The market and Stock J have the following probability distributions: Probability rM rJ 0.3 15% 20% 0.4 9 5 0.3 18 12 a. Calculate the expected rates of return for the market and Stock J. b. Calculate the standard deviations for the market and Stock J.

Answers

Answer 1

Answer: The answer is provided below

Explanation:

The expected rates of return for the market = 13.5

the expected rates of return for the market and Stock J = 11.6

The standard deviations for the market = 3.85

The standard deviations for Stock J = 6.22

The explanation has been attached.

The Market And Stock J Have The Following Probability Distributions: Probability RM RJ 0.3 15% 20% 0.4

Related Questions

On January 1, the Sleepy Monk Coffee Shop paid $15,000 for a full year of rent beginning on January 1. The rent payment was appropriately recorded in the Cash and Prepaid Rent accounts. If financial statements are prepared on January 31, the journal entry to record the adjustment would be:

Answers

Answer:

If financial statements are prepared on January 31, the journal entry to record the adjustment would be debit rent expense and credit prepaid rent for $1,250

Explanation:

According to the given data the rent has been expired for one month so only one month's rent expense will be recorded. Therefore to calculate one month's rent expense we have to make the following calculation:

one month's rent=Total rent/period for which rent is paid*1

one month's rent=$15,000/12*1

one month's rent=$1,250

Therefore, If financial statements are prepared on January 31, the journal entry to record the adjustment would be debit rent expense and credit prepaid rent for $1,250

Suppose that the government spending multiplier is 3.2 and the tax multiplier is 2.9. This means that, if prices are constant, a $200 billion rise in government spending will __________________, and a $200 billion cut in taxes will _____________________.

Answers

Answer:

At constant prices, a $200 billion rise in government spending will increase Real GDP by 640 billion

and;

A $200 billion cut in taxes will increase real GDP by 580 billion

Explanation:

Government spending multiplier = 3.2

Tax multiplier = 2.9

Mathematically;

ΔY/ΔG = 3.2

ΔY/200 = 3.2

ΔY = 200 * 3.2

ΔY = 640 billion

Cut in taxes;

Tax multiplier = 2.9

ΔY/ΔT = 2.9

ΔY/200 = 2.9

ΔY = 2.9 * 200

ΔY = 580 billion

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (5,000 units): Direct materials $70,000 Direct labor 20,000 Variable factory overhead 10,000 Fixed factory overhead 2,000 $102,000 Operating expenses: Variable operating expenses $17,000 Fixed operating expenses 1,000 18,000 If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of operating income reported on the absorption costing income statement would be

Answers

Answer:

Net operating income= $50,400

Explanation:

Giving the following information:

Production costs (5,000 units):

Direct materials $70,000

Direct labor 20,000

Variable factory overhead 10,000

Fixed factory overhead 2,000

Total= 102,000

Operating expenses:

Variable operating expenses $17,000

Fixed operating expenses 1,000

Sales= 4,000 units

Sales revenue= $150,000

The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

Unitary product cost= 102,000/5,000= $20.4

Income statement:

Sales= 150,000

COGS= 20.4*4,000= (81,600)

Gross profit= 68,400

Variable operating expenses= (17,000)

Fixed operating expenses=  (1,000)

Net operating income= 50,400

During the​ year, direct labor costs of​ $30,000 were​ incurred, manufacturing overhead totaled ​$42,000, materials purchased were​ $27,000, and selling and administrative costs were​ $22,000. Champagne sold​ 25,000 units of product during the year at a sales price of​ $5.00 per unit. What were the total manufacturing costs for the year assuming ​$2 comma 080 of indirect materials were used during the​ period?

Answers

Answer:

Using the models for total manufacturing cost that includes just direct labour costs, direct materials cost and overhead costs, total manufacturing cost = $99,000

Using the model that includes selling and administrative costs & indirect materials cost, total manufacturing cost = $123,080

Explanation:

Total manufacturing cost is a sum of the amount of cost incurred by a business to produce goods in a reporting period.

It usually consists of direct labour costs, direct materials cost and overhead costs.

In some models, the selling and administrative costs & cost of indirect materials are included.

Direct labour cost = $30,000

Manufacturing overhead costs = $42,000

Direct materials cost = $27,000

Total manufacturing cost = 30000 + 42000 + 27000 = $99,000

Selling and Administrative costs = $22,000

Indirect materials cost = $2,080

Total materials cost including selling and administrative costs & indirect materials cost = 99000 + 22000 + 2080 = $123,080

Hope this Helps!!!

Torche Corporation Balance Sheet As of March 11, 2020 (amounts in thousands) Cash 14,700 Accounts Payable 2,400 Accounts Receivable 4,800 Debt 3,700 Inventory 3,800 Other Liabilities 5,000 Property Plant & Equipment 15,800 Total Liabilities 11,100 Other Assets 900 Paid-In Capital 6,000 Retained Earnings 22,900 Total Equity 28,900 Total Assets 40,000 Total Liabilities & Equity 40,000 Use T-accounts to record the transactions below, which occur on March 12, 2020, close the T-accounts, and construct a balance sheet to answer the question. 1. Receive payment of $12,000 owed by a customer 2. Buy $15,000 worth of manufacturing supplies on credit 3. Purchase equipment for $44,000 in cash What is the final amount in Total Liabilities & Equity?

