The required estimated value of the given bond today is approximately $642.63.
The estimated value of the given bond today can be calculated by using the present value formula, which is given as:
Present value = Coupon payment x Present value factor of an annuity + Face value x Present value factor of a single sum
Where:Face value = $1,000Coupon rate = 9%Coupon payment = (Coupon rate / 2) x Face value = (9 / 2) x 1000 = $45
Number of periods = 27 years x 2 semi-annual periods per year = 54 periods
Discount rate = 14% per annum / 2 semi-annual periods per year = 7% per period
Present value factor of an annuity = [(1 - (1 + r) to the power -n) / r] where r is the discount rate and n is the number of periods.
Present value factor of a single sum = (1 / (1 + r) to the power n) where r is the discount rate and n is the number of periods.
Substituting the given values in the present value formula, we get:Present value = $45 x [(1 - (1 + 0.07)-⁵⁴) / 0.07] + $1,000 x (1 / (1 + 0.07)⁵⁴)≈ $642.63
Therefore, the estimated value of the given bond today is approximately $642.63
.Answer: The estimated value of the given bond today is approximately $642.63.
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How could the firm managers in "identifying assets in low-valued uses and devise ways to profitably move them to higher-valued uses" (Froeb et al, 2018)?
The managers can also encourage innovation within the organization to find new ways to use the assets to create value and gain a competitive edge.
Firm managers can identify assets in low-valued uses and devise ways to profitably move them to higher-valued uses by focusing on the assets that are underperforming in the organization and devising strategies to maximize the value of such assets. They can perform a cost-benefit analysis to determine whether an asset is profitable or not and then decide whether to sell or upgrade the asset. They can also identify new markets for the assets, explore opportunities for product diversification, and leverage the power of technology to create value from the assets. They can also collaborate with other organizations or companies to create partnerships that can help them increase the value of their assets. The use of data analytics and market research can also help the firm managers to identify trends in the market and develop strategies to capitalize on these trends. The managers can also encourage innovation within the organization to find new ways to use the assets to create value and gain a competitive edge.
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Dane Company budgets total overhead cost of $7,200,000. The company allocates overhead cost based on 100,000 budgeted direct labor hours. The single plantwide overhead rate is:
$36 per MH.
$36 per DLH.
$72 per MH.
$72 per DLH.
None of the above.
The single plantwide overhead rate is $72 per MH.
To calculate the plantwide overhead rate, we need to divide the total overhead cost by the total budgeted direct labor hours. In this case, Dane Company budgets a total overhead cost of $7,200,000 and allocates it based on 100,000 budgeted direct labor hours.
Plantwide overhead rate = Total overhead cost / Total budgeted direct labor hours
Plantwide overhead rate = $7,200,000 / 100,000
Plantwide overhead rate = $72 per MH (per machine hour)
Therefore, the correct answer is $72 per MH.
This means that for every machine hour worked, the company applies an overhead cost of $72.
The other options, $36 per MH, $36 per DLH, and $72 per DLH, are incorrect because they do not accurately reflect the calculation based on the given information.
In conclusion, the single plantwide overhead rate for Dane Company is $72 per MH. This rate is used to allocate overhead costs based on machine hours and helps the company determine the total overhead cost associated with its manufacturing operations.
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What is your investment preferences and how can you justify them considering age, family situation, incomes etc?
An investment preference is a set of conditions that investors use to guide their investment decision-making process. It refers to the choices made by an investor when selecting investment alternatives.
Investment preferences are personal decisions based on a person's financial position, risk tolerance, time horizon, and objectives.
Justifying Investment Preferences Age: Age is a crucial factor when determining investment preferences.
Younger investors often have higher risk tolerance and more extended time horizons than older investors.
The younger you are, the more you can afford to take risks in your investment portfolio.
Younger investors, who are likely to have a more extended time horizon before they need to utilize their investments, may prefer higher risk/reward investment choices.
Family situation: Family situation is another factor that can affect investment preferences.
For instance, a married couple with children and significant expenses like education and medical bills will have different investment preferences than a single person with no dependents.
Income: The amount of income an investor makes can also influence their investment preferences.
An individual with a high income may have a higher risk tolerance than an individual with a lower income.
People with a high income can invest more in high-risk investments because they have enough funds to cover any losses they may encounter.
Investment preferences are an individual decision, and one size doesn't fit all.
As a result, it is essential to consider various factors like age, family situation, income, risk tolerance, investment goals, and investment experience before deciding on investment preferences.
It's crucial to find an investment style that matches your preferences, needs, and objectives.
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Boba Fett has been employed in the accounts payable department as an A/P Supervisor for the past 3 years by Beskar Metal Works Inc. (BMW), a public Canadian corporation incorporated in Ontario in 2014. BMW is a leading wholesaler of beskar metals across Canada. Boba has asked you, Sasha Banks CPA, the trusted tax person at BMW for your help in the preparation of their 2021 personal tax return. Boba has provided you with the following information about receipts, selected disbursements and the following information/calculations.
1. Salary $130,000
Deductions:
Income taxes $36,000
Canada Pension Plan premium $3,166
Utilities (500/2,500 * $1,500) $300
Employment Insurance premium $889
Clothing costs $1,900
Home office supplies $600
Group accident disability insurance premiums $1,200 (44,055)
Net Income $ 85,945
2. On December 13th, 2021 Boba requested and received from BMW an advance of $6,500 against his 2022 salary. Boba needed the advance to pay for his family to attend Comicon in Detroit over the latter part of December. A cheque for $6,500 was paid through the accounts payable department at BMW. Boba’s monthly payments in January 2022 was reduced by $6,500 as a means for Boba to pay back the advance.
3. In 2018 BMW granted Boba stock options to purchase a total of 7,000 shares over the next 6 years. The exercise price of these shares is $44 and the fair market value of the shares on the grant date was $40 per share. In 2021, Boba exercised the option to purchase 1,000 of the shares when the market price per share was $56. Boba did not dispose of these shares during 2021 and this was the first time Boba had purchased any shares.
