Answer:
a. Break-even point = Fixed Cost divided by Contribution per unit
= $1,500,000/$19.95
= 75,188 subscribers
b. New break-even point = $1,500,000/$24.95
= 60,120 subscribers
c. Subscriber base = 73,000
less dropped subscribers 10,000
adjusted subscribers = 63,000
The company will still be profitable because it will break-even with 60,120 subscribers. The excess 2,880 (63,000 - 60,120) subscribers after the break-even point of 60,120 will cause the company to make some profit.
Explanation:
a) Data and Calculations:
Fixed cost = $1,500,000 per month
Variable cost $20 per month per subscriber
Charges to customers per month $39.95
Contribution = $39.95 - $20 = $19.95
New variable cost = $25
New monthly charge = $49.95
Contribution per unit = $49.95 - $25 = $24.95
a. The breakeven point is 75,188.
b. The new breakeven point is 60,120.
c. If 10,000 subscribers will drop their service because of the monthly fee increase, the firm will still be profitable.
The formula used to determine breakeven point is : Fixed cost / (price - variable cost)
Initial breakeven point = $1,500,000 / ($39.95 - $20)
$1,500,000 / $19.95 = 75,188
New breakeven point = $1,500,000 / ($49.95 - $25)
$1,500,000 / $24.95 = 60,120
Profit = total revenue - total cost
Total revenue = $49.95 x 63,000 = 3,146,850
Total cost = $1,500,000 + ($25 x 63,000) = 3,075,000
Profit = 3,146,850 - 3,075,000 = $71,850
A similar question was answered here: https://brainly.com/question/14971552
How are the jobs of a music teacher and music therapist alike?
Answer:
they both play music
Explanation:
Answer:
They both make music
Explanation:
You are a co-founder of a start-up firm making electronic sensors. After a year of sales, your business is not growing rapidly, but you have some steady customers keeping the business afloat. A major supplier has informed you it can no longer supply your firm because it is moving to serve large customers only, and your volume does not qualify. Though you have no current orders to support it increased commitment to this supplier, you do have a new version of your sensor coming out that you help will increase the purchase volume by over 75% and qualify you for continuing supply. This supplier is important to your business. What do you do
Answer is given below :
Explanation:
To persuade the supplier to stay in touch with the company and continue to supply it, we can do the following as
Tell the supplier that sales have increased with the new product that the company is going to market, using different estimation methods. Demonstrate product samples to the supplier to gain their trust. Provide the supplier with some favourable terms and conditions so that it stays with the company. Make a formal agreement with him, we will order the bulk goods from the supplierCalculate the following: The future value of lump-sum investment of $3,200 in four years that earns 6 percent. Round your answer to the nearest dollar. (Hint: Use Appendix A.1 or the Garman/Forgue companion website.) Round Future value of a Single Amount in intermediate calculations to four decimal places. $ The future value of $1,100 saved each year for three years that earns 4 percent. Round your answer to the nearest dollar. (Hint: Use Appendix A.3 or the Garman/Forgue companion website.) Round Future value of Series of Equal Amounts in intermediate calculations to four decimal places. $ A person who invests $1,800 each year finds one choice that is expected to pay 4 percent per year and another choice that may pay 7 percent. What is the difference in return if the investment is made for four years? Round your answer to the nearest dollar. (Hint: Use Appendix A.3 or the Garman/Forgue companion website.) Round Future value of Series of Equal Amounts in intermediate calculations to four decimal places. $ The amount a person would need to deposit today with a 7 percent interest rate to have $4,000 in three years. Round your answer to the nearest dollar. (Hint: Use Appendix A.2 or the Garman/Forgue companion website.) Round Present value of a Single Amount in intermediate calculations to four decimal places. $
Answer:
(a) $4,040
(b) $3,434
(c) $348
(d) $3,265
Explanation:
(a) Calculate the following: The future value of lump-sum investment of $3,200 in four years that earns 6 percent. Round your answer to the nearest dollar. (Hint: Use Appendix A.1 or the Garman/Forgue companion website.) Round Future value of a Single Amount in intermediate calculations to four decimal places. $
To estimate this, the formula for calculating future value is used as follows:
FV = PV * (1 + r)^n ………………………….. (1)
Where,
FV = future value = ?
PV = lump-sum investment = $3,200
r = interest rate = 6%, or 0.06
n = number of years = 4
Substitute the values into equation (1) to have:
FV = $3,200 * (1 + 0.06)^4
FV = $3,200 * (1.06)^4
FV = $3,200 * 1.2625
FV = $4,040
(b) The future value of $1,100 saved each year for three years that earns 4 percent. Round your answer to the nearest dollar. (Hint: Use Appendix A.3 or the Garman/Forgue companion website.) Round Future value of Series of Equal Amounts in intermediate calculations to four decimal places. $
To calculate this, the formula for calculating the Future Value (FV) of an Ordinary Annuity is used as follows:
FV = M * (((1 + r)^n - 1) / r) ................................. (2)
Where,
FV = Future value of the amount after 3 years =?
