Answer: c. $18,000 increase
Explanation:
Department margin was $100,000 in September.
October Margin = Sales - Variable Costs - Traceable Fixed Costs
= (2,000 *( 210 - 25 - 80 - 15) ) - 62,000
= (2,000 * 90) - 62,000
= $118,000
= October Margin - September Margin
= 118,000 - 100,000
= $18,000 increase
Eiffel Corporation is a 100-percent owned French subsidiary of Tower Corporation, a U.S. corporation. During the current year, Eiffel paid a dividend of €500,000 to Tower. Assume an exchange rate of €1 = $1.50. Withholding taxes of €2,500 were imposed on the dividend. The dividend is paid out of earnings and profits that have not been subject to the deemed dividend rules under subpart F or GILTI. Compute the tax consequences to Tower as a result of this dividend.
Answer:
Eiffel Corporation
Computation of the tax consequences to Tower:
Withholding tax = €2,500 x $1.50 = $3,750.00
Domestic Corporation tax = 156,712.50
Total tax consequence = $160,462.50
Explanation:
a) Data and Computations:
Dividend = €500,000
Withholding tax = €2,500
Net after w/tax = €497,500
Exchange rate = €1 = $1.50
Therefore, net dividend after withholding tax = €497,500 x $1.50
= $746,250
Corporation tax rate = 21% of $746,250
= $156,712.50
Tower will suffer a withholding tax burden of $3,750 when translated into dollars and a corporation tax on income totalling $156,712.50 based on the TCJA tax rate of 21% instead of the former 35%.
"If Jason receives his quarterly bonus of $3,000 and spends $2,100 on a computer and puts the rest in his savings account, what is Jason’s MPC and MPS?"
Answer: 0.70; 0.30
Explanation:
Marginal propensity to consume(MPC) is the additional spending by an economic agent due to a rise in income while the marginal propensity to save is the additional saving by someone due to rise in income.
Increase in income = $3,000
Increase in spending = $2,100
Increase in savings = $3,000 - $2,100 = $900
MPC = $2,100/$3,000
= 0.70
MPS = $900/$3,000
= 0.30
The internal rate of return method is used to analyze a $831,500 capital investment proposal with annual net cash flows of $250,000 for each of the six years of its useful life. a. Determine a present value factor for an annuity of $1, which can be used in determining the internal rate of return. Carry your answer out to three decimal places.
Answer:
annuity factor for 20% and 6 periods = 3.326
Explanation:
the IRR represents the discount rate at which a project's NPV = 0
NPV = initial outlay + PV of future cash flows
NPV = 0
initial outlay = -$831,500
PV of future cash flows = $831,500 = cash flow x annuity factor
annuity factor = $831,500 / $250,000 = 3.326
using an annuity table and looking for the annuity factors for 6 periods, we find that the annuity factor for 20% and 6 periods = 3.326.
So our IRR = 20%
Alternate Outputs from One Day's Labor Input: USA: 12 bushels of wheat or 3 yards of textiles. India: 3 bushels of wheat or 12 yards of textiles. From the data, the USA:________.
a) has an absolute advantage over India in the production of wheat.
b) should export textiles to India.
c) has an absolute advantage over India in the production of textiles.
d) has a comparative advantage in the production of textiles.
Answer: a) has an absolute advantage over India in the production of wheat.
Explanation:
When a country is said to have an Absolute advantage in the production of a commodity, it means that they can produce more of that commodity than the country being compared to given the same amount of resources, all else being equal.
Given one day's labor input, the US can produce 12 bushels of wheat while India can only manage 3 bushels. The United States therefore has an Absolute advantage in the production of Wheat than India.
Sandhill corporation manufactures a single product. montlhly production costs incurred in the manufacturing process are show below for the production of 3900 maintanance costs are mixed costs. the fixed portions of these costs are 387 and 258, respectively.
