Answer:
Direct labor time (efficiency) variance= $40,000 favorable
Explanation:
Giving the following information:
The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $20.
Last month, 18000 units were produced, and 88000 direct labor hours.
To calculate the direct labor quantity variance, we need to use the following formula:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Standard quantity= 18,000*5= 90,000
Direct labor time (efficiency) variance= (90,000 - 88,000)*20
Direct labor time (efficiency) variance= $40,000 favorable
What entry would make to adjust the manufacturing overhead account for overallocated or underallocated overhead?
Answer:
Adjustments
1. Overallocated Manufacturing Overhead:
Debit Manufacturing Overhead
Credit Cost of goods sold
With the amount of overallocated manufacturing overhead.
2. Underallocated Manufacturing Overhead:
Debit Cost of goods sold
Credit Manufacturing Overhead
With the amount of underallocated manufacturing overhead.
Explanation:
When the manufacturing overhead is overallocated, the account has a credit balance. To adjust the entry, the account is debited while the cost of goods sold is credited. This reduces the cost of goods sold by the amount of the overallocation. The opposite takes place with an underallocated overhead. The purpose of the latter is to increase the cost of goods sold to reflect the overhead expense for the period.
If Roten Rooters, Inc., has an equity multiplier of 1.52, total asset turnover of 1.20, and a profit margin of 6.2 percent, what is its ROE
Answer:
11.30%
Explanation:
Roten rooters have an equity multiplier of 1.52
The total assets turnover is 1.20
The profit margin is 6.2%
= 6.2/100
= 0.062
Therefore the ROE can be calculated as follows
= 0.062× 1.52×1.20
= 0.1130×100
= 11.30%
Hence the ROE is 11.30%
Answer:
The answer is 11.31 percent
Explanation:
ROE means Return on Equity. It is a Profitability ratio.
The most common formula for Return on Equity (ROE) is:
Net income / equity.
To calculate the Return on Equity (ROE) for this question, we use dupont formula:
Equity multiplier x total asset turnover x profit margin
= 1.52 x 1.2 x 0.062
0.1131
Expressed as a percentage is:
11.31 percent
The market consensus is that Analog Electronic Corporation has an ROE = 9%, a beta of 1.25, and plans to maintain indefinitely its traditional plowback ratio of 2/3. This year’s earnings were $3 per share. The annual dividend was just paid. The consensus estimate of the coming year’s market return is 14%, and T-bills currently offer a 6% return. a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Calculate the P/E ratio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the present value of growth opportunities. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Suppose your research convinces you Analog will announce momentarily that it will immediately reduce its plowback ratio to 1/3. Find the intrinsic value of the stock.
Answer:
a. Stock Price is $10.60.
b. Trailing P/E ratio is 3.53, while Leading P/E ratio is 3.33.
c. Present value of growth opportunitiesis -$9.28.
d .Stock Price is $15.85.
Explanation:
The following are given in the question:
ROE = 9%
b = beta = 1.25
pr = Plowback ratio = 2/3 = 0.67
dpr = dividend payout ratio = 1- pr = 1/3 = 0.33
e0 = This year’s earnings per share = $3
mr = The coming year’s market return = 14%
tr = T-bills return = 6%
We can now proceed as follows:
a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
The stock price can be calculated using the following formula:
P0 = Stock Price = d * (1 + g) / (r - g) …………………………. (1)
Where;
d = dividend per share = e0 / dpr = $3 / (1 / 3) = $1
g = Sustainable growth rate = ROE * pr = 9% * 2/3 = 0.06
rf = Risk free rate = Return on T-bills = 6%
b = Beta = 1.25
mr = Market return = 14%
r = Required return on Equity = rf + b * (mr - rf) = 6% + 1.25 * (14% - 6%) = 0.16
Substituting the values into equation (1), we have:
Stock Price = $1 * (1 + 0.06) / (0.16 – 0.06)
Stock Price = $1 * 1.06 / 0.10
Stock Price = $1 * 10.60
P0 = Stock Price = $10.60
b. Calculate the P/E ratio. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Trailing P/E ratio = P0/E0 = $10.60 / $3 = 3.53
Leading P/E ratio = P0/e1 ………………………………………. (2)
Where;
e1 = e0 * (1 + g) = $3 * (1 + 0.06) = 3.18
Substituting the values into equation (2), we have:
Leading P/E ratio = $10.60 / 3.18 = 3.33
c. Calculate the present value of growth opportunities. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)
P0 = e1 / r + pvgo …………………………………… (3)
Where pvgo denotes present value of growth opportunities, and P0, e1 and r are as already obatained in part a and b.