Answers

Answer:

Final amount in Total Liabilities & Equity = $40,015,000

Explanation:

A T-account refers to an informal term that is used to describe a set of financial records that are based on the principle of double-entry bookkeeping. The term T- account is used to indicate how bookkeeping entries appear.

Balance sheet is a statement of financial position used to report assets, liabilities and shareholders' equity of a company.

Note: See the attached excel for the T-accounts prepared and the balance sheet constructed. Just scroll down on the excel file to see everything.

Creative Computing sells a tablet computer called the Protab. The $740 sales price of a Protab Package includes the following: One Protab computer. A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. A coupon to purchase a Creative Probook e-book reader for $150, a price that represents a 50% discount from the regular Probook price of $300. It is expected that 20% of the discount coupons will be utilized. A coupon to purchase a one-year extended warranty for $70. Customers can buy the extended warranty for $70 at other times as well. Creative estimates that 40% of customers will purchase an extended warranty. Creative does not sell the Protab without the limited warranty, option to purchase a Probook, and the option to purchase an extended warranty, but estimates that if it did so, a Protab alone would sell for $720. All Protab sales are made in cash. Required: 1. & 2. Indicated below whether each item is a separate performance obligation and allocate the transaction price of 100,000 Protab Packages to the separate performance obligations in the contract. 3. Prepare a journal entry to record sales of 100,000 Protab Packages (ignore any sales of extended warranties).

Answers

Answer:

Explanation:

1. Package of $740 sales price includes :

Protab Computer - 1

Limited warranty for 6 month

Coupon to purchase e-book for $150 (represents 50% discount) expected 20% utilized

Coupon to purchase 1-year warranty for $70 regular price $70 expected 40% purchase

Protab Computer price alone is $720.

2.  

Performance    Stand along          Percentage of the    Allocation of total

Obligation         selling price        sum of the stand     transactions price to

                   of the performance  alone selling price    each performance

                     obligation                of the performance   obligation.

                                                      obligation

Protab -   $72000000                      96%                          $71040000

tablet

Open to   $3000000                         4%                           $2960000

purchase

Probook

Option to

purchase      $0                                 0 .00%                               -

extended

warranty

Total;         $75,000,000              100.00%                       $74,000,000

Protab Selling Price = 100000 units × $720 = $72,000,000

Selling price of option to purchase probook = 100000 units × 20% utilisation * $150 = $3000000

Selling price of option to purchase extended warranty = ($70 -$70)×100000 units * 40% = $0

Total = $75,000,000

Percentage of Protab selling price of Total Selling Price = $72,000,000 /$75,000,000 = 96%

Percentage of Option to purchase Probook of Total Selling Price = $3,000,000 /$75,000,000 = 4%

Percentage of Option to purchase extended warranty of Total Selling Price = 0 .00%

Total Transaction Price = 100000 units × $740 = $74,000,000

Allocation of Total Transaction price to Protab = $74,000,000 * 96% = $71040000

Allocation of Total Transaction price to Option to purchase probook = $74,000,000 * 10% = $2960000

3.

Journal Entry

Account Title                         Debit                                Credit

Cash                                  $74,000,000  

Sales Revenue                                                          $71040000

Deffered Revenue - discount option                       $2960000

Technology transfer agreements: Select one: a. protect "distinctive" or "famous" marks from unauthorized uses only when confusion is likely to occur. b. permit a company to quickly penetrate a foreign market without incurring the substantial financial and legal risks associated with direct investment. c. prevent an intellectual property owner from granting to another the right to use protected technology in return for some form of compensation. d. assert that priority of trademark rights in the United States depends upon the priority of use anywhere else in the world.

Answers

Answer:

b. permit a company to quickly penetrate a foreign market without incurring the substantial financial and legal risks associated with direct investment.

Explanation:

Technology transfer agreements can be defined as a contractual agreement between two parties, the licensor (rightful owner of the patent or trademark) and lincesee, granting them the legal rights to use an intellectual property under the stated terms and conditions binding the contract.

An intellectual property is an embodiment of the creative work such as trademark, patent or copyright of an individual, usually an inventor.

Technology transfer agreements allows an intellectual property owner to license or grant to another the right to use its protected technology in return for some form of compensation and permit a company to quickly penetrate a foreign market without incurring the substantial financial and legal risks associated with direct investment because this will further enhance foreign direct investments, expansion and deeply foster world trade among countries.