M = Annual savings = $1,100
r = interest rate = 4%, or 0.04
n = number of years = 3
Substituting the values into equation (2), we have:
FV = $1,100 * (((1 + 0.04)^3 - 1) / 0.04)
FV = $1,100 * 3.1216
FV = $3,434
(c) A person who invests $1,800 each year finds one choice that is expected to pay 4 percent per year and another choice that may pay 7 percent. What is the difference in return if the investment is made for four years? Round your answer to the nearest dollar. (Hint: Use Appendix A.3 or the Garman/Forgue companion website.) Round Future value of Series of Equal Amounts in intermediate calculations to four decimal places. $
To do this, we first calculate the return of each of the 2 investments by using the the formula for calculating the Future Value (FV) of an Ordinary Annuity in part b above is used as follows:
Calculation of return at 4 percent
Where;
FV at 4% = Future value of the return after 4 years =?
M = Annual savings = $1,800
r = interest rate = 4%, or 0.04
n = number of years = 4
Substituting the values into equation (2), we have:
FV at 4% = $1,800 * (((1 + 0.04)^4 - 1) / 0.04)
FV at 4% = $1,800 * 4.2465
FV at 4% = $7,644
Calculation of return at 7 percent
Where;
FV at 7% = Future value of the return after 4 years =?
M = Annual savings = $1,800
r = interest rate = 7%, or 0.07
n = number of years = 4
Substituting the values into equation (2), we have:
FV at 7%= $1,800 * (((1 + 0.07)^4 - 1) / 0.07)
FV at 7% = $1,800 * 4.4399
FV at 7% = $7,992
Calculation of the difference in return
This is calculated as follows:
Difference = FV at 7% - FV at 4% = $7,992 - $7,644 = $348
(d) The amount a person would need to deposit today with a 7 percent interest rate to have $4,000 in three years. Round your answer to the nearest dollar. (Hint: Use Appendix A.2 or the Garman/Forgue companion website.) Round Present value of a Single Amount in intermediate calculations to four decimal places. $
To estimate this, the formula for calculating present value is used as follows:
PV = FV / (1 + r)^n ………………………….. (1)
Where;
PV = Present value or amount to deposit today = ?
FV = future value in three years = $4,000
r = interest rate = 7%, or 0.07
n = number of years = 3
Substitute the values into equation (1) to have:
PV = $4,000 / (1 + 0.07)^3
PV = $4,000 / 1.2250
PV = $3,265
list down 10,10 real world examples of input and output markets.(Domestic and international)
Answer:
1) Example of an input market: you are an employee at CVS
input ⇒ labor (your work)
2) Example of an output market: you purchase medicines at CVS
output ⇒ goods (medicines)
3) Example of an input market: you deposit your savings at a bank
input ⇒ capital (savings)
4) Example of an output market: a company gets a loan from the bank
output ⇒ capital (loan)
5) Example of an input market: you have 2 houses and rent one of them
input ⇒ land (real estate)
6) Example of an output market: you rent a room at the university's dorm
output ⇒ land (room)
7) Example of an input market: a foreign company sells oil to the US
input ⇒ land (oil)
8) Example of an output market: an American company exports PVC products
output ⇒ goods (PVC products)
9) Example of an input market: you purchase bonds from Costco
input ⇒ capital (your money)
10) Example of an output market: Costco pays interest (coupons) to its bondholders
output ⇒ capital (interests)
Explanation:
Input factors are the resources used to produce goods and services.
Output factors are the goods or services that are produced using input factors.
A series of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the concept of the time value of money will continue to apply. Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next six years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $400,000 $37,500 $480,000 $450,000 $550,000 $375,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 4%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar
Answer:
Total PV= $1,979,094.24
Explanation:
To calculate the present value, we need to use the following formula on each cash flow:
PV= Cf/(1+i)^n
Cf1= 400,000/1.04= 384,615.38
Cf2= 37,500/1.04^2= 34,670.86
Cf3= 480,000/1.04^3= 426,718.25
Cf4= 450,000/1.04^4= 384,661.89
Cf5= 550,000/1.04^5= 452,059.91
Cf6= 375,000/1.04^6= 296,367.95
Total PV= $1,979,094.24
JRN Enterprises just announced that it plans to cut its dividend from $2.50 to $1.50 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 4% per year and JRN's stock was trading at $25.00 per share. With the new expansion, JRN's dividends are expected to grow at 8% per year indefinitely. Assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to:
Answer:
P0 = $25
Explanation:
To calculate the value of JRN after the announcement, we will use the constant growth model of DDM as the dividends are expected to grow at a constant rate. The formula for price under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
D0 is the dividend todayr is the required rate of return g is the growth rate in dividendsAs the risk will remain the same, so we can say that the r or required rate of return will remain the same. To calculate r, we will input the pre announcement values in the formula above.
25 = 2.5 / (r - 0.04)
25 * (r - 0.04) = 2.5
25r - 1 = 2.5
25r = 2.5 + 1
r = 3.5 / 25
r = 0.14 or 14%
Using the same formula for post announcement values, we calculate teh price to be,
P0 = 1.5 / (0.14 - 0.08)
P0 = $25
Quick Computing currently sells 10 million computer chips each year at a price of $20 per chip. It is about to introduce a new chip, and it forecasts annual sales of 12 million of these improved chips at a price of $25 each. However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 3 million per year. The old chips cost $6 each to manufacture, and the new ones will cost $8 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip?