Production in units 3900
Production cost
Direct materials 9675
Direct labor 27420
Utilities 3702
Property taxes 1290
Indirect labor 5805
Supervisor salaries 2451
Maintanance 1233
Depreciation 3096
Required:
Calculate variable costs per unit, variable cost per unit for utilities and variable cost per unit for maintenance.
Answer:
variable costs per unit = $10.57
variable cost per unit for utilities = $0.85
variable cost per unit for maintenance = $0.25
Explanation:
I believe that the question is incomplete: the missing part is that both utilities and maintenance costs are mixed.
Production in units 3,900
Variable production cost s:
Direct materials $9,675 / 3,900 = $2.4808 per unit
Direct labor $27,420 / 3,900 = $6.9846 per unit
Utilities ($3,702 - $387) / 3,900 = $0.85 per unit
Maintenance ($1,233 - $258) / 3,900 = $0.25 per unit
total variable costs per unit = $10.5654 ≈ $10.57
When gasoline gallons are priced in terms of number of seashells, seashells serve as: Group of answer choices
Answer:
Unit of account
Explanation:
Money serves three functions :
1. Unit of account : money serves the function of determining the value of a good or service. It is usually assumed that goods that are more highly priced are more valuable that goods that have lower prices
2. Medium of exchange : goods and services can be exchanged for money. For example, if I want to buy a gallon of gasoline and pay 4 seashells, money has served as a medium of exchange.
3. store of value: money can be saved, retrieved and exchanged sometimes in the future
Seacrest Company has 15,000 shares of cumulative preferred 2% stock, $50 par and 50,000 shares of $5 par common stock. The following amounts were distributed as dividends:
Year 1 $30,000
Year 2 12,000
Year 3 45,000
Required:
Determine the dividends per share for preferred and common stock for each year.
Answer:
Cumulative Preferred Stock must always pay out Dividends and when they cannot, the amount unpaid will be accrued for payment to another year when it can be paid.
When Dividends are declared, Preference Shareholders are paid first and then common shareholders follow.
Year 1
Preference Shares = Number of shares * Par value * %
= 15,000 * 50 * 2%
= $15,000
Common Shareholders will get the rest;
= 30,000 - 15,000
= $15,000
Year 2.
Preference Shareholders are still due $15,000 however only $12,000 is available. They will take all of it and be owed $3,000.
Preference Shares, Year 2 = $12,000
Common Shareholders get nothing.
Year 3.
Preference Shareholders are owed $15,000 for the year. They are also owed $3,000 from the previous year.
Preference Shares = 15,000 + 3,000
= $18,000
Common Shareholders will get the remainder;
= 45,000 - 18,000
= $27,000
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:
Sales in Units
April 70,000
May 85,000
June 110,000
July 90,000
The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 15% of the following month’s sales. The inventory at the end of March was 10,500 units.
Required:
Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total.
Answer:
Results are below.
Explanation:
Giving the following information:
Sales in Units
April 70,000
May 85,000
June 110,000
July 90,000
Desired ending inventory= 15% of the following month’s sales.
The inventory at the end of March was 10,500 units.
To calculate the production required for each month, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
April:
Sales= 70,000
Desired ending inventory= 85,000*0.15= 12,750
Beginning inventory= (10,500)
Total production= 72,250
May:
Sales= 85,000
Desired ending inventory= 110,000*0.15= 16,500
Beginning inventory= (12,750)
Total production= 88,750
June:
Sales= 110,000
Desired ending inventory= 90,000*0.15= 13,500
Beginning inventory= (16,500)
Total production= 107,000
Total quarter= 268,000
erekes Manufacturing Corporation has prepared the following overhead budget for next month. Activity level 3,200 machine-hours Variable overhead costs: Supplies $ 16,640 Indirect labor 29,120 Fixed overhead costs: Supervision 15,400 Utilities 6,600 Depreciation 7,600 Total overhead cost $ 75,360 The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 3,100 machine-hours rather than 3,200 machine-hours
Answer:
Variable overhead= $44,330
Fixed overhead= $29,600
Total overhead= $73,930
Explanation:
Giving the following information:
Total variable overhead= $45,760
Total fixed overhead= $29,600
Total overhead cost= $75,360
First, we need to calculate the variable predetermined overhead rate:
Variable predetermined overhead rate= 45,760/3,200= $14.3 per machine hour
Now, for 3,100 hours:
Variable overhead= 14.3*3,100= $44,330
Fixed overhead= $29,600
Total overhead= $73,930
Martine Piccirillo works as the payroll clerk for Centinix, a security company that hires many part-time and temporary workers who are paid on an hourly basis. What law governs the hiring or documenting of these workers?