BSU Inc. wants to purchase a new machine for $40,070, excluding $1,200 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,000, and BSU Inc. expects to sell it for that amount. The new machine would decrease operating costs by $8,500 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a six-year period with no salvage value. Click here to view PV table.
(a) Determine the cash payback period. (Round cash payback period to 2 decimal places, e.g. 10.53.) Cash payback period years
(b) Determine the approximate internal rate of return. (Round answer to 0 decimal places, e.g. 13%. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Internal rate of return (c) Assuming the company has a required rate of return of 7%, determine whether the new machine should be purchased. The investment be accepted.

Answers

Answer:

4.62  years

8.02%

Explanation:

The payback period is the number of years it would take the investment to recoup itself.

Payback=initial capital outlay/annual cash flow

initial capital outlay is the cost of the new  machine plus installation cost minus the salvage value of the old machine.

initial capital outlay=$40,070+$1,200-$2,000=$ 39,270.00

Annual cash flow is the reduction in operating costs of $8,500 per year

payback =$ 39,270.00/$8,500.00=4.62  years

The internal rate of return is computed in the attached

 

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $16,800; Accounts Receivable, $7,050; Supplies, $700; Equipment, $11,750; Accounts Payable, $9,000. What is the amount of owner's equity as of May 31 of the current year?

Answers

Answer:

$27,300

Explanation:

Riser Inc. had the following liabilities and assets on May 31 of the current year

Cash= $16,800

Account receivables= $7,050

Supplies= $700

Equipment= $11,750

Account payable= $9,000

Since Assets = Liabilities+ stockholder's equity

The stockholder's equity can be calculated as follows

Cash+Account receivables+Supplies+Equipment= Account payable+stockholder's equity

$16,800+$7,050+$700+$11,750=$9,000+stockholder's equity

$36,300=$9,000+stockholder's equity

Stockholder's equity= $36,300-$9,000

Stockholder's equity= $27,300

Hence the amount of owner's equity as of May 31 of the current year is $27,300

The current sections of Flint Corporation’s balance sheets at December 31, 2016 and 2017, are presented here. Flint Corporation’s net income for 2017 was $156,213. Depreciation expense was $27,567.

2017

2016

Current assets
Cash
$107,205

$ 101,079

Accounts receivable
81,680

90,869

Inventory
171,528

175,612

Prepaid expenses
27,567

22,462

Total current assets
$387,980

$390,022

Current liabilities
Accrued expenses payable
$ 15,315

$ 5,105

Accounts payable
86,785

93,932

Total current liabilities
$102,100

$ 99,037



Prepare the net cash provided (used) by operating activities section of the company’s statement of cash flows for the year ended December 31, 2017, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answers

Answer:

209305

Explanation:

Statement of cash flow

Cash from operating activities

Profit after taxation                                                                           156213

Adjustments :

Depreciation                                                                                       27567

Cash flow from operating activities before working capital changes  183780

Working Capital changes :

Change in trade receivables                                                                  9189

Change in inventories                                                                           4084

Change in prepaid expenses                                                                (5105)

Change in trade payables                                                                      7147

Change in accrued expenses                                                                10210  

Cash generated from operations                                                      209305

Complete the following statements to demonstrate your understanding of the relationships among the different structures of the Federal Reserve.
The Board of Governors of the Federal Reserve is in charge of setting and overseeing monetary policy and is headed by the (speaker of the house/president of the bank of nwe york/president of the federal open marker committee/chairman of federal reserve) . Monetary policy is supposed to be (independent of/coordinated with) Congress and the president. This goal is aided by the fact that the governors' (two years term dont allow/ 14 year terms allow)
them to outlast the president who appointed them.
Because Congress initially intended to create a decentralized banking system, there are also smaller branches of the Federal Reserve known as district banks.
The presidents of the district banks take turns serving as members of the (board of goverment/ federal open market committee)
The Federal Open Market Committee (FOMC) is the official policymaking body of the Federal Reserve and is made up of (all board governors and five bank presidents/ all bank presidents and five board governors/ memebers of the board of governors/ distrtct bank presidents) . The mechanism for translating FOMC policy into action is (the federal funds rate/the reserve requirement/ the statement of open-market operations/ an FOMC directive) , which outlines the course of monetary policy for the next six weeks.

Answers

Answer:

The Board of Governors of the Federal Reserve is in charge of setting and overseeing monetary policy and is headed by the chairman of federal reserve.  Monetary policy is supposed to be independent of Congress and the president.  This goal is aided by the fact that the governors' 14 year terms allow them to outlast the president who appointed them.

Because Congress initially intended to create a decentralized banking system, there are also smaller branches of the Federal Reserve known as district banks.

The presidents of the district banks take turns serving as members of the federal open market committee.

The Federal Open Market Committee (FOMC) is the official policy-making body of the Federal Reserve and is made up of district bank presidents. The mechanism for translating FOMC policy into action is the reserve requirement, which outlines the course of monetary policy for the next six weeks.

Explanation:

The Federal Reserve is the U.S. equivalent of a central bank.  It conducts the nation's monetary policy, provides and maintains an effective and efficient payments system, and supervises and regulates banking operations.

