MFG Manufacturing sells a product for $40 per unit. The production cost of the product is $21 per unit: direct materials of $8, direct labor of $7, variable overhead of $4 and fixed overhead of $2. The fixed overhead per unit comes from dividing $500,000 of fixed factory overhead by 250,000 units produced. In addition, MFG pays $3 for shipping each unit sold. Finally, MFG has fixed costs outside the factory (such as office building depreciation and salaries) that total $200,000 per year. Assuming breakeven in units was correctly computed to be 20,000 units, breakeven in dollars is:

Answers

Answer 1

Answer:

Break-even sales  =$800,000

Explanation:

The break-even sales is the amount of revenue that a business must generate that would equate its total costs to total revenue. At the break even sales, the contribution is exactly to total iced cost, and the business makes no profit or loss

Break-even (units) = Total general fixed cost /(selling price- variable cost)

Break-even sales = Break-even (in units) × Selling price

Break-even sales = 20,000 × $40 =$800,000

Break-even sales=$800,000


Related Questions

Gelb Company currently manufactures 53,500 units per year of a key component for its manufacturing process. Variable costs are $2.95 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $64,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.50 per unit. Calculate the total incremental cost of making 53,500 units and buying 53,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier

Answers

Answer and Explanation:

The computation of the total incremental cost is shown below;

For making 53,500 units

Particulars Relevant     Relevant            Total

                       Per Unit    Fixed Costs        Relevant Costs

Variable Cost

Per Unit           $2.95                          $157,825

                                                                    (53,500 units × $2.95)

Fixed

Manufacturing

Costs                        $67,000           $67,000

Total Incremental Costs to Make  $224,825

For making 53,500 units

Particulars Relevant     Relevant            Total

                       Per Unit    Fixed Costs        Relevant Costs

Purchase

Price

Per Unit        $3.50                                  $187,250

                                                                    (53,500 units × $3.50)

Total Incremental Cost to Buy   $187,250

The company should buy the component from the outside supplier as it saves the cost for ($224,825 - $187,250) = $37,575 plus the buying cost is less than the making cost

Suppose your employer offers you a choice between a $ 4 comma 600 bonus and 200 shares of the company stock. Whichever one you choose will be awarded today. The stock is currently trading for $ 64 per share. Ignore transaction costs. a. Suppose that if you receive the stock​ bonus, you are free to trade it. Which form of the bonus should you​ choose? What is its​ value? b. Suppose that if you receive the stock​ bonus, you are required to hold it for at least one year. What can you say about the value of the stock bonus​ now? What will your decision depend​ on?

Answers

Answer:

a. Suppose that if you receive the stock​ bonus, you are free to trade it. Which form of the bonus should you​ choose? What is its​ value?

I would choose the stock bonus because the current market price = 200 x $64 = $12,800 which is much higher than $4,600 (cash bonus)

b. Suppose that if you receive the stock​ bonus, you are required to hold it for at least one year. What can you say about the value of the stock bonus​ now? What will your decision depend​ on?

Even if you are required to hold the stock for one year, the price difference with the cash bonus is too great = ($12,800 - $4,600) / $4,600 = 178% higher. Since you are employed by the company, you should know if the company is doing well or not, and the probable future stock price.

Only if something catastrophic happened to the company would make the cash bonus more attractive.

Thomas Company uses a standard cost system. Information for raw materials for Product RBI for the month of October follows: Standard unit price $1.75 Actual purchase price per unit $1.65 Actual quantity purchased 4,000 units Actual quantity used 3,900 units Standard quantity allowed for actual production 3,800 units What is the materials purchase price variance

Answers

Answer:

Material price variance = $400

Explanation:

A material price variance occurs where materials are purchased at a price either lower or higher than the standard price. A favorable variance is recorded where the actual total cost of materials is lower that the standard cost. While an adverse variance implies the opposite.

It is is computed as follows:

The material price variance

                                                                                           $

4000 units should have cost (4,000× 1.75)              =  7,000

but did cost - actual cost        (4,000× $1.65)           =  6,600

Material price variance                                                   400  favorable

Material price variance = $400

Sandy wants to persuade her audience that the high cost of daily and seasonal ski passes led to the largest decline in revenue that Colorado's major ski resorts have seen in nearly a decade, and that ticket costs should be reduced. She should use what organizational pattern

Answers

Answer: argument from cause to effect

Explanation:

Arguments of Cause and Effect. or better still Claims of cause and effect are hypothesis which are supported the thought that one event usually controls or causes another. example from the question.

we all know that sometimes a rise in cost also can result in a decrease in sale or revenues because the case could also be. The reason for Colorado decline in revenue is as a results of visit sales thanks to high cost, and also the effect is that the decline in revenues generated.