Answer:
Annual cashflow for the decision= $162 million
Explanation:
The proper cashflow would be determined as follows:
Contribution per unit = Sales price - variable cost
Contribution per unit of new chip = 25-8 = $17 per unit
Contribution per unit of old chip = 20 - 6 = 14 per unit.
Contribution form the sale of the new chip = contribution per unit × annual sales in unit
=17 × 12 million units = $204 million
lost Contribution from the old chip = contribution per unit × lost annual sales in unit
Lost contribution from old chip= $14 × 3 million unit = $42 million
Note that the lost contribution is an opportunity cost occasioned as a result of the introducing the new chip, hence the contribution should be deducted
Annual cashflow for the decision= $204 million -$42 million = $162 million
Annual cashflow for the decision= $162 million
Comprehensive Ratio Analysis
Data for Lozano Chip Company and its industry averages follow.
Lozano Chip Company: Balance Sheet as of December 31, 2013 (Thousands of Dollars)
Cash $ 225,000 Accounts payable $601,866
Receivables 1,575,000 Notes payable 326,634
Inventories 1,125,000 Other current liabilities 525,000
Total current assets $2,925,000 Total current liabilities $1,453,500
Net fixed assets 1,350,000 Long-term debt 1,068,750
Common equity 1,752,750
Total assets $4,275,000 Total liabilities and equity $4,275,000
Lozano Chip Company: Income Statement for Year Ended December 31, 2013 (Thousands of Dollars)
Sales $7,500,000
Cost of goods sold 6,375,000
Selling general and administrative expenses 825,000
Earnings before interest and taxes (EBIT) $ 300,000
Interest expense 111,631
Earnings before taxes (EBT) $ 188,369
Federal and state income taxes (40%) 75,348
Net income $ 113,022
Calculate the indicated ratios for Lozano. Round your answers to two decimal places.
Ratio Lozano Industry Average
Current assets/Current liabilities 2.0
Days sales outstanding* days 35.0 days
COGS/Inventory 6.7
Sales/Fixed assets 12.1
Sales/Total assets 3.0
Net income/Sales % 1.2%
Net income/Total assets % 3.6%
Net income/Common equity % 9.0%
Total debt/Total assets % 30.0%
Total liabilities/Total assets % 60.0%
*Calculation is based on a 365-day year.
Construct the extended Du Pont equation for both Lozano and the industry. Round your answers to two decimal places.
For the firm, ROE is %
For the industry, ROE is %
Outline Lozano's strengths and weaknesses as revealed by your analysis
Answer and Explanation:
The computation of Construction of the extended Du Pont equation for both Lozano and the industry is shown below:-
Current asset ÷ current liability = 2
Days sales outstanding =35 days
Sales ÷ Inventory = 6.67
Sales ÷ Fixed assets = 5.55
Sales ÷ Total assets = 1.754
Net income ÷ Sales = 1.5%
Net income ÷ Total assets = 2.64%
Net income ÷ common equity = 6.45%
Total liabilities ÷ Total assets =59%
b. the computation of firm and industry ROE is shown below:-
Du Pont
Lozano
ROI = [(net profit ÷ sales) × (sales ÷ Total assets)]
= [(113,022 ÷ 7,500,000) × (7,500,000 ÷ 4,275,000)]
= 0.0264
or
= 2.64%
For Industry
ROI = 1.2% × 3
= 0.036
or
= 3.6%
c. Lozano's strengths
1. ROI determined the profit at the time when a firm earned on investing a capital unit
2. Also, the net income or sales figured out the efficiency level so that it could maintain the business affairs
Lozano's Weakness
1. If we compare the fixed asset turnover with the average of an industry than the investment made in fixed assets would not be a good judgment
For 2018, Gourmet Kitchen Products reported $23 million of sales and $18 million of operating costs (including depreciation). The company has $15 million of total invested capital. Its after-tax cost of capital is 10% and its federal-plus-state income tax rate was 35%. What was the firm's economic value added (EVA), that is, how much value did management add to stockholders' wealth during 2018? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary.
Answer:
$1,750,000
Explanation:
Economic value added (EVA) = Net operating profit after taxes - Invested capital * Cost of capital
Economic value added (EVA) = [($23,000,000 - $18,000,000)*(1 - 0.35)] - [$15,000,000*10%]
Economic value added (EVA) = $5,000,000*(0.65) - $1,500,000
Economic value added (EVA) = $3,250,000 - $1,500,000
Economic value added (EVA) = $1,750,000
Hence, the management add the value of $1,750,000 to stockholders' wealth during 2018.
Calculator In 2019 Todd purchased an annuity for $150,000. The annuity is to pay him $2,500 per month for the rest of his life. His life expectancy is 100 months. Which of the following is correct? a.For each $2,500 payment received in the first year, Todd must include $1,500 in gross income. b.If Todd collects 20 payments and then dies in 2019, Todd's estate should amend his tax returns for 2019 and 2020 and eliminate all of the reported income from the annuity for those years. c.Todd is not required to recognize any income until he has collected 60 payments (60 × $2,500 = $150,000). d.For each $2,500 payment received in the first year, Todd must include $1,000 in gross income. e.None of these choices are correct.