On January 1, 2009, a U.S. firm made an investment in Germany that will generate $5 million annually in depreciation, converted at the current spot rate. Projected annual rates of inflation in Germany and in the United States are 5 percent and 2 percent, respectively. The real exchange rate is expected to remain constant, and the German tax rate is 50 percent. Required: Calculate the expected real value (in terms of January 1, 2009, dollars) of the depreciation charge in year 2013. Assume that the tax write-off is taken at the end of the year.

Answers

Answer:

The expected real value (in terms of January 1, 2009, dollars) of the depreciation charge in year 2013 will be $1,958,815.416.

Explanation:

It is expected that the value of the dollar in the German market will fall at the same rate as that of the real market value of the dollar when we envisage the exchange rate will remain the same. Thus the depreciation of the tax write-off in terms of its real value in dollars will fall at 5% every year from 2009 to 2013.

Therefore, at a tax rate of 50% in Germany, a $2.5 million charge on depreciation on the investment of $5 million will result in 2013.

To calculate the real value of the dollar at an inflation of 5% yearly in 2013

When the tax rate in German is 50%, then charges of depreciation of $5 million will equal4$2.5 million in 2013 dollars. When the dollar's real value of this write-off is declining due to the inflation at 5% annually, the real value in 2013 will be calculated as:

Given: $2,500,000 (P/F , 5%, 5years) ;  0.78356 (factor for calculating the amount to be recieved after  5years)

= $2,500,000 * 0.78356

= $1,958,815.416

The following list of statements about corporations are given below.
1. A corporation is an entity separate and distinct from its owners.
2. As a legal entity, a corporation has most of the rights and privileges of a person.
3. Most of the largest U.S. corporations are publicly held corporations.
4. Corporations may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be sued.
5. The net income of a corporation is taxed as a separate entity.
6. Creditors have no legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts.
7. The transfer of stock from one owner to another does not require the approval of either the corporation or other stockholders; it is entirely at the discretion of the stockholder.
8. The board of directors of a corporation manages the corporation for the stockholders, who legally own the corporation.
9. The chief accounting officer of a corporation is the controller.
10. Corporations are subject to more state and federal regulations than partnerships or proprietorships. Andrea has studied the information above and has come with more statements about corporations.
Identify whether each statement is true or false.
1. Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership.
A. True B. False
2. Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation.
A. True B. False
3. When a corporation is formed, organization costs are recorded as an asset.
A. True B. False
4. Each share of common stock gives the stockholder the ownership rights to vote at stockholder meetings, share in corporate earnings, keep the same percentage ownership when new shares of stock are issued, and share in assets upon liquidation.
A. True B. False
5. The number of issued shares is always greater than or equal to the number of authorized shares.
A. True B. False
6. A journal entry is required for the authorization of capital stock.
A. True B. False
8. Publicly held corporations usually issue stock directly to investors. The trading of capital stock on a securities exchange involves the transfer of already issued shares from an existing stockholder to another investor.
A. True B. False
9. The market price of common stock is usually the same as its par value.
A. True B. False
10. Retained earnings is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.
A. True B. False

Answers

Answer:

1. Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership.

A. True B. False

2. Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation.

A. True B. False

3. When a corporation is formed, organization costs are recorded as an asset.

A. True B. False

4. Each share of common stock gives the stockholder the ownership rights to vote at stockholder meetings, share in corporate earnings, keep the same percentage ownership when new shares of stock are issued, and share in assets upon liquidation.

A. True B. False

5. The number of issued shares is always greater than or equal to the number of authorized shares.

A. True B. False

6. A journal entry is required for the authorization of capital stock.

A. True B. False

8. Publicly held corporations usually issue stock directly to investors. The trading of capital stock on a securities exchange involves the transfer of already issued shares from an existing stockholder to another investor.

A. True B. False

9. The market price of common stock is usually the same as its par value.

A. True B. False

10. Retained earnings is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.

A. True B. False

Explanation:

1) Corporation management means that experts can be hired as managers.  On the other hand, the managers may not act in the best interest of the owners, even though, they are legally required to do so.

2) Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation.  Limited liability of stockholders may be a disadvantage to non-stockholders, but it is an advantage for stockholders, who will not be required to contribute more money to offset liabilities of the corporation in the event of liquidation.  Since corporations are distinct persons in law, they also need to be regulated and taxed as separate persons.  So, this is not a disadvantage.  It is only a consequence of being separate entity, like all individuals.

3) Organization costs include legal payments, state and federal registration, and incorporation fees, promotions, and charges associated with the underwriting of stocks and bonds. Organization costs can be classified as assets on the company's balance sheet.

4) A share in a company's stock accords some rights on the holder as itemized above.

5) The number of issued shares may be equal to or less than the authorized shares.  Some companies do not issue all the shares that they are authorized to issue at the same time.

6) Authorization of capital stock does not require a journal entry.  A memorandum record of the authorization is instead maintained to show the number of authorized capital shares and the par value.

7) There is no question 7.

8) Initial public offerings are made directly to investors.  The stock exchange market caters for the exchange of shares among investors.  The company is not involved and does not take any financial record, except the register of shareholders.