Substituting the values into equation (2) and solve for pvgo, we have:
$10.60 = $3.18 / 0.16 + pvgo
$10.60 = $19.875 + pvgo
pvgo = $10.60 - 19.875
pvgo = -$9.28
d. Suppose your research convinces you Analog will announce momentarily that it will immediately reduce its plowback ratio to 1/3. Find the intrinsic value of the stock.
g = ROE * pr = 9% * (1 / 3) = 3%
dpr = 1 – pr = 1 - 1/3 = 2/3
d = dividend per share = e0 / dpr = $3 / (2 / 3) = $2
Stock Price = d * (1 + g) / (r - g) = $2 * (1 + 3%) / (0.16 – 3%)
Stock Price = $2 * (1 + 3%) / (0.16 – 3%)
Stock Price = $15.85
Which of the following statements regarding the Securities and Exchange Commission (SEC) is not true?
a. SEC rules frequently require disclosures in addition to those required by GAAP.
b. The SEC has the authority to establish and enforce accounting rules for public companies.
c. Public companies must register with the SEC.
d. The SEC is a private professional organization.
Answer:
d. The SEC is a private professional organization.
Explanation:
SEC stands for Securities and Exchange Commission. It is the United States of America's federal government agency which regulates the market laws.
The main function of this body is to maintain fair and efficient market, protect the investors and facilitate the capital formation.
All the companies must be a part of the SEC agency as given by the federal law of the US.
Why is it a good idea for the HR plan to consider changes recruiters have seen in the company’s workforce?
Answer:
It is a good idea because recruiter, by their vast experience, are well equipped to understand the changes in the organization's workforce, and ultimately key and reflect this changes as a drive for organization success.
Explanation:
It is important to understand the concept of human resource planning in an organization. Human resources planning is basically the procedure that ensure an organization has the right set of people with the right skill set in a bid to achieve the organizational objective. Hence, a critical aspect of human resources planning is identifying and forecasting of the requisite workforce with the required skill set the organization needs.
Employers, who represent the bulk of hr team and thus spearhead the planning process, understand the imperative of a good and competent workforce. Hence, they follow and monitor trends in a bid to tap and key into the new ways and methods of doing things. So, when these recruiters note these changes, it's a good idea to reflect such in the hr planning.
If you have a long position in a foreign currency, you can hedge with:______.
a) a short position in a currency forward contract.
b) borrowing in the domestic and foreign money markets.
c) a short position in an exchange-traded futures option.
d) a short position in foreign currency warrants.
Answer:
a) a short position in a currency forward contract
Explanation:
If you have long exposure, then you hedge it with short exposure in forward market. In future options, you need to pay a premium, but in the forward market, you don't need to pay any premium and it can be customized.
Karen bought her house in 1980 for $78,500. In 2005, it was worth $850,000. What’s the rate of return on Karen’s investment?
Answer:
the rate of return on Karen investment is 10%
Explanation:
Given that
Bought price = P = $78500
Sale price = S =$850,000
Time priod = n = 25 years (1980 to 2005)
Based on the above information
The Rate of return is
= (S ÷ P)^(1 ÷ n) - 1
= ($850,000 ÷ $78,500)^(1 ÷ 25) - 1
= 0.099973
= 10.00%
hence, the rate of return on Karen investment is 10%
We simply applied the above formula
Answer:
he rate of return on Karen investment is 10%. Explanation: Given that. Bought price = P = $78500. Sale price = S =$850,000.
