Answer:
14.18%
Explanation:
Northwest lumber has a profit margin of 5.25%
The total assets turnover is 1.5
The equity multiplier is 1.8
Therefore the ROE can be calculated as follows
= 5.25 × 1.5 × 1.8
= 14.18%
Hence the ROE is 14.18%
How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much?
Answer:
1. Overhead incurred during the year;
= Depreciation on manufacturing plant and equipment + Property taxes on plant + Plant Janitors wages
= 485,000 + 19,000 + 9,500
= $513,500
2. The under or over allocation depends on how much manufacturing overhead was allocated to jobs for the year.
= Actual machine hours * Overhead rate
Overhead rate = Manufacturing overhead cost / Allocated Machine hours
= 570,000 / 71,250
= $8
Allocated Manufacturing Overhead = 57,000 * 8
= $456,000
The allocated manufacturing overhead is more than the actual overhead. This means that it is Underallocated and the company did not budget enough for the overheads.
Underallocation = 513,500 - 456,000
= $57,500
Which of the following would cause a "Prior Period Adjustment" to be reported on the 2025 Statement of Retained Earnings?
A. Failure to Accrue Revenue at 12/31/24, but not 12/31/21 Depreciation Overstatement.
B. 12/31/21 Depreciation Overstatement, but not Failure to Accrue Revenue at 12/31/24.
C. Both Failure to Accrue Revenue at 12/31/24 and 12/31/21 Depreciation Overstatement.
D. Neither Failure to Accrue Revenue at 12/31/24 nor 12/31/21.
Answer:
Cause of a "Prior Period Adjustment in 2025 Statement of Retained Earnings:"
A. Failure to Accrue Revenue at 12/31/24, but not 12/31/21 Depreciation Overstatement.
Explanation:
A company's failure to accrue revenue in accordance with the accrual concept and revenue recognition principle means that there is a "Prior Period Error" which must be corrected retrospectively in the financial statements (Retained Earnings). Retrospective restatement involves the correction of the error arising from the recognition, measurement, and disclosure of amounts of elements of financial statements. The restatement is done as if a prior period error had never occurred.
If testing cannot be completed any earlier than four days after the prototype has been built, what type of lag exists?
A. Start to Finish
B. Start to Start
C. Finish to Start
D. Finish to Finish
E. Any of these could be correct.
Answer: finish to finish
Explanation:
A lag is minimum amount of time that is required for a dependent activity have to be delayed to either start or end.
If testing cannot be completed any earlier than four days after the prototype has been built, the type of lag that exists is finish to finish.
When Deer Valley Resort Co. (DVRC) was developing its ski resort in the Wasatch Mountains near Park City, Utah, it sold parcels of land in the resort village to third parties. Each sales contract reserved the right of approval over the conduct of certain businesses on the property including ski rentals. For fifteen years, DVRC permitted Christy Sports, LLC, to rent skis in competition with DVRC's ski rental outlet. When DVRC opened a new mid-mountain ski-rental outlet, it revoked Christy's permission to rent skis. This meant that most skiers who flew into Salt Lake City and shuttled to Deer Valley had few choices: they could carry their ski equipment with them on their flights, take a shuttle into Park City and look for cheaper ski rentals there, or rent from DVRC. Christy filed a suit in a federal district court against DVRC. Was DVRC's action an attempt to monopolize in violation of Section 2 of the Sherman Act
Answer:
No it wasn't a violation of Section 2 of the Sherman Act.
Explanation:
This is an actual court case which was ruled in favor of DVRC. The court used an analogy to compare DVRC with Disneyland, where the theme park owners would not allow competition within their premises. Even though DVRC sold the land parcel to Christy Sports, a restrictive covenant was imposed at the time of the sale where DVRC could decide freely which third party businesses could operate there. Since the covenant is legal, there is no reason why DVRC will not enforce it.
Evaluating and rewarding managers based on absorption basis income can lead to overproduction. true or false
Answer:
True
Explanation:
The absorption basis of income, profits are always high when the production is greater than income because more fixed costs will have been deferred in closing inventory.
So, managers will focus more on increasing production which create huge balances of closing stocks and consequently results in large profits.
Sheffield Company had an investment which cost $250000 and had a salvage value at the end of its useful life of zero. If Mussina's expected annual net income is $5000, the annual rate of return is:
Answer: 4%
Explanation:
From the question, we are informed that Sheffield Company had an investment which cost $250000 and had a salvage value at the end of its useful life of zero and that Mussina's expected annual net income is $5000.