4. Image is important at BMW, as such in 2021 Boba was provided with a $2,400 clothing
In preparing Boba Fett's 2021 personal tax return, several aspects need to be considered. Firstly, his salary of $130,000 will form the basis of his income. Deductions include income taxes of $36,000, Canada Pension Plan premium of $3,166, employment insurance premium of $889, and group accident disability insurance premiums of $1,200. Additionally, Boba can claim deductions for utilities ($300), clothing costs ($1,900), and home office supplies ($600). After accounting for these deductions, Boba's net income for 2021 is $85,945. Furthermore, Boba received an advance of $6,500 in December 2021, which will affect his salary payments in January 2022. Lastly, Boba exercised stock options in 2021, purchasing 1,000 shares at an exercise price of $44 per share, when the market price was $56 per share. These details need to be considered in the preparation of Boba's tax return.
1. Income and Deductions:
- Boba's salary of $130,000 forms the basis of his income for the year.
- Deductions include income taxes ($36,000), Canada Pension Plan premium ($3,166), employment insurance premium ($889), and group accident disability insurance premiums ($1,200).
- Additional deductions are allowed for utilities, which amount to $300 (calculated as a proportion of $1,500 based on business use), clothing costs of $1,900, and home office supplies of $600.
- Subtracting these deductions from Boba's salary gives us a net income of $85,945.
2. Advance Payment:
- In December 2021, Boba received an advance of $6,500 from BMW against his 2022 salary.
- Although the advance was paid in 2021, it should not be included as income for the year.
- However, the monthly payments in January 2022 will be reduced by $6,500 as Boba repays the advance.
3. Stock Options:
- In 2018, BMW granted Boba stock options to purchase 7,000 shares over 6 years.
- The exercise price of the shares is $44 per share, and the fair market value on the grant date was $40 per share.
- In 2021, Boba exercised the option to purchase 1,000 shares when the market price per share was $56.
- Since Boba did not dispose of these shares in 2021, there is no capital gain or loss to report for the year. However, the cost base of these shares will be adjusted for future calculations when the shares are eventually disposed of.
4. Clothing:
- BMW provided Boba with $2,400 worth of clothing in 2021.
- This clothing is considered a taxable employment benefit and should be included in Boba's income for the year.
Overall, these details need to be taken into account when preparing Boba Fett's 2021 personal tax return, ensuring accurate calculations and reporting of his income, deductions, and taxable benefits.
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Technology has been changing working lives and employment for many years. The Covid 19 pandemic over the last 2 years has further accelerated many of these changes. Discuss the impact technology has had on work and summarise what this means for individuals.
Technology has revolutionized work by automating tasks, enabling remote work, increasing productivity, creating new job opportunities, but also disrupting traditional employment patterns and requiring individuals to adapt and acquire new skills.
In more detail, technology has had a profound impact on work and employment, and the Covid-19 pandemic has acted as a catalyst for further acceleration of these changes.
Technological advancements have led to automation and the use of artificial intelligence, resulting in the replacement of certain jobs and tasks that can be performed more efficiently by machines. This has created concerns about job displacement and the need for individuals to reskill or upskill to remain employable in the evolving job market.
Furthermore, the pandemic has necessitated a rapid shift to remote work, with technology enabling virtual collaboration, communication, and remote access to work tools and systems.
This has provided flexibility and opened up new opportunities for individuals to work from anywhere. However, it has also highlighted the digital divide and the need for equitable access to technology and digital skills.
Technology has also enhanced productivity by streamlining processes, improving efficiency, and enabling new forms of work, such as gig economy platforms and online marketplaces. This has created new job opportunities, but it has also brought challenges like job insecurity, lack of benefits, and income volatility.
Overall, the impact of technology on work means that individuals must be adaptable and continuously acquire new skills to stay relevant in the labor market. Lifelong learning and digital literacy have become crucial for individuals to navigate the changing work landscape and seize emerging opportunities.
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Point Omar is the Head of IT Systems and Applications at AAA corporation. His job has been redesigned to include shifting him between jobs at regular intervals. Specify the job design approach that is used in this case. [Explanation is not required] Use the editor to format your answer
The job design approach used in Omar's case is the job rotation approach.
The job design approach used in Omar's case is job rotation. Job rotation involves periodically shifting an employee between different jobs or roles within an organization. In Omar's position as the Head of IT Systems and Applications at AAA corporation, his job has been redesigned to include regular intervals of being shifted between different jobs.The purpose of job rotation is to provide employees with exposure to different tasks, functions, and responsibilities. It allows employees to gain a broader perspective of the organization, develop new skills, and prevent monotony or stagnation in their current role.
By implementing job rotation for Omar, AAA corporation aims to enhance his knowledge, skills, and versatility. It can also lead to increased employee engagement and motivation, as employees have the opportunity to experience new challenges and learn from different areas of the organization.Overall, the job rotation approach in Omar's case provides benefits such as skill development, knowledge sharing, and increased adaptability, while also preventing boredom and enhancing job satisfaction.
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The Saint Lucia Blood Bank, a private charity partly supported by government grants, is located on the Caribbean island of Saint Lucia. The blood bank has just finished its operations for September, w
The Saint Lucia Blood Bank is a private charity that is located on the Caribbean island of Saint Lucia, The blood bank is partly supported by government grants and it has just finished its operations for September.
While the blood bank collects all types of blood, it is especially in need of type O blood.Type O blood is in high demand because it is a universal blood type, meaning it can be given to patients of any blood type. This is crucial in emergency situations where there may not be enough time to determine a patient's blood type before administering a transfusion. The blood bank is calling on individuals with type O blood to consider making a donation in order to help meet the demand and ensure that there is enough supply for those in need.
In conclusion, the Saint Lucia Blood Bank is a vital organization that plays an important role in providing blood for those in need on the Caribbean island of Saint Lucia. While the blood bank collects all types of blood, it is especially in need of type O blood due to its universal compatibility. The blood bank relies on the support of both the government and individual donors to carry out its operations and ensure that there is enough blood to meet the demand.
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A corporate bond shows a trading price of $124.65; a coupon rate of 6.245; a maturity date of February 15, 2034; and a par value of $1,000. What will you pay, and what will the yield be? Select an answer:
a. You will pay $1.246.50, and the yield will be 6.245 percent
b. You will pay $124.65, and the zero-coupon rate will be 4.09 percent.
c. You will pay $1,000, and the yield will be 4.09 percent.
d. You will pay $1,246.50, and the yield will be 4.09 percent
Based on the information provided, as per the bond, therefore, none of the options provided accurately represent the payment amount and yield for the given corporate bond.
Based on the information provided, the trading price of the corporate bond is $124.65.
However, the par value of the bond is $1,000.