Explanation:
Suppose you were hired as a consultant for a company that wants to penetrate the Comp-XM market. This company wants to pursue a niche cost leader strategy. From last year’s reports, which company would be the strongest competitor? Select: 1Save Answer Digby Chester Andrews Baldwin
Answer:
Option B. Chester Company
Explanation:
The company wants to pursue Niche Cost Leader Strategy. In a Niche cost leader strategy the product is highly differentiated and the cost the company charges to its customer is low as apposed to other competitors. The companies that has highly differentiated product and are new entrants usually use this strategy to win a good share of market size.
The strongest competitor would have lowest price, very stable market share price, high investment in plant and equipment, higher production capacity, lowest return on investment, lowest earnings per dollar sales. etc.
Now we will asses different reports and conclude which competitor will be the strongest competitor for the Niche Cost Leader Strategy company. The analysis is given as under:
Lowest Price: If we look at the Production information, Price Column and take the average price of the products of each company then we can conclude that Chester's price of average product is $20, Baldwin has $24.17 and the rest of the competitors are charging high. This means Chester is charging lowest price.Stable Market Share Price: The vulnerability of share price of Chester is the lowest which stands at $0.45. This means that the stock exchange values the company's share as a stable stock with least vulnerability. (See Stock Market Summary)Lower Return on Asset and Return on Sales: If we analyze the Selected Financial Statistics then we will acknowledge that Chester also has 2nd lowest Return on Assets and Return on sales which shows that the company is charging lower prices to its customers. Baldwin is not appropriate to consider here because the company is incurring losses hence its Return on Assets and Return on Sales can not be considered as good indication.Higher Investment in Plant and equipment: The company has 2nd highest investment in plant and equipment with highest Net Book Value of $148k and Baldwin stands at $178k. Now again the higher investment of Baldwin is financed by debt which costs the company more than Chester. This means Chester would be strongest competitor because the company will have to only bear the depreciation cost which is non cash flow in nature and not the interest cost which Baldwin is bearing. (See Income statement for Interest Cost and Balance sheet for Carrying value of the asset).Production Capacity: Chester has the highest production capacity which means that the company despite its 2nd largest investment in plant and equipment. This means that the plant and machinery of Chester is more innovative which is the reason that the production capacity is higher than other competitors.From the above analysis it seems that Chester is pursuing Niche Cost Leader Market and is the strongest competitor that the company will face. Hence B is the correct option here.
M Corp. has an employee benefit plan for compensated absences that gives each employee 15 paid vacation days. Vacation days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days. At December 31, 2021, M's unadjusted balance of liability for compensated absences was $28,200. M estimated that there were 200 total vacation days available at December 31, 2021. M's employees earn an average of $141 per day. In its December 31, 2021, balance sheet, what amount of liability for compensated absences is M required to report
Answer:
$28,200
Explanation:
M Corp. benefit plan provides employees 15 paid vacation days and M estimated that there were 200 total vacation days and each employee can earn $141 per day. The amount of liability for compensated absences can be calculated by multiplying the number of total vacation days with the wage per day
Liability = no. of days x wage per day
Liability = 200 days x $141
Liability = $28,200
Those characteristics of a product that make it superior to competitive substitutes are referred to as __________.
Answer:
Points of difference
Explanation:
The point of difference means the factors that created the differentiation with respect to the product and services. Here, differentiation means that the company products are differentiated from that of the competitors. It could be done with the quantity, price, quality, etc
Therefore according to the given situation, the term we called as a point of difference and the same is to be considered
A broker-dealer that is registered in Illinois and that is not registered in any other State may effect transactions in securities:
Answer: with any existing customer who is a resident of Illinois and is on vacation anywhere in the United States.
Explanation:
A broker-dealer is an economic agent that purchases and also sells securities for either its own account or transacts on behalf of its customers.
