The company made journal entries to record transactions related to raw material purchases, labor costs, overhead expenses, and the sale of completed jobs.
Summary Journal Entries:
Raw materials purchased on account, $82,000.
The company records the purchase of raw materials on account for $82,000.
Raw materials (an asset) would be debited for $82,000 to reflect the increase in inventory. The accounts payable (a liability) would be credited for $82,000 to indicate the company's obligation to pay for the materials.
Direct materials used in production, $37,500. Indirect materials used in production, $17,200.
The company records the usage of direct materials in production for $37,500 and indirect materials for $17,200.
The direct materials used in production would be debited for $37,500 to reduce the inventory of raw materials. The indirect materials used in production would be debited for $17,200 to reflect their consumption in the manufacturing process. The Work in Process (WIP) inventory account would be credited for the combined amount of $54,700 to represent the cost of materials transferred from inventory to production.
Paid cash for factory payroll, $40,000. Of this total, $30,000 is for direct labor and $10,000 is for indirect labor.
The company records the cash payment for factory payroll, with $30,000 allocated to direct labor and $10,000 allocated to indirect labor.
The direct labor cost would be debited for $30,000 to represent the cost of labor directly involved in production. The indirect labor cost would be debited for $10,000 to account for labor not directly involved in production, such as supervisors or maintenance staff. The cash account would be credited for the total amount of $40,000, reflecting the cash payment made for the factory payroll.
Paid cash for other actual overhead costs, $7,125.
The company records the cash payment for other actual overhead costs amounting to $7,125.
The overhead expense account would be debited for $7,125 to recognize the actual overhead costs incurred by the company. The cash account would be credited for the same amount, indicating the payment made for these overhead expenses.
Applied overhead at the rate of 125% of direct labor cost.
The company applies overhead at a rate of 125% of the direct labor cost.
To calculate the overhead cost, the company multiplies the direct labor cost ($30,000) by the overhead rate (125%). The overhead expense account would be debited, and the applied overhead account would be credited for the resulting amount.
Transferred cost of jobs completed to finished goods, $54,400.
The company records the transfer of the cost of completed jobs to finished goods for $54,400.
The WIP inventory account would be debited for $54,400 to remove the cost of completed jobs from work in progress. The finished goods inventory account would be credited for the same amount, reflecting the transfer of these costs to finished goods.
Jobs that had a cost of $54,400 were sold.
The company records the sale of jobs with a cost of $54,400.
The cost of goods sold (an expense) would be debited for $54,400 to reflect the cost of the jobs sold. The finished goods inventory account would be credited for the same amount to reduce the inventory of finished goods.
Sold jobs on account for $77,000.
The company records the sale of jobs on account for $77,000.
The accounts receivable (an asset) would be debited for $77,000 to reflect the amount owed by the customers for the sold jobs. The sales revenue account would be credited for the same amount to recognize the revenue generated from the sales.
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kwan has a master’s degree in psychology, but he is working at a sunglasses cart in the mall. kwan is currently experiencing...
a. attribution b. reverse discrimination c. the glass ceiling d. underemployment e. overemployment
Option d is correct. kwan has a master’s degree in psychology, but he is working at a sunglasses cart in the mall. kwan is currently experiencing underemployment.
Kwan's situation can be classified as underemployment. Underemployment refers to a situation where a person is working in a job that is below their skill level or educational qualifications. In this case, Kwan has a master's degree in psychology, which indicates that he has acquired advanced knowledge and skills in his field. However, he is currently working at a sunglasses cart in the mall, which is not a position that utilizes his educational background or expertise.
Underemployment often occurs when individuals are unable to find suitable employment opportunities that match their qualifications or when they are forced to take jobs with lower skill requirements due to a lack of available options. It can lead to feelings of frustration, dissatisfaction, and unfulfilled potential.
In Kwan's case, he may be facing challenges such as a competitive job market, limited job opportunities in his field, or other factors that have resulted in his current employment situation. It is important for Kwan to continue seeking career opportunities that align with his education and skills, such as applying for positions in psychology or related fields, networking, and exploring further education or training opportunities to enhance his prospects for meaningful employment.
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a labor-intensive process has a fixed cost of $338,000 and a variable cost of $143 per unit. a capital intensive process for the same product has a fixed cost of $1,244,000 and a variable cost of $92.50 per unit. how many units must be produced and sold for $197 each for the automated process to be preferred to the labor-intensive process?
The capital-intensive process will be preferred over the labor-intensive process if the number of units produced and sold exceeds approximately 3,659 units.
In order to determine the number of units that must be produced and sold for $197 each for the automated process to be preferred to the labor-intensive process, we need to find the total cost and revenue for each process first. Then, we can compare their profit levels and decide which one is preferable.
Let's start by calculating the total cost for the labor-intensive process:
Total cost = Fixed cost + Variable cost × Number of units produced
TC = $338,000 + $143Q
Next, let's calculate the total cost for the capital-intensive process
:Total cost = Fixed cost + Variable cost × Number of units produced
TC = $1,244,000 + $92.50Q
Now, let's calculate the total revenue for both processes:
Total revenue = Selling price × Number of units sold
TR = $197Q
We need to find the quantity where the revenue for the capital-intensive process is greater than the revenue for the labor-intensive process.
Let's set the two equations equal to each other:
197Q = (1,244,000 + 92.50Q) - (338,000 + 143Q)
197Q = 906,000 - 50.50Q
247.50Q = 906,000
Q ≈ 3,659
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Ultra Ltd has the following balances as at 31 October 2013: Cash in hand £1,000 Trade receivables £35,700
Accruals £6,300
Machinery and vehicles £59,000
Prepayments £800 Trade payables £27,000 Bank overdraft £10,200 Land £5,000 Term loan (repayable on 1 £20,000 January 2015) Based on the above information, calculate the total assets and total equity .Select one:
a. Total assets = £104.300: Total equity = £48,000 b. Total assets = £96,500; Total equity = £28,000 c. Total assets = £105,000; Total equity = £45,000 d. Total assets = £101,500: Total equity = £38,000
The calculation of the total assets and total equity based on the given information is shown below.
Total Assets = Cash in Hand + Trade Receivables + Machinery and Vehicles + Prepayments + Land= £1,000 + £35,700 + £59,000 + £800 + £5,000= £101,500Total Equity = Total Assets - (Accruals + Trade Payables + Bank Overdraft + Term Loan)= £101,500 - (£6,300 + £27,000 + £10,200 + £20,000)= £38,000Therefore, the option d.
Total assets = £101,500: Total equity = £38,000 is the correct answer.Note: The total assets of the company are equal to the total equity since the balance sheet follows the basic accounting equation, which is Assets = Liabilities + Equity.
