The SG&A Expense/Sales is the tertiary ratio that drives profitability.
What is SG&A Expense/Sales?This refers to the everyday operating expenses of running a business that are not included in the production of goods or delivery of services.
As the SG&A includes rent, salaries, advertising, marketing expenses etc., it is the tertiary ratio that drives profitability.
Therefore, E is correct.
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The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct?
i. If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future.
ii. The demand for gasoline will fall in the future.
iii. The demand for electricity will rise in the future.
iv. The demand for diesel will rise in the future.
a. (i) and (ii)
b. only (i)
c. (ii) and (iv)
d. (i), (ii) and (iii)
Answer:
d. (i), (ii) and (iii)
i. If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future. ii. The demand for gasoline will fall in the future. iii. The demand for electricity will rise in the future.Explanation:
Currently electric cars are expensive because their supply is very limited, but if the supply increases, their price should fall.
Since less cars will consume gasoline and diesel, their demand should decrease in the future.
Since more cars will consumer electricity, its demand should increase in the future.
Games Galore Corporation hires Amanda, a minor, to create new customized game software for certain clients. Amanda signs a contract that requires her to work for Games Galore for eighteen months. Before beginning work, however, Amanda tells Games Galore that she will not create new software for Games Galore and that she is going to work for Ideal Worldcraft, Inc., a Games Galore competitor. Answer the following questions, providing the reasoning/analysis behind your conclusions, i.e. list the applicable rule/law, and apply the facts to the rule to reach a conclusion. You can also argue in the alternative.
(a) Is Games Galore’s contract with Amanda enforceable?
(b) Why or why not?
Answer and Explanation:
According to the question the contract is valid but the same would not be enforceable as Amanda is a minor. As a minor her consent is not valid completely but if there is any violation on Games Galore so the same would be penalized that results the contract to be enforceable. For minors, the guardian is necessary
So being a minor the contract would not be enforceable although she accepts the terms and condition of 18 months
According to the substitution effect of labor supply, when the wage rate goes up: Group of answer choices it becomes more costly to consume leisure, so people will work more. it becomes less costly to consume leisure, so people will work more. the opportunity cost of enjoying leisure goes down. firms will hire more workers since people are more willing to work.
According to the substitution effect of labor, firms would hire more workers because people are more willing to work more.
The substitution effect of labor tells us that as income is raised, people would be more willing to give up leisure hours to work more.
This is due to the fact that they would earn more money for the extra hours that they would have spent on leisure.
There would be more willingness to work and the firms would have more people to hire.
Read more on the substitution effect here:
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difference between a public limited liability and private limited liability company
Answer: A private limited company is a company that is owned privately, while a public limited company has the right to sell shares of it's stock to the public
Explanation:
n
Defaulting on a bond most nearly means
the bond issuer cannot pay the promised amount
O the bond issuer pays a percentage of the bond's value
O the bond holder sells the bond on the secondary market
O the bond's rating has decreased
Favaz began business at the start of this year and had the following costs: variable manufacturing cost per unit, $9; fixed manufacturing costs, $60,000; variable selling and administrative costs per unit, $2; and fixed selling and administrative costs, $220,000. The company sells its units for $45 each. Additional data follow: Planned production in units10,000 Actual production in units10,000 Number of units sold8,500 There were no variances. The income (loss) under absorption costing is:
Answer:
$18,000
Explanation:
Calculation for what The income (loss) under absorption costing is:
First step is to calculate the Fixed manufacturing
per unit
Fixed manufacturing per unit = $60,000 ÷ 10,000