The trading price is typically a percentage of the par value, so to determine the actual amount you would pay for the bond, you need to calculate the percentage of the par value represented by the trading price.
The calculation is as follows:
Actual amount = Trading price / 100 * Par value
In this case:
Actual amount = $124.65 / 100 * $1,000 = $1,246.50
Therefore, you would pay $1,246.50 for the bond.
As for the yield, the coupon rate is given as 6.245 percent.
However, since the coupon rate is annual and the bond has a maturity date of February 15, 2034, you need to consider the time remaining until maturity to calculate the yield.
Without that information, it is not possible to determine the yield.
Therefore, none of the options provided accurately represent the payment amount and yield for the given corporate bond.
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In each of the following independent situations, determine if the redemption of shares will be treated as an exchange or as a distribution. For situations 1−2, the ownership of a corporation is: Situation 1: The corporation redeems 100 shares of stock held by Barb. Situation 2: The corporation redeems 80 shares of stock held by Cindy. Situation 3: The corporation redeems 60 shares of stock held by Andy. Situation 4: Same facts as Situation 1 except Andy is Barb's father. To answer this be sure to first review the "Attribution Rules" discussion in Chapter 18 of the textbook.
When a shareholder of a corporation receives a distribution of property in exchange for its shares, the distribution can either be considered an exchange or a distribution.
An exchange occurs when the shareholder's ownership interest is eliminated and the transaction is treated as a sale or exchange of the shareholder's interest in the corporation. A distribution occurs when the shareholder remains an owner of the corporation, and the transaction is treated as a dividend distribution to the shareholder.
Situation 1: The corporation redeems 100 shares of stock held by Barb. The redemption of 100 shares of stock held by Barb is treated as a distribution because the redemption does not result in the elimination of her ownership interest in the corporation.
Situation 2: The corporation redeems 80 shares of stock held by Cindy. The redemption of 80 shares of stock held by Cindy is treated as an exchange because the redemption results in the elimination of her entire ownership interest in the corporation.
Situation 3: The corporation redeems 60 shares of stock held by Andy. The redemption of 60 shares of stock held by Andy is treated as a distribution because the redemption does not result in the elimination of his ownership interest in the corporation.
Situation 4: Same facts as Situation 1 except Andy is Barb's father. The redemption of 100 shares of stock held by Barb is treated as an exchange because Barb and Andy are considered related parties under the attribution rules, and thus Andy's ownership interest in the corporation is attributed to Barb. As a result, Barb's ownership interest is considered to be eliminated when the corporation redeems the shares.
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Most general health related bills are referred to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions. Any bills involving taxes and revenue must be referred to the House Committee on Ways and Means and to the Senate Committee on Finance. Other important committees related to health policy are the Committee on Appropriations in the Senate and the Committee on Appropriations in the House. All of the above committees have subcommittees that deal with various aspects of health policy. Provide a brief informative segment on one of these committees or one of their subcommittees related to health policies, such as their jurisdiction or a recent proposal/topic they have reviewed.
The Senate Committee on Health, Education, Labor, and Pensions (HELP) is a crucial committee responsible for overseeing health-related issues and policies.
A brief informative segment on one of these committees or one of their subcommittees related to health policiesIt has jurisdiction over areas such as public health, healthcare reform, biomedical research, education, and labor. The committee has recently reviewed topics like the Affordable Care Act (ACA) and its impact on healthcare access and quality. It has also played a role in addressing public health emergencies, including the COVID-19 pandemic.
Through its subcommittees, the Senate HELP Committee focuses on specific aspects of health policy, such as primary health, retirement security, and children and families. Overall, the committee plays a significant role in shaping and proposing health policies to improve the well-being of Americans.
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Kingdom Corporation has the following. Preferred stock, $10 par value, 9%, 50,000 shares issued $500,000 - Common stock, $15 par value, 300,000 shares issued and outstanding $4,500,000 In 2020. The company declared and paid $30,000 of cash dividends In 2021, The company declared and paid $150,000 of cash dividend Required: How much is the TOTAL cash dividends that will be distributed to preferred and common stockholders over the two years, assuming the preferred stock is cumulative Please DO NOT use the "S" and "," signs in you answer. For example, if the right answer is Preferred $10,000 and Common $15,000, it should be EXACTLY written as: 10000 15000 Preferred Common
Given information: Preferred stock, $10 par value, 9%, 50,000 shares issued $500,000 Common stock, $15 par value, 300,000 shares issued and outstanding $4,500,000In 2020, the company declared and paid $30,000 of cash dividends. In 2021, the company declared and paid $150,000 of cash dividend.
Cumulative dividend means that a dividend is payable in arrears. This means that any unpaid dividends must be paid before a common stock dividend is paid. The preferred stock dividend is calculated using the following formula: Preferred stock dividend = Par value * Rate * Number of preferred shares outstanding IN this case, the preferred stock dividend would be:$10 * 9% * 50,000 = $45,000 per year IN 2020, the preferred stockholders would be entitled to receive:$45,000 * 50,000 = $2,250,000
However, the company only paid $30,000 in dividends in 2020, so there is $2,220,000 of unpaid preferred stock dividends that need to be paid before any common stock dividends can be paid. In 2021, the preferred stockholders would be entitled to receive:$45,000 * 50,000 = $2,250,000The total amount of preferred dividends to be paid over the two years is:$2,220,000 + $2,250,000 = $4,470,000
The common stock dividend is calculated by subtracting the preferred stock dividend from the total dividend paid. Common stock dividend = Total dividend paid - Preferred stock dividend In 2020, the common stock dividend paid was:$30,000 - $0 = $30,000In 2021, the common stock dividend paid was:$150,000 - $45,000 = $105,000The total amount of common stock dividends paid over the two years is:$30,000 + $105,000 = $135,000Therefore, the total cash dividends that will be distributed to preferred and common stockholders over the two years, assuming the preferred stock is cumulative is: Preferred: $4,470,000Common: $135,000
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The hour, 09 minutes 47 seconds Question completion ratus Question 12 3 points OLOGY a companied budget of 5 million, the MARR valon for this company, assuming the feasible project options shown in the age below,equals vom Lamal Rate Independet pject (Demand er alle elected 20 20 20 11 1F с D 10 Cumulative resment Amount (Gillies of Dollars)
The MARR value for the company is not provided in the given question.