9) The market price of shares may be more or less than the par value.  The market price is determined by investors, who exchange shares at arm's length in the stock exchange market.  The par value is determined by those authorizing the issue of shares.

10) Retained Earnings are the income generated by the corporation which have not been distributed to shareholders in the form of dividends.

From the choice of simple moving average, weighted moving average, exponential smoothing, and linear regression analysis, which forecasting technique would you consider the most accurate? Why? (Ch. 18)

Answers

Answer:

weighted moving average

Explanation:

Of all these 4 options, the weighted moving average is the most accurate, as it is possible to place specific weights according to their significance.

The other techniques, such as an average, straight line, or exponential curve, assume things. The weighted average can change to any form.

However, the weighted average can be complicated to use if a long time frame is taken.

Additionally, the consumer will most likely want to adjust the weights as time periods pass. That will contribute to the complexity of applying the methods to a wide range of applications, such as predicting inventory item demand.

Hence, the first option is correct

A company reported total assets at the end of 2017 of $95,000; including cash of $35,000, accounts receivable of $20,000, and inventory of $40,000. It reported total assets at the end of 2018 of $110,000; including cash of $44,000; accounts receivable of $29,000, and inventory of $37,000. Compute the net increase or decrease in cash in 2018. Decrease of $9,000 Increase of $15,000 Increase of $9,000 Decrease of $15,000

Answers

Answer:

The correct option is increase of $9,000

Explanation:

The increase or decrease in cash in 2018 could be determined by using the formula below which is coined from the statement of cash flow:

Cash at the end of the year=cash at the beginning plus +increase in cash

cash at the end of 2018 is $44,000 whereas cash at the beginning which is the same at closing balance of 2017 is $35,000

$44,000=$35,000+increase in cash

increase in cash =$44,000-$35,000

increase in cash in 2018=$9,000

Annual production and sales level of Product A is 34,300 units, and the annual production and sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of Product A under activity-based costing?

Answers

Answer:

$3.00

Explanation:

Calaculation of the approximate overhead cost per unit of Product A under activity-based costing:

The first step is to calculate for the Activity 1 allocated to Product A line which is :

$87,000 × 3,000/5,800

=$261,000,000/5,800

=$45,000

The second step is to calaculate for Activity 2 allocated to Product A line which is :

$62,000 × 4,500/10,000

$279,000,000/10,000

=$27,900

The third step is to calculate for Activity 3 allocated to Product A line which is :

$93,000 × 2,500/7,750

=$232,500,000/7,750

=$30,000

The total overhead allocated to Product A

$45,000+$30,000+$27,900

= $102,900

Overhead per unit of Product A: $102,900/Annual production of 34,300 units

= $3.00

Therefore the approximate overhead cost per unit of Product A under activity-based costing will be $3.00

Ma Barker Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor hours were estimated at $100,000 and 40,000 hours, respectively, for the year. In July, Job #334 was completed at a cost of $5,000 in direct materials and $2,400 in direct labor. The labor rate is $6 per hour. If Job #334 contained 200 units, the unit product cost on the completed job cost sheet would be:___________.
a) $42.00
b) $39.50
c) $41.90
d) $37.00

Answers

Answer:

The correct answer is option (A) $42.00

Explanation:

Solution

Given that:

The established rate  is given as = 100,000/40,000

= $2.5 per hour

Thus

The cost of the job is shown is shown below:

The direct material = $5,000

The direct labor = $2400

Then

The manufacturing overheard is = 400 * 2.5 = $1,000

So,

The total cost is = $5,000 + $2400 + $1000 = $8,400

To get our unit cost,

Unit cost = $8400/200 = $42.00

It is important to know that, the  number of labor hours used in jobs = Total labor cost/Rate per hour

=2,400/6 = 400 hours

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $201,000 of raw materials on credit; issued materials to production of $198,000 of which $27,000 were indirect. Minstrel incurred a factory payroll of $153,000, of which $37,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $180,000 during the month, compute the amount of under- or overapplied overhead:

Answers

Answer:

Underapplied overhead=  $6,000

Explanation:

Giving the following information:

Direct labor= $153,000 - $37,000= $116,000

The predetermined overhead application rate= 150% of direct labor cost.

Actual overhead= $180,000

First, we need to allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 116,000*1.5= $174,000

Now, we can calculate the over/under allocation:

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 180,000 - 174,000

Under/over applied overhead=  $6,000 underallocated

T-bills currently yield 5.0 percent. Stock in Danotos Manufacturing is currently selling for $87 per share. There is no possibility that the stock will be worth less than $80 per share in one year.

Required:
a. What is the value of a call option with a $76 exercise price?
b. What is the intrinsic value?
c. What is the value of a call option with a $68 exercise price?
d. What is the intrinsic value?
e. What is the value of a put option with a $76 exercise price?
f. What is the intrinsic value?

