Answer:
The answer is job description (JD).
Explanation:
The job description is the summary of tasks, duties, and responsibilities for a particular position. The job description also includes the requirements for the position holder. In some cases, it may details the reporting line, compensation and benefits regarding to the job.
A corporation is attempting to sell additional shares to its existing shareholders through a rights distribution. A shareholder who wishes to subscribe must send the purchase amount with the rights certificate to the:
Answer:
Right agent.
Explanation:
A rights agent is said to be a correlative junction, serve and also seen to be an obedient mediator and right assistance between his client and any form of third party organisation or also other clients. A right agent is sometimes seen to be reliable to a principal when he/she acts without actual authority, but with apparent authority. He is also held responsible for indemnify and also principal loss or damage resulting from his/her act. He is also keen and careful in his advise and dealing on behalf of his client is he owes certain contractual duties to his/her agent as he protect him also from wrong claims, expenses that are not worthwhile, liabilities etc.
A company has evaluated several projects using net present value. All projects are similar in amount invested and risk. Rank the projects in the order they should be accepted.
Answer:
First option - $2067
second option - $340
third option - $62
not acceptable - ($615)
Explanation:
Please find attached the question used in answering this question.
Net present value is the present value of after tax cash flows from an investment less the amount invested.
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.
if the fed sells $2 million of bonds to the First National bank, what happens to reserves and the monetary base
Answer:
First National bank
ASSETS
Decrease in RESERVE $2 million
Increase in SECURITIES $2 million
Federal Reserve
ASSETS:Decrease in RESERVE $2 million
LIABILITIES:Decrease in SECURITIES $2 million
Decrease in Reserve by $2 million while the Monetary Base Decrease by $2 million
Explanation:
Based on the information given if federal reserve sell the amount of $2 million of bonds to the First National bank, what will happen is that:
1. In First National bank:
Assets
RESERVE will decrease by the amount of $2 million while the SECURITIES will increase by the same amount of $2 million.
2. In Federal reserve :
Assets and Liabilities
Both the RESERVE AND SECURITIES will decrease by the amount of $2 million.
3. The Reserve will decrease by the amount of $2 million while Monetary Base will as well decrease by the same amount of $2 million.
In Summary
First National bank
ASSETS
Decrease in RESERVE $2 million
Increase in SECURITIES $2 million
Federal Reserve
ASSETS:Decrease in RESERVE $2 million
LIABILITIES:Decrease in SECURITIES $2 million
Decrease in Reserve by $2 million while the Monetary Base Decrease by $2 million
A project has estimated annual net cash flows of $56,600. It is estimated to cost $339,600.
Required:
Determine the cash payback period.
Answer:
It will take exactly 6 full years to cover for the initial investment.
Explanation:
Giving the following information:
Cash flow= $56,600
Initial investment= 339,600
The payback period is the time required for the cash flow to cover the initial investment:
Year 1= 56,600 - 339,600= -283,000
Year 2= 56,600 - 283,000= -226,400
Year 3= 56,600 - 226,400= -169,800
Year 4= 56,600 - 169,800= -113,200
Year 5= 56,600 - 113,200= -56,600
Year 6= 56,600 - 56,600= 0
It will take exactly 6 full years to cover for the initial investment.
Discuss SOX in 500 words or more. How do logging and separation of duties help comply with SOX? How might database auditing and monitoring be utilized in SOX compliance? How can a dba use automation to comply with SOX frameworks?
Answer:
The Sarbanes-Oxley Act of 2002 was designed to protect investors and shareholders from accounting frauds, misguided financial statements and intentional errors by improving accuracy and reliability of company's accounts. This act was created in response to financial scandals and frauds that took place before 2002. Public corporations are required to comply with the Laws and regulations in the Sarbanes-Oxley Act.
Explanation:
The Enron scandal was the base for the Sarbanes Oxley Act. It was created to avoid further potential frauds in the businesses. Auditors at Enron were responsible for ensuring accuracy of financial statements. Anderson deceived many investors who relied on companies financial statements. Anderson certified financial statements of the company without questioning them about the relevancy and accuracy. Anderson was found guilty of obstructing justice by destroying Enron's related auditing documents. Attorneys helped to mold some of company's special purpose partnership. These deals lead to demise of the company. Merrill Lynch replaced research analyst after his coverage of the Enron company which dissatisfied the company executives. Merrill Lynch was subject to threats by Enron that it would loose $750 million from stock offerings.