A broker-dealer that is registered in Illinois and that is not registered in any other State may effect transactions in securities with any existing customer who is a resident of Illinois and is on vacation anywhere in the United States.
Use your knowledge of emotions and emotional intelligence to select the word or phrase that best completes each of the following sentences. _____________has four components, including__________, which is the ability to connect to others, build positive relationships, respond to the emotions of others, and influence others. Managers with_________ emotional intelligence can undermine employee morale and hurt the organization.
Answer:
Emotional Intelligence_____________has four components, including____Empathy______, which is the ability to connect to others, build positive relationships, respond to the emotions of others, and influence others. Managers with__low_______ emotional intelligence can undermine employee morale and hurt the organization.
Explanation:
Emotional Intelligence, according to Peter Salovey and John Mayer, is "the ability to monitor one's own and other people's emotions, to discriminate between different emotions and label them appropriately, and to use emotional information to guide thinking and behavior".
The components include self-awareness, self-regulation or control, internal motivation or self-motivation, empathy, and social skills. The first three deals with the individual while the last two show how the individual relate with others. Somebody can be said to possess at one extreme, high emotional intelligence or at the other extreme, low emotional intelligence.
Direct Materials, Direct Labor, and Factory Overhead identify the following costs as direct materials, direct labor, or factory overhead for a magazine publisher:______ a. Staples used to bind magazines b. Wages of printing machine employees c. Maintenance on printing machines d. Paper used in the magazine
Answer:
a. Staples used to bind magazines - Direct Material
The staples are integral to holding the magazines so is a direct material.
b. Wages of printing machine employees. - Direct Labor
The printing machine employees are directly related to the magazine's production as they print it.
c. Maintenance on printing machines. - Factory Overhead
This cost is not directly associated with the publishing of the magazine so is an overhead.
d. Paper used in the magazine. -Direct Material
Without paper, the magazine can not be published which makes it a direct material.
What is a captive market, and why is nutrition an important consideration for a captive market?
Answer:
Nutrition should be considered because it is important to attract nutrition minded individuals. A captive market is when a restaurant a clientele that must use their services and when they have no choice but to eat there nutritious choices must be available
Captive market are those market where the potential consumer has to face a limited number of competitive suppliers. Nutrition is an important consideration for a captive market due to the limited number of suppliers in the market.
What is a Captive market?Captive market refers to the market when there is a limited number of competitive suppliers due to which the potential customers have their only choices to purchase what is available or to make no purchase at all.
It is market structure where the suppliers has monoply as there is limited number of suppliers and consumers are obliged through lack of choice to buy a particular product. The major examples of the captive market are the food shops in the cinemas, airports, colleges etc.
Basically, captive market provides very less choice to the customers.
Learn more about captive market here:-
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Polk Company manufactures basketballs.
Materials are added at the beginning of the production process and conversion costs are incurred uniformly.
Production and cost data for the month of July 2017 are as follows:
Production Data: Basketballs
Units Percent Complete
Work in process units, July 1 400 60%
Units started into production 1,090
Work in process units, July 31 540 40%
Cost Data: Basketballs
Work in process, July 1
Materials $760
Conversion costs 590
$1,350
Direct materials 2,630
Direct labor 1,590
Manufacturing overhead 1,110
Required:
1. Calculate the equivalent units of production for materials and conversion costs.
2. Calculate the unit costs of production for materials and conversion costs.
(Round unit costs to 3 decimal places)
3. Calculate the assignment of costs to units transferred out and in process at the end of the accounting period.
(Round answers to 0 decimal places)