It should be noted that the annual rate of return is calculated as the average Income divided by the average investment. Here, the average Income is $5,000 while the average investment will be ($250,000/2) = $125,000.
Therefore, annual rate of return will be:
= $5000/$125,000
= 4%
In 2007, interest rates were about 4.5% and inflation was about 2.8%. What was the real interest rate in 2007
Answer: 1.7%
Explanation:
The real interest rate is the interest rate in an economy after being adjusted for inflation.
Real Interest = Interest - Inflation
= 4.5% - 2.8%
= 1.7%
3) What is the coupon payment of a 15-year $10,000 bond with a 9% coupon rate with semiannual payments
Answer:
$450
Explanation:
The computation of coupon payment is shown below:-
Semiannual coupon payment amount = Future value × Coupon rate ÷ Coupon payments in a year
Where
Future value = $10,000
Coupon rate = 9%
Coupon payment in a year = 2
Now place the values to the above formula
So, the coupon payment is
= $10,000 × 9% ÷ 2
= $450
Therefore for computing the coupon payment we simply applied the above formula.
The major levels of intensity at which a company can choose to distribute its products are __________ distribution.
Answer:
Exclusive, selective, intensive
Explanation:
When a company markets its products it needs to choose carefully how it will distribute its products most effectively.
There is need for consideration of the cost and benefit associated with a level of distribution intensity because each one has associated cost like number of salespeople to drive the process.
There are 3 levels of intensity for distributing products
- Intensive or mass coverage is when products are distributed widely in all locations where product is sold. It is ideal for low priced goods that have a high demand.
- Selective coverage is when sales are limited to locations where clients are most concentrated.
- Exclusive coverage is for higher end products targeted at a narrow market.
Compute the selling price if variable costs are $16 per unit. Determine the formula used to calculate the selling price.
Answer: $40
Explanation:
Selling price can be calculated through the contribution margin equation;
Contribution margin = (Selling Price - Variable cost) / Selling Price
Contribution margin = Fixed costs/break-even point
= 660,000/1,100,000
= 60%
60% = (Selling Price - 16) / Selling Price
Selling price * 60% = Selling price - 16
16 = Selling price - (0.6 * selling price)
16 = Selling price * 40%
16/40% = Selling price
Selling price = $40
Dan Martin did business as Martin's Appliance. For years, he bought furniture from Independent Furniture. Martin's Appliance was sold to Struthers Appliance, Inc. and Martin became the manager, but Independent did not know of the ownership change. Martin ordered furniture from Independent, which was never paid for the furniture. Independent sued Martin for the amount due. He claimed that he was only an agent for Struthers' so could not be personally liable. Is Martin correct?
Answer: No. Martin did not disclose his status as an agent of Struthers.
Explanation:
From the question, we are informed that Dan Martin did business as Martin's Appliance and that for years, he bought furniture from Independent Furniture.
We are further told that Martin's Appliance was sold to Struthers Appliance, Inc. and Martin became the manager, but Independent did not know of the ownership change and that Martin ordered furniture from Independent, which was never paid for the furniture.
We are the informed that Independent sued Martin for the amount due. He claimed that he was only an agent for Struthers' so could not be personally liable.
In the above situation, we can deduce that Martin is not correct. Martin did not disclose his status as an agent of Struthers. If he had disclose his Identity, he could not be personally liable but in this regard, he didn't.
XYZ Corp owns a 3-year $10 million par floating rate bond. The coupons on the bond are 12-month LIBOR. XYZ would like to hedge against interest rates falling by entering into an interest rate swap with a $10 million notional that receives a fixed rate and pays a floating rate (12-month LIBOR). You are given the following prices for zero coupon bonds. Years to Maturity Zero-coupon Bond Price 1 0.99 2 0.97 3 0.93 Calculate the fixed rate XYZ Corp would receive on the swap.
Answer:
2.45%
Explanation:
The computation of the fixed rate is shown below:
Years to maturity Zero coupon bond price YTM Forward rate
1 0.99 1.01%
2 0.97 1.53% 2.06%
3 0.93 2.45% 4.30%
The fixed rate should be equivalent to the YTM of the 3 year bond i.e. 2.45% the same is to be considered
Managers get things done through other people. They make decisions, _______________, and direct the activities of others to attain goals.
Answer:
allocate resources
Explanation:
According to the given scenario, the Manager has an important role in any organization as he needs to distribute the work among the employees.
The Manager has major responsibility is to make decisions for the benefit of the organization, allocation of resources so that work should be done in an efficient manner without any barrier and the activities that should be directed to meet the targets.