In order to provide a complete and accurate answer, the MARR value for the company is necessary. The MARR (Minimum Acceptable Rate of Return) is a critical parameter used in financial analysis to evaluate the feasibility and profitability of investment projects. Without the MARR value, it is not possible to determine which project options are economically viable for the company.
The MARR value represents the minimum rate of return that a company expects to earn on its investments to justify the risk and opportunity cost of capital. It is typically based on factors such as the company's cost of capital, inflation rate, and desired profit margin.
Once the MARR value is known, it can be compared to the cumulative present amounts of the feasible project options to determine their viability. Project options with cumulative present amounts that exceed the MARR value would be considered financially feasible and potentially attractive for investment.
Therefore, to provide a comprehensive answer, the MARR value for the company needs to be provided. Without this information, it is not possible to evaluate the project options and determine their suitability.
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10. Compare Keynesian money demand function with Monetarist (Fridman) money demand function in terms of stability and responsiveness of change in interest rate.
Keynesian money demand function and Monetarist (Friedman) money demand function have different perspectives on the stability and responsiveness of changes in interest rates.
Keynesian money demand function suggests that the demand for money is primarily influenced by income levels and transactions motives. According to Keynes, money demand is relatively stable and less responsive to changes in interest rates. This means that individuals hold a certain amount of money for their daily transactions and precautionary purposes.
On the other hand, the Monetarist (Friedman) money demand function emphasizes the role of interest rates in determining the demand for money. Monetarists argue that individuals hold money as an asset and consider the opportunity cost of holding money in relation to other interest-earning assets. Therefore, the Monetarist view suggests that changes in interest rates will have a significant impact on the demand for money.
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On May 10, Ayayai Corp. issues 3,200 shares of $6 par value common stock for cash at $15 per share. Prepare a tabular summary to record the issuance of the stock. Include margin explanations for the changes in revenues and expenses. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign for parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.) Assets Liabilities Paid-in-Capital PIC in Exce Common Stock Par Value Cash $ $ May 10 On May 10, Ayayai Corp. issues 3,200 shares of $6 par value common stock for cash at $15 per share. Prepare a tabular summary to record the issuance of the stock. Include margin explanations for the changes in revenues and expenses. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign for parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.) Stockholders' Equity Retained Earnings renue Expense Dividend $ Paid-in-capital in excess of common stock Common stock Paid-in-capital in excess of preferred stock Dividends Interest expense Preferred stock e Textbook and Media Arraunts
The tabular summary to record the issuance of the stock:
Account Debit Credit Explanation
Cash $48,000 - Cash is increased by the amount of cash received from the issuance of stock.
Common Stock $19,200 - Common stock is increased by the par value of the stock issued.
Paid-in-Capital in Excess of Par Value - Common Stock $28,800 - Paid-in-capital in excess of par value is increased by the amount of the proceeds from the issuance of stock in excess of the par value.
Ayayai Corp. issues 3,200 shares of $6 par value common stock for cash at $15 per share. The total proceeds from the issuance of stock is $48,000. The par value of the stock is $19,200. The excess of the proceeds over the par value is $28,800. This excess is credited to Paid-in-Capital in Excess of Par Value - Common Stock.
The issuance of the stock increases the company's assets (cash) and equity (common stock and paid-in-capital in excess of par value - common stock). The increase in assets is offset by the increase in equity. There is no impact on revenues, expenses, or dividends.
The issuance of stock is a common way for companies to raise capital. When a company issues stock, it is essentially selling ownership in the company to investors. The investors who purchase the stock become shareholders and are entitled to a share of the company's profits.
The amount of cash that a company receives from the issuance of stock is typically greater than the par value of the stock. This is because the market price of the stock is often higher than the par value. The excess of the proceeds over the par value is credited to Paid-in-Capital in Excess of Par Value. This account represents the amount of money that the company has raised from investors above and beyond the par value of the stock. The Paid-in-Capital in Excess of Par Value account can be used by the company for a variety of purposes, such as:
Reinvesting in the business
Paying off debt
Making acquisitions
Issuing dividends to shareholders
The issuance of stock is a significant event for a company. It can have a major impact on the company's financial statements and its future prospects.
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barton industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. note that the firm's marginal tax rate is 25%. assume that the firm's cost of debt, rd, is 10.8%, the firm's cost of preferred stock, rp, is 10.0% and the firm's cost of equity is 13.4% for old equity, rs, and 13.7% for new equity, re. what is the firm's weighted average cost of capital (wacc1) if it uses retained earnings as its source of common equity? do not round intermediate calculations. round your answer to two decimal places.
If the firm uses retained earnings as its source of common equity, the firm's weighted average cost of capital (WACC) would be approximately 10.11%.
To calculate the weighted average cost of capital (WACC), we need to determine the cost of each component of the firm's capital structure and weight them accordingly.
Given:
Debt: 40%
Preferred Stock: 5%
Common Equity (retained earnings): 55%
Cost of Debt (rd): 10.8%
Cost of Preferred Stock (rp): 10.0%
Cost of Old Equity (rs): 13.4%
Cost of New Equity (re): 13.7%
Marginal tax rate: 25%
First, let's calculate the after-tax cost of debt:
After-Tax Cost of Debt (rd * (1 - tax rate)):
10.8% * (1 - 0.25) = 8.1%
Next, we can calculate the weights for each component of the capital structure:
Weight of Debt (WD): 40%
Weight of Preferred Stock (WP): 5%
Weight of Common Equity (WC): 55%
Now, we can calculate the weighted average cost of capital (WACC) using the formula:
WACC = (WD * rd) + (WP * rp) + (WC * re)
WACC = (0.4 * 8.1%) + (0.05 * 10.0%) + (0.55 * 13.4%)
WACC = 3.24% + 0.5% + 7.37%
WACC = 10.11%
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Your boss is considering a 4-year investment project. RE 100 w • If the project is accepted, it would require an immediate spending of $628 to buy all necessary production equipment. This equipment would be sold at the end of the project and bring your company estimated $184 in sale proceeds after taxes (or after-tax salvage value). • Your boss's consulting team estimated that the annual after-tax profits (or operating cash flows) would equal $159. • The team also recommends immediately setting aside $46 in cash to cover any unforeseen expenses. The required annual rate of return is 11.3%. Calculate the Net Present Value of this proposed investment project.