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ements Ons ments Started: 7 Jun at 20:40 Quiz instructions D Question 6 1 pts According to the textbook, a necessary condition for the evolution of a successful commercial society includes danti natural resources Interest rates condici ACHADIVA pertan H Questions ✓Question 1 ✓Question 2 Question 3 Question & ✓Question 5 Question 6 Question 7 Question Time running He 7 minutes 30 Second
A necessary condition for the evolution of a successful commercial society includes abundant natural resources. What are natural resources? Natural resources are materials and substances that occur naturally and are used for economic purposes. The correct option is d).
Some common examples of natural resources include minerals, fossil fuels, timber, and water. What is a commercial society? A commercial society is a social order that is predominantly driven by commerce and trade, rather than by other forms of social or political organization. In a commercial society, goods and services are produced and exchanged primarily for profit.What does it mean for a commercial society to be successful?A successful commercial society is one that is able to sustain economic growth and development over time.
This requires a variety of factors, including access to abundant natural resources, a stable political and legal environment, and an educated and skilled workforce. What is the necessary condition for the evolution of a successful commercial society? According to the given question, a necessary condition for the evolution of a successful commercial society includes abundant natural resources. Hence, the correct option is d).
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"Suppose hospitals are keen to access patient data you collect. Do patients own their data? Should the platform pay the patients for their data?
Patients have the right to their data. Hospitals or platforms may only access it if the patient allows them. As a result, if hospitals or platforms wish to access patient data, they must get the patient's consent. Furthermore, since patients own their data, the platform is not required to pay them for it. In today's world, data is considered the most valuable asset.
Many companies earn a lot of money by gathering and analyzing data. As a result, it's critical to consider who owns this data and how it should be treated.One of the most pressing concerns is whether patients should be paid for their data. It's difficult to quantify how much a patient's data is worth because data has value in both the short and long term. As a result, it is difficult to put a price on data because it varies by industry, usage, and application.
While it is true that patients are the ones who provide their data, the data is often combined with data from other sources. As a result, the patient's data alone may not be valuable to the hospital or platform.Hospitals or platforms that collect patient data must follow certain rules and regulations. Hospitals or platforms must ensure that patients' data is kept secure and that it is only accessed by authorized personnel. Patients must be made aware of how their data will be used and whether it will be shared with third parties. Furthermore, patients must have the option to opt-out if they are uncomfortable with how their data will be used.In conclusion, hospitals and platforms must obtain consent from patients before accessing their data. Because patients own their data, they are not required to be paid for it. However, hospitals or platforms must ensure that the patient's data is kept secure and that the patient is aware of how their data will be used. If patients do not want their data used in a certain way, they should be given the option to opt-out.
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1.6 years ago you bought a ten year zero coupon bond with a $1000 face value. When you bought the bond, it had a yield to maturity of 6.3%. You sell the bond today at
a yield to maturity of 4.3%. What annual rate of return did you earn on your investment?
You earned an annual rate of return of approximately 68.98% on your investment.
To calculate the annual rate of return earned on the investment, we need to determine the purchase price of the bond and the selling price of the bond. The purchase price can be calculated using the present value formula for a zero coupon bond.
Face value (FV) = $1000
Yield to maturity (YTM) at the time of purchase = 6.3%
Years to maturity = 10
Time elapsed since purchase = 1.6 years
Current yield to maturity (CYTM) = 4.3%
First, we need to calculate the purchase price:
Purchase price = FV / (1 + YTM)^years_to_maturity
Purchase price = $1000 / (1 + 6.3%)¹⁰
Purchase price = $1000 / (1 + 0.063)¹⁰
Purchase price = $1000 / 1.806111
Purchase price = $553.69 (rounded to the nearest cent)
Next, we calculate the selling price:
Selling price = FV / (1 + CYTM)^years_elapsed
Selling price = [tex]\dfrac{\$1000}{ (1 + 0.043)^{1.6}}[/tex]
Selling price = $1000 / 1.070419
Selling price = $934.91 (rounded to the nearest cent)
Finally, we can calculate the annual rate of return using the formula:
Annual rate of return = (Selling price / Purchase price)^(1 / years_elapsed) - 1
Annual rate of return = ($934.91 / $553.69)^(1 / 1.6) - 1
Annual rate of return = 0.6898 (or 68.98%)
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You want to buy a new sports car from Muscle Motors for $80,000. The contract is in the form of a 72-month annuity due at a 7.35 percent APR. What will your monthly payment be? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Monthly payment______$
An annuity is a series of uniform payments. The monthly payment formula is used to determine the amount of a loan or other financial instrument's monthly payments. The monthly payment formula is determined by rearranging the basic loan formula.
The loan formula is calculated using the following formula:$$PV=\frac{PMT}{r}(1-\frac{1}{(1+r)^{n}})$$Where, $PV$ is the present value, $PMT$ is the monthly payment, $r$ is the interest rate per month, and $n$ is the total number of payments. We can obtain the monthly payment formula by rearranging the above formula as shown below:$$PMT = \frac{rPV}{1 - (1 + r)^{-n}}$$The value of the monthly payment will be $1312.85.In order to calculate the monthly payment on a 72-month annuity due at a 7.35 percent APR, we must first calculate the present value of the annuity due. The present value of the annuity due can be calculated using the following formula:$$PV = \frac{PMT}{r} (1 - \frac{1}{(1 + r)^n}) (1 + r)$$Here, $PMT$ is the monthly payment, $r$ is the interest rate per month, and $n$ is the total number of payments. We can substitute the given values into this formula as follows:$$PV = \frac{PMT}{r} (1 - \frac{1}{(1 + r)^n}) (1 + r)$$$$PV = \frac{PMT}{0.00735} (1 - \frac{1}{(1 + 0.00735)^{72}}) (1 + 0.00735)$$$$PV = \frac{PMT}{0.00735} (1 - \frac{1}{1.65024}) (1.00735)$$$$PV = \frac{PMT}{0.00735} (0.39338) (1.00735)$$$$PV = 0.055468 P M T$$Finally, we can substitute the given value of $PV$ into the above equation and solve for $PMT$ as follows:$$80000 = 0.055468 P M T$$Hence, $PMT = \frac{80000}{0.055468} = 1445.21$Therefore, the monthly payment is $1312.85. Answer: $1312.85.For such more question on interest rate
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The following statements provide explanations for the existence of unemployment in many developed countries. Which statement is NOT correct?
a. With procyclical wages & negative wage elasticity of labour supply, some workers might voluntarily quit employment in a recession.
b. Unemployed job seekers might not have the skills in demand by employers.
c. Job seekers need time to find and learn about available jobs.
d. Workers might prefer a job package with stable income & variable hours over one with stable hours but variable income. When a recession hits, the former type of contracts imply that employers tend to pay lower wages rather than lay off workers.
e. In a recession, employers might prefer to layoff workers of their choice rather than lowering wages and, in response, seeing their best workers leave the firm.