Answer:
d.For each $2,500 payment received in the first year, Todd must include $1,000 in gross income
Explanation:
The computation is shown below:
As we know that
Exclusion Ratio is
= Cost ÷ Benefit
= $150,000 ÷ ($2,500 × 100)
= 0.6
Now
= 0.6 × $2,500
= $1,500 Excludible
So, the involved amount is
= $2,500 - $1,500
= $1,000 Includible
Hence, the correct option is d. and the same is to be considered
The other options are wrong
While visiting a client to deliver their 2019 tax documents, one of the owners approaches you and states: "The IRS says my travel is no longer business travel, but instead, is commuting. They are saying I am going to owe taxes on the money the company has reimbursed for my travel. I spend $1,500 per week traveling, and travel at least 50 weeks out of the year, traveling weekly to Houston on Monday, Los Angeles on Tuesday, Seattle on Wednesday, Chicago on Thursday, and Philadelphia on Friday. I leave my home in Atlanta early Monday morning, and on Friday night, I fly back to Atlanta, and my home. I visit different clients each time I visit the cities to which I travel. My job is to help them get their restaurants up and running, and I am usually there from start to finish, which takes anywhere from 3 to 9 months. I have been traveling like this for the past 10 years. That is a lot of money we are talking about. The IRS also said something about fraud, fines and penalties, maybe even jail time. Are they right? Can they send me to jail for doing my job? What should I do?"
Answer:
Commuting refers to travelling from your home to your workplace. It generally refers to the distance that people generally travel to get to their office or any type of workplace.
While business travel refers to not only leaving your house to go to work, but actually going somewhere else to perform your regular business activities, e.g. going form one state to another to close a sale. In order for business travel to be effectively recognized as such, it must be necessary for your business activity and it should last more than one ordinary workday.
In this case, your client continuously leaves his house and goes form one state to another performing his normal business activities. This perfectly fits the IRS's definition of business travel.
Initially, you can try to solve this issue with IRS Office of Appeals (since you are right), but if that doesn't work, then you can go to Tax Court.
On October 28, 2013, Mercedes Company committed to a plan to sell a division that qualified as a component of the entity according to GAAP regarding discontinued operations and was properly classified as held for sale on December 31, 2013, the end of the company's fiscal year. The division's loss from operations for 2013 was $2,000,000. The division's book value and fair value less cost to sell on December 31 were $3,000,000 and $2,500,000, respectively. What before-tax amount(s) should Mercedes report as loss on discontinued operations in its 2013 income statement? Group of answer choices
Answer: $2,500,000
Explanation:
Discontinued operations is when a particular division in a company shutdown.
With regards to the above question, the before-tax amount that Mercedes should report as loss on discontinued operations in its 2013 income statement will be:
= $2,000,000 + ($3,000,000 - $2,500,000)
= $2,000,000 + $500,000
= $2,500,000
A blank is something a person want to get out of a job or that bring them job satisfaction
Answer:
A work value is something a person wants to get out of a job or that brings them job satisfaction. Correct answer: B
Work values include talents, motives, values and attitudes which provide stability and direction for the chosen career. That is why it is very important to choose your career for the right reasons, goals and motivation.
Explanation:
Lancelot Manufacturing is a small textile manufacturer using machinehours as the single indirectcost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Case High School Job Direct materials Direct labor Manufacturing overhead costs Machinehours mh mh What is the bid price for the Case High School job if the company uses a % markup of total manufacturing costs?
Answer:
$3,927
Explanation:
For the computation of bid price first we need to follow some steps which is shown below:-
Manufacturing overhead rate = Overhead cost ÷ Machine hours
= 45,000 ÷ 100,000
= $0.45
Total manufacturing cost charged to the school
= 2,000 + 400 + (900 × 0.45)
= $2,805
Markup cost = $2,805 × 0.4
= $1,122
Bid price of job = Total manufacturing cost charged to school + Markup cost
= $2,805 + $1,122
= $3,927
Ratio Analyses
Use the following balance sheet and cash flow statement information to answer the questions below.
Liquid assets: $16,000;
home value: $190,000;
monthly mortgage payment: $1,250;
investment assets: $100,000;
personal property: $20,000;
total assets: $326,000;
short-term debt: $5,400 ($450 a month);
long-term debt: $170,000 ($2,200 a month);
total debt: $175,400;
monthly gross income: $13,000;
monthly disposable income: $6,000;
monthly expenses: $7,000.
Calculate the ratios below. Round your answers to two decimal places.
Answer:
Since the requirements were missing, I looked for similar questions:
(a) Liquidity ratio for individuals
basic liquidity ratio = cash (liquid) assets / monthly expenses = $16,000 / $7,000 = 2.29
Depending on the maturity of the investment assets, the liquidity ratio could increase, but since the information is limited, we can only consider liquid assets. E.g. if the investment assets include bonds that mature in a very short term they should be included in this formula, but if they include bonds that mature in x number of years, then they aren't included.