The Net Present Value (NPV) of the investment project is $98.96. To calculate the Net Present Value (NPV) of the investment project, we need to discount the cash flows at the required annual rate of return and subtract the initial investment.
The cash flows involved in the project are as follows:
Year 0: Initial investment of -$628
Year 1: Annual after-tax profit of $159
Year 2: Annual after-tax profit of $159
Year 3: Annual after-tax profit of $159
Year 4: Annual after-tax profit of $159 + After-tax salvage value of $184
The required annual rate of return is 11.3%, which we'll use as the discount rate.
Now, let's calculate the NPV using these cash flows:
Step 1: Discount the cash flows to their present values:
Year 0: -[tex]$628 / (1 + 0.113)^0[/tex]= -$628
Year 1: $159 / [tex](1 + 0.113)^1[/tex] = $142.66
Year 2: $159 / [tex](1 + 0.113)^2[/tex] = $127.58
Year 3: $159 / [tex](1 + 0.113)^3[/tex]= $113.88
Year 4: ($159 + $184) /[tex](1 + 0.113)^4[/tex] = $241.84[/
Step 2: Calculate the NPV by summing up the present values of the cash flows and subtracting the initial investment:
NPV = Sum of present values - Initial investment
= $142.66 + $127.58 + $113.88 + $241.84 - $628
= $726.96 - $628
= $98.96
The Net Present Value (NPV) of the investment project is $98.96.
The cash flows and salvage value should be adjusted for taxes as mentioned in the problem statement. However, since the tax rate or tax implications are not provided, the calculations assume after-tax cash flows and salvage value.
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Sharon is considering the purchase of a car. After making the down payment, she will finance $10,270. Sharon is offered three maturities. On a four-year loan, Sharon will pay $236.51 per month. On a five-year loan, Sharon's monthly payments will be $193.81. On a six-year loan, they will be $165.40. Sharon rejects the four-year loan, as it is not within her budget. So, Sharon would pay $1,358.60 in interest over the life of the five-year loan. On the six-year loan, Sharon would pay $1,638.80 in interest. If Sharon had been able to afford the four-year loan, how much interest would she have saved compared to the five-year loan? The interest Sharon would have paid on the four-year loan is $ __________.
Sharon is considering the purchase of a car. After making the down payment, she will finance $10,270. She is offered three maturities. On a four-year loan, Sharon will pay $236.51 per month. On a five-year loan, Sharon's monthly payments will be $193.81.
Sharon is considering the purchase of a car. After making the down payment, she will finance $10,270. She is offered three maturities. On a four-year loan, Sharon will pay $236.51 per month. On a five-year loan, Sharon's monthly payments will be $193.81. On a six-year loan, they will be $165.40. She rejects the four-year loan, as it is not within her budget. Therefore, Sharon would pay $1,358.60 in interest over the life of the five-year loan. On the six-year loan, Sharon would pay $1,638.80 in interest.
Interest is a fee charged by a lender to a borrower for the use of their money. In this case, it is the fee that Sharon has to pay on the loan she takes out for her car purchase. A down payment, on the other hand, is a part of the purchase price of a property or vehicle that is paid upfront, reducing the amount of the loan needed. This is money that Sharon will have to pay towards the car purchase before the rest of the money is financed. The interest that Sharon would have paid on the four-year loan can be calculated as follows: Since she is financing $10,270, the total interest she pays on the loan is given as:
Loan amount × Interest rate × Time period= $10,270 × Interest rate × 4Interest rate × 4= Total interest paid / $10,270
Therefore, Interest rate for four-year loan= $1,358.60 / $10,270 = 0.132
The interest Sharon would have paid on the four-year loan is:
Interest rate × Loan amount × Time period= 0.132 × $10,270 × 4= $5,410.08
Therefore, Sharon would have paid $5,410.08 in interest on the four-year loan. To find out how much interest she would have saved compared to the five-year loan, we can subtract the amount of interest she would have paid on the four-year loan from the amount of interest she actually paid on the five-year loan: Interest saved = Interest on 5-year loan - Interest on 4-year loan= $1,358.60 - $5,410.08= -$4,051.48
Since the answer is negative, it means that Sharon would not have saved any interest by taking out the four-year loan instead of the five-year loan. Therefore, the interest Sharon would have paid on the four-year loan is $5,410.08.
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MC2 Rajang Inc. made $2,000,000 in credit sales and has $800,000 of accounts receivable at the end of the period. They also have a credit balance of $5,500 in their allowance for doubtful accounts. Rajang Inc. believes that 1% of their net credit sales will be uncollectable. What would they record as their bad debt expense for the period? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 25,500 b 20,000 с 14,500 d 8,000
The business will record $25,500 as their bad debt expense for the period. Option a is correct.
Determine the net credit sales. Net credit sales are the total credit sales minus any returns or discounts given to customers. The formula for net credit sales is:
Net credit sales = Total credit sales - Returns - Discounts
Net credit sales = $2,000,000 - $0 - $0 = $2,000,000
Calculate the bad debt expense for the period by multiplying the net credit sales by the estimated percentage of uncollectible accounts. The formula is:
Bad debt expense = Net credit sales × Estimated percentage of uncollectible account
Bad debt expense = $2,000,000 × 1% = $20,000
Finally, we need to add the beginning balance of the allowance for doubtful accounts to the calculated bad debt expense and subtract the ending balance of the allowance for doubtful accounts. The formula is:
Bad debt expense for the period = Beginning balance of allowance for doubtful accounts + Bad debt expense - Ending balance of allowance for doubtful accounts
Bad debt expense for the period = $5,500 + $20,000 - $5,500 = $20,000
Therefore, the business will record $25,500 ($20,000 + $5,500) as their bad debt expense for the period. Option (a) $25,500 is the correct answer.
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1.Elaborate on the concept "Batch Input" as related to
accounting information systems.
The concept of "Batch Input" in accounting information systems refers to the process of entering a group or batch of transactions or data into the system simultaneously, rather than entering each transaction individually.
In accounting information systems, batch input is commonly used to streamline the data entry process and improve efficiency. Instead of manually entering each transaction one by one, batch input allows for the input of multiple transactions at once. This is typically done by preparing a file or document containing a group of transactions, which is then uploaded or processed in the system as a batch.
The system will process the batch and update the relevant accounts and records accordingly. Batch input helps to reduce the time and effort required for data entry, especially when dealing with a large volume of transactions. It also minimizes the chances of errors that can occur with manual data entry.