Which financial strategy would you choose to mitigate risk exposure? In your own words, present an example using XYZ company
Answer:
Creating an Insurance fund
Explanation:
An Insurance fund could a very good financial strategy to mitigate risk exposure.
For example, XYZ company is an bank that has over 500, 000 customer base throughout the country. XYZ company has forseen possible financial loses resulting from theft and economic downturn in the future. A safe practice would be to allocate a portion of it's profit– either quarterly or annual profit to an Insurance fund which would mitigate the company from possible financial risks resulting from theft or economic vices.
This financial strategy has proven to be successful in real life in mitigating a company from exposure to risk.
The best way to characterize public relations at Under Armour is to use the label Multiple Choice fund raising. political public relations. marketing public relations. relationship management. publicity
Answer:
The correct answer is the option: Marketing Public Relations.
Explanation:
To begin with, the concept known as "Public Relations" in the marketing field refers to the instrument that the managers have and they can use with the purpose to establish better relationships with the public and with the target audience that the company has. The major goal of the public relations strategy is to know how to engage the company in relationships with outside agents that can benefit the company in its image to the customers. Therefore that this type of strategy focuses on the actions that the company can take in order to increase its public image to the society.
Mayan Company had net income of $37,380. The weighted-average common shares outstanding were 8,900. The company's earnings per share is: Multiple Choice $7.48. $5.36.
Answer:
$4.20.
Hie, the question you have provided is not complete, as it is missing all choices of options.
However important information to answer the question is provided below :
Earnings per share = Earnings Attributable to Holders of Common Shares ÷ Weighted Average Number of Common Shares
= $37,380 ÷ 8,900
= $4.20
Conclusion :
The company's earnings per share is: $4.20
A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000.__________ Fill in the blank, read surrounding text. % is the percentage change in the price of this bond if the yield to maturity rises to 6% from the current yield to maturity of 4.5%
Answer:
12.38% decrease
Explanation:
Given the following parameters
6%
Number of years = 12
Market yield I= 6 === 4.5
Present Value = 916.16 == 1045.59
PMT (annuity payment) = 50 (5%x1000)
Future value = 1000
Therefore, to solve for the percentage change, we have in the price of this bond in this situation, we have (916.16-1045.59) / 1045.59 = -0.1238
Hence, 12.38% decrease is the percentage change in the price of this bond if the market yield rises to 6% from the current yield of 4.5%,
The percentage change in the price of this bond will be -12.38%.
The price of the bond at 4.5% is calculated thus:
Yield to maturity = 4.50%Years left to maturity = 12Annual coupon rate = 5%Face value = $1000.Annual coupon payment = $50Price of the bond at 4.5% = $1045.59The price of the bond at 6.0% is calculated thus:
Yield to maturity = 6.00%Years left to maturity = 12Annual coupon rate = 5%Face value = $1000.Annual coupon payment = $50Price of the bond at 6.0% = $916.16The percentage change in price will be:
= (916.16 - 1045.59) / 1045.59
= -12.38%
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Farris Company is considering a cash outlay of $500,000 for the purchase of land, which it could lease for $40,000 per year. If alternative investments are available that yield a 15% return, the opportunity cost of the purchase of the land is
Answer: $75,000
Explanation:
Opportunity cost is what an individual, firm or the government has to forgo when another different choice is made.
From the question, we are informed that Farris Company is considering a cash outlay of $500,000 for the purchase of land, which it could lease for $40,000 per year and that alternative investments are available that yield a 15% return.
Then the opportunity cost of the purchase of the land will be:
= $500,000 × 15%
= $500,000 × 0.15
= $75,000
On January 1, a company issued and sold a $300,000, 5%, 10-year bond payable, and received proceeds of $293,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The carrying value of the bonds immediately after the first interest payment is:
Answer: $293,350
Explanation:
The carrying value of the bonds immediately after the first interest payment will be the addition of the received proceed and the ammortized discount. This will be:
= $293,000 + $350
= $293,350
Note that the ammortized discount was calculated as:
= ($300000 - $293000)/20
= $7000/20
= $350
Begin by reviewing the labels for the change in stockholders' equity and then enter the amounts for each situation.
Three situations about Timmy Company's issuance of stock and declaration and payment of dividends during the year ended January 31, 2017. follow.
Requirements.
Begin by reviewing the labels for the change in stockholders' equity and then enter the amounts for each situation.
Situation A Situation B Situation C
Total stockholders' equity, January 31, 2016
Add: Issuance of stock
Net income
Less: Dividends declared
Net loss
Total stockholders' equity, January 31, 2017
For each situation, use the accounting equation and the statement of retained earnings to compute the amount of Timmy's net income or net loss during the year ended January 31 2017.