Fixed manufacturing per unit= $6
Second step is to calculate per unit cost
Cost Per Unit=$45 − $9 − $2 − $6 ×$ 8,500
Cost Per Unit = $238,000
Now let calculate the income (loss)
Income (loss)= $238,000 − $220,000
Income (loss) = $18,000
Therefore The income (loss) under absorption costing is:$18,000
A machine at a cost of $5,000 was purchased 3 years ago. It can be sold now for $3,000. If the machine is kept, the annual operating and maintenance costs will be $1,500. If it is kept and operated for next five years, determine the amount at time 0 (now) equivalent to the cost of owning and operating the machine for the next five-year period. It is anticipated that the machine can be sold for $1,000 at the end of the five-year period. Use an interest rate of 10%
Answer:
$10,065.26
Explanation:
First, we need to calculate the present value of machine operating cost using the following formula
PV of operating cost = Yearly Operating cost x ( 1 - ( 1 + Interest rate )^-numbers of years ) / Interest rate
Where
Yearly operating cost = $1,500
Interest rate = 10%
Numbers of years = 5 years
Placing values in the formula
PV of operating cost = $1500 x ( 1 - ( 1 + 10% )^-5 ) / 10%
PV of operating cost = $5,686.18
Now calculate the present vlaue of salvahge value
PV of SAlvage value = Slavage value / ( 1 + Interest rate )^Numbers of years
where
Salvage Value = $1,000
Interest rate = 10%
Numbers of years = 5 years
PLacing values in the formula
PV of SAlvage value = $1,000 / ( 1 + 10% )^5
PV of SAlvage value = $620.92
Net cost at time 0 = Initial purchase cost + PV of operating cost - Present value of salvage value = $5,000 + $5,686.18 - $620.92 = $10,065.26
a. On April 1, the company hired an attorney for a flat monthly fee of $2,000. Payment for April legal services was made by the company on May 12.
b. As of April 30, $2,559 of interest expense has accrued on a note payable. The full interest payment of $7,677 on the note is due on May 20.
c. Total weekly salaries expense for all employees is $8,000. This amount is paid at the end of the day on Friday of each five-day work week. April 30 falls on a Tuesday, which means that the employees had worked two days since the last payday. The next payday is May 3.
Required:
The above three separate situations require adjusting journal entries to prepare financial statements as of April 30. For each situation, present both the April 30 adjusting entry and the subsequent entry during May to record payment of the accrued expenses.
Answer:
Apr 30
Dr Legal fees expense $2,000
Cr Legal fees payable $2,000
May 12
Dr Legal fees payable $2,000
Cr Cash $2,000
Apr 30
D Interest expense $2,559
Cr Interest payable $2,559
May 20
Dr Interest expense $5,118
Dr Interest payable $2,559
Cr Cash $7,677
Apr 30
Dr Salaries expense $3,200
Cr Salaries payable $3,200
May 03
Dr Salaries expense $4,800
Dr Salaries payable $3,200
Cr Cash $8,000
Explanation:
Preparation of the adjusting journal entries to prepare financial statements as of April 30 and the subsequent entry during May to record payment of the accrued expenses.
Apr 30
Dr Legal fees expense $2,000
Cr Legal fees payable $2,000
May 12
Dr Legal fees payable $2,000
Cr Cash $2,000
Apr 30
D Interest expense $2,559
Cr Interest payable $2,559
May 20
Dr Interest expense $5,118
($7,677- $2,559)
Dr Interest payable $2,559
Cr Cash $7,677
Apr 30
Dr Salaries expense $3,200
($8,000*2/5)
Cr Salaries payable $3,200
May 03
Dr Salaries expense $4,800
($8,000*3/5)
Dr Salaries payable $3,200
($8,000*2/5)
Cr Cash $8,000
Ridgewood, Inc. manufactures upholstery fabric and uses process costing. In the Weaving Department, direct materials are added at the beginning of the process, and conversion costs are added evenly throughout the process. During the month, the Weaving Department used $280,000 of direct materials and $70,000 of conversion costs. At the end of the month, 10,000 equivalent units of direct materials and 9,000 equivalent units of conversion costs had been used. What is the cost per equivalent unit for conversion costs
Answer:
See below
Explanation:
A corporation had the following assets and liabilities at the beginning and end of this year.
Assets Liabilities
Beginning of the year $57,000 $24,436
End of the year 115,000 46,575
A. Owner made no investments in the business, and no dividends were paid during the year.
B. Owner made no investments in the business, but dividends were $1,500 cash per month.
C. No dividends were paid during the year, but the owner did invest an additional $45,000 cash in exchange for common stock.