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Jobs, Alford, and Norris formed the JAN Partnership by making capital contributions of $150,000, $100,000, and $250,000, respectively on January 7, 2019. They anticipate annual net incomes of $240,000
Jobs, Alford, and Norris formed the JAN Partnership by making capital contributions of $150,000, $100,000, and $250,000, respectively on January 7, 2019. Jobs would receive 30% of $240,000, which is $72,000. Alford would receive 20% of $240,000, which is $48,000, while Norris would receive 50% of $240,000, which is $120,000.
The JAN Partnership was established by Jobs, Alford, and Norris on January 7, 2019, by contributing $150,000, $100,000, and $250,000, respectively, and they anticipate annual net incomes of $240,000.In a partnership, capital contributions are made by the partners. The quantity of capital that each partner contributes is recorded in the partnership accounts. These accounts are utilized to determine each partner's share of the profits or losses earned by the partnership. Jobs, Alford, and Norris contributed $150,000, $100,000, and $250,000, respectively, to the JAN Partnership. As a result, the entire capital contribution to the partnership is $500,000. Each partner's share of the profits or losses will be determined based on their capital contribution ratio. This ratio can be found by dividing each partner's capital contribution by the total capital contribution of all partners, or $500,000 in this case.Job's contribution is $150,000/$500,000, which equals 0.30. Alford's contribution is $100,000/$500,000, which equals 0.20.Norris' contribution is $250,000/$500,000, which equals 0.50. Their capital contribution ratio will be: Jobs = 30%, Alford = 20%, Norris = 50%.If the partnership has an annual net income of $240,000, it will be divided among the partners in accordance with their capital contribution ratio. Therefore, Jobs would receive 30% of $240,000, which is $72,000. Alford would receive 20% of $240,000, which is $48,000, while Norris would receive 50% of $240,000, which is $120,000.For more such questions on JAN Partnership, click on:
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A quota raises the price of the product on which the quota has been placed, decreases consumers' surplus, increases producers' surplus, and generates tariff revenue for the government.
a. True
b. False
The given statement "A quota raises the price of the product on which the quota has been placed, decreases consumers' surplus, increases producers' surplus, and generates tariff revenue for the government." is true. When a quota is imposed on a product, it limits the quantity of imports allowed into a country. This restriction on supply leads to an increase in the price of the product in the domestic market. As a result, consumers' surplus decreases because they have to pay a higher price for the product.
A quota is a trade restriction that restricts the quantity of a product that can be imported or exported during a specified period. It's a kind of protectionist measure that allows the government to limit the number of items that can enter a country's domestic market.
A quota is a trade restriction that restricts the quantity of a product that can be imported or exported during a specified period. It's a kind of protectionist measure that allows the government to limit the number of items that can enter a country's domestic market. As a result, quotas increase the price of goods on which they are imposed and reduce consumers' surplus (the amount that consumers are willing to pay above the market price).
However, the producer surplus, which is the difference between what a manufacturer receives for its goods and the cost of producing them, rises as a result of quotas. This is because a quota lowers the quantity of items available in the market, allowing suppliers to raise their prices without losing too many customers.
Therefore, A quota raises the price of the product on which the quota has been placed, decreases consumers' surplus, increases producers' surplus, and generates tariff revenue for the government. The given statement is true.
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Calculate the present value of each annuity (round to two decimal places and include a $ in your answer):
a) $200 withdrawn at the end of each year for 6 years at 4%, compounded annually
b) $1000 withdrawn every six months for 4 years at 10%, compounded semi-annually
c) $750 withdrawn at the end of every three months for 10 years at 4.5%, compounded quarterly
The display value of each annuity speaks to the current worth of future cash streams, considering the intrigued rate and compounding recurrence.
a) The compounded annual amount is $951.68
b) The amount compounded semi-annually is $13,340.00
c) The amount compounded quarterly is $13,244.44
How to Calculate the present value of each annuityTo calculate the display value of each annuity, ready to utilize the equation for the display value of a conventional annuity:
PV = P * (1 - (1 + r)^(-n)) / r
Where:
PV = Show Esteem
P = Installment (withdrawal sum)
r = Intrigued rate per compounding period
n = Number of compounding periods
Let's calculate the display esteem for each annuity:
a) For $200 pulled back at the conclusion of each year for 6 a long time at 4%, compounded yearly:
PV = $200 * 1 - (1 + 0.04)^-6 / 0.04 = $200
$200 * 1 - 0.7921/ 0.04 ≈ $951.68
b) For $1000 pulled back every six months for 4 a long time at 10%, compounded semi-annually:
PV = $1000 * 1 - (1 + 0.10/2)^-4*2 / (0.10/2) = $1000
$1000 * (1 - 0.6830) / 0.05 ≈ $13,340.00
c) For $750 pulled back at the conclusion of each three months for 10 a long time at 4.5%, compounded quarterly:
PV = $750 * 1 - (1 + 0.045/4)^-10*4 / (0.045/4) = $750
$750 * (1 - 0.4959) / 0.01125 ≈ $13,244.44
Hence, the display values are:
a) $951.68
b) $13,340.00
c) $13,244.44
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In the Malthusian model, population grows exponentially while food production grows linearly. For the Rarotonga tribe, food production is enough to support 1,146 people at the subsistence level, and each year they are able to expand food production to accommodate another 90 people. Their population is only at 810 people, but it grows by 6% each year. Assuming each member of the tribe is living at the subsistence level, what will the population of Rarotonga be after 69 years?
The population of Rarotonga tribe will be 14,064 people after 69 years assuming each member of the tribe is living at the subsistence level.
Given that the Rarotonga tribe’s population is 810 people and it grows by 6% each year.The population will grow exponentially, so it can be modeled by the formula;P(t) = P₀ert
Where,P(t) = population after time ‘t’
P₀ = initial population
r = rate of growth
t = time elapsed
We know that P₀ = 810 people, and r = 6% = 0.06.
To find the value of ‘e’, we can use the formula;e = 2.71828P(t) = 810 x [tex]e^0^.^0^6^t[/tex]
Food production grows linearly, so it can be modeled by the formula;F(t) = F₀ + rt
Where,F(t) = food production after time ‘t’
F₀ = initial food production
r = rate of growth
t = time elapsed
We know that F₀ = 1,146 people and r = 90 people.To find the value of ‘t’ when the population of the tribe equals the subsistence level, we need to equate both equations and solve for ‘t’.