Aloan Co. provides the following sales forecast for the next three months:Sales units: January: 3,000 February: 4,200 March: 5,000The compnay wants to end each month with the ending finished goods invetory equal to 10% of the next month's sales. Finished goods inventory on December 31 is 300 units. The budgeted production units for February are?
Answer:
The budgeted production units for February are 4,400.
Explanation:
Prepare a Production Budget for February as follows :
units
Budgeted Sales 4,200
Add Budgeted Closing Stock (5,000 × 10%) 500
Total Production Needed 4,700
Less Budgeted Opening Stock (3,000 × 10%) (300)
Budgeted Production 4,400
What is the current yield on a zero coupon bond with a remaining life of 4 years, a yield to maturity of 10.8%, and a par value of $1000
Answer:
$663.5
Explanation:
given that
number of years remaining = 4 years
yield to maturity ratio = 10.8% = 1.108
Par value = $1000
Current yield takes a look at the current price of a bond, instead of looking at it from a face value. That being said, it can be calculated mathematically as
Current yield = 1000 / 1.108^4
Current yield = 1000 / 1.507
Current yield = $663.5
Therefore, the current yield from the question we are given, is found to be $663.5.
I hope that helps
The interest rate by corporations to evaluate the attractiveness of economic alternatives is known as the
Answer: Weighted Average Cost of Capital
Explanation:
The Weighted Average Cost of capital for a company refers to rate a company pays on the various capital methods it employs to fund its operations such as common and preferred stock as well as debt.
This rate is used to evaluate the attractiveness of economic ventures and projects because the company needs the rate of return on the project to be at least higher than the company WACC so that the company may be able to pay off its capital holders.
For the questions below, select the appropriate answer.
Are households primarily buyers or sellers in the goods and services market?
Are households primarily buyers or sellers in the labor market?
Are firms primarily buyers or sellers in the in the labor market?
Are firms primarily buyers or sellers in the goods and services market?
A Buyers
B. Sellers
C. Neither
Answer:
Explanation:
Are households primarily buyers or sellers in the goods and services market?
A. Buyers
Households are primary buyers in the goods and service market. Households buy goods and services from the producers in the goods and services market
Are households primarily buyers or sellers in the labor market?
B. Sellers
- Households are sellers in the labor market. They sell their services in exchange for wages
Are firms primarily buyers or sellers in the in the labor market
A. Buyers
Firms are buyers in the labor market. They buy the services of households
Are firms primarily buyers or sellers in the goods and services market?
B. Sellers
Firms are sellers in the goods and services market. They sell their finished goods and services
Next year Baldwin plans to include an additional performance bonus of 0.25% in its compensation plan. This incentive will be provided in addition to the annual raise, if productivity goals are reached. Assuming the goals are reached, how much will Baldwin pay its employees per hour? Select: 1Save Answer $29.63 $28.15 $31.04 $28.22
Answer:
$29.63
Explanation:
Calculation for how much will Baldwin pay its employees per hour
First step is to find the Total raise percentage
Total raise = 5% + 0.25%
Total raise = 5.25%
Since the present wages is given as $28.15 Second step is to calculate how much will Baldwin pay its employees per hour
Amount Baldwin will pay = $28.15× (1+0525)
Amount Baldwin will pay = $28.15× (1.0525)
Amount Baldwin will pay = $29.63
Therefore how much will Baldwin pay its employees per hour will be $29.63
Suppose that you can sell as much of a product (in integer units) as you like at $60 per unit. Your marginal cost (MC) for producing the qth unit is given by: MC=7q This means that each unit costs more to produce than the previous one (e.g., the first unit costs 7*1, the second unit (by itself) costs 7*2, etc.). If fixed costs are $80, what is the profit at the optimal integer output level?
Answer:
Profit at the optimal integer output level is $176.50.
Explanation:
This can be determined as follows:
Step 1: Calculation of optimal integer output level
At the optimal integer output level, profit is maximized where marginal revenue (MR) is equal to the marginal cost (MC), i.e. where;
MR = MC ................................ (1)
For any product, the MR is equal to the price per unit of the product. Therefore, we have:
MR = Price per unit = $60
Also given,
MC = 7q
Substituting for MR and MC in equation (1) and solve for q, we have:
$60 = 7q
q = $60 / 7
q = 9 units
Therefore, the optimal integer output level is 9 units.
Step 2: Calculation of total revenue at optimal integer output level
Total revenue = Price per unit * q = $60 * 9 = $540
Step 3: Calculation of total cost at optimal integer output level
Since MC = 7q, the total cost (C) can be obtained by taking the integral of the MC as follows:
C = ∫(MC)dq = ∫[7q]dq = (7 / 2)q^2 + F = 3.5q^2 + F ........... (2)
Where F is Fixed cost which is given as $80.