Tamarisk Corporation had the following 2020 income statement. Sales revenue $189,000 Cost of goods sold 129,000 Gross profit 60,000 Operating expenses (includes depreciation of $20,000) 54,000 Net income $6,000 The following accounts increased during 2020: Accounts Receivable $14,000, Inventory $10,000, Accounts Payable $12,000. Prepare the cash flows from operating activities section of Tamarisk’s 2020 statement of cash flows using the indirect method.

Answers

Answer:

Kindly check attached picture for Tamarisk Corporation Statement Of Income 2020 (indirect method)

Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below:

Sales $17,600,000
Net operating income $6,200,000
Average operating assets $36,000,000

Required:
a. Compute the margin for Alyeska Services Company.
b. Compute the turnover for Alyeska Services Company.
c. Compute the return on investment (ROI) for Alyeska Services Company.

Answers

Answer:

a. The margin for Alyeska Services Company: 35.23%

b. The turnover for Alyeska Services Company: 0.49

c. The return on investment (ROI) for Alyeska Services Company: 17.22%

Explanation:

a. The profit margin reflects a company's overall ability to turn income into profit, is calculated by formula:

Profit margin = (Net operating income/Net sales ) x 100% = $6,200,000/$17,600,000 x 100% = 35.23%

b. Asset turnover helps investors understand how effectively companies are using their assets to generate sales. Asset turnover is calculated by using following formula:

Asset Turnover =  Total Sales/ Average Total Assets  = $17,600,000/$36,000,000 = 0.49

c. Return on investment (ROI) is calculated by using following formula:

ROI = Net income/Total investment  x 100%

In Alyeska Services Company,

ROI = Net operating income/Average operating assets  x 100% = $6,200,000/$36,000,000 x 100% = 17.22%

A company's beginning Work in Process inventory consisted of 21,500 units that were 20% complete with respect to direct labor. These beginning units were completed and another 92,400 units were started during the current period. Of those started, 61,500 were finished and the remaining 30,900 were 40% complete at the end of the period. Using the weighted-average method, the equivalent units of production with regard to direct labor were:

Answers

Answer:95,360 units.

Explanation:The  equivalent unit of production shows the quantity of work done by a manufacturing company  on units of output partially completed at the end of a period.

Equivalent units of production =Units completed(work n progress at beginning + finished goods)+Ending work in progess

=(21,500+61, 500)+(30,900×40%)

=83,000 +  12,360

=95,360 units.

The equivalent units of production for conversion is 95,000 units.

Many large, packaged goods marketers like Procter & Gamble, Kraft, and Pillsbury have used the product manager (or brand manager) system of marketing organization and implementation. Which of the following is the key advantage of this system?
A. Product managers have relatively little authority
B. Product managers are short-term in their orientation
C. Product managers have direct responsibility for research and development of new products
D. Product managers can assume profit-and-loss responsibility for the performance of the product line
E. Product managers have line responsibility over sales managers

Answers

Answer:

C. Product managers have direct responsibility for research and development of new products

Explanation:

The position of Product manager is an all-encompassing role. He is tasked with the job of ensuring the members of the team are up and doing; he ensures each member of the team supplies considerable input to the end that the team effort can be evidently seen. The Product manager is also saddled with the responsibility of ensuring swift communication amidst all parties; he splits complex tasks into easily understandable processes. He sets the target and goal for each team member; he is the one who accesses and optimizes team members' performances.

Despite and inspite of these varying responsibilities, the biggest and most vital task of the Product manager is to research products, assess the market (customers), create services/products which are innovative and solve critical problems thereby, adding value to the customer base. The more information he has about the market and need of the customers, the better he is able to tailor the products and services rendered to address those needs. Overall, the Product manager due to his extensive involvement and oversight, he ensures that the chances of product failure is significantly reduced.

In the light of the explanation above, Option C. (Product managers have direct responsibility for research and development of new products) is the correct answer.