Answer:
IRCA(Immigration Reform and Control Act of 1986)
FLSA(Fair Labor Standards Act)
Explanation:
The Immigration Reform and Control Act (IRCA) forbids employers from recruiting/hiring any foreign citizen that doesn't have a proper work authorization. That means that all Centinix's employees should have a green card.
The Fair Labor Standards Act (FLSA) sets the federal standards for minimum wage, overtime pay, record keeping, and child labor. This includes any full time or part time worker employed by Centinix.
Galactic Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of 4,500 units at $212 per unit. The equipment has a cost of $418,500, residual value of $31,500, and an eight-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $36.00 Direct materials 140.00 Factory overhead (including depreciation) 24.00 Total cost per unit $200.00 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. 18 %
Answer:
24%
Explanation:
The computation of the average rate of return is shown below;
As we know that
The Average rate of return = Net income ÷ Average investment
where,
Net income is
= (Selling price per unit - totat cost per unit) × additional units sales
= ($212 - $200) × $4,500 units
= $54,000
And, the average investment is
= (cost price + equipment) ÷ 2
= ($418,500 + $31,500) ÷ 2
= $225,000
So, the average rate of return is
= $54,000 ÷ $225,000 × 100
= 24%
Answer:
Galactic Inc.
Average Rate of Return: = Annual Net Income/Average Investment cost
= $54,000/$225,000 x 100
= 24%
Explanation:
Galactic Inc. Income Statement:
Sales Revenue, 4,500 x $212 = $954,000
Cost, 4,500 x $200 = 900,000
Annual Net Income = $54,000
Average Investment in equipment = $225,000 ($418,500 + 31,500)/2
b) Galactic Inc.'s average rate of return (ARR) on the equipment is average (annual) net income that the equipment generates divided by the average cost of the investment, and then multiplied by 100. The average cost of the investment equals the (initial book value + the residual value)/2. The ARR also known as the Accounting Rate of Return does not take into consideration the time value of money. As such, the net income is not discounted to the present value before the computation of the ratio.
Hunt Inc. intends to invest in one of two competing types of computer-aided manufacturing equipment: CAM X and CAM Y. Both CAM X and CAM Y models have a project life of 10 years. The purchase price of the CAM X model is $3,600,000, and it has a net annual after-tax cash inflow of $900,000. The CAM Y model is more expensive, selling for $4,200,000, but it will produce a net annual after-tax cash inflow of $1,050,000. The cost of capital for the company is 10%.
Required:
Calculate the NPV for each project.
