survey
Answer:
[tex]n=(\frac{1.960(840)}{150})^2 =120.47 \approx 121[/tex]
So the answer for this case would be n=12 rounded up to the next integer
Explanation:
[tex]\bar X=2500[/tex] represent the sample mean
[tex]\mu[/tex] population mean (variable of interest)
s=840 represent the sample standard deviation
n represent the sample size
The margin of error is given by this formula:
[tex] ME=z_{\alpha/2}\frac{\sigma}{\sqrt{n}}[/tex] (a)
And on this case we have that ME =150 and we are interested in order to find the value of n, if we solve n from equation (a) we got:
[tex]n=(\frac{z_{\alpha/2} \sigma}{ME})^2[/tex] (b)
The critical value for 95% of confidence interval, the significance level if 5% and the critical value would be [tex]z_{\alpha/2}=1.960[/tex], replacing into formula (b) we got:
[tex]n=(\frac{1.960(840)}{150})^2 =120.47 \approx 121[/tex]
So the answer for this case would be n=12 rounded up to the next integer
he Petteys family plans to buy a home for $224,900, and has been offered a 30-year mortgage with a rate of 5.5% if they make a 20% down payment . Calculate the down payment. (Do not include a dollar sign with your answer)
Answer:
44,980
Explanation:
20 % of $224,900 = (20/100) × $224,900 = $44,980
Andrew Manufacturing held an average inventory of $1.1 million (raw materials, work-in-process, finished goods) last year. Its sales were $8.0 million, and its cost of goods sold was $5.8 million. The firm operates 260 days a year. What is the inventory day’s supply? What target inventory level is necessary to reach a 20- and 10-day inventory days supply during the next two years?
Answer:
The Inventory day's supply is 49.3 days supply
The Target inventory level to reach a 20-day inventory days supply is $ 0.446 million
The Target inventory level to reach a 10-day inventory days supply is $ 0.223 million
Explanation:
In order to calculate the inventory day’s supply we would have to calculate the following:
Inventory day's supply = (Average inventory / Cost of goods sold) * 260 days a year
Inventory day's supply = 1.1/5.8)*260
Inventory day's supply = 49.3 days supply
To calculate the target inventory level necessary to reach a 20- and 10-day inventory days supply during the next two years we would have to calculate the following:
Target inventory level to reach a 20-day inventory days supply = (20/260)*5.8 = $ 0.446 million
Target inventory level to reach a 10-day inventory days supply = (10/260)*5.8 = $ 0.223 million
Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2016. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2016 was $210 million.
Required:
1. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2016.
2. Prepare the journal entry by Tanner-UNF to record interest on December 31, 2016, at the effective (market) rate.
3. At what amount will Tanner-UNF report its investment in the December 31, 2016, balance sheet? Why?
4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2017, for $190 million. Prepare the journal entry to record the sale.
If an advertiser bids $4.75 CPM and another advertiser bids $0.50 per CPC with a click rate of 1%, the display network would award the ad space to A. the CPM bidder because the network would earn $4.75 versus only 50 cents with the CPC bidder BY. the CPM bidder since the network has no idea how many click throughs the CPM bidder will get C. the CPC bidder because the 1% click through rate would produce $5.00 over 1,000 impressions D. the CPC bidder because the $0.50 per click rate would produce an income of $50.00 versus only $4.75 for the CPM bidder
Answer: C. the CPC bidder because the 1% click through rate would produce $5.00 over 1,000 impressions
Explanation:
From the question, an advertiser bids $4.75 cost per thousand impressions (CPM) while another advertiser bids $0.50 per CPC with a click rate of 1%. Over 1000 impressions, the second advertiser bids will produce:
= $0.50 × 1% × 1000
= $0.50 × 0.01 × 1000
= $5
Based on the analysis above, the CPC bidder will be awarded the advertisement space because the 1% click through rate would give $5.00 over 1,000 impressions.
Lang Warehouses borrowed $287,610 from a bank and signed a note requiring 15 annual payments of $27,709 beginning one year from the date of the agreement. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: Determine the interest rate implicit in this agreement
Answer:
The interest rate implicit in this agreement is 5%
Explanation:
A fix periodic payment made for a specific of time is known as annuity.
The 15 annual loan payment of $27,709 is an annuity payment and we will use the following formula to calculate the interest rate.
PV of annuity = P x annuity factor
Where
P = annual payments = $27,709
Placing values in the formula
$287,610 = $27,709 x annuity factor
Annuity factor = $287,610 / $27,709
Annuity factor = 10.37966
The annuity factor of 10.37966 for 15 years is for 5% interest rate.
Taking all parameters into account, what would you expect to be the probability of it costing exactly $15 to produce one kilogram of penicillin? State where/how you found your answer.
Answer:
Worst case = $28 per kilogram
Base case = $16 per kilogram
Best case = $10.50 per kilogram.
Explanation:
Based on the information and data given in slide 37 what i would expect to be the probability of it costing would tend to depend on the worst, base and best case scenarios once all the parameters given are been taken into account.