On January 1, Year 1, the City Taxi Company purchased a new taxi cab for $51,000. The cab has an expected salvage value of $12,000. The company estimates that the cab will be driven 200,000 miles over its life. It uses the units-of-production method to determine depreciation expense. The cab was driven 60,000 miles the first year and 63,000 the second year. What is the amount of depreciation expense reported on the Year 2 income statement and the book value of the taxi at the end of Year 2, respectively

Answers

Answer:

The amount of depreciation expense reported on the Year 2 is $12,285 and the book value of the taxi at the end of Year 2 is $27,015

Explanation:

In order to calculate the amount of depreciation expense reported on the Year 2 income statement and the book value of the taxi at the end of Year 2, respectively we would have to make the following calculations:

Particulars               Amount

Cost of taxi                    $51,000.00

Salvage Value             $12,000.00

Life in miles                   200,000.00

Depreciation per mile = ($51,000.00  - $12,000.00 )/200,000=0.195

Depreciation for Year 1 = 60,000 * 0.195=11,700.00

Depreciation for Year 2 = 63,000 * 0.195=12,285.00

book value of the taxi, respectively, at the end of Year 2 = 51,000 - 11,700 - 12,285=27,015.00

The amount of depreciation expense reported on the Year 2 is $12,285 and the book value of the taxi at the end of Year 2 is $27,015

Bond X is noncallable and has 20 years to maturity, a 9% annual coupon, and a $1,000 par value. Your required return on Bond X is 8%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 8.5%. How much should you be willing to pay for Bond X today

Answers

Answer:

$954.54

Explanation:

The price of the bond today is the present value of the promised cash inflows of coupon payment and repayment of face value which is computed using fv formula in excel below:

Price in 5 years time:

=-pv(rate,nper,pmt,fv)

rate is 8.5% in 5 years' time

nper is 15 years in 5 years' time

pmt is the annual coupon=$1000*9%=$$90

fv is the face value of $1000

=-pv(8.5%,15,90,1000)=$ 1,041.52  

Price today:

=-pv(8%,20,90,1,041.52)=$954.54  

Christie and Jergens formed a partnership with capital contributions of $250,000 and $350,000, respectively. Their partnership agreement calls for Christie to receive a $55,000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $119,000, then Christie and Jergens's respective shares are:

Answers

Answer:

Christie and jergen's respective shares are $59,500 and $59,500

Explanation:

Solution

Recall that:

Christie and Jergens created a partnership with capital contributions of = $250,000 and $350,000

The contract terms enables Christie to receive an amount of = $55,000 per salary

An interest allowance is received by both of them equal to =10%

The net income of the Present year = $119,000

Thus,

We find the respective shares of both partners which is stated as follows :

Christie's net income = $59,500

Jergen's net income = $59, 500

The total for both is =$119,000

Hence, due to their partnership contract terms or agreement the sharing of the profit and loss is dividend equally between them.

The graph shows excess demand. A graph titled Excess supply has quantity on the x-axis and price on the y-axis. A line with positive slope represents supply and a line with negative slope represents demand. The lines intersect at the point of equilibrium (p star, Q star). A point on the demand line is (P 2, quantity demanded) and a point on the supply line is (P 2, quantity supplied). Both points are lower than the point of equilibrium. Excess demand is indicated between the 2 points. Which needs to happen in order to stop disequilibrium from occurring? Q needs to be coordinated with supply. Q needs to be coordinated with demand. The price of goods needs to be increased. The price of goods needs to be decreased.

Answers

Answer:

The price of goods needs to be increased.

Explanation:

Excess demand occurs when the quantity demanded is higher than the quantity supplied. This happens when the price of the good is lower than the equilibrium price. This can happen naturally in the market, or can happen if the government imposes a binding price floor.

The best way to solve excess demand is to raise the price, in order to reach equilibrium. Once in equilibrium, the price will coordinate the quantity supplied and the quantity demanded so that they're roughly equal.

Association between the number of goods the producers wants to sell at a specific value to that of quantity the purchaser wants to buy is called demand and supply.

The correct answer is:

Option C.  The cost of goods needs to be raised.

This can be explained as:

When there is more need for the product than it is supplied or created is excess demand.

This problem arises when the value of the goods and commodities is lower.

This can arise intrinsically or due to any trade or governmental policies.

The excess demand can be solved by increasing the price of the product.

Therefore, the price of the goods should be increased.

To learn more about demand and supply follow the link:

https://brainly.com/question/13353440

The Callie Company has provided the following information: Operating expenses were $244,000; Cost of goods sold was $378,000; Net sales were $940,000; Interest expense was $47,000; Gain on sale of a building was $84,000; Income tax expense was $142,000. What was Callie's gross profit

Answers

Answer:

Callie's Gross Profit is $562000

Explanation:

Gross profit is the profit earned by a business after deducting the costs associated with producing or selling its goods (for manufacturing and trading businesses) or the costs associated with providing the services (for service businesses) from the net revenue.

It is the profit from the trading section of the business before deducting the operating and financing expenses of the business and before adding any other income.