D. Dividends were $1,500 cash per month, and the owner invested an additional $35,000 cash in exchange for common stock.
Determine the net income earned or net loss incurred by the business during the year for each of the above separate cases.
Answer:
Net Income / Net Loss:
Scenario A $35,888 (-58,000 + 22,112)
Scenario B $37,088 (-58,000 + 22,112 + 1,500)
Scenario C -$9,112 (-58,000 + 45,000 + 22,112)
Scenario D $17,112 (-58,000 + 35,000 + 22,112 + 18,000)
Explanation:
a) Data and Calculations:
Beginning Ending
Assets $57,000 $24,463
Liabilities 115,000 46,575
Equity (58,000) ($22,112)
Net Income / Net Loss:
Scenario A $35,888 (-58,000 + 22,112)
Scenario B $37,088 (-58,000 + 22,112 + 1,500)
Scenario C -$9,112 (-58,000 + 45,000 + 22,112)
Scenario D $17,112 (-58,000 + 35,000 + 22,112 + 18,000)
b) The net income is the difference between the beginning equity plus new investments and the ending equity and dividends.
Who Is Lil Loaded i want to know
Answer:
search it up
Explanation:
Answer:
he is a rapper dude. search it up
Explanation:
Mike Greenberg opened Cheyenne Window Washing Inc. on July 1, 2022. During July, the following transactions were completed.
July 1 Issued 9,800 shares of common stock for $9,800 cash.
1 Purchased used truck for $6,560, paying $1,640 cash and the balance on account.
3 Purchased cleaning supplies for $740 on account.
5 Paid $1,440 cash on a 1-year insurance policy effective July 1.
12 Billed customers $3,030 for cleaning services performed.
18 Paid $820 cash on amount owed on truck and $410 on amount owed on cleaning supplies.
20 Paid $1,640 cash for employee salaries.
21 Collected $1,310 cash from customers billed on July 12.
25 Billed customers $2,050 for cleaning services performed.
31 Paid $240 for maintenance of the truck during month.
31 Declared and paid $490 cash dividend.
Journalize the July transactions.
Post to the ledger accounts.
Prepare a trial balance at July 31.
Journalize the following adjustments. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
(1) Services performed but unbilled and uncollected at July 31 were $1,750.
(2) Depreciation on equipment for the month was $202.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $320 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $415.
Answer:
Cash (Dr.) $9.800
Common Stock (Cr.) $9,800
Truck (Dr.) $6,560
Cash (Cr.) $1,640
Accounts Payable -Truck (Cr.) $4,920
Cleaning Supplies (Dr.) $740
Accounts Payable (Cr.) $740
Prepaid Insurance (Dr.) $1,440
Cash (Cr.) $1,440
Accounts Receivable (Dr.) $3,030
Service Revenue (Dr.) $3,030
Accounts Payable - Truck (Dr.) $820
Accounts Payable - Supplies (Dr.) $410
Cash (Cr.) $1,230
Cash (Dr.) $1,310
Accounts Receivable (Cr.) $1,310
Maintenance Expense Truck (Dr.) $240
Cash (Cr.) $240
Dividend paid (Dr.) $490
Cash (Cr.) $490
Explanation:
1) Accounts Receivable (Dr.) $1,750
Service Revenue (Cr.) $1,750
2) Depreciation expense (Dr.) $202
Accumulated Depreciation (Cr.) $202
3) Insurance Expense (Dr.) $120
Prepaid Insurance (Cr.) $120
4) Ending Inventory (Dr.) $320
Cleaning Supplies (Cr.) $320
5) Salaries Expense (Dr.) $415
Salaries Payable (Cr.) $415
On December 31, Year 2, Morgan Company had the following normal account balances in its general ledger. Use this information to prepare a trial balance.