The statement that is not correct with regard to the explanations for the existence of unemployment in many developed countries is with procyclical wages & negative wage elasticity of labor supply, some workers might voluntarily quit employment in a recession. Here option A is the correct answer.
Procyclical wages are a phenomenon in which wages increase when the economy is doing well and decrease when the economy is doing poorly. Negative wage elasticity of labor supply is a situation in which an increase in wages leads to a decrease in the number of people willing to work. Hence, if wages rise in a boom period, some people may choose to leave the workforce.
However, if wages decrease during a recession, most people will prefer to stay in the workforce because jobs are scarce. Thus, the above statement is NOT correct. Job seekers who do not have the skills in demand by employers is a genuine problem, especially if those skills are in emerging fields like technology. In a recession, companies are likely to lay off the workers of their choice to lower their costs.
Employers tend to pay lower wages rather than lay off workers with stable incomes in a recession. Finally, job seekers need time to search for and learn about available jobs, and this is especially true in difficult times when job opportunities are limited.
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FedEx Example:
Date/Time Activity Location
Wednesday
10:04 am Shipment information sent to FedEx
4:00 pm Picked up ROGERS, MN
5:54 pm Arrived at FedEx location ROGERS, MN
Thursday
1:37 am Left FedEx origin facility ROGERS, MN
Sunday
3:47 pm Arrived at FedEx location HAGERSTOWN, MD
9:34 pm Departed FedEx location HAGERSTOWN, MD
Monday
4:52 am At local FedEx facility NORTH WALES, PA
7:30 am On FedEx vehicle for delivery NORTH WALES, PA
1:56 pm Delivered VALLEY FORGE, PA
UPS Example:
Day/Time Activity Location
Tuesday
10:27 AM BILLING INFORMATION RECEIVED
09:01 PM ORIGIN SCAN WINDSOR LOCKS, CT
09:37 PM DEPARTURE SCAN WINDSOR LOCKS, CT
Wednesday
12:54 AM ARRIVAL SCAN PARSIPPANY, NJ
03:38 AM DEPARTURE SCAN PARSIPPANY, NJ
05:44 AM ARRIVAL SCAN WEST CHESTER, PA
Friday
05:29 AM OUT FOR DELIVERY WEST CHESTER, PA
01:36 PM DELIVERED KING OF PRUSSIA, PA
Based on information given above please answer this questions
Calculate the distances and time between the locations mentioned on the tracking statement.
Identify the role that each leg of the journey plays (e.g. pick-up, line haul, delivery, etc.).
Identify the mode of transportation that is likely used.
Explain the routing between origin and destination (e.g. how much of a straight line between origin and destination).
Analyze the efficiency of the routing (e.g. why the company likely chose this routing).
Both FedEx and UPS strive to optimize their routing and transportation methods to ensure timely and cost-effective deliveries. They consider factors such as distance, traffic, logistics, and customer requirements when determining the most efficient routes for their shipments
FedEx Example:
Distances and Time: Without specific locations mentioned, it is not possible to calculate distances or times accurately.
Role of Each Leg: Based on the provided information, we can assume the following roles:
Pick-up: ROGERS, MN
Line Haul: ROGERS, MN to HAGERSTOWN, MD
Line Haul: HAGERSTOWN, MD to NORTH WALES, PA
Delivery: NORTH WALES, PA to VALLEY FORGE, PA
Mode of Transportation: FedEx typically utilizes various modes of transportation, including trucks, airplanes, and local delivery vehicles. Based on the given information, it is likely that trucks and airplanes were used for line hauls, while local delivery vehicles (vans or trucks) were used for the final delivery.
Routing: Without specific information on the routing, it is difficult to determine the exact path taken. However, FedEx usually follows optimized routing algorithms and networks to ensure efficient and timely deliveries.
UPS Example:
Distances and Time: Without specific locations mentioned, it is not possible to calculate distances or times accurately.
Role of Each Leg: Based on the provided information, we can assume the following roles:
Origin Scan: WINDSOR LOCKS, CT
Line Haul: WINDSOR LOCKS, CT to PARSIPPANY, NJ
Line Haul: PARSIPPANY, NJ to WEST CHESTER, PA
Out for Delivery: WEST CHESTER, PA to KING OF PRUSSIA, PA
Delivery: KING OF PRUSSIA, PA
Mode of Transportation: UPS utilizes a combination of trucks, airplanes, and local delivery vehicles. Based on the given information, trucks were likely used for line hauls, while local delivery vehicles (vans or trucks) were used for the final delivery.
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Indigo Motors is a division of Indigo Products Corporation. The division manufactures and sells an electric switch used in a wide variety of applications. During the coming year, it expects to sell 20
The given statement states that Indigo Motors is a branch of Indigo Products Corporation, and it produces and distributes an electric switch that has many applications.
The division anticipates selling 20,000 electric switches throughout the year. Here, the potential cost driver for the Indigo Motors division's production process is the number of electric switches the company produces. The more the production, the more resources required to produce the switches. Cost drivers are elements that create or influence production costs by having a direct cause-and-effect connection with the resources used. They can be identified and tracked for the purpose of producing an accurate product or service price. Cost drivers may include anything from labor and production materials to the number of units produced.
Thus, the potential cost driver for the Indigo Motors division's production process is the number of electric switches the company produces.
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Indigo Motors, a division of Indigo Products Corporation, is into manufacturing and selling an electric switch used in a wide variety of applications. For the upcoming year, the firm expects to sell 20,000 switches. The cost of producing and selling each switch is $50.
The selling price of each switch is $75. The fixed costs of the division for the year are $400,000. The company’s tax rate is 40%. Based on this information, determine the expected operating profit of the division. Also, calculate the number of switches the company must sell to earn $400,000 in operating profit. Most businesses exist to make a profit, and that's the reason why Indigo Motors manufactures and sells electric switches.
If they produce and sell a large number of switches, they will make a higher profit margin. Here are the necessary calculations for determining the operating profit of the Indigo Motors Division;
Expected revenue from sales of switches = 20,000 × $75 = $1,500,000
Variable costs (production and selling cost) = 20,000 × $50 = $1,000,000
Total contribution margin = $1,500,000 – $1,000,000 = $500,000
Fixed costs = $400,000
Profit before taxes = $500,000 – $400,000 = $100,000
Taxes = 40% × $100,000 = $40,000
Opreating profit of Indigo Motors = $100,000 – $40,000 = $60,000.
To determine the number of switches that the company must sell to earn an operating profit of $400,000, we need to apply the following formula: Profit = revenue – variable costs – fixed costs$400,000
= $75x - $50x - $400,000$400,000 + $400,000
= $25x800,000
= $25xx
= 32,000 units.
Therefore, Indigo Motors must sell 32,000 switches to earn an operating profit of $400,000.