Answer:
NPV of CAM X = $1,930,110.40
NPV of CAM Y = $2,251,795.46
Explanation:
The NPV for each project can be calculated using the following steps:
Step 1: Calculation of present value (PV) for each project
The PV for each project can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV of a project = P * [{1 - [1 / (1 + r)]^n} / r] …………………………………. (1)
Where;
For CAM X
P = Net annual after-tax cash inflow = $900,000
r = Cost of capital or interest rate = 10%, or 0.10
n = number of project life = 10
Substitute the values into equation (1) to have:
PV of CAM X = $900,000 * [{1 - [1 / (1 + 0.10)]^10} / 0.10]
PV of CAM X = $900,000 * 6.14456710570468
PV of CAM X = $5,530,110.40
For CAM Y
P = Net annual after-tax cash inflow = $1,050,000
r = Cost of capital or interest rate = 10%, or 0.10
n = number of project life = 10
Substitute the values into equation (1) to have:
PV of CAM Y = $1,050,000 * [{1 - [1 / (1 + 0.10)]^10} / 0.10]
PV of CAM Y = $1,050,000 * 6.14456710570468
PV of CAM Y = $6,451,795.46
Step 2: Calculation of net present value (NPV) for each project
The NPV for each project can be calculated using the following formula:
NPV of each project = PV of each equipment - Purchase price of each equipment ........ (2)
Using equation (2), we have:
NPV of CAM X = PV of CAM X - Purchase price of CAM X = $5,530,110.40 - $3,600,000 = $1,930,110.40
NPV of CAM Y = PV of CAM Y - Purchase price of CAM Y = $6,451,795.46 - $4,200,000 = $2,251,795.46
Additional Note:
Although this not part of the requirement of the question, but note that the final decision is that since the positive NPV of $2,251,795.46 for CAM Y is gereater than the positive NPV of $1,930,110.40 for CAM X, Hunt Inc. will choose to invest in CAM Y.
Following are financial data from year-end financial statements of Portland Company for 2017, 2016 and 2015.
2017 2016 2015
Accounts receivable $136,125 $144,576 $132,000
Cost of goods sold 1,023,750 864,000 960,000
Current assets 450,000 360,000 405,000
Current liabilities 300,000 250,000 310,000
Inventory 225,000 165,000 195,000
Sales 1,642,500 1,752,000 1,200,000
Required:
Compute the following financial ratios for 2016 and 2017.
Answer:
Answers are calculated below
Explanation:
Financial ratios can be calculated according to their formulas. Both formulas and calculation are as follows
CURRENT RATIO
Current ratio = Current assets/current liabilities
Current ratio (2016) = $360,000/$250,000
Current ratio (2016) = 1.44
Current ratio (2017) = $450,000 / $300,000
Current ratio (2017) = 1.50
ACID RATIO
Acid ratio = (Current asset - inventory)/current liabilities
Acid ratio (2016) = (360,000 - 165,000)/250,000
Acid ratio (2016) = 0.78
Acid ratio (2017) = (450,000-225,000)/300,000
Acid ratio (2017) = 225,000/300,000
Acid ratio (2017) = 0.75
INVENTORY TURNOVER RATIO
Inventory turnover ratio = cost of good Sold / Average inventory
Inventory turnover ratio (2016) = 864,000/(360,000 ÷2)
Inventory turnover ratio (2016) = 864,000/180,000
Inventory turnover ratio (2016) = 4.80
Inventory turnover ratio (2017) = 1,023,750 / ( 390,000 ÷ 2)
Inventory turnover ratio (2017) = 1,023,750 / 195,000
Inventory turnover ratio (2017) = 5.25
DAYS SALE IN RECEIVABLE
Days sale in receivable = 365/Average receivable turnover ratio
Days sale in receivable (2016) = 365/ 12.67(w1)
Days sale in receivable (2016) = 28.81 days
Days sale in receivable (2017) =365/11.7(w1)
Days sale in receivable (2017) = 31.20 days
Working 1
Account receivable turnover ratio = Sales/ Average receivable
Account receivable turnover ratio (2016) = 1,752,000/138,288(w2)
Account receivable turnover ratio = 12.67 times
Account receivable turnover ratio (2017) = 1,642,500/140,351(w2)
Account receivable turnover ratio (2017) = 11.7 times
Working 2
Average receivable = (Opening + Closing) /2
Average receivable (2016) = (132,000 + 144,576) /2
Average receivable (2016) = 138,288
Average receivable (2017) = (144,576 +136,125 ) /2
Average receivable (2017) = 140,351
The date the directors vote to pay a dividend is called the: Multiple Choice Date of declaration. Date of record.