Answers

Answer:

a) Call option = Stock price - present value of the exercise price

= $87 – [$76 ÷ 1.05]

= $14.62

b) The intrinsic value is the amount by which the stock price exceeds the exercise price of the call, so the intrinsic value is

= $87 - $76

=$11

c) Call option = Stock price - present value of the exercise price

= $87 – [$68 ÷ 1.05]

= $22.24

d) The intrinsic value is the amount by which the stock price exceeds the exercise price of the call, so the intrinsic value is

= $87 - $68

=$ 19.

e) The value of the put option is $0 because there's no chance the put exhausts the money.

f) The intrinsic value is also $0

Explanation:

A firm's bonds have a maturity of 14 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 7 years at $1,073.00, and currently sell at a price of $1,135.93. What are their nominal yield to maturity and their nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places.

Answers

Answer:

YTM = 6.51%

YTC = 6.40%

Explanation:

We need to solve using excel goal seek or bond formulas to generate the yield (interest rate) which matches the future couponb and maturity payment with the current selling price of the bond:

Present value of the coupon

[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]

C 40.000 (1,000 x 8% / 2 payment per year)

time 28 (14 years x 2 payment per year)

rate 0.032529972 (generate using goal seek tool)

[tex]40 \times \frac{1-(1+0.0325299719911398)^{-28} }{0.0325299719911398} = PV\\[/tex]

PV $727.8688

Pv of the maturity (lump sum)

[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]  

Maturity   1,000.00

time   28.00

rate  0.032529972

[tex]\frac{1000}{(1 + 0.0325299719911398)^{28} } = PV[/tex]  

PV   408.06

PV c $727.8688

PV m  $408.0612

Total $1,135.9300

As this is a semiannual rate we multiply it by 2

0.032529972 x 2 = 0.065059944 = 6.51%

We repeat the procedure with changing the time and end-value to adjust for the callabe conditions:

[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]

C 40.000

time 14 (7 years x 2 payment per year)

rate 0.032015131

[tex]40 \times \frac{1-(1+0.0320151313225188)^{-14} }{0.0320151313225188} = PV\\[/tex]

PV $445.6984

[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]  

Maturity   1,073.00 (call price)

time   14.00

rate  0.032015131

[tex]\frac{1073}{(1 + 0.0320151313225188)^{14} } = PV[/tex]  

PV   690.23

PV c $445.6984

PV m  $690.2316

Total $1,135.9300

Againg his will be a semiannual rate so we multiply by two:

0.032015131 x 2 = 0.064030263 = 6.40%

Wings Co. budgeted $572,000 manufacturing direct wages, 2,500 direct labor hours, and had the following manufacturing overhead: Overhead Cost Pool Budgeted Overhead Cost Budgeted Level for Cost Driver Overhead Cost Driver Materials handling $ 196,000 4,900 pounds Weight of materials Machine setup 19,600 560 setups Number of setups Machine repair 1,600 32,000 machine hours Machine hours Inspections 16,500 330 inspections Number of inspections Requirements for Job #971 which manufactured 4 units of product: Direct labor 20 hours Direct materials 220 pounds Machine setup 30 setups Machine hours 16,700 machine hours Inspections 15 inspections The total overhead of Job #971 under the ABC costing is:

Answers

Answer:

Total allocated overhead= $11,435

Explanation:

Giving the following information:

Materials handling $196,000 4,900 pounds

Machine setup $19,600 560 setups  

Machine repair $1,600 32,000 machine hours

Inspections $16,500 330 inspections

Job 971

Direct labor 20 hours

Direct materials 220 pounds

Machine setup 30 setups

Machine hours 16,700 machine hours

Inspections 15 inspections

First, we need to calculate the estimated overhead rate for each activity:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Materials handling= 196,000/4,900= $40 per pound

Machine setup= 19,600/560= $35 per setup  

Machine repair= 1,600/32,000= $0.05 per machine hour

Inspections= 16,500/330= $50 per inspection

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Materials handling= 40*220= 8,800

Machine setup= 35*30= 1,050  

Machine repair= 0.05*16,700=835

Inspections= 50*15= 750

Total allocated overhead= $11,435

Assume straight-line depreciation. A company plans to purchase machinery costing $1,000,000 with salvage value of $200,000 after 4 years. After-tax net income is expected to be $55,000, $40,000, $35,000, and $30,000 during the 4 years. Calculate the accounting rate of return. Round your answer to the nearest tenth of a percent.

Answers

Answer:

Accounting rate of return = 6.67%

Explanation:

The accounting rate of return (ARR) is the proportion of the average investment that is earned as profit.

ARR = average operating income/ Average investment

Average income =( 55,000 + 40,000 + 35,000 + 30,000)/4=40,000

Average investment  = initial cost + salvage value/2

                                 = 1,000,000 + 200,000/2 = 600,000

ARR = 40,000/600,000 × 100= 6.67

Accounting rate of return = 6.67%

Answer:

6.7%

Explanation:

This year, Napa Corporation received the following dividends: KLP Inc (a taxable Delaware corporation in which Napa holds an 8% stock interest) - $55,000 Gamma Inc (a taxable Florida corporation in which Napa holds a 90% stock interest) - $120,000 Napa and Gamma do not file a consolidated tax return. Compute Napa's dividends-received deduction. Please show complete calculation.