1. Timmy issued $13 million of stock and declared no dividends.
2. Timmy issued no stock but declared dividends of $17 million.
3. Timmy issued $20 million of stock and declared dividends of $27 million.
Answer:
Note: The missing part of the question is
" 2017'million 2016'million
Total asset 77 50
Total liability 18 13"
Solution:
Stockholders Equity at year end
2017 2016
Assets 77 50
Less: liabilities -18 -13
Equity at end 59 37
Note: Situation 1, 2 and 3 is the same as question 1, 2 and 3
Situation 1 Situation 2 Situation 3
$'million $'million $'million
Total stockholders Equity 37 37 37
Jan 31 ,2016
Add: Issuance of stock 13 0 20
Less: dividend declared 0 -17 -27
Net income 9 39 29
Total stockholders Equity 59 59 59
January 31,2017
You have $. You put % of your money in a stock with an expected return of %, $ in a stock with an expected return of %, and the rest in a stock with an expected return of %. What is the expected return of your portfolio?
Answer: 16.26%
Explanation:
The expected return is the weighted average of the returns of the constituent stocks in the portfolio.
Weights.
Stock A = 20%
Stock B
= 30,000/70,000
= 0.4286
Stock C
= 70,000 - 30,000 - (20% * 70,000)
= 70,000 - 30,000 - 14,000
= $26,000
= 26,000/70,000
= 0.3714
Expected return = ( 0.2 * 12%) + ( 0.4286* 15%) + ( 0.3714 * 20%)
= 0.024 + 0.06429 + 0.07428
= 0.16257
= 16.26%
Calculate the real deficit or surplus in the following cases: a. Inflation is 17 percent. Debt is $7 trillion. Nominal deficit is $820 billion.
Answer:
$370 Billion Surplus
Explanation:
We can find the real deficit by using the following formula:
Real Surplus / (Deficit) = Nominal Deficit – (Inflation * Total Debt)
Here,
Nominal Deficit is $820 Billions
Inflation is 17%
And
Total Debt is $7 Trillion
By putting values, we have:
Real Deficit = $820 Billions - (17% * $7,000 Billions)
= $370 Billion Surplus
Absolute Company has a manufacturing facility in Brooklyn that manufactures robotic equipment for the auto industry. For Year 1, Absolute collected the following information from its main production line:Actual quantity purchased 200 unitsActual quantity used 110 unitsUnits standard quantity 100 unitsActual price paid $8 per unitStandard price $10 per unitAbsolute isolates price variances at the time of purchase. What is the materials price variance for Year 1?a. $400 favorableb. $400 unfavorablec. $220 favorabled. $220 unfavorable
Answer:
Direct material price variance= $400 favorable
Explanation:
Giving the following information:
Actual quantity purchased 200 units
Actual price paid $8 per unit
Standard price $10 per unit
To calculate the direct material price variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (10 - 8)*200
Direct material price variance= $400 favorable
Determine which of the following situations describe games and which describe decisions. In each case, indicate what specific features of the situation caused you to classify it as you did. (a) A group of grocery shoppers in the dairy section, with each shopper choosing a flavor of yogurt to purchase (b) A pair of teenage girls choosing dresses for their prom (c) A college student considering what type of postgraduate education to pursue (d) The New York Times and the Wall Street Journal choosing the prices for their online subscriptions this year (e) A presidential candidate picking a running mate
Answer:
Situation which describes:
1. Game:
(a) A group of grocery shoppers in the dairy section, with each shopper choosing a flavor of yogurt to purchase
(Because of the attribute of each shopper choosing a flavor of yogurt.)
2. Decisions:
(b) A pair of teenage girls choosing dresses for their prom. (The prom which date and time has been fixed already)
(c) A college student considering what type of postgraduate education to pursue. (Because of decision to be educated)
(d) The New York Times and the Wall Street Journal choosing the prices for their online subscriptions this year. (Due to the various financial ability of its reader)
(e) A presidential candidate picking a running mate ( Due to the election that is upcoming)
Explanation:
Last year Attic charged $2,334,667 Depreciation on the Income Statement of Andrews. If early this year Attic purchased a new depreciable asset, the effect on Andrews's financial statements would be (all other items remaining equal):
Answer:
Note: The correct option is a. Increase Net Cash from operations.