Answer: Date of declaration
Explanation:
The declaration date is also known as announcement date. The date of declaration is the date when the board of directors announces when the next dividend will be paid.
It should be noted that the statement consist of the size of the dividend, date of the previous dividend and also the next dividend payment date.
Part-time workers likely result in A. inaccurately high estimates of the labor force. B. inaccurately low estimates of the labor force. C. a disincentive for the unemployed to seek employment. D. lower incomes and fewer jobs.
Answer:
Correct answer:
A. inaccurately high estimates of the labor force.
Explanation:
Part-time work is the type of work where an individual has a flexible work plan is a given company unlike the traditional full-time work. Doing such work create the impression that, there is high labour force among the various industries and sectors. For example, someone might be working in two different firms under part-time basis same day which create an impression of two different individuals.
You bought a painting 7 years ago as an investment. You originally paid $145,000 for it. If you sold it for $307,000, what is your annual return on the investment
Answer:
11.3%
Explanation:
In this scenario a painting was bought at present value of $145,000 and sold at future value of $307,000. The time is 7 years in the future.
Return on investment is the gain on original cost of a project. A positive return on investment will result in profit of the project.
To calculate annual rate we use the following formula
Present value = Future value (1 + rate) ^ -number of years
145,000 = 307,000 {(1+r) ^ -7}
145,000/307,000 = (1+r) ^-7
0.4723 = (1 + r) ^ -7
1.113 = 1+ r
r = 0.113= 11.3%
A corporate charter specifies that the company may sell up to 23 million shares of stock. The company sells 15 million shares to investors and later buys back 4.5 million shares. The number of authorized shares after these transactions are accounted for is: Multiple Choice 19 million shares. 23 million shares. 15 million shares. 11 million shares.
Answer:
23 million shares
Explanation:
The computation of the number of authorized shares after these transactions are shown below:
Since the corporate charter represent the company could sell till 23 million shares of stock so here the no of authorized shared after the transactions should be 23 million shares
So, the second option is correct
And, the same is to be considered
You have just been instructed to develop a schedule for introducing a new product into the marketplace. Below are the elements that must appear in your schedule. Arrange these elements into a work breakdown structure (down through level 3), and then draw the arrow diagram. You may feel free to add additional topics as necessary.1. Production layout2. Market testing3. Review plant cost4. Select distributors5. Analyze selling cost6. Analyze customer reactions7. Storage and shipping cost8. Select salespeople9. Training salespeople10. Trained distributors
Answer:
Attached below is the arrangement of these elements with additional topics and arrow diagram
Explanation:
The given Elements are : Production layout , market testing , Review plant cost, select distributors, Analyze selling cost, Analyse customer reactions, storage and shipping cost, select salespeople, training sales people, trained distributors. including additional topics as well
On December 31, 2016, when its Allowance for Doubtful Accounts had a debit balance of $1,432, Sunland Company estimates that 9% of its accounts receivable balance of $105,900 will become uncollectible and records the necessary adjustment to Allowance for Doubtful Accounts. On May 11, 2017, Sunland Company determined that B. Jared’s account was uncollectible and wrote off $1,091. On June 12, 2017, Jared paid the amount previously written off.Required:Prepare the journal entries on December 31, 2016, May 11, 2017, and June 12, 2017.
Answer: Please see explanation column for answers
Explanation:
1) To record bad debts expense
Date Account Debit Credit
Dec 31, 2016 Bad Debt Expense $10,963
Allowance for doubtful account $10,963
Calculation ;
Bad debts expense
9% x $105,900 = $9,531
Adjustment= $9,531 + debit balance of $1,432=$10,963
2) To write off uncollectible accounts receivables
Date Account Debit Credit
May 11, 2017 Allowance for doubtful account $1,091.