The gross profit is simply calculated as follows,

Gross Profit = Net Revenue - Cost of Goods Sold

Callie's gross profit = 940000 - 378000

Callie's Gross Profit = 562000

Assume that Kish Inc. hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D0 = $0.90; P0 = $27.50; and g = 7.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings?

Answers

Answer:

The cost of equity from retained earnings based on the DCF approach is 10.50%

Explanation:

In order to calculate the cost of equity from retained earnings based on the DCF approach we would have to calculate the following formula:

Cost of Equity = (D1/P0) + growth rate

Cost of Equity =[($0.9 x 1.07)/$27.50] + 0.07

Cost of Equity = 0.1050

Cost of Equity =10.50%

Therefore, The cost of equity from retained earnings based on the DCF approach is 10.50%

Barton Chocolates used a promissory note to borrow $1,000,000 on July 1, 2018, at an annual interest rate of 6 percent. The note is to be repaid in yearly installments of $200,000, plus accrued interest, on June 30 of every year until the note is paid in full (on June 30, 2023). Show how the results of this transaction would be reported in a classified balance sheet prepared as of December 31, 2018. (Do not round intermediate calculations.)

Answers

Answer:

Explanation:

Balance sheet for Barton Chocolates as at December 31,2018

Current liabilities                                  230,000

Non current liabilities                           800,000

Workings.

Loan - $1,000,000

Loan date = July 1

Reporting date = December 31

Timeline = 6 months / 1/2 years

Yearly installment = $200,000

Interest payable = 6/100*1000000*1/2 = 30,000

Current liabilities are liabilities that are due for settlement within a year

Therefore the current liability portion = $200000+30000= $230,000

The non current liability is the balance of the principal loan amount = 1000000=200000= 800000

In January 2017, Crane Company, a newly formed company, issued 9500 shares of its $8 par common stock for $13 per share. On July 1, 2017, Crane Company reacquired 950 shares of its outstanding stock for $10 per share. The acquisition of these treasury sharesa. increased total stockholders' equity.b. decreased the number of issued shares.c. decreased total stockholders' equity.d. did not change total stockholders' equity.

Answers

Answer:

The correct option is C, decreased total stockholders' equity

Explanation:

By reacquiring 950 shares out of the issued shares of 9,500 shares ,the company takes possession of the 950 shares and give cash to stockholders in return for the shares repossessed.

As a result the total stockholders' equity would reduce, this is usually accounted for by deducting the cost of such repurchase from total stockholders' equity in the equity section of the balance sheet

A company plans to replace one of its machines 5 years from now. If they deposit $6,827 a month in an account that gives them 0.65% interest per month. How much money will they still need to pay for the machine if the cost is $1,123,553 at that time in the future?

Answers

Answer:

They would require $624,532.94  more

Explanation:

The first task is to compute the future value of the monthly deposit of $6,827 with an interest of 0.65% per month for five years.

=fv(rate,nper,-pmt,pv)

rate id 0.65% per month

nper is the number of deposits =5 years*12=60

pmt is the monthly deposit of $6,827

pv is the present value of deposits,it is unknown and taken as zero

=fv(0.65%,60,-6827,0)=$499,020.06  

balance of the required funds=required funds-future value of the deposits

balance of required funds= $1,123,553-$499,020.06=$624,532.94  

1. Of the 4 strategic approaches to international markets, which one(s) might be the best for a manufacturing company? a financial services company? or a company like Coke or Pepsi? Thoughts? 2. What strategy option for entering a foreign market might you employ if your firm is technology-centric? 3. What strategy option for entering a foreign market might you use if you were a start-up or smaller firm? 4. Why is the Think Global- Act Local strategy appear to be the best for many companies wishing to go global?

Answers

Answer:

1a. For manufacturing company– Buying a local manufacturing company

b. For a financial services company– Partnership

c. A company like Coke or Pepsi– Greenfield Investments

Explanation:

1a. Buying a local company saves valuable resources for the foreign manufacturing, and it allows for quick market knowledge since this company has already been in operations for a long time.

b. A partnership would be best for a financial services company, this would involve a smooth transition into new markets without having to spend much on physical structures as the domestic company is already having necessary infrastructures in place.

c. Coke and Pepsi would preferably choose to use the Greenfield investment strategy by building a new plant from the ground up because of its established quality standards as well as trade mark and intellectual property protection.

2. A technology-centric firm would benefit most by buying a Company because of the already available market share as well as benefiting from reduced government regulations.

3. If one is operating a start-up or smaller firm of course cost would be a major consideration, therefore selling out License to foreign companies may be effective. This would transfer the rights to use a product or service in a different market geography.