Land $18,000
Unearned revenue 16,200
Dividends 5,200
Prepaid rent 6,850
Cash 59,010
Salaries expense 12,500
Accounts payable 1,940
Common stock 23,000
Operating expense 13,800
Office supplies 1,900
Advertising expense 2,100
Retained earnings, Beginning 14,300
Service revenue 70,720
Accounts receivable 6,800
Answer and Explanation:
The preparation of the trial balance is given below:
Particulars Debit amount Credit amount
Land $18,000
Unearned revenue $16,200
Dividend $5,200
Prepaid rent $6,850
Cash $59,010
Salaries expense $12,500
Account payable $1,940
Common stock $23,000
Operating expense $13,800
Office supplies $1,900
Advertising expense $2,100
Retained earnings $14,300
Service revenue $70,720
Account receivable $6,800
Totals $126,160 $126,160
Marigold Corp. applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period:
Estimated annual overhead cost $1400000
Actual annual overhead cost $1375000
Estimated machine hours 500000
Actual machine hours 490000
a. $1372000 applied and $3000 overapplied
b. $1400000 applied and $3000 overapplied
c. $1372000 applied and $3000 underapplied
d. $1375000 applied and neither under-nor overapplied
Answer:
World biggest Logic To solve anything
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer.
Month Occupancy-Days Electrical Costs
January 1,736 $4,127
February 1,904 $4,207
March 2,356 $5,083
April 960 $2,857
May 360 $1,871
June 744 $2,696
July 2,108 $4,670
August 2,406 $5,148
September 840 $2,691
October 124 $1,588
November 720 $2,454
December 1,364 $3,529
Required:
a. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day.
b. What other factors other than occupancy-days are likely to affect the variation in electrical costs from month to month?
Answer:
Total cost= 1,395 + 1.56x
x= number of units of activity
Explanation:
To calculate the unitary and fixed costs, we need to use the following formulas:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (5,148 - 1,588) / (2,406 - 124)
Variable cost per unit= $1.56
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 5,148 - (1.56*2,406)
Fixed costs= $1,395
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 1,588 - (1.56*124)
Fixed costs= $1,395
The total cost is given by:
Total cost= 1,395 + 1.56x
x= number of units of activity
The electrical costs can vary with the season. In summer a higher electricity use is required to cool down the rooms and, some artifacts such as freezers and refrigerators usage increase. In winter the days are shorter, artificial lighting increases.
Calculating Earnings per Share Little, Inc., reported earnings of $162,000 for 2013, and at the end of the year, had the following securities outstanding: 60,000 shares of common stock. (The year-end share price was $25 per share). Employee stock options for the purchase of 8,000 common shares at an exercise price of $22 per share. (The options are fully vested).
(a) Calculate the basic earnings per share for Little, Inc. for 2013. Round to two decimal places.
(b) Calculate the diluted earnings per share for Little, Inc. for 2013. Round to two decimal places.
Answer:
(a) Basic earnings per share = $2.70 per share
(b) Diluted earnings per share = $2.38 per share
Explanation:
(a) Calculate the basic earnings per share for Little, Inc. for 2013. Round to two decimal places.
Basic earnings per share = Earnings / Number of shares of common stock .......... (1)
Where;
Earnings = $162,000
Number of shares of common stock = 60,000
Substituting the values into equation (1), we have:
Basic earnings per share = $162,000 / 60,000 = $2.70 per share
(b) Calculate the diluted earnings per share for Little, Inc. for 2013. Round to two decimal places.
Diluted earnings per share = Earnings / (Number of shares of common stock + Number of common shares for employee stock options) ............ (2)
Where;
Earnings = $162,000
Number of shares of common stock = 60,000
Number of common shares for employee stock options = 8,000
Substituting the values into equation (2), we have:
Diluted earnings per share = $162,000 / (60,000 + 8,000) = $162,000 / 68,000 = $2.38 per share
Answer: See Explanation
Explanation:
a. Calculate the basic earnings per share for Little, Inc. for 201
(Net income - Preferred stock dividend) / Weighted SVF shaers of the common stock outstanding
= ($162,000 - 0) / 60,000
= $162000 / 60000
= $2.70
b. Calculate the diluted earnings per share for Little, Inc. for 2013
= ($162,000 - 0) / (60,000+8,000)
= $162000 / 68000
= $2.38
In the Excel, or spreadsheet, approach to recording financial transactions, if manufacturing overhead is underapplied by X dollars, the Manufacturing Overhead account is closed out by deducting X dollars in the Manufacturing Overhead column and deducting X dollars in the Retained Earnings column.
a. True
b. False
Answer:
False.