Explanation:
Note: This question is not complete as the options are omitted. The options are therefore provided to complete the question before answering the question as follows:
a. Increase Net Cash from operations
b. Decrease Net Cash from operations on the Cash Flow Statement
c. No impact on Net Cash from operations
d. Just impact the Balance Sheet
The explanation of the answers is now provided as follows:
Since the assets was purchased early in the year, depreciation will be charged on it in the income statement for the year at the end of the year. Since depreciation is a non-cash item, it will added back to the net income in the indirect Cash Flow Statement method as one of the adjustments to the net income under the Cash from operations. This adding back of the depreciation will therefore lead to an Increase Net Cash from operations.
Therefore, the correct option is a. Increase Net Cash from operations.
Brik Products, located in Atlanta, Georgia, produces two lines of electric toothbrushes, Deluxe and Standard. Because Brik can sell all the toothbrushes it produces, the owners are expanding the plant. They are deciding which product line to emphasize. To make the decision, they assemble the following data.
Per Unit
Deluxe Toothbrush Standard Toothbrush
Sales price $94 $54
Variable expenses 22 16
Contribtion margin $72 $36
Contribution margin ratio 75.5% 70.4%
Requirements:
1) Identify the constraining factor for Brik products.
2) Prepare an analysis to show which product line to em
Complete Question:
Brik Products, located in Atlanta, Georgia, produces two lines of electric toothbrushes: Deluxe and Standard. Because Brik can sell all the toothbrushes it produces, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data:
Per Unit
Deluxe Toothbrush Standard Toothbrush
Sales price $94 $54
Variable expenses 22 16
Contribution margin $72 $36
Contribution margin ratio 75.5% 70.4%
After expansion, the factory will have a production capacity of 4.200 machine hours per month. The plant can manufacture either 68 Standard electric toothbrushes or 26 Deluxe electric toothbrushes per machine hour.
Requirements:
1. Identify the constraining factor for Brik Products.
2. Prepare an analysis to show which product line to emphasize.
Answer:
Brik Products
1. The constraining factor for Brik Products is the 4,200 machine hours.
2. Analysis to show which product line to emphasize:
Product Mix Analysis
Deluxe Standard
Sale price $94 $54
Variable expense 22 16
Contribution margin per unit $72 $38
Number of toothbrushes per hour 26 68
Total contribution margin per hour $1,872 $2,584
Decision: Brik Products should emphasize the production and sale of the Standard electric toothbrushes as this rakes in more contribution per the constraining factor, i.e. machine hours.
Explanation:
a) Data and Calculations:
Deluxe Standard
Sale price $94 $54
Variable expense 22 16
Contribution margin per unit 72 38 (not $36)
Contribution margin ratio 76.6% (not 75.5%) 70.4%
Number of toothbrushes per hour 26 68
Machine hours available = 4,200 hours
b) Analysis:
For Brik Products, the contribution margin per machine hour = contribution per unit x units per hour. Brik will generate a total contribution margin per product line without producing the other that is equal to the contribution margin per machine hour multiplied by total machine hours.
Assuming that Brik Products concentrates on the production of the standard electric toothbrushes alone, it will generate a total contribution margin of $10,852,800 ($2,584 x 4,200) as against the total contribution margin of $7,862,400 ($1,872 x 4,200) to be generated if only Deluxe electric toothbrushes are produced.
1. The "four Ms" of cause-and-effect diagrams are:______.
a. mentality, motivation, management, and manpower.
b. material, methods, men, and mental attitude.
c. material, machinery/equipment, manpower, and methods.
d. material, management, manpower, and motivation.
e. named after four quality experts.
2. A Systematic Approach to Capacity Decisions includes:A. Evaluate the alternativesB. Identify gapsC. Estimate capacity requirementsD. Develop alternativesE. All are correct
Answer:
1. C. c. material, machinery/equipment, manpower, and methods.
2. E. All are correct
Explanation:
1. The cause-and-effect diagram also known as the Ishikawa diagram is used by organizations to find out the likely causes of unwanted problems. This diagram traces the roots of problems and helps managers discover the potential causes of these problems. The four M's that form the bone of the diagram to which other causes are traced include the;
a. material, which is about the products used in the production process and potential problems that can be attributed to them.
b. machinery/equipment, which is about the plant and likely problems that can arise from their use.
c. manpower, which is about the personnel used in the production process, and,
d. methods, which is about the systems adopted by the organization.
2. A systematic approach to capacity decisions include;
a. Estimation of capacity requirements
b. Identification of gaps by comparing the expected requirements with available capacity.
c. Develop alternative plans and methods that would help to reduce the gaps.
d. Evaluate the alternatives taking into consideration their qualitative and quantitative attributes.