Accounts receivable--- B. Jared $1,091.
3) To reinstate accounts accounts previously written off
Date Account Debit Credit
June 12, 2017 Accounts receivable--- B. Jared $1,091.
Allowance for doubtful account $1,091.
3b)to collect cash from receivables
Date Account Debit Credit
June 12, 2017 Cash $1,091.
Accounts receivable--- B. Jared $1,091.
The Making Ethical Decisions box "Good Finance or Bad Medicine" has an important message for managers who make financial decisions. Which of the following statements summarizes this message?
A. Managers must balance good economic decisions with socially forward thinking.
B. Checking academic credentials of recently graduated doctors is imperative due to the cost of lawsuits that patients may file if they learn that they were served by a surgeon without a license.
C. The support of a good law firm is worth every penny a hospital might pay. The finance manager should always budget for a legal team.
D. Financial decisions must be based on what insurance companies are willing to pay.
Answer:
A. Managers must balance good economic decisions with socially forward thinking.
Explanation:
Good Finance or bad medicine refers that if you are aware of finance or you have studied the finance subject so you are capable of making the financial decisions which give you the better return at less risk in near future and if you are not aware of finance than it would lead to the worst situation
Therefore the first option depicts the given message i.e making a better balance in the economic decisions with the help of forward-thinking i.e. to be social
The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 2200 units, the actual direct labor cost was $65600 for 4100 direct labor hours worked, the total direct labor variance is
Answer:
400 favorable
Explanation:
The computation of total direct labor variance is presented below:-
Total direct labor variance = (Standard rate - Standard hours) × (Actual rate - Actual hours)
= ($15 × (2 × 2,200)) - $65,600
= ($15 × 4,400) - $65,600
= $66,000 - $65,600
= 400 favorable
Therefore for determining the total direct labor variance we simply applied the above formula.
An appraiser estimated the replacement cost new of a building at $560,000. The building has an estimated economic life of 40 years and an estimated remaining life of 30 years. What is the current value of the building
Answer:
The answer is $420,000
Explanation:
To find the amount of depreciation being charged years, we use the following formula:
Cost of the asset ÷ number of useful life
Cost of the asset - $560,000
Number of useful life - 40 years
$560,000 ÷ 40 years
$14,000.
The asset has 30 years remaining, that means it has used 10 years. So the accumulated depreciation is $140,000
And the current value of the building now is $420,000($560,000 - $140,000)
The current value of the building is $420000
The estimated economic life is 40 years, hence after 40 years the value of the house would be 0.
Since the estimated remaining life is 30 years. Hence:
Percentage value of house = 30 remaining years / 40 economic year
Percentage value of house = 0.75 * 100 = 75%
The current value of the building = 75% * $560000 = $420000
The current value of the building is $420000
Find out more on current value at: https://brainly.com/question/24304697
You consider buying a share of stock at a price of $10. The stock is expected to pay a dividend of $1.00 next year, and your advisory service tells you that you can expect to sell the stock in 1 year for $12. The stock's beta is 1.0, rf is 16%, and E[rm] = 26%. What is the stock's abnormal return? rev: 03_30_2019_QC_CS-164617 Multiple Choice 4% 10% 6% 0%
Answer: 4%
Explanation:
Abnormal returns are the excess actual returns received over the expected return.
The actual return can be calculated as;
= [tex]\frac{New Stock price + dividends - Old Stock Price}{Old stock price}[/tex]
= [tex]\frac{12 - 10 + 1}{10}[/tex]
= 30%
The expected return according to CAPM;
Expected return = Risk free rate + beta( market return - risk free rate)
= 16% + 1 ( 26% - 16%)
= 26%
Abnormal return = 30% - 26%
= 4%
A $10,000 municipal bond with 10 years to maturity is purchased in the primary market at 105. The bond is sold after 2 years at 105. The taxable gain or loss is a:
Answer: B. a 2 point capital gain
Explanation:
Municipal Bonds have to be amortized using the straight-line method and this applied to both newly issued or bonds being traded at a premium.