4. Prepare a production cost report for the month of July for the basketballs.
(Round unit costs to 3 decimal places and all other answers to 0 decimal places)
Answer:
1. Material $1,490
Conversion $1,490
2. Material $1,490
Conversion $1,166
3.Cost of units transferred out $4,842
Cost of ending Work in process $1,838
4. $6,680
Explanation:
1.Computation of the Equivalent unit of production for material
Beginning Work In Process 400
Add Started during the year 1,090
Units to be accounted 1,490
Computation of the Equivalent unit of production for Conversion cost
Completed and transferred 950
(1,090+400 -540)
Add ending work in process 540
Units to be accounted for 1,490
2)Calculation for the unit costs of production for materials
Production units Materials
Completed& transferred 950 100% =950
Add Ending work in process 540 100%=540
Total 1,490 1,490
Calculation for the unit costs of production for conversion costs
Completed& transferred 950 100%=950
Add Ending work in process 540 40% =216
Total 1,490 1,166
3)Calculation for the assignment of costs to units transferred out and in process
Equivalent cost per unit Materials Conversion Cost Total
Beginning work in process
760 590 =1,350
Cost added during the year
2,630 2,700 =5,330
(1,590+1,110=2,700)
Total cost
3,390 3,290 6,680
÷Equivalent units of production 1,490 1,166
=Equivalent cost per unit
2.275 2.822
Cost of units transferred out=
950× (2.275+2.822)
Cost of units transferred out=950×5.097
Cost of units transferred out= 4,842
Cost of ending Work in process
Direct materials 540×2.275 =1,228
Conversion cost 216×2.822= 610
Total (1,228+610)= 1,838
4)Preparation of a production cost report for the month of July for the basketballs.
Production Cost Report
Direct Materials 1,350
Add cost added during the year 5,330
Cost to be accounted for 6,680
Cost to be accounted for
Cost transferred out 4,842
950× (2.275+2.822)
Add cost of ending WIP 1,838
Total 6,680
What personal strengths have you discovered through your internship experience?
Answer:
The answer is below
Explanation:
An internship experience is expected to an individual in his or her area of study. Hence, considering the field of study is in finance, the internship experience has helped me to develop the following personal strengths amongst others:
1. My analytical skills have improved
2. I have developed leadership skills
3. My problem-solving skills have greatly increased
4. I have developed self-management skills
5. My professionalism in terms of approach to work has been greatly influenced.
On June 1, Murphy Company paid $5,400 for one year of advertising in advance. Murphy debited Prepaid Advertising. The advertising expense will be used evenly throughout the year. If the appropriate adjusting entry is not made at the end of the year, what will be the effect on:
Answer:
Expenses = Understated by $3,150
Assets = Overstated by $3,150
Explanation:
When Murphy Company paid for advertising in advance on June 1, the entries will be :
Prepaid Advertising $5,400 (debit)
Cash $5,400 (credit)
By the year end, December 31, 7 months advertising expense would have been expired the entries must be :
Advertising Expense $3,150 (debit)
Prepaid Advertising $3,150 (credit)
Advertising Expense Calculation = $5,400 × 7/12 = $3,150
Thus, if not adjusted the following are the effects :
Expenses = Understated
Assets = Overstated
A monopoly sells its good in the United States, where the elasticity of demand is negative 1.6 , and in Japan, where the elasticity of demand is negative 5.6 . Its marginal cost is $7 . At what price does the monopoly sell its good in each country if resales are impossible?
Answer:
a. The monopoly will sell its good in the United States at $18.67.
b. The monopoly will sell its good in Japan at $8.52.
Explanation:
For any firm, profit is maximized where marginal revenue (MR) is equal to marginal cost (MC), i.e. where;
MR = MC ................................. (1)
For a monopolist, relationship between MR, the price elasticity of demand, and the price that gives maximum profits is given as follows:
MR = P(1 + 1/E) .................... (2)
Where P denotes price and E denotes elasticity of demand.