4. It provides a good foresight into the requirements needed to enter foreign markets.

Venus Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following information relates to its budgeted operations for the current year.
Commercial Residential
Revenues $300,000 $480,000
Direct materials costs $30,000 $50,000
Direct labor costs 100,000 300,000
Overhead costs 85,000 215,000 150,000 500,000
Operating income (loss) $85,000 $(20,000)
The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Here are the three activity cost pools and related information she developed:
Activity Cost Pools Estimated Overhead Cost Drivers
Scheduling and travel $85,000 Hours of travel
Setup time 90,000 Number of setups
Supervision 60,000 Direct labor cost
Expected Use of Cost Drivers per Product
Commercial Residential

Scheduling and travel 750 500
Setup time 350 250
What should Peggy Kingman do?

Answers

Answer and Explanation:

The explanation is shown below:-

First we need to find out the activity based overhead rates

Activity              Estimated overhead  Basis   Quantity   Activity based

                              cost                                                      overhead rates

Travel

and Scheduling     $85,000           Hours of  1,250             $68

                                                         travel  (700 + 500)

Set up time          $90,000           Number of   600             $150

                                                       setups  (350 + 250)

Supervision          $60,000          Direct labor  $400,000    15%

                                                        cost ($100,000 + $300,000)

Now we need to find out the overhead cost assigned to commercial which is shown below:-

Activity           Activity based       Actual allocation of         Overhead

                    overhead rates              cost drivers                 assigned

Travel and

Scheduling      $68                           750                               $51,000

Set up time       $150                         350                              $52,500

Supervision     15%                        $100,000                        $15,000

Total                                                                                        $118,500

For computing the overhead assigned we simply multiply the activity based overhead rate with actual allocation of cost drivers.

after this we need to find out the overhead cost assigned to residential which is shown below:-

Activity           Activity based       Actual allocation of         Overhead

                    overhead rates              cost drivers                

Travel and

Scheduling      $68                             500                             $34,000

Set up time     $150                            250                              $37,500

Supervision    15%                             $300,000                     $45,000

Total                                                                                          $116,500

For computing the overhead we simply multiply the activity based overhead rate with actual allocation of cost drivers.

Finally we need to find out the operating income or loss for the commercial and residual which is shown below:-

Particulars                              Commercial           Residential

Sales revenue                        $300,000             $480,000

Less: Direct material cost     $30,000                 $50,000

Less: Direct labor cost          $100,000              $300,000

Less: Overhead costs

assigned                                $118,500               $116,500

Operating income (loss)        $51,500               $15,500

The Peggy Kingman should establish the cost to be assigned based on the product lines for overhead cost as the Peggy Kingman is more focused to the overhead cost which were based on the activity cost drivers. Moreover, it shows a profit earned on residential product line

You are an international shrimp trader. A food producer in the Czech Republic offers to pay you 2.3 million Czech koruna today in exchange for a​ year's supply of frozen shrimp. Your Thai supplier will provide you with the same supply for 2.8 million Thai baht today. If the current competitive market exchange rates are 25.49 koruna per dollar and 39.31 baht per​ dollar, what is the value of this​ deal?

Answers

Answer:

$19,002.77

Explanation:

The computation of the value of deal is shown below:

The value of the deal = Sales revenue - purchase cost

where,

Sales revenue is

= 2,300,000 ÷ 25.49 koruna per dollar

= $90,231.46

And, the purchase cost is

= 2,800,000 ÷ 39.31 baht per​ dollar

= $71,228.69

So, the value of the deal is

= $90,231.46 - $71,228.69

= $19,002.77

hence, the value of the deal is $19,002.77

A company started the year with the following: Assets $121,000; Liabilities $41,500; Common Stock $71,500; Retained Earnings $8,000. During the year, the company earned revenue of $6,400, all of which was received in cash, and incurred expenses of $3,700, all of which were unpaid as of the end of the year. In addition, the company paid dividends of $2,400 to owners. Assume no other activities occurred during the year. The amount of liabilities at the end of the year is

Answers

Answer:

$45,200

Explanation:

According to the scenario, the computation of the given data are as follows:

Liabilities = $41,500

Expense incurred during year = $3,700

So, we can calculate the total amount of liabilities by using the following formula:

Liabilities at the end of the year = Liabilities  + Expense incurred

Liabilities at the end of the year = $41,500 + $3,700

= $45,200

. Suppose Stevie'sStevie's expectation to sell one standard scooter for every three chrome scooters was incorrect and for every four scooters sold two are standard scooters and two are chrome scooters. Will the breakeven point of total scooters increase or​ decrease? ​ Why? (Calculation not​ required.)