Answers

Answer:

$147,500

Explanation:

Computation of Napa's dividends-received deduction

Napa is said to holds less than 20% stock interest in KLP Inc which means that the dividends received deduction in the case of dividends received from KLP would be 50%.

And in case of dividends received from Gamma, the dividends received deduction would be 100% reason been that KLP holds more than 80% of the stock interest in Gamma.

Hence:

Napa’s dividends-received deduction will be:

= ($55,000 x 50%) + $120,000

=$27,500 +$120,000

= $147,500

Therefore Napa's dividends-received deduction will be $147,500

Compared with diversification based on intangible resources, diversification based on financial resources is: a. less imitable and more likely to create value on a long-term basis. b. more imitable and less likely to create value on a long-term basis. c. less imitable and less likely to create value on a long-term basis. d. more imitable and more likely to create value on a long-term basis.

Answers

Answer:

b. more imitable and less likely to create value on a long-term basis.

Explanation:

In Finance, diversification can be defined as an investment technique that focuses on distributing capital or portfolio across various investments.

Basically, the aim of adopting a diversification is to lessen or mitigate the degree of uncertainty of the portfolio by enhancing its high long-term returns.

Diversification helps financial experts or investors to complement or annul the losses associated with an asset class by the benefits of another asset class in a portfolio.

Compared with diversification based on intangible resources, diversification based on financial resources is more imitable or copied by rivals in the industry and less likely to create value on a long-term basis.

Diversification based on intangible resources, includes intellectual property, brand recognition, human resources, patents, customer lists, trademarks, copyrights, and goodwill etc.

Diversification based on financial resources, includes shares, money, bond, gold, debentures, checks, and promissory notes.

The Lone Cactus Nursery has the following general ledger account balances as of August.
Purchases $56,211
Freight In 3,000
Purchases Returns and Allowances 500
Purchases Discounts 300
Calculate the net delivered cost of purchases for August.

Answers

Answer:

Net delivered cost of purchase             $58,411

Explanation:

Computation of net delivered cost of purchase.

Particular                                                 Amount

Purchases                                                $56,211

Freight In                                                  $3,000

                                                                $59,211

Less: Purchases Returns                         $500

Less: Purchases Discounts                     $300    

Net delivered cost of purchase             $58,411

Firm B, a calendar year, cash basis taxpayer, leases lawn and garden equipment. During December, it received the following cash payments. To what extent does each payment represent current taxable income to Firm B?

a. $522 repayment of a loan from an employee. Firm B loaned $500 to the employee six months ago, and the employee repaid the loan with interest.

b. $600 deposit from a customer who rented mechanical equipment. Firm B must return the entire deposit when the customer returns the undamaged equipment.

c. $10,000 short-term loan from a local bank. Firm B gave the bank a written note to repay the loan in one year at 9 percent interest.

d. $888 prepaid rent from the customer described in part b. The rent is $12 per day for the 74-day period from December 17 through February 28.

Answers

Answer:

a. $522 repayment of a loan from an employee. Firm B loaned $500 to the employee six months ago, and the employee repaid the loan with interest.

Firm B should recognize $22 as interest income.

b. $600 deposit from a customer who rented mechanical equipment. Firm B must return the entire deposit when the customer returns the undamaged equipment.

The deposit cannot be recognized as income since it is a liability.

c. $10,000 short-term loan from a local bank. Firm B gave the bank a written note to repay the loan in one year at 9 percent interest.

Interests ($900) will be recognized when they are actually paid for in 1 year. No accrued interests must be reported on the balance sheet (December 31).

d. $888 prepaid rent from the customer described in part b. The rent is $12 per day for the 74-day period from December 17 through February 28.

The $888 will be recognized as revenue during the current year.

Explanation:

When a taxpayer is a cash basis taxpayer, it will only report income and expenses that are actually collected or paid for respectively. All accounts receivable or accounts payable are not considered revenues nor expenses.

Arizona Crystal is a distributor of feldspar, amethyst and other mystically powerful types of crystals. The owner of Arizona Crystal, Geri Moonbeam, is proud to be a part of the movement that is contributing to the higher spirituality of the world. Geri buys crystals from local collectors and then ships them out to wholesalers throughout the country. Geri pays cash for the crystals, but she extends credit to the wholesalers. As the business has grown, problems have arisen. When Geri buys more crystals than she can sell, inventory increases and cash flow problems arise. When Geri doesn’t buy enough crystals, then she can’t fill orders and that creates problems with her customers. She needs to base her buying decisions on accurate forecasts of the demand for crystals so she can avoid these problems. After consulting her tarot cards, Geri visits a friend from El Paso, Texas, who channels for a Wall Street tycoon who didn’t survive the crash of 1929. He recommends that, since she only has twelve months of data, she should try using a moving average or exponential smoothing forecasting model. So Geri contacts you. She provides you with data on the number of crystals (in thousands) ordered during each of the past twelve months and asks you to help her develop a forecasting model. 8. Use a five period moving average model to forecast the demand in January of 1993. Also calculate the RMSE for this model. Use the table below to carry out your calculations. How does this model compare with the three period model? Month Demand (A) Demand (F) (A-F)2 Jan-92 25.6 Feb-92 24.7 Mar-92 21.3 Apr-92 13.9 May-92 12.6 Jun-92 18.0 Jul-92 21.5 Aug-92 22.3 Sep-92 30.7 Oct-92 15.0 Nov-92 13.8 Dec-92 22.6