The bond in question is trading at 105 and so has a 5 point premium which needs to be amortized at 1 point a year for 5 years. As it was bought after two years, the amortization was 2 points which means the cost of the bond should be;
105 - 2 = 103
Yet it was sold for 105. The gain is therefore
= 105 - 103
= 2 point capital gain
Barette Consulting currently has no debt in its capital structure, has $500 million of total assets, and its basic earning power is 15%. The CFO is contemplating a recapitalization where it will issue debt at a cost of 10% and use the proceeds to buy back shares of the company's common stock, paying book value. If the company proceeds with the recapitalization, its operating income, total assets, and tax rate will remain unchanged. Which of the following is most likely to occur as a result of the recapitalization? a) The ROA would remain unchanged b) The basic earning power ratio would decline c) The basic earning power ratio would increase d) The ROE would increase e) The ROA would increase
Answer:
d) The ROE would increase
Explanation:
Since the company's operating income will remain unchanged, net income will decrease due to interest expense, but the total number of shares outstanding will decrease. This will result in a higher EPS (earnings per share), and a higher ROE (return on equity), but it would also make the company's risk increase and Re (cost of equity) increase.
If 40 Ps are needed, and on-hand inventory consists of 15 Ps and 10 each of all other components and subassemblies, how many Cs are needed
Answer:
350 units
Explanation:
The computation of the number of Cs is needed is shown below;
The requirement of Ps = 40
Ps still = 15
So, the Net of Ps needed is
=40 - 15
= 25
Bs needed for 25 units of P is
= 3 × 25
= 75
And, B units still = 10
So, the Net of B units needed is
= 75 - 10
= 65
So, Cs needed for 65 units of B is
= 4 × 65
= 260
Cs needed directly for every unit of P is
= 1 × 4
= 4
hence , total Cs needed for 25 units of P is
= 4 × 25
= 100
Now
Total Cs required is
= 260 + 100
= 360
And, C units still = 10
So, the Net Cs needed is
= 360 - 10
= 350 units
A three-year annuity-immediate will be issued a year from now with annual payments of 5,000. Using the forward rates, calculate the present value of this annuity a year from now.
Answer:
13,152.5
Explanation:
Given the the above parameters as mentioned in the question
To calculate the PV (Present Value)
We have PV = 5000 * 1.05 * [ 1/(1.0575)² + 1/(0.625)³ + 1/(1.065)⁴]
PV = 5000 * 1.05 * (0.8942094350 + 0.8337064929 + 0.7773230908) =
=> PV = 5000 * 1.05 * 2.5052390187
= 13,152.50
Therefore, in this case, using the forward rates, the present value of this annuity a year from now is 13,152.50
Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance
Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 18 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 990 oil changes.
Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June:
Actual number of oil changes performed: 990
Actual number of direct labor hours worked: 291 hours
Actual rate paid per direct labor hour: $16.00
Standard rate per direct labor hour: $15.00
Required:
a. Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June using the formula approach.
b. Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June.
c. Calculate the total direct labor variance for oil changes for June.
d. What if the actual wage rate paid in June was $14.00? What impact would that have had on the direct labor rate variance (LRV)? On the direct labor efficiency variance (LEV)? Indicate what the new variances would be below. If required, round your answers to the nearest cent.