We then substitute F = $80 and q = 9 into equation (2) to have:
C = 3.5(9^2) + 80
C = (3.5 * 81) + 80
C = 283.50 + 80
C = $363.50
Therefore, total cost at the optimal integer output level is $363.50.
Step 4: Calculation of profit at optimal integer output level
Profit = Total revenue - Total cost ...................... (3)
Where;
Total revenue = $540; from step 2 above.
Total cost = $363.50; form step 3 above.
Substituting the values into equation (3), we have:
Profit = $540 - $363.50 = $176.50
Therefore, profit at the optimal integer output level is $176.50.
g As the economy moves toward equilibrium expenditure, an unplanned ______ in inventories leads firms to ______ production.
Answer:
1. decrease
2. increase
Explanation:
Economy equilibrium is a term often used in economics to describe a situation in a given economy, in which the total sum of expenditures is the same or equals to the total sum of supplies or production level in that particular economy.
Hence, as the economy moves toward equilibrium expenditure, an unplanned DECREASE in inventories leads firms to INCREASE production.
If a company has a cost of capital of 12%, their minimum rate of return (hurdle rate) is expected to be
Question:
Q1 If a company has a cost of capital of 12%, their minimum rate of return (hurdle rate) is expected to be?
a. 11%
b. 11.9%
c. 12%
d. Greater than 12%
Answer:
Option C is correct
Minimum rate of return= 12%
Explanation:
The cost of capital is the minimum rate of rate of return that investors are expected to receive for their investment for it to be acceptable.
It is the opportunity cost of capital which the investors which investors would have earned on alternative investment opportunities.
The minimum rate of return encompasses the following factors; inflation, risk involved in the investment, prevailing interest rate
The minimum rate of return should be equal to or greater that the cost. Therefore the minimum rate of return = 12%
Minimum rate of return= 12%
The general ledger of the Fly-Buy-Nite (FBN) Engineering Company contained the following account balances. Construct an income statement. What is the net income before taxes and the net profit (or loss) after taxes? Amount($1,000s)Administrative expenses 2,750Sub-contracted services 15,000 Development expenses 900Interest expense 200Sales revenue 35,000 Selling expenses 4,500
Answer:
Fly-Buy-Nite (FBN) Engineering Company
Income Statement
Sales revenue 35,000
Less Expenses :
Administrative expenses 2,750
Sub-contracted services 15,000
Development expenses 900
Interest expense 200
Selling expenses 4,500 (23,350)
Net Income 11,650
Net Income before taxes is $11,650
Explanation:
The Income Statement shows operating results that is Profit or Loss resulting from trading operations of the company. Profit or Loss = Sales less Expenses.
A business has developed a product, but is unsure where to focus its efforts to sell the product. Marketing can help this company by:
Answer:
Identifying the potential customer.
Explanation:
Identifying the potential customer is the right answer because a business requires customers to sell their product and the success of its product is directly related to the demand made by customers. Therefore, marketing is a process or technique that helps to find the area where the potential customer exists. So, after finding the segment of potential customers a company may focus to sell its product.
A bond has a $1000 par value, 10 years to maturity, and a 7% annual coupon and sells for $985.a. What is the yield to maturity (YTM)
Answer:
the yield to maturity (YTM) is 7.22 %
Explanation:
The yield to maturity (YTM) can be determined as follows :
Pv = - $985
n = 10
Pmt = $1000 × 7 % = $70
P/ yr = 1
Fv = $1000
YTM = ?
Using a Financial Calculator, the yield to maturity YTM is 7.2157 or 7.22 %.