1. The "four Ms" of cause-and-effect diagrams are material, machinery/equipment, manpower, and methods. Thus, option C is correct.
2. A Systematic Approach to Capacity Decisions includes all of the options. Thus, option E is correct.
Due to the high demand for a given good or service on the market, firms often employ capacity management as a method to maximize production efficiency. Its objectives include locating and resolving manufacturing process bottlenecks and accelerating output through resource optimization and the removal of time and capacity restrictions.
It aids businesses in overcoming difficulties related to creating long-term organizational strategies, managing supply chain operations, and satisfying short- and medium-term client demand. In order to guarantee that it accomplishes the manufacturing output within the allotted time, an organization must analyze the availability of its resources while doing this. In sectors including manufacturing, retail, services, and information technology, this practice is widespread.
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A firm is making an economic loss of $100,000. This means that: multiple choice 1 the firm should immediately exit the industry. the firm's revenues are less than its opportunity costs. the firm is not making an accounting profit. the firm could increase economic profit if its resources were used in a different way. If a firm is making an economic profit of zero: multiple choice 2 it will have unhappy stockholders. it is not making an accounting profit. the firm should change to a different line of business. it cannot make a higher economic profit by changing how it is using its resources.
A firm is making an economic loss of $100,000. This means that:
Choice 1 -
The firm could increase economic profit if its resources were used in a different way.
If a firm is making an economic profit of zero:
Choice 2 -
It cannot make a higher economic profit by changing how it is using its resources.
What Is Economic Profit (or Loss)?An economic profit or loss is the difference between the revenue received from the sale of an output and the costs of all inputs used, as well as any opportunity costs. In calculating economic profit, opportunity costs and explicit costs are deducted from revenues earned.Opportunity costs are a type of implicit cost determined by management and will vary based on different scenarios and perspectives.The calculation for economic profit --Economic profit = revenues - explicit costs - opportunity costsLearn more about Economic Profit (or Loss) on:
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Consider the following information on large-company stocks for a period of years. Series Arithmetic Mean Large-company stocks 12.1 % Inflation 3.4A. What was the arithmetic average annual return on large-company stocks in nominal terms?
B. What was the arithmetic average annual return on large-company stocks in real terms?
Answer:
a. 12.1 %
b. 8.41%
Explanation:
a. The arithmetic average annual return on large-company stocks in nominal terms is already stated in the table as 12.1%.
This is because it was not yet adjusted for inflation making it nominal.
b. The arithmetic average annual return on large-company stocks in real terms can be expressed by;
Real Return = [(1 + Nominal rate) / (1 + Inflation rate)] - 1
= (( 1 + 12.1%) / ( 1 + 3.4%)) - 1
= (1.121/1.034) - 1
= 1.0841 - 1
= 8.41%
pllzzzzzzzzzzzzzzzzz
Answer:
liability risk
Explanation:
Answer:
liability risk is right opstion
Used Car Problems. Marcy purchased a used car from ABC Motors. Six months later, the police seized the car from Marcy because it was a stolen vehicle. Marcy asked for her money back from ABC Motors. The manager there told her that the car was not stolen; that even if it were stolen, ABC Motors acted in good faith with no knowledge of a theft; therefore, no refund was legally required. ABC Motors had also sold a used car to Frank, who wrote a bad check for the car and left town but not before he sold the car to Betty, who paid a fair price for the car believing that Frank had all rights to sell it. ABC Motors asked Betty to return the car, but she told ABC to forget it. Assuming that ABC Motors was an innocent purchaser from the thief, which of the following is true regarding the manager's statement that Marcy is not due a refund?
A. The manager is correct, but only if ABC Motors can prove that it had never been charged with dealing in stolen merchandise.
B. The manager is correct, but only if ABC Motors can prove that none of its representatives were negligent in disregarding evidence of the theft at any time prior to its resale to Marcy.
C. The manager is correct.
D. The manager is incorrect, but only if Marcy can prove that she specifically asked if there was any problem with the car prior to her purchase and was affirmatively told that the title was good.
E. The manager is incorrect.
Answer:
E. The manager is incorrect.
Explanation:
Since the car was stolen, ABC Motors never had good title of it. A car comes with a title and before ABC bought it from someone it should have verified that the title was good. They are merchants and their normal job is to deal with this kind of things. A car dealership cannot sell cars without a good title, and if they do, they will get in legals problems for doing so.Their problems will not only involve the buyer, but they will also be investigated to check if they were involved in the theft.