Answers

Answer:

It depends upon the contribution per unit of each product or in other words it depends on composite contribution per unit.

Explanation:

The composition matters a lot because of the fact that every product has its own contribution per unit. So if the product chrome has $1 contribution per unit and standard scooter has $2 contribution per unit. Also suppose that $6 is the total fixed cost. Then the priority to sell must be standard scooter, because it has higher contribution. Secondly if we only sell chrome scooters then total 6 ($6 fixed cost - 6 units * $1 contribution per unit) units must be sold and if we only sell standard scooters then only 3 ($6 fixed cost - 3 units * $2 contribution per unit) units must be sold to breakeven. Suppose, if we reduce standard scooters from 3 scooters to 2 units ($6 fixed cost - 2 units * $2 contribution per unit) then their will be loss of $2 which can be reduced to zero by selling 2 chrome scooters ($2 loss - 2 units * $1 contribution per unit).

So this is how contribution per unit affects the composite breakeven units and most important thing is that if the composite contribution per unit has increased then the breakeven units will decrease and vice versa.

An ordinary annuity selling at $14,130.15 today promises to make equal payments at the end of each year for the next twelve years (N). If the annuity’s appropriate interest rate (IN) remains at 8.00% during this time, the annual annuity payment (PMT) will be

Answers

Answer:

PMT = $1875.00

Explanation:

The annuity refers to a series of fixed payments made after an equal interval of time and for a definite time period. The formula for the present value of annuity is,

For ordinary annuity

PV of annuity = PMT * [(1 - (1+IN)^-n) / IN]

Plugging in the values for the available variables. We calculate the PMT to be,

14130.15 = PMT * [(1 - (1+0.08)^-12) / 0.08]

14130.15 = PMT * 7.536078017

14130.15 / 7.536078017   =   PMT

PMT = $1875.000493 rounded off to $1875.00

Abe and Bea each have some money to invest in a CD (Certificate of Deposit). Abe has $5,000 and Bea has $20,000. Both are interested in making a 6-month investment at Synchrony Bank. The CD rates for Synchrony Bank (as of July 8, 2015) are as listed below. With 0.41% interest, Abe would get $5,010 in six months. With 0.50% interest, Bea would get $20,050 at the end of six months. If they pool their funds, they will be able to purchase a $25,000 CD, which pays a higher interest rate. The 0.60% interest will return $25,075 at the end of six months. Obviously, Abe gets back his $5,000 principle, and Bea gets back her $20,000 principle. How should the $75 interest be divided between the two of them

Answers

Answer:

Abe = $17.5

Bae = $57.5

Explanation:

Abe's principle = $5,000

Bea's principle = $ 20,000

Abe individual investment yield at 0.41% = (5010-5000) = $10

Bae's individual investment yield at ) 0.50%= (20000-20050) $50

Combined investment yield at 6 % = (25,075 - (20,000+5000) = $75

Extra interest yield = (75-(50+10) = $15

The extra interest yield of $15 should be shared equally among Abe and Bae as a result of joint effort

= 15/2 - $7.5

Therefore , the $75 interest is shared as below

Abe = $10 (interest on individual principle)+$7.5 = $17.5

Bae = $50 (interest on individual principle)+$7.5 = $57.5

Consider each of the following independent scenarios:a.Terrin Belson, plant manager for the laser printer factory of Compugear Inc., brushed his hair back and sighed. December had been a bad month. Two machines had broken down, and some factory production workers (all on salary) were idled for part of the month. Materials prices increased, and insurance premiums on the factory increased. No way out of it; costs were going up. He hoped that the marketing vice president would be able to push through some price increases, but that really wasn’t his department.b. Joanna Pauly was delighted to see that her ROI figures had increased for the third straight year. She was sure that her campaign to lower costs and use machinery more efficiently (enabling her factories to sell several older machines) was the reason why. Joanna planned to take full credit for the improvements at her semiannual performance review.c. Gil Rodriguez, sales manager for ComputerWorks, was not pleased with a memo from headquarters detailing the recent cost increases for the laser printer line. Headquarters suggested raising prices. "Great," thought Gil, "an increase in price will kill sales and revenue will go down. Why can’t the plant shape up and cut costs like every other company in America is doing? Why turn this into my problem?"d. Susan Whitehorse looked at the quarterly profit and loss statement with disgust. Revenue was down, and cost was up—what a combination! Then she had an idea. If she cut back on maintenance of equipment and let a product engineer go, expenses would decrease—perhaps enough to reverse the trend in income.e. Shonna Lowry had just been hired to improve the fortunes of the Southern Division of ABC Inc. She met with top staff and hammered out a 3-year plan to improve the situation. A centerpiece of the plan is the retiring of obsolete equipment and the purchasing of state-of-the-art, computer-assisted machinery. The new machinery would take time for the workers to learn to use, but once that was done, waste would be virtually eliminated.Required:For each of the above independent scenarios, indicate the type of responsibility center involved (cost, revenue, profit, or investment).