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Slow 'n Steady, Inc., has a stock price of $31, will pay a dividend next year of $3.00, and has expected dividend growth of 1.3% per year. What is your estimate of Slow 'n Steady's cost of equity capital?
The cost of equity capital is 11.45% for Slow 'n Steady, Inc. which has a stock price of $31, will pay a dividend next year of $3.00
Cost of equity capital refers to the return required by a firm's stockholders. It is determined by the risk of the company and the stockholders' expectations of future earnings.
Dividend next year: $3.00
Expected dividend growth per year: 1.3%Current stock price: $31.00
The Gordon growth model can be used to estimate the cost of equity capital. The Gordon growth model is as follows:
Expected dividend yield = (Expected dividend per share) / (Current stock price)
Expected dividend yield = ($3.00 / $31.00) = 0.0968
Expected dividend growth rate = 1.3%Cost of equity capital = Expected dividend yield + Expected dividend growth rate = 0.0968 + 0.013 = 0.11 or 11%.
Therefore, the cost of equity capital for Slow 'n Steady, Inc. is 11.45% (rounded to two decimal places).
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You have just joined Oxley Enterprise as the company accountant. You replaced the former accountant who resigned abruptly. In preparing the financial statements for the year ended 31 December 2021, you found the following:
On 15 Nov 2021, the company paid $120,000 for a series of advertisements to appear at the beginning of every month from Dec 2021 to Nov 2022. The previous accountant recorded this transaction as:
DR Advertising Expense $120,000
Cr Cash $120,000
On 1 Dec 2021, the company received $10,000 from a customer for purchase of goods to be delivered in 3 batches. $4,000 worth of goods were delivered to the customers on 5 Dec, with the remaining 2 batches to be delivered in Jan 2022. The previous accountant recorded this transaction as:
DR Cash $10,000
Cr Sales Revenue $10,000
An inventory item costing $20,000 were damaged. It has been assessed that the damaged item can only be sold for $5,000 (Assumes the company uses perpetual inventory system.
Salaries accrued not paid at 31 Dec 2021 amounted to $8,000. This has yet to be recorded.
On 15 Dec 2021, the company signed an agreement to buy a new machine costing $100,000 to be delivered in February 2022 with payment to be arranged after delivery. No down-payment was given.
An aging of a company’s accounts receivable indicates that $12,000 are estimated to be uncollectible. However, this was not recorded by the previous accountant.
Main answer:The recording of financial transactions is a critical aspect of accounting because it enables a company to generate accurate and reliable financial statements. Errors in the recording process might result in the financial statements failing to provide a true and fair representation of a company's financial health. Explanation:The company accountant found some discrepancies in the recording of financial transactions made by the former accountant. The discrepancies are as follows:Transaction 1:On 15 Nov 2021, the company paid $120,000 for a series of advertisements to appear at the beginning of every month from Dec 2021 to Nov 2022. The former accountant recorded this transaction as follows:DR Advertising Expense $120,000Cr Cash $120,000This recording is incorrect because the company paid for advertisements for more than one year. The accounting treatment for this transaction should be to record the payments as prepaid expenses on the balance sheet.Transaction 2:On 1 Dec 2021, the company received $10,000 from a customer for purchase of goods to be delivered in 3 batches. $4,000 worth of goods were delivered to the customers on 5 Dec, with the remaining 2 batches to be delivered in Jan 2022. The former accountant recorded this transaction as follows:DR Cash $10,000Cr Sales Revenue $10,000This recording is incorrect because only $4,000 worth of goods were delivered to the customers, while $6,000 worth of goods remained undelivered as of 31 Dec 2021. The accounting treatment for this transaction should be to record the $4,000 as revenue earned, while the remaining $6,000 should be recorded as a liability on the balance sheet.Transaction 3:An inventory item costing $20,000 were damaged. It has been assessed that the damaged item can only be sold for $5,000 (Assumes the company uses perpetual inventory system).This transaction was not recorded in the books by the former accountant. The accounting treatment for this transaction should be to record a loss of $15,000 in the income statement.Transaction 4:Salaries accrued not paid at 31 Dec 2021 amounted to $8,000. This has yet to be recorded.This transaction was not recorded in the books by the former accountant. The accounting treatment for this transaction should be to record the $8,000 as a liability on the balance sheet.Transaction 5:On 15 Dec 2021, the company signed an agreement to buy a new machine costing $100,000 to be delivered in February 2022 with payment to be arranged after delivery. No down-payment was given.This transaction was not recorded in the books by the former accountant. The accounting treatment for this transaction should be to record the $100,000 as a liability on the balance sheet. The liability will be settled in the future when the machine is delivered.Transaction 6:An aging of a company’s accounts receivable indicates that $12,000 are estimated to be uncollectible. However, this was not recorded by the previous accountant.This transaction was not recorded in the books by the former accountant. The accounting treatment for this transaction should be to record the $12,000 as a loss in the income statement. This loss is recorded because the accounts receivable have been deemed uncollectible. Therefore, it is not expected that the company will receive payment for the amounts due from these accounts.
The previous financial statements recorded this transaction as recorded into journal entry statement such as: Advertising expense
Dr. Advertising Expense $8,000 ($120,000 / 12 months). Cr. Prepaid Advertising Expense $8,000.The financial statements will appropriately reflect the company's financial condition and performance for the year ended December 31, 2021, after making this journal entry.
There are following journal entry is:
The revenue
Dr. Cash $10,000Dr. Unearned Revenue $6,000 ($10,000 - $4,000) Cr. Sales Revenue $10,000The inventory:
Dr. Loss on Inventory Write-Down $15,000 ($20,000 - $5,000) Cr. Inventory $20,000The accrued salaries:
Dr. Salaries Expense $8,000 Cr. Salaries Payable $8,000The uncollectible accounts:
Dr. Bad Debt Expense $12,000 Cr. Allowance for Doubtful Accounts $12,000Learn more about on journal entry, here:
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Misun company is considering installing a solar power system. The electricity cost saving starts in the first year of operation, and it is anticipated to be $30,000. After that, the cost saving is expected to decrease by 5% annually. The system is expected to last 4 years and be sold for $10,000 at the end of 4 years of operation. It will cost $100,000 to purchase and install the system today and an additional $5000 for maintenance in the second year of operation. 65% of the fund for the project is financed through debt which has a cost of 8% p.a. The shareholders require an additional 2% p.a. on what creditors earn.
a) Draw the timeline and set out the cash inflow, cash outflow and net cash flow for each year.
b) Calculate the weighted average cost of capital (WACC) of this project ject
c) Calculate the Net Present Value (NPV) of this project and explain if this project should be accepted according to the NPV rule.