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $450,000 is estimated to result in $184,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $74,000. The press also requires an initial investment in spare parts inventory of $33,000, along with an additional $3,750 in inventory for each succeeding year of the project. The shop’s tax rate is 23 percent and its discount rate is 10 percent. (MACRS schedule)
Required:
Calculate the NPV of this project.
Answer:
Masters Machine Shop
PV of Salvage value = $74,000 x 0.683 = $50,542
Present value of total savings $449,126
less Present value of investments 494,888
Net Present Value $4,780
Explanation:
a) Data Amount Present Value
Cash Outflow $450,000 $450,000
Initial spare parts 33,000 33,000
Annual Inventory 3,750 11,888
PV of investments $494,888
Project lifespan = 4 years
Discount rate = 10%
Annual pretax cost savings = $184,000
Tax rate 23% 42,320
After Tax savings $141,680
PV of Annuity of Tax savings = $141,680 x 3.170 = $449,126
Salvage value = $74,000
PV of Salvage value = $74,000 x 0.683 = $50,542
Present value of total savings $449,126
less Present value of investments 494,888
Net Present Value $4,780
b) Master Machine Shop's Net Present Value (NPV) is the difference between the cash inflows (savings) and the cash outflows (investments) for this four-year project
Your bank pays 4% interest annually. You have $2,500 invested in the bank. How long will it take for your funds to double
Answer:
17.69 years
Explanation:
The formula to calculate the number of periods of time is:
n=ln(FV/PV)/ln(1+r)
n= number of periods of time
FV= future value=$2,500*2=$5,000
PV= present value=$2,500
r=interest rate=0.04
Now, you can replace the values in the formula:
n=ln(5,000/2,500)/ln(1+0.04)
n=ln2/ln1.04
n=0.69/0.039
n=17.69
According to this, the answer is that it will take 17.69 years for your funds to double.
Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows:
Sales $188,000,000
Cost of goods sold (100,000,000)
Gross profit $88,000,000
Expenses:
Selling expenses $16,000,000
Administrative expenses 12,000,000
Total expenses (28,000,000)
Operating income $60,000,000
The division of costs between variable and fixed is as follows:
Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses 50% 50%
Management is considering a plant expansion program for the following year that will permit an increase of $11,280,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs.
Required:
1. Determine the total variable costs and the total fixed costs for the current year.
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
3. Compute the break-even sales (units) for the current year.
4. Compute the break-even sales (units) under the proposed program for the following year.
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,000,000 of operating income that was earned in the current year.
6. Determine the maximum operating income possible with the expanded plant.
7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year?
8. Based on the data given, would you recommend accepting the proposal?
A. In favor of the proposal because of the reduction in break-even point.
B. In favor of the proposal because of the possibility of increasing income from operations.
C. In favor of the proposal because of the increase in break-even point.
D. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
E. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.
Answer:
1. Variable Fixed
Cost of goods sold 70,000,000 30,000,000
Selling Expenses 12,000,000 4,000,000
Administrative Exp. 6,000,000 6,000,000
Total 88,000,000 40,000,000
Note:
Cost of goods sold 70% 30% on 10,000,000 for variable and Fixed respectively
Selling expenses 75% 25% on $16,000,000 for variable and Fixed respectively
Administrative expenses 50% 50% on $12,000,000 for variable and Fixed respectively