Since from equation (1) we have MR = MC, it also implies that from equation (2):
MC = P(1 + 1/E) .................... (3)
Equation (3) will now be used to solve this question when it can price discriminate and also impossible to resell as follows:
a. Calculation of monopoly price in the United States
Given;
MC = $7
E = -1.6
Substituting the values into equation (3) and solve for P, we have:
$7 = P(1 + 1/(-1.6))
P = $7 / (1 - 0.625)
P = $7 / 0.375
P = $18.67
Therefore, the monopoly will sell its good in the United States at $18.67.
b. Calculation of monopoly price in the Japan
Given;
MC = $7
E = -5.6
Substituting the values into equation (3) and solve for P, we have:
$7 = P(1 + 1/(-5.6))
P = $7 / (1 - 0.178571428571429)
P = $7 / 0.821428571428571
P = $8.52
Therefore, the monopoly will sell its good in Japan at $8.52.
Intel reports retained earnings at the end of the current year of $32,598 million and retained earnings at the end of the previous year of $30,091 million. The company reported dividends of $3,940 million and other transactions with shareholders that reduced retained earnings during the current year by $1,806 million. How much net income did the firm report in the current year
Answer:
Net Income = $8253 million
Explanation:
The net income earned by the company has two purposes at the end of the year or is treated in two ways. It is either paid out as dividends or is retained in the company and is transferred to the retained earnings account. Thus, we can say that the closing balance of retained earnings can be calculated as,
Closing Balance of retained earnings:
Closing Balance = Opening Balance + Net Income - Dividends - Payments during the year using retained earnings
32598 = 30091 + Net Income - 3940 - 1806
32598 - 30091 + 3940 + 1806 = Net Income
Net Income = $8253 million
What's the present value of a perpetuity that pays $250 per year if the appropriate interest rate is 5%
Answer:
PV of Perpetuity = $5000
Explanation:
A perpetuity is a series of cash flows that are constant, occur after equal intervals of time and are for infinite period of time or are perpetual. Thus, it is like and annuity but with an infinite time period. The formula for the present value of of perpetuity is,
PV of Perpetuity = Cash Flow / r
Where,
r is the required rate of returnPV of Perpetuity = 250 / 0.05
PV of Perpetuity = $5000
Define the principles that govern the conversation process, and mention five examples if you are not apply these principles
The correct answer to this question is the following.
The principles that govern the conversation process are the following.
First, there is an opening. In this first part of the conversation process is when we greet the other person with a simple "Hello," "How is it going?"
The second part is called the Feedforeard, in which we try to make an introduction of the conversation with general statements or questions such as "Nice weather, ha?" or "I really wanted to meet you."
The third part is the Business part, in which we go straight forward to the reason for our conversation. We state our arguments, the purpose of the talking, what we need from the other person, and so on. The fourth part is the Feedback process, in which we listen to the arguments of the other individual, and make clarifications. The firth part is the Closing, in which, we thank for the conversation and casually or formally, we say goodby to the other person.
is the amount a business earns after deducting what it spends for salaries and other expenses.
Answer:
After deducting the expenses for salaries and other expenses like rent, the money you have left is the amount of money that you actually earned.
Nicholas Industries can issue a 20-year bond with a 6% annual coupon. This bond is not convertible, is not callable, and has no sinking fund. Alternatively, Nicholas could issue a 20-year bond that is convertible into common equity, may be called, and has a sinking fund. Which of the following most accurately describes the coupon rate that Nicholas would have to pay on the convertible, callable bond?
a. It could be less than, equal to, or greater than 6%.
b. Greater than 6%.
c. Exactly equal to 8%.
d. Less than 6%.
e. Exactly equal to 6%.
Answer:
a. It could be less than, equal to, or greater than 6%.
Explanation:
The attribute with related to the second bond i.e. converted and the feature of the sinking fund would be disposed off to decrease the required rate of return on the other hand feature of the call increase the required rate of return on the bond. Also it contains the low coupon rate as compared with the bond i.e. not convertible
Hence, the correct option is A.