Answers

Answer: a. Cost center b. Investment center. c. Revenue center d. Profit center. d. Investment center.

Explanation:

a. Cost center

We are informed that Terrin Belson, a plant manager for the laser printer factory of Compugear Inc., complained that two machines had broken down, and some factory production workers were idled for part of the month. He also complained that materials prices has and insurance premiums on the factory has increased and costs were going up.

The responsibility center involved here is the cost center. Everything he was complaining about was with regards to the rise on costs of running the company. Therefore, the cost center should be in charge.

b. Investment center

We are told that Joanna Pauly was delighted to see that her ROI figures had increased for the third straight year as she was sure that her campaign to lower costs and efficiently use of machinery was the reason for this.

This is the responsibility of the investment center. We can see that Joanna is talking about the increase in the return on investment. Therefore, the investment center should be responsible to handle this.

c. Revenue center

From the information, we are told that Gil Rodriguez, sales manager for ComputerWorks, was not pleased with a memo from headquarters detailing recent cost increases for the laser printer line. The headquarters suggested that increase in prices will kill sales and that the revenue will go down.

The responsibility center involved in this situation is the revenue center. We can see that the headquarters was concerned that the increase will in price will affect revenue as the revenue will reduce. This is the revenue center in charge.

d. Profit center

We are told that Susan Whitehorse looked at the quarterly profit and loss statement with disgust as the revenue was down, and the cost was up. The responsibility center in charge here is the profit center as the main issue of discussion is about the profit and loss of the company.

e. Investment center

We are told that Shonna Lowry had just been hired to improve the fortunes of the Southern Division of ABC Inc. and that after meeting with top staff, she gave out a 3-year plan to improve the situation as obsolete equipment will be retired and the state-of-the-art, computer-assisted machinery will be bought.

This is an investment because she told the firm to buy state-of-the-art, computer-assisted machinery will be bought in order to improve their fortunes. The responsibility center involved is the investment center.

North Star prepared the following unadjusted trial balance at the end of its second year of operations ending December 31. Account Titles Debit Credit Cash $ 12,800 Accounts Receivable 6,800 Prepaid Rent 2,560 Equipment 21,800 Accumulated Depreciation $ 1,080 Accounts Payable 1,080 Income Tax Payable 0 Common Stock 25,600 Retained Earnings 2,900 Sales Revenue 52,400 Salaries and Wages Expense 25,800 Utilities Expense 13,300 Rent Expense 0 Depreciation Expense 0 Income Tax Expense 0 Totals $ 83,060 $ 83,060 Other data not yet recorded at December 31: Rent expired during the year, $1,280. Depreciation expense for the year, $1,080. Utilities used and unpaid, $9,800. Income tax expense, $470. Prepare the adjusting journal entries required at December 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answers

Answer:

North Star

Adjusting Journal Entries:

December 31:

Rent Expense      $1,280

Prepaid Rent                      $1,280

To accrue rent for the period.

Depreciation Expense $1,080

Accumulated Depreciation           $1,080

To accrue Depreciation charge for the year.

Utilities Expense $9,800

Utilities Payable            $9,800

To accrue unpaid utilities.

Income Tax Expense $470

Income Tax Payable         $470

To accrue income tax liability.

Explanation:

Adjusting entries are journal entries that are made at the end of an accounting period to ensure that all expenses and incomes pertaining to the period are recognized in accordance with the accrual concept and the matching principle.  These accounting concepts require that all expenses incurred whether paid for or not and income whether received or not, which relate to the period, are matched respectively.

Helix Company has been approached by a new customer to provide 2,000 units of its regular product at a special price of $6 per unit. The regular selling price of the product is $8 per unit. Helix is operating at 75% of its capacity of 10,000 units. Identify whether the following costs are relevant to Helix's decision as to whether to accept the order at the special selling price. No additional fixed manufacturing overhead will be incurred because of this order. The only additional selling expense on this order will be a $0.50 per unit shipping cost. There will be no additional administrative expenses because of this order. Calculate the operating income from the order.