Answer:
Guillermo's Oil and Lube Company
Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance
a1. Direct labor rate variance (LRV) = Actual Labor Rate minus Standard Labor Rate multiplied by Actual hours worked
= $16 - $15 x 291
= $291 U
a2. Direct labor efficiency variance (LEV) = Standard hours minus Actual hours x Standard hourly rate
= 297 - 291 x $15
= $90 F
b1. Direct labor rate variance (LRV) = the difference between the actual wages paid and the standard wages
= (Actual labour rate x actual hours) - (standard rate x actual hours)
= ($16 x 291) - ($15 x 291)
= $4,656 - $4,365
= $291 U
b2. Direct labor efficiency variance = the difference between the actual number of direct labor hours worked and budgeted direct labor hours that should have been worked based on the standards
(291 x $15) - (297 x $15)
4,365 - 4,455
= $90 F
c. Total Direct labor rate variance (LRV) = Actual Wages minus Standard Wages
= (Actual labor rate x Actual hours) - (Standard labor rate x Standard hours)
= ($16 x 291) - ($15 x 297)
= $4,656 - $4,455
= $201 U
d. If actual wage rate paid in June was $14.00:
d1. Direct labor rate variance (LRV) = Actual Labor Rate minus Standard Labor Rate multiplied by Actual hours worked
= $14 - $15 x 291
= $291 F
d2. Direct labor efficiency variance (LEV) = Standard hours minus Actual hours x Standard hourly rate
= 297 - 291 x $15
= $90 F
d3. Total Direct labor rate variance (LRV) = Actual Wages minus Standard Wages
= (Actual labor rate x Actual hours) - (Standard labor rate x Standard hours)
= ($14 x 291) - ($15 x 297)
= $4,074 - $4,455
= $381 F
Explanation:
a) Data and Calculations
Actual number of oil changes performed: 990
Standard number of direct labor hours to for 990 oil changes = 990 x 0.3 hours (since 18 minutes = 0.3 hours or 18/60) = 297 hours
Actual number of direct labor hours worked: 291 hours
Actual rate paid per direct labor hour: $16.00
Standard rate per direct labor hour: $15.00
b) The impact on direct labor rate variance if the actual wage rate paid in June was $14 was to turn the unfavorable labor rate variance into a favorable variance of $291 and the total direct labor variance would have been a favorable variance $381 instead of an unfavorable variance of $201.
The bond has a 12% annual coupon rate, a $1,000 par value, it matures in 15 years and pays coupon quarterly. The current bond price is $900. What is the bond’s annual yield? A. 14.28% B. None of the answers is correct C. 13.60% D. 12.85%
Answer:
A. 14.28%
Explanation:
As per Approximation formula,
Quarterly yield = (A + B / C) * 100
A = Quarterly coupon = 12% of 1,000 / 4 =30
B = (Redemption - Price value / Number of coupon) = (1,000 - 900) / (15 * 4)
= 1.667
C= (Redemption value + Price / 2) = 1,000 + 900 / 2 = 1,900 /2 = 950
Quarterly yield = 30 + 1.66667 / 950 = 31.6667 / 950 = 0.03333
Quarterly yield = 3.33%
Using the calculator, we get exact Ytm quarterly = 3.3925%
Effective amount yield = {(1 + 0.033925)^4 - 1} * 100
Effective amount yield = 0.142762 * 100
Effective amount yield = 14.2762%
Effective amount yield = 14.28%
E Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 44,000 units per month is as follows:
Per Unit
Direct materials $44.60
Direct labor $8.50
Variable manufacturing overhead $1.50
Fixed manufacturing overhead $18.10
Variable selling & administrative expense $2.60
Fixed selling & administrative expense $12.00
The normal selling price of the product is $94.10 per unit. An order has been received from an overseas customer for 2,400 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.60 less per unit on this order than on normal sales.
Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $80.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be:_______
Answer:
financial advantage for accepting special order = $59,520
Explanation:
relevant production costs for special order (2,400 units):
direct materials $44.60
direct labor $8.50
variable manufacturing overhead $1.50
variable selling & administrative expense $1
total costs per unit = $55.60
total revenue from special order = 2,400 x $80.40 = $192,960
relevant costs associated to special order = 2,400 x $55.60 = ($133,440)
financial advantage for accepting special order = $59,520