Listed below are several terms and phrases associated with asuumptions, board accounting principles, and coctrains. Pair each item from List A with the item from List B that is most appropriately associated with it. (a) A common denominator is the dollar. (b) All information that could affect decision should be reported. (c) Concerns the relativr size of an item and its effect on decisions. (d) Criteria usually satisfied for products at point of sale. (e) Record expenses in the period the related revenue is recognized. (f) The enterprise is separate from its owners and other entities. (g) The entity will continue indefinitely. (h) The life of an enterprise can be divided into artificial time periods. (i) The original transaction value upon acquisition.
1. Expense recognition
2. Periodicity
3. Historical cost principle
4. Materiality
5. Revenue recognition
6. Going concern assumption
7. Monetary unit assumption
8. Economic entity assumption
9.Full-disclosure principle
Answer:
=>>> A common denominator is the dollar.
Answer is 7. Monetary unit assumption
=>>>All information that could affect decisions should be reported .
Answer is 9. Full - disclosure principle
=>>>Concerns the relative size of an item and its effect on decisions .
Answer is 4. Materiality
=>>>>Criteria usually satisfied for
products at point of sale
Answer is 5. Revenue recognition
=>>>Record expenses in the period the related revenue is recognized.
Answer is 1. Expense recognition
=>>>The enterprise is separate from its owner and other entities
Answer is 8. Economic entity assumption
=>>>The entity will continue indefinitely.
Answer is 6. Going concern assumption
=>>>The life of an enterprise can be divided into artificial time periods
Answer is 2. periodicity
=>>>The original transaction value upon acquisition
Answer is 3. Historical cost principle
The manager of the manufacturing unit of a company is responsible for the costs of the manufacturing unit. The president is in the process of deciding whether to evaluate the manager of the manufacturing unit by the average cost per unit or the variable cost per unit. Quality and timely delivery would be used in conjunction with the cost measure to reward the manager.
a. What problems are associated with using the average cost per unit as a performance measure?
b. What problems are associated with using the variable cost per unit as a performance measure?
Answer:
AC Problems : Incurred even at 0 output level, much varying & deviant from cash flows
VC Problems : Doesn't include fixed cost, incomplete expenditure, incomplete financial (accounting) statements.
Explanation:
Average Cost is the cost per unit off output.
Problems with AC as a performance measure :
It includes all (fixed & variable cost) average. So, including fixed cost, it is not zero even at zero output level. It's variance analysis during production & cost phases is very complicated. It's result are deviant as evident from cash flows.Variable Cost is the cost incurred on variable factors of production.
Problems with VC as a performance measure :
It doesn't include fixed cost. So, it is not a correct measure of complete total expenditure. Fixed costs are huge. No financial inclusion of them makes accounting information unreliable (for legal purposes)Whats the total Late Fee Interest charged to the customers based on the policy below?
Vittorla's Furniture Bazaar
Accounts Receivable Aging Summary
As of June 30, 2015
Customer Current 1-30 Days 31-60 Days 61-90 Days 90 Days Total
Bull and Bear Café $750 $750
Eckhardt Design $1,000 $1,000
Halifax Sporting Goods $500 $500
Walker Studios $1,500 $1,500
TOTAL $2,250 $500 $1,000 $0 $0 $3,750
Late Fee Interest Policy
Age Interest
Current 0%
1-30 Days 0%
31-60 Days 5%
61-90 Days 10%
>90 Days 20%
a. $0
b. $50
c. $75
d. $100
e. $200
Answer:
b. $50
Explanation:
Calculation for the total Late Fee Interest charged to the customers
Under 1 to 30 days Halifax Sporting Goods had $500
Hence,
1 to 30 days= $ 500 x 0%
1 to 30 days= $ 0
Under 31 to 60 days Eckhardt Design had $1,000
Hence,
31 to 60 days= $ 1,000 x 5%
31 to 60 days= $ 50
Under 61 to 90 days Walker Studios had $0
Hence,
61 to 90 days= $ 0 x 10%
61 to 90 days = $ 0
Under 90 days there is also $0
Hence,
90 days=$ 0 x 20%
90 days = $ 0
The Total Late Fee Interest
1 to 30 days= $ 0
31 to 60 days= $ 50
61 to 90 days = $ 0
90 days = $ 0
Total =$50
Therefore the total Late Fee Interest charged to the customers will be $50
A notorious spendthrift, who was usually broke for that reason, received the following letter from his uncle, a wealthy and prudent man: "I understand you're in financial difficulties again. I promise to give you $5,000 on your birthday next month, but you'd better use it wisely or you'll never get another dime from me." The spendthrift thereupon signed a contract with a car dealer to purchase a $40,000 automobile and to make a $5,000 down payment on the day after his birthday. If the spendthrift sues the uncle for $5,000 after the latter learned of the car-purchase contract and then repudiated his promise, which of the following is the uncle's best defense?