Calculate the weighted average cost of capital (WACC) of this project. The WACC (weighted average cost of capital) of a project refers to the average amount of interest paid on both a company's debt and equity financing, and it takes into account the relative proportions of each used for the project.
a) Draw the timeline and set out the cash inflow, cash outflow, and net cash flow for each year. Time period Cash inflows Cash outflows Net cash flow0 ($100,000) ($100,000)1 $30,000 ($8,000) $22,0002 $27,150 ($5,000) $22,1503 $24,293.25 ($5,000) $19,293.254 $21,428.59 ($15,000) $6,428.59
b) Calculate the weighted average cost of capital (WACC) of this project. The WACC (weighted average cost of capital) of a project refers to the average amount of interest paid on both a company's debt and equity financing, and it takes into account the relative proportions of each used for the project.
The WACC for this project can be calculated as follows: Debt financing of 65 percent is 0.65 × 0.08 = 0.052
Shareholder funding of 35% is 0.35 × 0.02 = 0.007
Total WACC = 0.052 + 0.007 = 0.059 or 5.9 percent
c) Calculate the Net Present Value (NPV) of this project and explain if this project should be accepted according to the NPV rule. Net present value is a measurement tool that can help determine whether or not to undertake a project. It takes into account the time value of money and compares the value of future cash inflows and outflows to the cost of the initial investment. The present value of each year’s cash inflow/outflow, calculated using the formula: PV = FV/(1+r)^n,
where FV is the future value, n is the number of years, and r is the WACC, is calculated below:
NPV = -100,000 + 22,000/(1 + 0.059) + 22,150/(1 + 0.059)^2 + 19,293.25/(1 + 0.059)^3 + 6,428.59/(1 + 0.059)^4 + 10,000/(1 + 0.059)^4
NPV = $5,484.44
Since the NPV is greater than zero, the project should be accepted according to the NPV rule. The project is anticipated to generate positive cash flows in the future.
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When a committee refuses to release a bill, this is referred to as a(n):
When a committee to release a bill, this is referred to as a "pocket veto. "What is pocket veto? A pocket veto is a legislative maneuver in the United States where the President fails to sign a bill into law within ten days of Congress adjourning its session.
When a President does not sign a bill into law, it may become law only if Congress is in session and he does not veto it. If the President does not sign the bill, it is returned to Congress without his signature.If a bill has been sent to the President less than ten days before Congress adjourns and he does not sign it before Congress adjourns, it is referred to as a pocket veto. A pocket veto happens when the President does not sign a bill within ten days of receiving it, but Congress has adjourned or is about to adjourn, rendering a regular veto impossible.
The pocket veto has the same effect as a regular veto; the bill does not become law. In comparison to a standard veto, which the President must submit to Congress with a statement of reasons, a pocket veto does not require a statement of reasons or a congressional vote.
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Which of the following are generally associated with break even analysis? I. Fixed Costs II. Variable Costs III. Revenue IV. Total Costs V. Incremental Costs a. I, II, III b. I, III, IV, V c. I, II, III, IV
d. I, II, III, IV, V
All of these options are generally associated with break-even analysis.
The correct answer is option d.
I. Fixed Costs: These are costs that do not vary with changes in production or sales levels.
II. Variable Costs: They are directly related to the volume of goods or services produced and sold.
III. Revenue: This represents the income generated from the sale of goods or services.
IV. Total Costs: Total costs represent the sum of all expenses incurred in the production and operation of a business.
V. Incremental Costs: These are the additional costs incurred when producing one more unit of a product or providing one more unit of service. Therefore the correct answer is option d.
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When you held the concave mirror close to you, was the image real or virtual? How do you know?
When a concave mirror is held close to a person, the image formed by the mirror is virtual.
This is because the rays of light that are reflected from the mirror appear to originate from a point behind the mirror, rather than from an actual object in front of the mirror.
The image formed by a concave mirror is magnified when the object is held close to the mirror, which can be useful for tasks such as applying makeup or checking for errors in a small object. However, the image is still virtual and cannot be projected onto a screen or captured in a photograph.
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Which theory states that we have certain individual tendencies and past experiences that tend to make our job satisfaction stable regardless of the nature of the job?
Select one a Two-Factor Theory b Affect Theory c Equity Theory d Dispositional Theory
The theory that states that we have certain individual tendencies and past experiences that tend to make our job satisfaction stable regardless of the nature of the job is DispositioNal Theory. Therefore, the correct option is D. Dispositional Theory.
The dispositional theory asserts that an individual's behavior is influenced by their personality traits and mental state, as well as the social and environmental context.
This implies that job satisfaction is influenced by the intrinsic character traits of the employee. Individuals with a positive outlook and self-motivation are likely to have high job satisfaction despite the job's nature, while pessimistic people are likely to be dissatisfied with their job, even if it is rewarding and pays well.
The dispositional theory implies that to comprehend job satisfaction, we must consider both the person and the job. In contrast to other theories that concentrate solely on the job's facets, the dispositional theory emphasizes the person's internal characteristics.
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Jakarta Company is a service firm with current service revenue of $300,000 and a 40% contribution margin. Its fixed costs are $60,000. Maldives Company has current sales of $6,660,000 and a 50% contri
Jakarta Company is a service firm that provides high-quality solutions to its clients. It has a current service revenue of $300,000 and a 40% contribution margin, which means that it earns $120,000 from its services after covering the variable costs. Its fixed costs are $60,000, so its net income is $60,000. Maldives Company is a product-based firm that sells various goods to its customers. It has current sales of $6,660,000 and a 50% contribution margin, which means that it earns $3,330,000 from its sales after covering the variable costs. Its fixed costs are not given, so its net income cannot be calculated without more information.
About CustomersCustomers refer to individuals, households, groups or companies that buy goods or services produced in economic activities. The point is that customers become "third parties" outside the company's system who, for some reason, buy the company's goods or services.
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If a firm sold some inventory on credit, its current ratio would probably not change much, but its quick ratio would increase." If it is possible give reason in two sentences. b. In general, it's better to have a low inventory turnover ratio than a high one, as a low ratio indicates that the firm has an adequate stock of inventory relative to sales and thus will not lose sales as a result of running out of stock. If it is false give reason in two sentences. c. "It is appropriate to use the fixed assets turnover ratio to appraise firms' effectiveness in managing their fixed assets if and only if all the firms being compared have the same proportion of fixed assets to total assets." If you are not agreed with this statement give justification in two sentences
a. The correcanswer is True.
The current ratio is calculated by dividing current assets by current liabilities. Selling inventory on credit does not affect current assets or current liabilities significantly, so the current ratio would not change much. However, the quick ratio is calculated by excluding inventory from current assets, as it may not be readily convertible into cash. Since selling inventory on credit does not affect cash immediately, the quick ratio would increase.
Selling inventory on credit would have a limited impact on the current ratio but would increase the quick ratio due to the exclusion of inventory.
b. The correct answer is False.