(b) Debt-to-asset ratio :
generally the formula is debt to asset ratio = $175,400 / $326,000 = 0.54
(c) Debt service-to-income ratio
debt service to income ratio = monthly payments / gross income = ($450 + $2,200) / $13,000 = $2,650 / $13,000 = 0.20
(d) Debt payments-to-disposable income ratio
debt payments to disposable income ratio = monthly payments / disposable income = ($450 + $2,400) / $6,000 = $2,650 / $6,000 = 0.44
James Grunig, professor emeritus of public relations at the University of Maryland, listed the following possible objectives for a communicator _________.
Answer: See explanation
Explanation:
According to James Grunig, professor emeritus of public relations at the University of Maryland, the five possible objectives for a communicator are:
• Message Exposure - This refers to situation when the intended people get exposed to the message that is being shared. Here, materials are provided to the mass media by the PR personel.
• Accurate dissemination of message - Messages must be passed across and communicated as clearly as possible without giving out false information or witholding back some information which is vital for the accuracy of the information delivered.
• Acceptance of the message - The message passed must be accepted by the person that's being addressed.
• Attitude change - There must be an attitude change after the message has been delivered as these shows acceptance and products should be purchased.
• Change in overt behavior - Overt behavior is openly seen and hence, there will be change in overt behavior and the goods will be purchased.
Big-Pear Corp. is considering replacing its existing equipment that is used to produce smart cell phones. This existing equipment was purchase 2 years ago at a base price of $48,000. Installation costs at the time for the machine were $7,000. The existing equipment is considered a 5-year class for MACRS. The existing equipment can be sold today for $60,000 and for $30,000 in 4 years. The new equipment has a purchase price of $145,000 and is also considered a 5-year class for MACRS. Installation costs for the new equipment are $8,000. The estimated salvage value of the new equipment in year 4 is $70,000. This new equipment is more efficient than the existing one and thus savings before taxes using the new equipment are $12,000 a year. Due to these savings, inventories will see a one time reduction of $3,000 at the time of replacement. The company's marginal tax rate is 33% and the cost of capital is 12%. For this project, what is the incremental cash flow in year 3
Answer:
-$7,525.44
Explanation:
MACRS 5 year depreciation
20%32%19.20%11.52%11.52%5.76%if project is carried out:
initial outlay = {[$60,000 - ($55,000 x 52%)] x (1 - 33%)} - $145,000 - $8,000 + $3,000 = -$128,962
cash flow year 1 = [$12,000 - ($154,000 x 20%)] x 0.67 = -$12,596
cash flow year 2 = [$12,000 - ($154,000 x 32%)] x 0.67 = -$24,977.60
cash flow year 3 = [$12,000 - ($154,000 x 19.2%)] x 0.67 = -$11,770.56
cash flow year 4 = {[$12,000 - ($154,000 x 11.52%)] x 0.67} + {[$70,000 - ($154,000 x 17.28%)] x (1 - 33%)} = -$3,846.34 + $29,070.50 = $25,224.16
if project is not carried out:
cash flow year 1 = -$10,506 x 0.67 = -$7,0752.20
cash flow year 2 = -$6,336 x 0.67 = -$4,245.12
cash flow year 3 = -$6,336 x 0.67 = -$4,245.12
cash flow year 4 = (-$3,168 x 0.67) + ($30,000 x 0.67) = $17,977.44
incremental cash flow year 3 = -$11,770.56 - (-$4,245.12) = -$7,525.44
Using your accounting knowledge, fill in the blanks in the following separate income statements a through e. Identify any negative amount by putting it in parentheses. a b c d e Sales $62,000 $43,500 $ 46,000 $ ? $25,600 Cost of goods sold Merchandise inventory (beginning) 8,000 17,050 7,500 8,000 4,560 Total cost of merchandise purchases 38,000 ? ? 32,000 6,600 Merchandise inventory (ending) 11950 ? (3,000) (9,000) (6,600) ? Cost of goods sold 34,050 16,000 ? ? 7,000 Gross profit ?27950 ? 3,750 45,600 ? Expenses 10,000 10,650 12,150 3,600 6,000 Net income (loss) $ 17950? $16,850 $ (8,400) $42,000 $ ?
Answer:
1. d's Sales is $79,000
2. b's Total cost of merchandise purchases is $1,950
3. c's Total cost of merchandise purchases is $43,750
4. c's Cost of goods sold is $42,250
5. d's Cost of goods sold is $33,400
6. b's Gross profit is $27,500
Explanation:
Note: Kindly see the attached excel file which contains the calculations
In order to do the calculations, the following formulas are employed:
Gross profit = Sales - Cost of goods sold
Cost goods sold = Beginning merchandise inventory + Total cost of merchandise purchases - Ending merchandise inventory
Sales = Cost of goods sold + Gross profit
Total cost of merchandise purchases = Cost goods sold - Beginning merchandise inventory + Ending merchandise inventory
First, d's Sales is $79,000
Second, b's Total cost of merchandise purchases is $1,950
Third, c's Total cost of merchandise purchases is $43,750
Forth, c's Cost of product sold is $42,250
Fifth, d's Cost of product sold is $33,400
Sixth, b's Gross profit is $27,500
How to calculate gross profit?