Explanation:
To close the underapplied Manufacturing Overhead account requires that the Cost of Goods Sold is debited, say with $100 while the Manufacturing Overhead account is credited with the same amount. Underapplied Manufacturing Overhead account means that a debit balance is left after applying the overhead to production. To close this debit, therefore, a credit entry is required to the manufacturing overhead account. The corresponding debit entry goes to the Cost of Goods Sold, or this may be apportioned among Cost of Goods Sold, Finished Goods Inventory, and Work-in-Process, as may be the case.
Answer:
True.
Explanation:
Matrix Inc. calculates cost for an equivalent unit of production using the weighted-average method.
Data for July:
Work-in-process inventory, July 1 (40,000 units):
Direct materials (92% completed) $122,800
Conversion (58% completed) 77,250
Balance in work in process inventory, July 1 $200,050
Units started during July 94,000
Units completed and transferred 109,600
Work-in-process inventory, July 31:
Direct materials (92% completed) 24,400
Conversion (58% completed) Cost incurred during July:
Direct materials $184,000
Conversion costs 292,000
Required:
a. Cost per equivalent unit for materials under the weighted-average method is calculated to be:______
b. Cost per equivalent unit for conversion under the FIFO method is calculated to be:_______
Answer:
a. $2.32
b. $2.92
Explanation:
Part a
Equivalent Units
Completed and Transferred 109,600 x 100% 109,600
Ending Work In Process 24,400 x 92% 22,448
Equivalent Units with respect to Materials 132,048
Total Materials Cost
Materials cost Beginning Work in Process $122,800
Add Material Cost incurred during the year $184,000
Total Material Costs $306,800
Cost per equivalent unit = Total Materials Cost ÷ Equivalent Units
= $306,800 ÷ 132,048
= $2.32
Part b
Equivalent Units
To finish OWIP 40,000 x 42% 16,800
Started and Completed (109,000 - 40,000) x 100 69,000
Closing Work in Progress 24,400 x 58% 14,152
Equivalent units with respect to conversion cost 99,952
Total Conversion Cost
Conversion Cost incurred during the year $292,000
Total Material Costs
Cost per equivalent unit = Total Conversion Cost ÷ Equivalent Units
= $292,000 ÷ 99,952
= $2.92
the majority of retailers are what
On August 31, 2021, the general ledger of The Dean Acting Academy shows a balance for cash of $7,824. Cash receipts yet to be deposited into the checking account total $3,218, and checks written by the academy but not yet processed by the bank total $1,305. The company's balance of cash does not reflect a bank service fee of $23 and interest earned on the checking account of $34. These amounts are included in the balance of cash of $5,922 reported by the bank as of the end of August. Required: 1. Prepare a bank reconciliation to calculate the correct ending balance of cash on August 31, 2021. (Amounts to be deducted should
Answer:
1. Bank balance per reconciliation $7,835
Company balance per reconciliation $7,835
2. August 31, 2021
Dr Cash $34
Cr Interest revenue $34
August 31, 2021
Dr Service fees expense $23
Cr Cash $23
Explanation:
1. Preparation of a bank reconciliation to calculate the correct ending balance of cash on August 31, 2021 .
BANK CASH BALANCE
Per bank statement $5,922
Add deposit outstanding $3,218
Less check Outstanding ($1,305)
Bank balance per reconciliation $7,835
COMPANY CASH BALANCE
Per general ledger $7,824
Less service fees ($23)
Interest earned $34
Company balance per reconciliation $7,835
Therefore the correct ending balance of cash on August 31, 2021 will be :
Bank balance per reconciliation $7,835
Company balance per reconciliation $7,835
2.Preparation of the necessary entries to adjust the balance for cash
August 31, 2021
Dr Cash $34
Cr Interest revenue $34
August 31, 2021
Dr Service fees expense $23
Cr Cash $23
Abigail has just signed a 5-year lease for her new business. The full annual lease amount is due at the beginning of every year and such cash flows have been agreed to be 20,156 dollars now and the subsequent payments to increase by 5% per year until maturity. Given that the prevailing average market interest rate is 8% per year compounded monthly, compute the present value of this financial asset. (note: round your answer to the nearest cent and do not include spaces, currency signs, or commas)
Answer: $93,088
Explanation:
Rate is compounded monthly which makes it:
= 8% / 12
= 0.6667%
= 0.006667
The payment of $20,156 is to increase yearly at a rate of 5%. Payments are at the beginning of the period so the first payment does not have to be discounted.