Answers

Answer:

Helix decision would be to accept this order at the special price because from the calculations they will still have a net income of $2,000 at this special price of $6 per unit

Explanation:

Selling price: at $6 per unit; This is a relevant cost ; Revenue = ($6*2000) units) $12,000

_________________________

Direct material cost: at $1 per unit; This is a relevant cost; Revenue = (1 * 2000) $2000

____________________________

Direct labor cost: at $2 per unit; This is a relevant cost ; Revenue = (2 * 2000) $4000

____________________________

Variable manufacturing overhead: at $1.50 per unit; This is a relevant cost; Revenue = (1.50 * 2000) $3,000

____________________________

Fixed manufacturing overhead: at $0.75 per unif; This is not a relevant cost; Revenue = $0 (not relevant)

_____________________________

Regular selling expenses: at $1.25 per unit; This is not a relevant cost; Revenue = $0(not relevant)

______________________________

Additional selling expenses(shipping cost) : at $0.50 per unit; This is a relevant cost; Revenue = (0.50 * 2000) $1,000

______________________________

Administrative expenses: at $0.75 per unit; This is not a relevant cost; Revenue = $0

__________________________

Total operating expenses: Sum of all relevant cost = (Direct material cost + Direct labor cost + Variable manufacturing overhead + Additional selling expenses) = ($2,000 + $4,000 + $3,000 + $1,000) = $10,000

__________________________

Net income : (Selling price - Total operating expenses)= ($12,000 - $10,000) = $2,000

________________________

Yes, Helix should accept the order at the special price

______________

Helix decision would be to accept this order at the special price because from the calculations they will still have a net income of $2,000 at this special price of $6 per unit

The following cost data relate to the manufacturing activities of Chang Company during the just completed year: Manufacturing overhead costs incurred: Indirect materials $ 15,000 Indirect labor 130,000 Property taxes, factory 8,000 Utilities, factory 70,000 Depreciation, factory 240,000 Insurance, factory 10,000 Total actual manufacturing overhead costs incurred $ 473,000 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 400,000 Direct labor cost $ 60,000 Inventories: Raw materials, beginning $ 20,000 Raw materials, ending $ 30,000 Work in process, beginning $ 40,000 Work in process, ending $ 70,000 The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $25 per machine-hour. A total of 19,400 machine-hours was recorded for the year.Prepare a schedule of cost of goods manufactured for the year.

Answers

Answer:

Cost of Goods  Manufactured $893,000

Explanation:

Chang Company

Schedule of Cost of Goods Manufactured

Inventories: Raw materials, beginning $ 20,000

Add Purchases of raw materials  $ 400,000

Less Raw materials, ending $ 30,000

Direct Materials Used  $390,000

Direct labor cost $ 60,000

Manufacturing overhead Costs: $ 473,000

Indirect materials $ 15,000

Indirect labor 130,000

Property taxes, factory 8,000

Utilities, factory 70,000

Depreciation, factory 240,000

Insurance, factory 10,000

Total actual Manufacturing Costs 923,000

Add Work in process, beginning $ 40,000

Cost of Goods Available For Manufacture $ 963,000

Less Work in process, ending $ 70,000

Cost of Goods  Manufactured $893,000

Applied Overhead = Rate * Hours worked

                                = 25* 19,400=  485,000

The applied overhead is subtracted or added to the cost of goods sold amount. It is not accounted for in the schedule of cost of goods manufactured.

A shoe manufacturer is producing at a point where its marginal costs are $5 and its fixed costs are $5000. At the current price of $10 it is producing 500 pairs. If the demand goes down, such that they can now only charge $8 per pair, should they continue production in the short run?

Answers

Answer:

In a short time, as long as the product line can be sold with a positive contribution margin, the company should continue selling it.

Explanation:

Giving the following information:

UNitary variable cost= $5

Fixed costs are $5000.

Sales= 500 units

Selling price= $8

First, we need to calculate the current income:

Income= 500*(8-5) - 5000= -$3,500

In a short time, as long as the product line can be sold with a positive contribution margin, the company should continue selling it. Demand can increase and income could become positive.

On June 30, 2010, Microsoft Corporation was holding $4.8 billion of cash that it had collected from customers in advance for future software licenses and the future delivery of other products and services. In its financial statements, Microsoft classified and recorded this amount as

Answers

Answer: O the liability Unearned Revenue on its balance sheet.

Explanation:

Unearned Revenue is a liability that goes into the balance sheet to record the cash received for goods and/or services that the company have not delivered yet.

This is so that the company is not in violation of the Accrual Accounting concept known as the Revenue Recognition Principle that states that revenue should be recognised only in the period that they have been earned.

Microsoft in this scenario will record this cash as an Unearned Revenue and then consider it revenue when it has delivered the said goods and services.

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