Then Applying formulas are employed:
Now the Gross profit is = Sales - Cost of products sold
Then Cost goods sold = Beginning Merchandise inventory + Total cost of merchandise purchases - Ending Merchandise inventory
The formula is Cost of goods sold + Gross profit
Then Total cost of merchandise purchases = Cost products sold - Beginning merchandise inventory + Ending merchandise inventory
a b c d e
$ $ $ $ $
Sales 62000 43,500 46000 79000 25,600
Cost of goods sold
Merchandise inventory (beginning) 8,000 17,050 7,500 8,000 4,560
Total cost of merchandise purchases 38,000 1,950 43,750 32,000 6,600
Merchandise inventory (ending) (11,950) (3,000) (9,000) (6,600) (4,160)
Cost of goods sold 34,050 16,000 42,250 33,400 7,000
Gross profit 27,950 27,500 3,750 45,600 18,600
Expenses 10,000 10,650 12,150 3,600 6,000
Net income (loss) 17,950 16,850 (8,400) 42,000 12,600
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Eric and Deborah are partners at a law firm. They are trying to determine which of them has a comparative advantage in typing the 25 pages required for a sales pitch to a prospective client.
Eric can type 20 pages per hour. For other activities, he can bill clients $500 per hour. Eric's opportunity cost of typing pages is_____per page.
Deborah's opportunity cost of typing pages is 25% lower than Eric's. However, as the senior partner, her billing rate is 20% higher. Based on all of these facts,_____has a comparative advantage in typing pages.
Answer:
Eric's opportunity cost of typing pages is $25 per page.
Based on all of these facts, Deborah has a comparative advantage in typing pages.
Explanation:
Eric's opportunity cost of typing is $500 / 20 pages = $25 per page.
Since's Deborah's opportunity cost of typing pages is 20% less than Eric's, then she has a comparative advantage in typing pages.
The person, business or country with the lowest opportunity cost has the comparative advantage in producing that good.
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $28,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $28,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 11 percent on her investments. a. What is the after-tax cost if Isabel pays the $28,000 bill in December
Answer:
A. $17,640
B.$18,666
Explanation:
a. Calculation for the after-tax cost if Isabel pays the $28,000 bill in December
First step is to find the Tax savings in current year
Tax savings in current year = $28,000*37%
Tax savings in current year = $10,360
Last step is to calculate for the After tax cost using this formula
After tax cost = Cost of bill - Tax savings
Let plug in the formula
After tax cost= $28,000-$10,360
After tax cost=$17,640
Therefore the after-tax cost if Isabel pays the $28,000 bill in December will be $17,640
b. Calculation for the after-tax cost if Isabel pays the $20,000 bill in January
First step is to find the Tax savings in next year
Tax savings in current year = $28,000*37%
Tax savings in current year = $10,360
Second step is to find the present value of $1 ($28,000/$28,000) at 11% for one year using present value table
Present value of $1 at 11% for one year = 0.901
Present value of tax savings = $10,360* .901
Present value of tax savings =$9,334.36
Last step is to calculate for the After tax cost using this formula
After tax cost = Cost of bill - Tax savings
Let plug in the formula
After tax cost = $28,000-$9,334.36
After tax cost=$18,665.64 approximately $18,666
Therefore the after-tax cost if Isabel pays the $28,000 bill in January will be $18,666
During 2018, Mayfair Enterprises had the following securities outstanding: 1. 250,000 shares of common stock with an average market price of $25 per share. 2. 9.5% convertible preferred, which had been sold at its par value of $100. The preferred stock is convertible into three shares of common stock and 3,000 preferred shares are currently outstanding. During 2018, Mayfair Enterprises earned net income after income taxes of $3.2 million. Calculate the (a) basic earnings per share and (b) diluted earnings per share for Mayfair Enterprises for 2018.
Answer and Explanation:
The computation of the earning per share and the diluted per share is shown below:
But before that following calculations need to be computed
Preference dividend is
= 3,000 shares × $100 × 9.5%
= $28,500
a. Now the earning per share is
= (Net income - preference dividend) ÷ (number of weighted outstanding shares)
= ($3.2 million - $28,500) ÷ (250,000 shares)
= $12.69 per share
b. Now diluted per share is
= Earning after tax ÷ (number of weighted outstanding shares)
= $3.2 million ÷ (250,000 shares + 3,000 × 3)
= $12.36 per share
Yuma, Inc. manufactures teddy bears and dolls. Currently, Yuma makes 2,100 teddy bears each month. Each teddy bear uses $3.50 in direct materials and $1.00 in direct labor. Yuma uses two activities in manufacturing the teddy bears: Sewing and Processing. The cost associated with Sewing is $15,750 a month, allocated on the basis of direct labor hours. The cost associated with Processing is $10,500 a month, allocated on the basis of batches. Teddy bears use 1/2 of the direct labor hours, and 35% of total batches. What is the total manufacturing cost for one teddy bear?