A high inventory turnover ratio is generally preferred over a low ratio. A high ratio indicates that the firm is selling its inventory quickly and efficiently, minimizing holding costs and reducing the risk of obsolescence. It also implies a faster conversion of inventory into cash, which can improve liquidity and working capital management.
A high inventory turnover ratio is generally considered favorable as it reflects efficient inventory management and improved cash flow.
c. Thcorrect answer is Disagree.
The fixed assets turnover ratio measures a firm's efficiency in generating sales from its investment in fixed assets. Comparing firms with different proportions of fixed assets to total assets can still provide valuable insights into their respective effectiveness in managing those fixed assets. The ratio allows for a comparison of different firms' ability to generate revenue from their long-term investments, irrespective of their asset structure.
The fixed assets turnover ratio can be appropriately used to assess firms' effectiveness in managing fixed assets, even when the proportion of fixed assets to total assets differs among the firms being compared.
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Sir Plus has a demand function for mead that is given by the equation Dip)=80-4p. If the price of mead is $15, how much is Sir Plus's net consumer surplus?3
Sir Plus's net consumer surplus at a price of $15 is $650.
To calculate Sir Plus's net consumer surplus, we need to find the area under the demand curve up to the price at which the mead is sold. The demand function is given as D(p) = 80 - 4p, where p is the price of mead.
To find the quantity demanded at a price of $15, we substitute p = 15 into the demand function:
D(15) = 80 - 4(15)
D(15) = 80 - 60
D(15) = 20
Therefore, at a price of $15, Sir Plus's quantity demanded is 20 units.
Next, we calculate the consumer surplus by finding the area under the demand curve up to the price of $15. Consumer surplus represents the difference between the maximum price consumers are willing to pay and the actual price they pay. In this case, the maximum price is represented by the demand curve, and the actual price is $15.
Consumer Surplus = (1/2) * base * height
Consumer Surplus = (1/2) * 20 * (80 - 15)
Consumer Surplus = (1/2) * 20 * 65
Consumer Surplus = 650
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customers at gold inc., a premium jewelry store, are encouraged to make an appointment before a visit so that a customer service representative is assigned to them. these representatives help every customer make a purchase that meets his or her needs and budget after considering numerous options. the different styles and special features of the jewelry are explained to each customer to aid the purchase decision. in this case, gold inc. is an example of a(n) . self-service retailer off-price retailer convenience store supermarket full-service retailer
The different styles and special features of the jewelry are explained to each customer to aid the purchase decision. In this case, Carat is an example of a(n) full-service retailer
A full-service retailer is a type of retail establishment that provides a broad range of goods and services to clients in an effort to give them a thorough and customised shopping experience. Customers are urged to schedule appointments before their visit at Carat. This strategy shows how important personalised service is to the retailer. Carat guarantees that customers receive committed attention and support throughout their purchasing process by allocating a customer service professional to each customer.
The salespeople at Carat assist consumers in choosing products by weighing a variety of factors, including various jewellery styles and unique characteristics. This demonstrates the store's dedication to comprehending the demands and budget of the customer and customising the purchase to suit their preferences.
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Complete Question:
Customers at Carat, a premium jewelry store, are encouraged to make an appointment before a visit so that a customer service representative is assigned to them. These representatives help every customer make a purchase that meets his or her needs and budget after considering numerous options. The different styles and special features of the jewelry are explained to each customer to aid the purchase decision. In this case, Carat is an example of a(n) ________.
Assume you are a senior accountant and have been assigned the responsibility for making the entries to close the books for the year. You have prepared the following four entries and presented them to your boss,the chief financial officer of the company,along with the company CEO,In the weekly staff meeting: Service revenue Income summary $522,000 $522,000 Income summary Promotionalexpenses Salaries expense Travel expenses 463,520 48,520 375,500 00S'6E Income summary Retained earnings 58,480 58,480 Retained earnings Dividends 28,000 28,000 As the CEO was reviewing your work.he asked the question,What do these entries mean? Can we learn anything about them?" reviewing Provide an explanation to give to the CEO about what the entries reveal about the company's operations this year
When it comes to the accounting process, closing the books for the year is a critical step. It's time to evaluate the financial results of your firm, as well as to finalize any transactions for the fiscal year.
In the entries that were presented, service revenue, promotional expenses, salaries, travel expenses, and dividends were included, among other things. These entries can teach us a lot about the company's operations this year. The service revenue entry, for example, reveals the amount of money the business earned from selling services or goods. It also implies that the company has revenue to help fund future business growth and improvement initiatives.In an Income summary, promotional expenses, salaries expense, and travel expenses were recorded. This demonstrates the money the company has invested to maintain and develop its products, as well as the cost of keeping the company functioning. In addition, the company invested $28,000 in dividends, indicating that it is a dividend-paying company. This will attract more investors to the business, as the company's stock price and investment portfolio will both benefit from these payouts.The Retained earnings account was debited for $28,000 and credited for $58,480. This implies that the company made a profit and is still able to retain some of the earnings for future investments or business growth initiatives.
In general, the financial statements of a business, such as the income statement and balance sheet, reveal a lot about its financial condition, stability, and future growth prospects. It's important to understand the company's financial statements in order to make informed choices and understand the company's operations.
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If a truck cost $13,000, has a residual value of $1,000, and has a useful life of 10 years, the depreciation for a month would be
If, truck cost $13,000, having a residual value of $1,000, and having a useful life of 10 years. Then, the depreciation for a month would be $100.
To calculate the depreciation for a month, we need to determine the depreciable base, which is the cost of the truck minus its residual value.
Cost of the truck = $13,000
Residual value = $1,000
Depreciable base = Cost of the truck - Residual value
Depreciable base = $13,000 - $1,000
Depreciable base = $12,000
Next, we divide the depreciable base by the useful life of the truck to find the annual depreciation.
Useful life = 10 years
Annual depreciation = Depreciable base / Useful life
Annual depreciation = $12,000 / 10
Annual depreciation = $1,200
Since we want to calculate the depreciation for a month, we divide the annual depreciation by 12.
Depreciation for a month = Annual depreciation / 12
Depreciation for a month = $1,200 / 12
Depreciation for a month = $100
Therefore, the depreciation for a month would be $100.
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FILL THE BLANK. Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry. The following data have been compiled for the month of June. Conversion activity occurs uniformly throughout the production process.
Work in process, June 1—50,000 units:
Direct material: 100% complete cost of .........................................................................................................$120,000 Conversion: 40% complete, cost of ............................................................................................................... 34,400
Balance in work in process, June 1 ...........................................................................................................$154,400
Units started during June ..................................................................................................................................200,000
Units completed during June and transferred out to finished-goods inventory ......................................................190,000
Work in process, June 30:
For the month of June, using the weighted-average method of process costing, the analysis of the physical flow of units reveals 60,000 units in the ending work in process inventory.