2. Unit Variable cost = Total variable cost / Units produced
Total Variable cost 88,000,000
Unit produced 1,000,000
Unit variable cost 88
Unit Contribution margin = Selling Price - Variable cost per unit
Selling Price $188
- Variable cost per unit $88
Unit Contribution margin $100
3. Break even Point (Units) = Fixed cost / Contribution margin per unit
Fixed cost 40,000,000
Contribution margin per Unit 100
Break even Point (Units) 400,000
4. Break even point (units) = Fixed cost / Contribution margin per unit
Fixed cost 40,000,000
Increased Fixed cost 5,000,000
Total New fixed cost 45,000,000
Contribution margin per unit 100
Break even point (units) 450,000
5. Determined sales units = (New fixed cost + Desired Income) / Contribution margin
New Fixed Cost 45,000,000
Desired Income 60,000,000
105,000,000
Contribution margin 100
per unit
Determined sales units 1,050,000
6. Maximum Income from operation = Total New sales - Total New variable cost - Total Fixed cost
Sales 188,000,000
Increased sales 11,280,000
Total New sales 199,289,000
Variable cost 88,000,000
New Variable cost 5,280,000
Total New Variable cost 93,280,000
Total New Fixed cost 45,000,000
Maximum Income from 61,000,000
operation
Number of units = Increase in sales / Price per unit
New variable cost = Number of units * Unit variable cost
Increased sales 11,280,000
Price per unit 188
Number of units 60,000
Unit variable cost x 88.00
New Variable cost 5,280,000
7. Net income = Sales - Variable cost - New fixed cost
Sales 188,000,000
Less: Variable cost 88,000,000
Less: New fixed cost 45,000,000
Net Income 55,000,000
8. Option b. In favour of the proposal because of the possibility of increasing income from operation.
1. The total variable costs are $88,000,000.
Total fixed costs for the current year are $40,000,000.
2.a. The unit variable cost is $88 ($88,000,000/1,000,000)
b. The unit contribution margin is $100 ($188 - $88).
3. The break-even sales (units) for the current year = 400,000 units ($40,000,000/$100).
4. The break-even sales (units) for the proposed program = 450,000 units ($45,000,000/$100).
5. Sales units to realize $60,000,000 of operating income = 1,050,000 units ($45,000,000 + $60,000,000)/$100
6. The maximum operating income with the expanded plant is $61,000,000 ($199,280,000 - $93,280,000 - $45,000,000).
7. Operating income at current sales level = $49,720,000 (188,000,000 - $93,280,000 - $45,000,000).
8. I would recommend the acceptance of the proposal, B. In favor of the proposal because of the possibility of increasing income from operations.
Data and Calculations:
Sales unit at full capacity = 1,000,000 units
Selling price per unit= $188
Sales = $188,000,000
Cost of goods sold = $100,000,000
Variable cost of goods sold = $70,000,000 ($100,000,000 x 70%)
Fixed cost of goods sold = $30,000,000 ($100,000,000 x 30%)
Gross profit = $88,000,000
Expenses:
Selling expenses = $16,000,000
Variable cost of goods sold = $12,000,000 ($16,000,000 x 75%)
Fixed cost of goods sold = $4,000,000 ($16,000,000 x 25%)
Administrative expenses = 12,000,000
Variable cost of goods sold = $6,000,000 ($12,000,000 x 50%)
Fixed cost of goods sold = $6,000,000 ($12,000,000 x 50%)
Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses 50% 50%
Cost of goods sold $70,000,000 $30,000,000
Selling expenses 12,000,000 4,000,000
Administrative expenses 6,000,000 6,000,000
Total costs $88,000,000 $40,000,000
Selling price per unit = $188
Variable cost per unit 88
Contribution margin $100
Contribution ratio = 53.2% ($100/$188 x 100)
Fixed costs = $45,000,000 ($40,000,000 + $5,000,000)
Sales Revenue = $199,280,000 ($188,000,000 + $11,280,000)
Additional sales units = 60,000 ($11,280,000/$188)
Total sales units = 1,060,000 (1,000,000 + 60,000)
Learn more: https://brainly.com/question/18155783
Rocket Shoe Company is planning a one-month campaign for August to promote sales of one of its two shoe products. A total of $113,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign. Cross-Trainer Shoe Running ShoeUnit selling price $41 $45 Unit production costs: Direct materials $(8) $(10) Direct labor (3) (3) Variable factory overhead (2) (3) Fixed factory overhead (3) (4) Total unit production costs $(16) $(20) Unit variable selling expenses (13) (12) Unit fixed selling expenses (8) (4) Total unit costs $(37) $(36) Operating income per unit $4 $9No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 24,000 additional units of cross-trainer shoes or 20,000 additional units of running shoes could be sold without changing the unit selling price of either product.Required:Prepare a differential analysis report presenting the additional revenue and additional costs anticipated from the promotion of cross-trainer shoes and running shoes.