Answer:
$10.00
Explanation:
Calculation for the total manufacturing cost for one teddy bear
Total manufacturing cost=$3.50 + $1.00 + [($15,750 × 1/2)/2,100] + [($10,500 × 35%)/2,100]
Total manufacturing cost=$3.50 + $1.00 + ($7,875/2,100) + ($3,675/2,100)
Total manufacturing cost=$3.50 + $1.00 + $3.75+ $1.75
Total manufacturing cost=$10.00
Therefore the total manufacturing cost for one teddy bear will be $10.00
For the following accounts, indicate what causes the account to increase and decrease. The first account is completed as an example. (Abbreviation used: OH=overhead)
Account Is increased by: Is decreased by:
Raw Materials Inventory Materials purchased Materials used
Work-in-Process Inventory
Adjustment for over/under allocation of OH Completion of jobs Direct labor incurred Direct materials used Manufacturing overhead allocated Materials purchased Materials used Shipping sold jobs
Table of accounts
Account Is increased by: Is decreased by:
Raw Materials Inventory Materials purchased Materials used
Work-in-Process Inventory
Finished Goods Inventory
Cost of Goods Sold
Answer and Explanation:
The causes of the account to increase and decrease is shown below:-
Account Is increased by Is decreased by
Raw material inventory Material purchased Material used
Work-in-progress
inventory Direct material used Completion of jobs
Direct labor incurred
MOH allocated
Finished goods
inventory Completion of jobs Shipping sold jobs
Cost of goods sold Shipping sold jobs Adjustment for over/under
allocation of OH
Adjustment for over or under
allocation of OH
The above shows the increment and decrement of each item and the same is being considered
Which of the following is an example of a non-profit organization?
a. Home Depot
b. YMCA
c. Sports Authority
d. Kroger
Answer:
They, along with thousands of other nonprofits, receive regular donations of products from The Home Depot. Since 2008, The Home Depot and The Home Depot Foundation have worked with Good360 to distribute millions of dollars in product to nonprofit organizations that use the materials to help those in need.
A. Home Depot
Explanation:
Answer:
YMCA is a nonprofit organization
Whispering Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following. Inventory (beginning) $ 79,100 Sales revenue $422,000 Purchases 288,300 Sales returns 21,400 Purchase returns 27,900 Gross profit % based on net selling price 33 % Merchandise with a selling price of $29,400 remained undamaged after the fire, and damaged merchandise has a net realizable value of $8,700. The company does not carry fire insurance on its inventory. Compute the amount of inventory fire loss. (Do not use the retail inventory method.) Inventory fire loss $
Answer:
$42,700
Explanation:
The calculation of the amount of inventory fire loss is shown below:-
Particulars Amount
Opening inventory $79,100
Purchases $288,300
Less:- Purchase returns $27,900 $260,400
Goods available $339,500
Sales revenue $422,000
Less- Sales returns $21,400
Net Sales $400,600
Less:- Gross profit $132,198 $268,402
($400,600 × 33%)
Estimated ending inventory $71,098
Less:- Goods on hand-undamaged $19,698
$29400 × (1 - 0.33)
Less:- Goods on hand-damaged $8,700
Fire loss on inventory $42,700
Sunland Company uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2019 totaled $12000 of materials, $8000 of direct labor costs, and $5000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $9000, and the ending balance is $6000. During the year, the company completed 25 machines. How much is the cost per machine
Answer:
$1,120
Explanation:
The computation of the cost per machine is shown below:
Cost per machine is
= Total machine cost ÷ number of machines completed
where,
Total cost of machine is
= Opening work in process + direct material + direct labor + manufacturing overhead - ending work in process
= $9,000 + $12,000 + $8,000 + $5,000 - $6,000
= $28,000
And, the number of completed machines is 25
So, the cost per machine is
= $28,000 ÷ 25
= $1,120
Company analysis. Given the financial data in the popup window, for Disney (DIS) and McDonald's (MCD), compare these two companies using the following financial ratios: debt ratio, current ratio, total asset turnover, financial leverage component (equity miltiplier), profit margin, and return on equity. Which company would you invest in, either as a bondholder or as a stockholder?
Disney McDonald's
Sales $48,719 $28,049
EBIT $12,291 $8,143
Net Income $7,523 $5,521
Current Assets $15,078 $5,019
Total Assets $84,121 $36,669
Current Liabilities $13,295 $3,066
Total Liabilities $39,228 $20,583
Equity $44,993 $16,058
Answer:
1. Debt ratio=Total liabilities/Total assets
Disney = 39,228/84,121 =0.466328
McDonald's=20583/36669 =0.561319
Based on this ratio, Disney is a better investment option because Disney is less leveraged than McDonald's which means it is has taken lesser risk than McDonald's.
2. Current ratio = Current assets/Current liabilities
Disney = 15078/13295 = 1.1341
McDonald's=5019/3066 =1.6369
Based on this ratio, McDonald's is a better investment option because of higher ratio, its ability to pay its current liabilities with its current assets is better than Disney.
3. Total asset turnover=Sales/total assets
Disney = 48719/84121 = 0.5791
McDonald's = 28049/36669 = 0.7649
Based on this ratio, McDonald's is a better investment option because of higher ratio, it shows that McDonald's is generating more revenues per dollar of assets which implies better performance.