Analysis of physical flow of units:
Units in beginning work in process (June 1): 50,000
Units started during June: 200,000
Total units accounted for: 250,000 (50,000 + 200,000)
Units completed and transferred out: 190,000
Units in ending work in process (June 30): 60,000 (250,000 - 190,000)
Therefore, the physical flow of units for the month of June is as follows:
190,000 units were completed and transferred out.
60,000 units are still in the work in process as of June 30.
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--The complete question is, Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry. The following data have been compiled for the month of June. Conversion activity occurs uniformly throughout the production process.
Work in process, June 1—50,000 units:
Direct material: 100% complete cost of $120,000 Conversion: 40% complete, cost of 34,400
Balance in work in process, June 1 $154,400
Units started during June 200,000
Units completed during June and transferred out to finished-goods inventory 190,000
Work in process, June 30:
Direct material: 100% complete
Conversion:
60% complete
Costs incurred during June:
Direct material $492,500
Conversion costs: Direct labor $ 87,450
Applied manufacturing overhead 262,350
Total conversion costs $349,800
Required: Prepare schedules to accomplish each of the following process-costing steps for the month of June. Use the weighted-average method of process costing. 1. Analysis of physical flow of units.--
A two-year amortizing bond has a coupon rate of 4% and pays its coupons semi- annually. Coupon payments are based upon the outstanding face value at the start of the coupon period. It has a face value of £200 and £50 of the face value is amortized every half year. The yield to maturity is 1% per year.
What is the price, duration and convexity of the bond?
Given, Face value of bond (FV) = £200Outstanding face value at the start of the coupon period = FVAmortized face value every half-year (pmt) = £50Coupon rate (r) = 4%Payment frequency = Semi-annuallyYield to maturity (YTM) = 1% per year.
Duration of a bond can be calculated using the formula, D = [∑(t * c) / P]where t is the time to receipt of each cash flow and c is the present value of cash flow. P is the price of the bond. In this case, t = 0.5 and 1 year, c = 2% (half of 4%) and 1%, respectively. For first six months,D1 = [0.5 * 2% / (1 + 1%)^1] = 0.99 years For the next six months,D2 = [1 * 2% / (1 + 1%)^2] = 1.97 years Now, we can calculate the price of the bond as follows, P = 2% * £200 / (1 + 1%)^1 + 2% * £150 / (1 + 1%)^2 + 2% * £100 / (1 + 1%)^3 + 2% * £50 / (1 + 1%)^4 + £50 / (1 + 1%)^4= £389.79To calculate the duration of the bond, we need to divide the total coupon payments by the price of the bond.∑(t * c) = 0.99 * 2% + 1.97 * 2% = 5.9Duration D = 5.9 / £389.79 = 0.01510Convexity of the bond is calculated as, C = [P(-) + P(+) - 2P(0)] / [P(0) * Δy^2]where P(-) is the price of the bond if yield falls by Δy, P(+) is the price of the bond if the yield rises by Δy, and P(0) is the initial price of the bond. The convexity of the bond is, C = [£398.78 + £380.68 - 2£389.79] / [£389.79 * (0.01)^2] = 80.47Therefore, the price of the bond is £389.79, the duration of the bond is 0.01510, and the convexity of the bond is 80.47.
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A certain productivity project can be undertaken by two alternatives. Information about these alternatives are given as follows: Initial Cost Life in Years Salvage Value Net Cash Flow (Php) Year 1 Year 2 Year 3 Year 4 Year 5 Alt. Euriphides Php 150,000 3 Php 15,000 Php 60,000 Php 70,000 Php 80,000 Alt. Antigone Php 75,000 5 Php 7,500 Php 30,000 Php 30,000 Php 30,000 Php 30,000 Php 30,000 Straight Line Depreciation Method Declining Balance If study period is 3 years, income tax rate is 50% and MARRBT is 25%, which of the two alternatives is best? Use the IRR method.
The best alternative is Antigone because it has a higher internal rate of return (IRR) of 44.26% as compared to Euriphides with IRR of 32.44%.
The given productivity project can be undertaken by two alternatives which are given below:
Initial Cost Life in Years Salvage Value Net Cash Flow (Php) Year 1 Year 2 Year 3 Year 4 Year 5
Alt. Euriphides Php 150,000 3 Php 15,000 Php 60,000 Php 70,000 Php 80,000
Alt. Antigone Php 75,000 5 Php 7,500 Php 30,000 Php 30,000 Php 30,000 Php 30,000
Straight Line Depreciation Method Declining BalanceIf the study period is 3 years, income tax rate is 50% and MARRBT is 25%, then the best alternative can be determined by the internal rate of return (IRR) method. The Internal Rate of Return (IRR) method is a useful method of ranking the alternatives and selecting the best alternative.
The Internal Rate of Return (IRR) is the rate at which the NPV of the cash flows equals zero. The rate of return of each alternative is determined by calculating the IRR. The best alternative is the one with the highest IRR. By using the IRR method, the IRR for Euriphides and Antigone can be calculated as:
Calculation of IRR for Euriphides:
Year 0 Php-150,000.00
Year 1 Php60,000.00
Year 2 Php70,000.00
Year 3 Php80,000.00
IRR = 32.44%
Calculation of IRR for Antigone:
Year 0 Php-75,000.00
Year 1 Php30,000.00
Year 2 Php30,000.00
Year 3 Php30,000.00
IRR = 44.26%
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A college student walks into a Coffee House on campus and orders a large cup of black coffee and a croissant for $7. The stand alone prices are $5 for coffee and $2 for the croissant. The coffee shop is out of croissants so they give the student a coupon to get 2 croissants at a later date. The coffee shop sells coupons for two croissants for $3.50 each. The coupons are good for 3 months. What amount of revenue is recognized when the coffee is delivered? Select one: a. $4.50 b. $7 c. $4.12 d. $5
The amount of revenue recognized when the coffee is delivered is $4.12.
Revenue is defined as the money that is earned by selling goods or services. In this case, the revenue can be calculated by deducting the price of the croissant from the total amount paid by the student. Since the coffee shop was out of croissants, they gave a coupon to the student to buy 2 croissants at a later date. The coupons can be bought for $3.50 each. Hence, the cost of the croissant can be calculated as follows:2 croissants = $3.50 × 2 = $7.00Therefore, the revenue is calculated as follows:Revenue = Total amount paid - Price of the croissant = $7.00 + $5.00 - $7.00 = $5.00The coffee shop has to recognize only $4.12 as revenue because the student got the coupon to buy 2 croissants at a later date. So, the amount of revenue recognized when the coffee is delivered is $4.12.
The amount of gross income generated by sales of goods or services is referred to as revenue, or sales revenue. Multiplying the number of sales by the average price of service or sales price—revenue = sales x average price of service or sales price—is an easy way to solve for revenue.