Answers

Answer:

Explanation:

Month       Demand (A)        Demand (F)         (A-F)²

Jan-92         25.6                      -                        0

Feb-92        24.7                      -                        0

Mar-92        21.3                       -                        0

Apr-92        13.9                       -                          0

May-92       12.6                19.62          49.28

Jun-92        18.0                18.1             0.01

Jul-92         21.5                17.46          16.32

Aug-92       22.3               17.66           21.53

Sep-92       30.7                21.02          93.7

Oct-92        15.0                21.5            42.25

Nov-92       13.8                20.66         47.06

Dec-92       22.6               20.88         29.58

The demand for january of 1993 is 20.88

RMSE² = 49.28+0.01+16.32+21.53+93.7+42.25+47.06+29.58

=299.73

[tex]=\frac{299.73}{12} \\\\= 24.98[/tex]

RMSE = √24.98

=4.99

The model has higher values of demand and RMSE than that of three month moving average model

You own a portfolio that has a total value of $130,000 and a beta of 1.28. You have another $49,000 to invest and you would like the beta of your portfolio to decrease to 1.18. What does the beta of the new investment have to be in order to accomplish this

Answers

Answer:βB =0.9147=beta of new investment

Explanation:

Total investment= $130,000 + $49,000=  $179,000

Using

Portfolio beta(βp) = wA × βA + wB × βB

Where βp is the portfolio beta coefficient,

wA is the weight of the first investment,

βA is the beta coefficient of first investment;

wB is the weight of the second investment,

βB is the beta coefficient of second investment

but weight of investment is  stock value/ total investment x 100

wA= 130,000/ 179,000X 100=72.63%

WB= 49,000/179,000 X100=27.374%

Portfolio beta(βp) = wA × βA + wB × βB

1.18=(72.63%*1.28)+(27.374% XβB  )  

1.18=0.9296+0.27374βB  

βB i=(1.18-0.9298)/0.27374

βB =0.9147=beta of new investment

You have just turned 30 years​ old, have just received your​ MBA, and have accepted your first job. Now you must decide how much money to put into your retirement plan. You are required to specify a fixed percentage of your salary that you want to contribute. Assume that your starting salary is $ 70 comma 000 per year and it will grow 1.8 % per year until you retire. Every dollar in the plan earns 6.5 % per year. You cannot make withdrawals until you retire on your​ sixty-fifth birthday. After that​ point, you can make withdrawals as you see fit. You decide that you will plan to live to 100 and work until you turn 65. You estimate that to live comfortably in​ retirement, you will need $ 97 comma 000 per year starting at the end of the first year of retirement and ending on your 100th birthday. What percentage of your income do you need to contribute to the plan every year to fund your retirement​ income?

Answers

Answer:

Find attached

Explanation:

The present value of $97,000 per year after retirement for 35 years is computed thus:

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

rate is the plan rate of return of 6.5%

nper is 35 years(years after retirement)

pmt is the amount required per year

fv is not applicable is taken as zero

=-pv(6.5%,35,97000,0)=$1,327,634.80  

The amount needed in the account at retirement is the future value of the plan.

Regular yearly payment into the plan is =pmt

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

=-pmt(6.5%,35,0,1327634.80)=$ 10,703.74

The percentage of income that must be contributed is found in the attached

The Sunland Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $80 a night. Operating costs are as follows:

Salaries $5,400 per month
Utilities $1,200 per month
Depreciation $1,100 per month
Maintenance $2,140 per month
Maid service $19 per room
Other costs $37 per room

Required:
a. Determine the inn's break-even point in number of rented rooms per month.
b. Determine the inn's break-even point in dollars.

Answers

Answer:

Instructions are below.

Explanation:

Giving the following information:

The inn has 50 rooms that it rents at $80 a night.

Operating costs are as follows:

Salaries $5,400 per month

Utilities $1,200 per month

Depreciation $1,100 per month

Maintenance $2,140 per month

Maid service $19 per room

Other costs $37 per room

We won't take into account the depreciation expense because it is not a cash disbursement.

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

Fixed costs= 5,400 + 1,200 + 2,140= $8,740

Variable cost= 19 + 37= $56

Break-even point in units= 8,740 / (80 - 56)

Break-even point in units= 364 rented rooms

To calculate the break-even point in dollars, we need to use the following formula:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 8,740 / (24/80)

Break-even point (dollars)= $29,133

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