4. Financial leverage= Total debt/total equity
Disney = 39228/44993 = 0.8718
McDonald's = 30583/16058 = 1.2817
Based on this ratio, Disney is a better investment ratio because McDonald's ratio is more than 1, which means it has more debt than equity and it shows higher burden on the company to repay principal and interest.
5. Profit margin= Net income/Sales
Disney= 7523/48718 = 0.1544
McDonald's= 5521/28049 = 0.1968
Based on this ratio, McDonald's is a better option as it has earner more income per dollar of sales, which means it is more profitable and is performing better
6. Return on equity= Net income/Equity
Disney= 7523/44993 = 0.1672
McDonald's= 5521/16058 = 0.3438
Based on this ratio, McDonald's is a better option as is it is providing higher return to its shareholders.
Final Conclusion: McDonald looks a better investment option for both a bond holder and a shareholder.
Presented below is information related to Concord Corporation.
Oct. 1 Diane Lexington begins business as a real estate agent with a cash investment of $28,426 in exchange for common stock.
2 Hires an administrative assistant.
3 Purchases office furniture for $3,269, on account.
6 Sells a house and lot for N. Fennig; bills N. Fennig $5,117 for realty services performed.
27 Pays $1,208 on the balance related to the transaction of October 3.
30 Pays the administrative assistant $3,553 in salary for October.
Prepare the debit-credit analysis for each transaction.
Answer:
Date Account Titles Debit Credit
October 1 Cash $28,426
Common Stock $28,426
October 2 No journal entry
October 3 Office Furniture $3,269
Accounts Payable $3,269
October 6 Accounts Receivable $5,117
Service Revenue $5,117
October 27 Accounts Payable $1,208
Cash $1,208
October 30 Salaries Expense $3,553
Cash $3,553
Wildhorse Co. entered into these transactions during May 2022, its first month of operations.
1. Stockholders invested $31,500 in the business in exchange for common stock of the company.
2. Purchased computers for office use for $33,800 from Ladd on account.
3. Paid $4,100 cash for May rent on storage space.
4. Performed computer services worth $18,600 on account.
5. Performed computer services for Wharton Construction Company for $6,400 cash.
6. Paid Western States Power Co. $8,000 cash for energy usage in May.
7. Paid Ladd for the computers purchased in (2).
8. Incurred advertising expense for May of $3,100 on account.
9. Received $11,000 cash from customers for contracts billed in (4).
Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders' Equity in the far right column. (Ifa transaction causes a decrease in Assets, Liabilities or Stockholders' Fquity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Fquity item that was reduced. See Illustration 3-3 for example.
Assets Liabilities + Cash + Accounts Receivable + Equipment + Accounts Payable Common Stock $ $ $+ Stockholders' Equity Common Stock Retained Earnings Revenues - Expenses
Answer:
Amounts that reduce the respective balances have a negative sign in front of them.
International Gems sells fine jewelry and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping. International has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected. The final cost pool is used for general operations of the department and the cost driver is the number of orders. Information about the activities is summarized below:
Cost Pool Total Costs Cost Driver Annual Activity
Packaging and shipping $164,700 Number of boxes shipped 24,000 boxes
Final inspection $200,600 Number of individual items shipped 98,900 items
General operations and supervision $84,300 Number of orders 8,100 orders
During the period, the Far East sales office generated 684 orders for a total of 6,120 items. These orders were shipped in 1,474 boxes. What amount of shipping department costs should be allocated to these sales?
Answer:
Total shipping department cost = $29,647.26
Explanation:
Total shipping department cost = (Packaging and shipping cost per box * no of boxes) + (Final inspection cost per item * no of items) + (General operations and supervision cost per order * no of orders)
- Final inspection cost per item = Total cost / Annual activity
Final inspection cost per item = 200,600 / 98,900
Final inspection cost per item = 2.028311
- General operations and supervision cost per order = Total cost / Annual activity
General operations and supervision cost per order = 84,300 / 8,100
General operations and supervision cost per order = 10.40741
- Packaging and shipping cost per box = Total cost / Annual activity
Packaging and shipping cost per box = 164,700 / 24,000
Packaging and shipping cost per box = 6.6825
Hence, Total shipping department cost = (6.6825 * 1,474) + (2.028311 * 6,120) + (10.40741 * 684)
Total shipping department cost = 9850.005 + 12413.263 + 7118.668
Total shipping department cost = $29,647.26
The amount of shipping department costs that should be allocated to these sales will be $29647.26.
The final inspection cost per item will be:
= Total cost / Annuity activity
= 200600 / 98900
= 2.03
General operations and supervision cost per order will be:
= Total cost / Annual activity
= 84300 / 8100
= 10.41
Packaging and shipping costs per box will be:
= Total cost / Annual activity
= 164700 / 24000
= 6.68
Therefore, the total shipping cost will be:
= (6.6825 × 1.474) + (2.03 × 6120) + (10.41 × 684)
= 9850 + 12413.26 + 7118.67
= 29647.26
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