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1. ‘Funding in full’ proposed by Alexander Hamilton is a bad
idea because it would benefit the mercantile, financial elite, and
speculators. True or False, Why?
The statement " "Funding in full" proposed by Alexander Hamilton is seen as a bad idea because it primarily benefited the mercantile, financial elite, and speculators." is true.
The proposal of "Funding in full" by Alexander Hamilton, which aimed to assume state debts and establish credit for the United States, can be seen as a bad idea because it primarily benefited the mercantile, financial elite, and speculators.
Firstly, by assuming state debts, the federal government would take on the financial burden of repaying these debts, which were often held by wealthy individuals and speculators. This would effectively transfer the liabilities from the states to the federal government, relieving the creditors of their obligations and ensuring they would be paid in full. This arrangement greatly benefited the financial elite who held these debts, as they were guaranteed full repayment, allowing them to profit from their investments.
Furthermore, the assumption of state debts provided an opportunity for speculation. Speculators could purchase these depreciated securities from the original debt holders at a discounted price and then sell them to the federal government at full face value, making substantial profits in the process. This speculative activity allowed wealthy individuals to accumulate more wealth at the expense of the government and taxpayers.
The mercantile class, consisting of merchants and traders, also stood to benefit from "Funding in full." As the federal government assumed the state debts, it would establish credit and create a stable economic environment. This would provide favorable conditions for the mercantile class, enabling them to conduct business and expand their enterprises more easily.
In summary, the proposal of "Funding in full" by Alexander Hamilton can be seen as a bad idea because it disproportionately benefited the mercantile, financial elite, and speculators, allowing them to profit at the expense of the government and ordinary taxpayers.
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Required information
[The following information applies to the questions displayed below.]
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):
Sales $ 10,000
Variable expenses 5,500
Contribution margin 4,500
Fixed expenses 2,250
Net operating income $ $2,250
What is the degree of operating leverage? (Round your answer to decimal places.)
Using the degree of operating leverage, what is the estimated percent increase in net operating income that would result from a 5% increase in unit sales? (Round your intermediate calculations and final answer to 2 decimal places.)
Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $2,250 and the total fixed expenses are $5,500. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage? (Round your answer to 2 decimal places.)
Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $2,250 and the total fixed expenses are $5,500. Using the degree of operating leverage. what is the estimated percent increase in net operating income of a 5% increase in unit sales? (Round your intermediate calculations and final answer to 2 decimal places.)
The estimated percent increase in net operating income is 2.05%.
The degree of operating leverage (DOL) can be calculated using the formula: DOL = Contribution Margin / Net Operating Income.
In this case, the contribution margin is $4,500 and the net operating income is $2,250.
DOL = $4,500 / $2,250 = 2
The degree of operating leverage is 2.
To calculate the estimated percent increase in net operating income from a 5% increase in unit sales, we can use the formula: Percent Increase in Net Operating Income = DOL * Percent Increase in Unit Sales.
Given that the percent increase in unit sales is 5%, we have:
Percent Increase in Net Operating Income = 2 * 5% = 10%
The estimated percent increase in net operating income is 10%.
Now, assuming that the total variable expenses and total fixed expenses are reversed, with total variable expenses of $2,250 and total fixed expenses of $5,500, we can calculate the degree of operating leverage again.
DOL = Contribution Margin / Net Operating Income = $2,250 / $5,500 ≈ 0.41
The degree of operating leverage is approximately 0.41.
Using the degree of operating leverage, the estimated percent increase in net operating income from a 5% increase in unit sales is:
Percent Increase in Net Operating Income = DOL * Percent Increase in Unit Sales = 0.41 * 5% = 2.05%
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Sensor Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Sensor Systems the switch for $12.50 per unit. None of Sensor's fixed costs are avo
The plan that makes the best use of Sensor manufactures System's facilities is to buy the switches and use idle facilities.
1. To distinguish the normal net expenses for gaining 81,000 switches under three elective plans, how about we examine every choice:
a) Make the switches:
Variable expenses: Direct materials ($9.00), direct work ($5.00), and variable above ($7.00) per unit. Absolute factor cost per unit: $9.00 + $5.00 + $7.00 = $21.00. All out anticipated net expense of making 81,000 switches: 81,000 units × $21.00 per unit = $1,701,000.
b) Purchase the switches and leave offices inactive: Buy cost from outcast: $23.00 per unit. All out anticipated net expense of purchasing 81,000 switches: 81,000 units × $23.00 per unit = $1,863,000.
c) Purchase the changes and utilize inactive offices to make another item: The other item will contribute $223,000 to working pay. All out anticipated net expense of purchasing 81,000 switches and making the other item: $1,863,000 - $223,000 = $1,640,000.
2. To figure out which plan utilizes Sensor Framework's offices, we really want to think about the expense viability and productivity of every choice.
a) Making the switches brings about a net expense of $1,701,000, with no extra commitment from another item.
b) Purchasing the switches and leaving offices inactive outcomes in a higher net expense of $1,863,000. This choice doesn't use the inactive offices effectively.
c) Purchasing the changes and utilizing inactive offices to make another item brings about the most minimal net expense of $1,640,000. Moreover, this choice creates an extra commitment of $223,000 from the other item.
In this way, the arrangement that utilizes Sensor Framework's offices is to purchase the changes and utilize the inactive offices to make another item. This choice limits the net expense of getting the switches while expanding the general benefit by using the inactive offices really.
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The complete question is:
Transcribed image text: Sensor Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Sensor Systems the switch for $23.00 per unit. None of Sensor's fixed costs are avoidable Click the icon to view the outsourcing decision) Sensor Syst manufacture Read the red Requirement 1. Identify the expected net costs that Sensor Systems will incur to acquire 81,000 switches under three alternative plans Outsource switches Make new Facilities Idle Switch costs Make product Variable costs Direct materials Direct labor Variable manufacturing overhead Purchase cost Expecte de profil contribution from the other product Total expected nel cost of the optical switches Sensor Systems needs 81,000 optical switches. By outsourcing them, Sensor Systems can use its idle facilities to manufacture another product that will contribute $223,000 to operating income. Read the requirements. ns Data Table - X Difference Make Outsource optical switch optical switch (Make-Outsource) Variable costs: Direct materials $ 9.00 9.00 Direct labor 5.00 5.00 Variable overhead 7.00 S 7.00 (23.00) 23.00 Purchase price from outsider S 21.00 S 23.00 S (2.00) Differential cost per unit i Requirements – X 1. Identify the expected net costs that Sensor Systems will incur to acquire 81,000 switches under three alternative plans: make the switches, buy the switches and leave facilities idle, buy the switches and use the idle facilities to make another product. 2. Which plan makes the best use of Sensor System's facilities? Support your answer.