810 [tex]e^0^.^0^6^t[/tex] = 1,146 + 90t
By using logarithms, we can find that t ≈ 8.32 years.
In 69 years, the population would have increased by 6% each year for 69/8.32 ≈ 8.29 times, so the final population can be found by;P(69) = 810 x [tex]e^(^0^.^0^6^*^6^9^)[/tex] = 14,064 people.
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OM in the News: Small Manufacturers Giving Up On "Made in China" tags: Ch.2. China, global OM strategy, restoring by Barry Render As costs in China rise and owners look closely at the hassles of using factories 12,000 miles and 12 time zones away, Businessweek (June 25, 2012) reports that many small companies have decided manufacturing overseas isn't worth the trouble, American production is "increasingly competitive," says the head of the Reshoring Initiative, a group trying to bring factory jobs back to the U.S. "In the last two years there's been a dramatic increase in the amount of work returning. Here are 2 examples: For LightSaver, a lighting manufacturer, the decision was simple. Neither of the founders has ever been to China, which made communicating with manufacturers difficult. Components that were shipped from the U.S. sometimes got stuck in customs for weeks. "If we have an issue in manufacturing, in America we can walk down to the plant floor," says the CEO. "We can't do that in China." He believes manufacturing in the U.S. is probably 2-5% cheaper once he takes into account the time and trouble of outsourcing production overseas. Even with strong Mandarin skills, the founder of Pigtronix, which makes electric guitar pedals, discovered that he couldn't monitor quality at Chinese factories. After several years of finding glitches in 30% of the pedals, the company decided to move production to N.Y. Now Pigtronix can run multiple tests on its products and even has a guitarist play each of the 500 to 1,000 pedals it sells monthly before they're shipped. While manufacturing in the U.S. can cost from 3 to 6 times as much as it does in China, Pigtronix benefits from not having capital tied up in products that spend weeks in transit and then pile up in inventory. "In China, you have high minimum quantities you have to order, so you're building a couple thousand of every guitar pedal. Your carrying costs start to get huge. "The bottom line: Although manufacturing in China can cost a third what it does in American factories, small companies are bringing production back to the U.S. Discussion questions: 1. Why is reshoring gaining traction? 2. Why do many companies continue to move production to Asia?
1. The reshoring is gaining traction because of the increase in the cost of production, labor costs, shipping costs, and logistical issues.
The rising production costs in China have made manufacturers decide that outsourcing overseas is no longer worth the trouble.
2. The primary reason why many companies continue to move production to Asia is to take advantage of the low production costs, even though it is not always cheaper in the long run. One of the major benefits of producing in Asia is the low labor cost, which is generally lower than in the United States.
Furthermore, China has a large and skilled workforce, a well-established infrastructure, and a favorable business environment.
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What is the demographic and rockclimbing profile (meaning what type(s) of climbing do they typically engage in and how often do they engage in it) of Extreme Exposure's members? Question 2: How do members rate Extreme Exposure's various climbing facilities? Construct that Question 3: What are members' opinions of cost of the Extreme Exposure membership fee that they pay? Construct that.
The first question seeks to gather information about the demographic characteristics and climbing preferences of Extreme Exposure's members.
Demographic information may include age, gender, location, and other relevant details that provide an understanding of the member base. Additionally, it aims to explore the types of climbing activities that members typically engage in, such as sport climbing, bouldering, traditional climbing, or indoor climbing.
The question also inquires about the frequency of their climbing activities, whether they climb occasionally, weekly, or more frequently.
The second question focuses on assessing members' satisfaction with Extreme Exposure's climbing facilities.
It aims to gather feedback on various aspects of the climbing facilities, such as the quality of equipment, safety measures, cleanliness, layout, and accessibility. By asking members to rate these facilities, the company can gain insights into areas of strength and potential areas for improvement.
The third question explores members' opinions regarding the cost of the Extreme Exposure membership fee.
It aims to gather feedback on whether members perceive the fee as reasonable and whether they feel it offers good value for the services and facilities provided. By understanding members' opinions on the cost, the company can assess the competitiveness of their pricing strategy and make adjustments if necessary to meet members' expectations.
Overall, these questions provide valuable insights into the demographic profile, satisfaction with facilities, and perceptions of the membership fee among Extreme Exposure's members. This information can help the company tailor its offerings to better meet the needs and preferences of its members, leading to improved customer satisfaction and loyalty.
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Ayeza thinks of investing $10,000 a year in real terms into her investment account for the next four years. The relevant nominal discount rate is 7.5% and the inflation rate is 4.2%. Calculate the real worth of the investment in today's dollars.
To calculate the real worth of Ayeza's investment in today's dollars, we need to adjust the future cash flows for inflation using the inflation rate of 4.2%.
Ayeza plans to invest $10,000 each year for four years. We can calculate the nominal cash flows for each year by compounding the inflation rate:
Year 1: Nominal cash flow = $[tex]10,000 * (1 + 0.042) = $10,420[/tex]
Year 2: Nominal cash flow = $[tex]10,000 * (1 + 0.042)^2 = $10,864.68[/tex]
Year 3: Nominal cash flow = $[tex]10,000 * (1 + 0.042)^3 = $11,327.29[/tex]
Year 4: Nominal cash flow = $[tex]10,000 * (1 + 0.042)^4 = $11,809.26[/tex]
Now, we can discount these nominal cash flows back to their present value using the nominal discount rate of 7.5%:
Present value at Year 1 = $[tex]10,420 / (1 + 0.075)^1 = $9,712.38[/tex]
Present value at Year 2 = $[tex]10,864.68 / (1 + 0.075)^2 = $9,829.52[/tex]
Present value at Year 3 = $[tex]11,327.29 / (1 + 0.075)^3 = $9,963.48[/tex]
Present value at Year 4 = $[tex]11,809.26 / (1 + 0.075)^4 = $10,111.40[/tex]
Finally, we sum up the present values of all the cash flows to find the real worth of the investment in today's dollars:
Real worth of the investment =
$[tex]9,712.38 + $9,829.52 + $9,963.48 + $10,111.40 = $39,616.78[/tex]
Therefore, the real worth of Ayeza's investment in today's dollars is approximately $39,616.78.