The unit of production will tend to cost dollar per Kilogram which means that Worst case will be $28 per kilogram ,Base case will be $16 per kilogram and Best case will be $10.50 per kilogram. .
A company had the following partial list of account balances at year-end: Sales Returns and Allowances $ 1,000 Accounts Receivable 38,000 Sales Discounts 2,100 Sales Revenue 95,000 Allowance for Doubtful Accounts 1,200 How much is net sales revenue
Answer:
$91,900
Explanation:
The computation of net sales revenue is shown below:-
Here, for reaching the net sales revenue we add the sales revenue and deduct the sales return and allowances with sales discounts
Net sales revenue = Sales Revenue - Sales Returns and Allowances - Sales Discounts
= $95,000 - $1,000 - $2,100
= $91,900
Therefore we have applied the above formula.
Introduction to the future value of money. Under the concepts of the time value of money, you can determine the future value of an amount invested today that will earn a given interest rate over a given amount of time. This technique can be used to calculate the future value of:
(1) a single receipt or payment made
(2) a series of receipts or payments.
Lexi and Luke are sitting together, with their notebooks and textbooks open, at a coffee shop. They've been reviewing the latest lecture from Dr. Thibodeaux's financial management class by asking each other questions Today's topic addressed the calculation of future values for both simple and compound interest-earning accounts. Complete the missing information in the conversation that follows. Round your final answer to all computations to two decimal places. However, if you compute any interest factors as an intermediate step in your calculations, round them to four decimal places.
Lexi So, why is it important to be able to calculate the future value of some amount invested?
Luke First, remember that the amount invested is usually called _______maturity payment and the amount earned during the investment period is called_________interest.It is important to be able to calculate a future value so that you can know in advance what a given amount of principal will be worth after earning a specified________ interest rate for a known_________
Lexi OK, I understand that, and I know the amount of principal invested today can be called the ________ value of the investment, whereas the amount realized after the passage of t period of time is called its _________ value. But what causes the present and future values to be different values?
Luke Two things cause the present and future values to be different amounts. First, the _________ earned during the investment period causes the future value to be greater than, equal to, or less than the present value. Second, the method used to calculate the interest earned-that is, whether the account pays ______________ interest-determines the________.
Answer:
Principal
interest
interest for a known period
present value
future value
interest
simple or compound interest
the amount by which the future value differs from the present value
Explanation:
The initial amount invested is known as the principal amount.
The increase over and above the principal invested is called interest.
The duration of the investment is the period which the interest is earned.
present value is the present worth of investment
future value is the future amount that the investment would worth after been invested for a known period
Diogo has a utility function,U(q1, q2) = q1 0.8 q2 0.2,where q1 is chocolate candy and q2 is slices of pie. If the price of slices of pie, p2, is $1.00, the price of chocolate candy, p1, is $0.50, and income, Y, is $100, what is Diogo's optimal bundle?The optimal value3 of good q1 isq = units. (Enter your response rounded to two decimal places.)1 The optimal value of good q2 isq2 = units. (Enter your response rounded to two decimal places.)
Answer:
[tex](0.5 \times 8q_2)+q_2=100\\\\5q_2=100\\\\q_2=20[/tex]
since [tex]q_2 = 20[/tex]
[tex]q_1 = 8*20\\\\q_1=160[/tex]
Explanation:
U(q₁ q₂)
[tex]q_1^{0.8}q_2^{0.2}\\\\P_1= \$0.5 \ P_2=\$1 \ Y=100[/tex]
Budget law can be given by
[tex]P_1q_1+P_2q_2=Y\\\\0.5q_1+q_2=100[/tex]
Lagrangian function can be given by
[tex]L=q_1^{0.8}q_2^{0.2}+ \lambda (100-0.5q_1-q_2)[/tex]
First order condition csn be given by
[tex]\frac{dL}{dq} =0.8q_1^{-0.2}q_2^{0.2}-0.5 \lambda=0\\\\0.5 \lambda=0.8q_1^{-0.2}q_2^{0.2}---(i)[/tex]
[tex]\frac{dL}{dq} =0.2q_1^{0.8}q_2^{-0.8}- \lambda=0\\\\ \lambda=0.2q_1^{0.8}q_2^{-0.8}---(ii)[/tex]
[tex]\frac{dL}{d \lambda} =100-0.5q_1-q_2=0\\\\0.5q_1+q_2=100---(iii)[/tex]
From eqn (i) and eqn (ii) we have
[tex]\frac{0.5 \lambda}{\lambda} =\frac{0.8q_1^{-0.2}q_2^{0.2}}{0.2q_1^{0.8}q_2^{-0.8}} \\\\0.5=\frac{4q_2}{q_1}\\\\q_1=8q_2}[/tex]
Putting [tex]q_1=8q_2[/tex] in euqtion (iii) we have
[tex](0.5 \times 8q_2)+q_2=100\\\\5q_2=100\\\\q_2=20[/tex]
since [tex]q_2 = 20[/tex]
[tex]q_1 = 8*20\\\\q_1=160[/tex]