A. A promise to make a gift in the future is not enforceable.
B. Reliance by the promisee on a promise to make a future gift does not make the promise enforceable unless the value of the promised gift is substantially equivalent to the promisee's loss by reliance.
C. Reliance by the promisee on a promise to make a future gift does not make the promise enforceable unless that reliance also results in an economic benefit to the promisor.
D. Reliance by the promisee on a promise to make a future gift does not make the promise enforceable unless injustice can be avoided only by such enforcement.
Answer:
D. Reliance by the promisee on a promise to make a future gift does not make the promise enforceable unless injustice can be avoided only by such enforcement.
Explanation:
Promissory estoppel is the legal doctrine that is used to enforce promises, but in order for a promise to be enforceable, some requisites must exist:
the promise must be clear and concrete ✓the promisee must act as a consequence of the promise ✓the promisee's expectations about receiving the gift are reasonable ✓not fulfilling the promise will result in an injury to the promisee XRequisite number 4 does not exist in this case, therefore, the promise is not enforceable.
McNight Industries completed the following transactions during 2018:
Journalize the transactions. Explanations are not required. Round to the nearest dollar. (Record debits first, then credits. Exclude explanations from journal entries.)
Nov. 1: Made sales of $52,000. McNight estimates that warranty expense is 6% of sales. (Record only the warranty expense.)
McNight estimates that warranty expense is 6% of sales. (Record only the warranty expense.)
20 Paid $1,600 to satisfy warranty claims.
31 Estimated vacation benefits expense to be $6,000.
31 McNight expected to pay its employees a 3% bonus on net income after deducting the bonus.
Net income for the year is $52,000. Dec.
Answer:
Journal Entries
Date Accounts Titles Debit Credit
Nov 1 Warranty expense $3,120
($52,000 * 6%)
Estimated warranty payable $3,120
Nov 20 Estimated warranty payable $1,600
Cash $1,600
Dec 31 Vacation benefit expense $6,000
Vacation benefit payable $6,000
Dec 31 Employee bonus expense $1 ,515
Employee bonus payable $1,515
Working
Bonus = 3% * (Net income-Bonus)
Let bonus= x
x = 3% * (52,000 - (1+x))
x = 0.03 * (52,000- (1+x))
x = 1560 - 1.03
1.03x = 1560
x = $1,560 / 1.03
x = $1,514.5631
Bonus= $1,515
The settling of any net deficit in the combined current, and capital and financial accounts is done with
Answer: official reserves
Explanation:
The official reserve account is simply part of capital account which has to do with securities and foreign currency that are being held by the central bank of a particular country and which are used to balance payments yearly.
It should be noted that when there's trade surplus, there'll be increase in reserves and when there is a deficit in trade, there'll be decrease in reserves.
What is the Clementine's volume variance for SALES? If the variance is unfavorable put a minus sign in front of your answer.
Answer:
$1,632
Explanation:
Calculation for volume variance for SALES
Using this formula
Volume variance for SALES = (Actual units sold - Budgeted units to be sold) × Budgeted selling price
Let plug in the formula
Volume variance for SALES= (1,006 - 989)
×$96
Volume variance for SALES=17×$96
Volume variance for SALES= $1,632
Therefore the Volume variance for SALES will be $1,632