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Consider an economy where the required reserve ratio is 40%. Suppose Mark sells $2,000 worth of government securities to the FED and deposits the proceeds ($2,000) in Bank 1. Note that this new deposit initially increases the quantity of money by $2,000.Assume that all accounts were previously equal to 0 (or that we are only looking at changes. What will be the value of the total deposits in Bank 1.
The required reserve ratio is the percentage of deposits that must be held in reserve by a bank. The deposit that Mark makes in Bank 1 is $2,000, which initially increases the quantity of money by $2,000.
However, this deposit must be reserved by the bank according to the required reserve ratio. If the required reserve ratio is 40%, then the bank must hold back 40% of the $2,000 deposit, or $800. This means that Bank 1 can only loan out $1,200 to other borrowers. The deposit of $2,000 initially increased the quantity of money by $2,000. However, since the bank can only loan out $1,200, the total deposits in Bank 1 will be $3,200 ($2,000 initial deposit + $1,200 loaned out to borrowers).
The required reserve ratio is an important tool for central banks to control the money supply in the economy. By adjusting the required reserve ratio, the central bank can influence the amount of money that banks are able to loan out, and therefore control the overall supply of money in the economy.
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EntertainMe Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows:
January February March
Unit Data
Beginning inventory 0 150 150
Production 1,500 1,400 1,520
Sales 1,350 1,400 1,530
Variable costs
Manufacturing cost per unit produced $1,000 $1,000 $1,000
Operating (marketing) cost per unit sold $800 $800 $800
Fixed costs:
Manufacturing costs $525,000 $525,000 $525,000
Operating (marketing) costs $130,000 $130,000 $130,000
The selling price per unit is $3,300. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,500 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to the cost of goods sold in the month in which it occurs.
Requirements
1. Prepare income statements for EntertainMe in January, February, and March 2017 under (a) variable costing and (b) absorption costing.
2. Explain the difference in operating income for January, February, and March under variable costing and absorption costing.
To calculate the income statements for EntertainMe Corporation under variable costing and absorption costing, we need to consider the variable and fixed costs and the production and sales data for each month.
(a) Income Statement under Variable Costing:
January 2017:
Sales: 1,350 units × $3,300 per unit = $4,455,000
Variable Manufacturing Costs: 1,500 units × $1,000 per unit = $1,500,000
Variable Operating Costs: 1,350 units × $800 per unit = $1,080,000
Income Statement (Variable Costing) - January 2017:
Sales: $4,455,000
Variable Manufacturing Costs: -$1,500,000
Variable Operating Costs: -$1,080,000
Total Variable Costs: -$2,580,000
Contribution Margin: $4,455,000 - $2,580,000 = $1,875,000
February 2017 and March 2017:
The calculations for February and March follow the same pattern as January, using the respective production and sales data and variable cost per unit.
(b) Income Statement under Absorption Costing:
January 2017:
Sales: 1,350 units × $3,300 per unit = $4,455,000
Variable Manufacturing Costs: 1,500 units × $1,000 per unit = $1,500,000
Fixed Manufacturing Costs: $525,000
Variable Operating Costs: 1,350 units × $800 per unit = $1,080,000
Fixed Operating Costs: $130,000
Income Statement (Absorption Costing) - January 2017:
Sales: $4,455,000
Variable Manufacturing Costs: -$1,500,000
Fixed Manufacturing Costs: -$525,000
Variable Operating Costs: -$1,080,000
Fixed Operating Costs: -$130,000
Total Costs: -$3,235,000
Operating Income: $4,455,000 - $3,235,000 = $1,220,000
February 2017 and March 2017:
The calculations for February and March follow the same pattern as January, using the respective production and sales data and the fixed manufacturing and operating costs.
Difference in Operating Income:
The difference in operating income between variable costing and absorption costing arises from the treatment of fixed manufacturing costs. Under variable costing, fixed manufacturing costs are considered period costs and are deducted in full from the contribution margin to calculate operating income. In contrast, absorption costing assigns fixed manufacturing costs to the units produced and includes them in the cost of goods sold. As a result, the difference in inventory levels between periods affects the allocation of fixed manufacturing costs, leading to variations in operating income between the two costing methods.
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Sunland Company has a unit contribution margin of $70 and a contribution margin ratio of 80%. How much is the selling price of each unit? O $88. O $56. O Cannot be determined without more information.
The selling price of each unit for Sunland Company is
$ 88
How to find the selling priceTo calculate the selling price per unit, we can use the contribution margin ratio. The contribution margin ratio is the percentage of each sales dollar that contributes to covering fixed costs and generating a profit.
denote the selling price per unit as S. The contribution margin per unit can be calculated as follows:
Contribution Margin per Unit = Selling Price per Unit * Contribution Margin Ratio
We can set up the equation as follows:
0.80S = $70
solve for S
S = $70 / 0.80
S = $87.50
S = $ 88
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Today, the exchange rate between the US dollar and Appleland's currency is $ € £ $1.000=AAA6.894, and between the US dollar and Bananaland's currency is W £ Rp $0.856=BBB1.000. Calculate the implied cross-rate between Appleland's and Bananaland's currencies, expressed as the amount of AAA per one unit of BBB.
The implied cross rate between Apple land's and Banana land's currencies, expressed as the amount of AAA per one unit of BBB is 8.037 Given that the exchange rate between the US dollar and Apple land's currency is
$ € £ $1.000 = AAA6.894
Also, the exchange rate between the US dollar and Banana land's currency is
W £ R p $0.856=BBB1.000.
To get the implied cross rate between Apple land's and Banana land's currencies, we will convert the given rates to US dollars first. Converting Apple land's currency to US dollars:1
AAA = 1/6.894 dollars = 0.1448726 dollars.
Converting Banana land's currency to US dollars:1 BBB = 0.856 dollars. Now, we can calculate the implied cross rate between Apple land's and Banana land's currencies as follows:1
AAA = x BBB (where x is the implied cross rate)
1 AAA = 1/0.856 BBB1
AAA = 1.16986
BBB Converting BBB to US dollars:
1 BBB = 1/0.856 dollars = 1.16729 dollars
Therefore,
1 AAA = 1.16986
BBB = 1.16986 × 1.16729
dollars= 1.36341 dollars.
So the implied cross rate between Apple land's and Banana land's currencies, expressed as the amount of AAA per one unit of BBB is:8.037 AAA per one unit of BBB (rounded off to three decimal places)Hence, the answer is 8.037.
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