Suppose the information below is from the 2022 financial statements and accompanying notes of The Scotts Company, a major manufacturer of lawn-care products. (in millions) 2022 2021 Accounts receivable $270.4 $259.7 Allowance for uncollectible accounts 10.6 11.4 Sales revenue 2,981.8 2,871.8 Total current assets 1,044.9 999.3Note 19. Concentrations of Credit Risk Financial instruments which potentially subject the Company to concentration of credit risk con- sist principally of trade accounts receivable. The Company sells its consumer products to a wide variety of retailers, including mass merchandisers, home centers, independent hardware stores, nurseries, garden outlets, warehouse clubs, food and drug stores and local and regional chains. Professional products are sold to commercial nurseries, greenhouses, landscape services and growers of specialty agriculture crops. Concentrations of accounts receivable at September 30, net of accounts receivable pledged under the terms of the New MARP Agreement whereby the pur- chaser has assumed the risk associated with the debtor's financial inability to pay ($146.6 million and $149.5 million for 2022 and 2021, respectively), were as follows. 2021 2022 Due from customers geographically located in North America 53% 52%Applicable to the consumer business 61% 54%Applicable to Scotts LawnService", the professional businesses (primarily distributors), Smith & Hawken and Morning Song 39% 46%Top 3 customers within consumer business as a percent of total consumer accounts receivable 0% 0% The remainder of the Company's accounts receivable at September 30, 2022 and 2021, were generated from customers located outside of North America, primary retailers, distribu- tors, nurseries and growers in Europe. No concentrations of customers or individual customers within this group account for more than 10% of the Company's accounts receivable at either balance sheet date. The Company's three largest customers are reported within the Global Consumer segment, and are the only customers that individually represent more than 10% of reported consolidated net sales for each of the last three fiscal years. These three customers accounted for the following percentages of consolidated net sales for the fiscal years ended September 30:________. Largest 2nd Largest 3rd Largest Customer Customer Customer 2022 21.0% 13.5% 13.4% 2021 20.2% 10.9% 10.2% 2020 21.5% 11.2% 10.5%Calculate the accounts receivable turnover and average collection period for 2022 for the company. (Round answers to 1 decimal places, e.g. 15.2. Use 365 days for calculation.)Accounts receivable turnover enter the accounts receivable turnover rounded to 1 decimal place timesAverage collection period enter the average collection period rounded to 1 decimal place days
Answer:
Accounts Receivable Turnover= 11.7 times
Average collection period = 31.2 days
Explanation:
Calculation for the accounts receivable turnover and average collection period for 2022 for the company.
A. Computation for accounts receivable turnover
Using this formula
Accounts Receivable Turnover = Sales revenue/Net accounts receivable
Let plug in the formula
Accounts Receivable Turnover= 2,981.8/254.05
Accounts Receivable Turnover= 11.7 times
B. Computation for average collection period
Using this formula
Average collection period = 365/Accounts Receivable Turnover
Let plug in the formula
Average collection period = 365/11.7
Average collection period = 31.2 days
Therefore Accounts Receivable Turnover will be 11.7 times while the Average collection period will be 31.2 days
Marshall has received an inheritance and wants to invest a sum of money today that will yield $4,800 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
a. 96,000.00
b. 37,064.16
c. 48,000.00
d. 45,600.00
e. 43,320.00
Answer:
B
Explanation:
We are to find the present value of the annuity
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow each year from year 1 to 10 = $4,800
I = 5%
Present value = 37,064.16
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
ABC Production ABC Production, a consumer products firm with a functional structure, is expanding from a single product line into several diverse product groups, with most sales within one country. What form of departmentalization should it eventually adopt to manage the new conditions most effectively
Answer:
Divisional product structure
Explanation:
Divisional product structure is also called product based structure. It comprises of separate divisions that that function individually and focus on a different product or service.
Each division has a product line they work in, a set of clients they service, and a geographical location.
The major advantage not this type of departmentalization is that each department will more efficient in their service delivery as they specialise on one thing.
This will be the best structure for ABC Production ABC Production who are expanding from a single product line into several diverse product groups, with most sales within one country.
If a company has a cost of capital of 12%, their minimum rate of return (hurdle rate) is expected to be
Answer:
12%
Explanation:
A machine originally had an estimated useful life of 6 years, but after 4 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:_________.
a. 16 years
b. 4 years
c. 10 years
d. 6 years
Answer:
d. 6 years
Explanation:
Depreciation is the loss of value of an asset over a period of time. The asset has a useful life period after which it is referred to as scrap.
The value of the asset after it's useful life is called the salvage value.
Useful life of an asset is estimated and deductions in its value are made till the useful life is exhausted.
In this scenario the useful life was initially taken to be 6 years.
After 4 years it was realised a mistake wasade and useful life is supposed to be 10 years
Since useful life of the asset remains contstant, the remaining years of useful life is the real estimate of useful life less years already used.
Remaining useful life = 10 - 4 = 6 years
What situations would indicate that an increase in turnover might be just what an organization needs?
Answer:
Explanation:
In the context of Human Resources, turnover refers to the number of workers who leave the organization. A scenario where an increase is what is needed the most would be if the current employees are unable to efficiently and effectively complete their work and are costing the company more money than they are producing in sales. Therefore, if those employees leave the company will save money on them and can hire newer employees that may perform much more efficiently.