Answer:
Contribution Margin from proposal
Cross Trainer Shoes $360,000
Running Shoe $340,000
Explanation:
Preparation of differential analysis for Rocket Shoe Company
DIFFERENTIAL ANALYSIS
Cross Trainer Shoes Running Shoe
Differential Revenue 984,000 900,000
Differential costs:
Direct Material (192,000) (200,000)
Direct labor (72,000) (60,000)
Variable factory overhead (48,000) (60,000)
Variable selling expense (312,000) (240,000)
Differential cost (624,000) (560,000)
Contribution Margin from proposal 360,000 340,000
Differential Revenue
Cross Trainer Shoes(41*24,000)=$984,000
Running Shoe(45*20,000) =$900,000
Differential costs:
Direct Material
Cross Trainer Shoes (8*24,000)=192,000
Running Shoe(10*20,000)=200,000
Direct labor
Cross Trainer Shoes (3*24,000)=72,000
Running Shoe(3*20,000)=60,000
Variable factory overhead
Cross Trainer Shoes (2*24,000)=48,000
Running Shoe(3*20,000)=60,000
Variable selling expense
Cross Trainer Shoes (13*24,000)=312,000
Running Shoe(12*20,000)=240,000
Differential cost is the addition of direct materials +direct labor + Variable factory overhead+Variable selling expense
Contribution Margin from proposal
Cross Trainer Shoes 984,000-624,000=360,000
Running Shoe 900,000-560,000=340,000
Since Cross trainer shoes had $360,000 this means that cross trainer shoes would contribute more than Running shoe which had $340,000 because Cross trainer shoes contribution margin is higher.
Company manufactures two products. Both products have the same sales price, and the volume of sales is equivalent. However, due to the difference in production processes, Product A has higher variable costs and Product B has higher fixed costs. Management is considering dropping Product B because that product line has an operating loss.
Total Product A Product B
Sales Revenue $140,000 $70,000 $70,000
Variable Costs 124,250 63,500 60,750
Contribution Margin 15,750 6,500 9,250
Fixed Costs 30,000 3,000 27,000
Operating Income/(Loss) $(14,250) $3,500 $ (17,750)
Required:
a. If fixed costs cannot be avoided, should Richardson drop Product B? Why or why not?
b. If 50% of Product B's fixed costs are avoidable, should Richardson drop Product B? Why or why not?
Answer:
a. No - Because Richardson will be worse off than what he was before.
b. Yes - Because Richardson will be better off than what he was before.
Explanation:
a. Analysis of Operating Income is Richardson drop Product B
Sales Revenue $70,000
Less Variable Costs ($63,500)
Contribution $6,500
Fixed Costs ($30,000)
Total Operating Income ($23,500)
Dropping Product B will result in Total Operating Loss of $23,500. This means Richardson will be worse off than what he was before. He should not drop the product in this case.
b. Analysis of Operating Income is Richardson drop Product B
Sales Revenue $70,000
Less Variable Costs ($63,500)
Contribution $6,500
Fixed Costs ($15,000)
Total Operating Income ($8,500)
Dropping Product B will result in Total Operating Loss of $8,500. This means Richardson will be better off than what he was before. He should drop the product in this case.
Conner Manufacturing has two major divisions. Management wants to compare their relative performance. Information related to the two divisions is as follows:
Division 1:
Sales: $200,000
Expenses: $150,000
Asset investment: $950,000
Division 2:
Sales: $45,000
Expenses: $35,000
Asset investment: $200,000
Based on ROI, which division is more profitable?
a. Division 1
b. Both divisions have the same ROI ratio
c. Division 2
Answer:
The correct answer is:
Division 1 (a.)
Explanation:
Return on investment (ROI) is a financial ratio used to calculate the benefit earned on an investment cost.
Mathematically, it is represented as:
[tex]ROI = \frac{Net\ Income}{original\ cost\ of\ investment} \times 100[/tex]
where:
Net income = Sales - expenses
Original cost of investment = asset invested
Now let us calculate the ROI for each division:
Division 1 :
Net income = Sales - Expenses = 200,000 - 150,000 = $50,000
Asset investment = $950,000
[tex]ROI = \frac{50,000}{950,000} \times 100\ \\\\ROI = 5.26\%[/tex]
Division 2:
Net income = 45,000 - 35,000 = $10,000
Asset investment = $200,000
[tex]ROI = \frac{10,000}{200,000} \times 100\\\\= ROI = 0.05\ \times\ 100\ = 5\%[/tex]
Therefore, based on the ROI for both divisions, Division 1 has a greater ROI (5.26%) than Division 2 (5%) hence, Division 1 is more profitable.
A bond with a par value of $1,000 and an annual coupon has a yield to maturity of 5.60% and a current price of $975. If the bond has 18 years to maturity, what is its current yield?
Answer:
Current Yield is 5.74%
Explanation:
Current yield is the ratio of coupon payment of a bond to its current market price. It is calculated by using coupon payment and the current market value of the bond.
Coupon Payment = $1,000 x 5.6% = $56
Current market price = $975
Formula for Current yield is as follow
Current Yield = Annual Coupon Payment / Current Market Price
Current Yield = $56 / $975
Current Yield = 0.0574% = 5.74%