[tex]= 20,156 + \frac{20,156 * 1.04}{(1 + 0.006667)^{12} } + \frac{20,156 * 1.04^{2} }{(1 + 0.006667)^{24} } + \frac{20,156 * 1.04^{3} }{(1 + 0.006667)^{36} } + \frac{20,156 * 1.04^{4} }{(1 + 0.006667)^{48} }\\\\= 20,156 + 19,355.65 + 18,587.08 + 17,849.02 + 17,140.27\\\\= 93,088.02[/tex]
= $93,088
In January, Harry and Belinda Johnson had $10,660 in monetary assets: $1,100 in cash on hand; $1,200 in a statement savings account at First Credit Union earning 1.0 percent interest; $4,000 in a statement savings account at the Far West Savings Bank earning 1.1 percent interest; $2,260 in Homestead Credit Union earning a dividend of 1.3 percent; and $2,100 in their regular checking account at First Credit Union earning 1 percent.
If the Johnsons could put most of their monetary assets ($10,660) into a money market account earning 2.3 percent, how much would they have in the account after one year? Round your answer to the nearest dollar.
Answer:
the amount after one year is $10,905
Explanation:
The computation of the amount after one year is shown below:
= Monetary assets ×(1 + earning interest)
= $10,660 × (1 + 0.023)
= $10,660 × 1.023
= $10,905
Hence, the amount after one year is $10,905
We simply applied the above formula
sally borrowed $1000 from her friend monique two years ago. their arrangement required sally to repay $250 each year for the subsequent four years. Today with two paymewnts remaining on the loan, Sally offers to repay the loan with a single payment of $475. Assuming no change in interest rates throughout the entire time, should monique accept the signle $475 payment today, why or why not
Answer:
a
Explanation:
Here are the options to this question :
A. yes, 475 is more than the PV of the two remaining payments
B. More information is needed to decide
C. Monique is indifferent between the options, the PVs are equivalent
D. No, the PV of the remaining two payments is more than 475
We have to determine the present value of the remaining two payments and compare the options
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 = 0
Cash flow in year 2 = 0
Cash flow in year 3 = 250
Cash flow in year 4 = 250
I = 2%
PV = $466.54
$475 is greater than $466.54. Therefore, she should accept the single $475 payment
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
hello, im stuck. if i could get some ideas for this i will mark you brainliest if i can.
i just need some ideas and maybe an explanation. i don't expect an entire two page thing but just some help pls :((
thanks in advance.
Answer: so you are giving someone instructions like how to make a sandwich with a lot of detail so someone could do everything you did :)
Explanation:
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Quality improvement, relevant costs, relevant revenues. SpeedPrint manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows:
Variable Cost Fixed Cost Total Cost
Rework Cost per hr. $79 $115 $194
Repair Cost
Customer Support cost/hr. 35 55 90
Transportation Cost/load 350 115 465
Warranty repair cost/hour 89 150 239
Speed Print’s current presses have a quality problem that causes variations in the shade of some colors. Its engineers suggest changing a key component in each press. The new component will cost $70 more than the old one. In the next year, however, Speed Print expects that with the new component it will
(1) save 14,000 hours of rework,
(2) save 850 hours of customer support,
(3) move 225 fewer loads,
(4) save 8,000 hours of warranty repairs, and
(5) sell an additional 140 printing presses, for a total contribution margin of $1,680,000. SpeedPrint believes that even as it improves quality, it will not be able to save any of the fixed costs of rework or repair. SpeedPrint uses a 1-year time horizon for this decision because it plans to introduce a new press at the end of the year.
1. Should SpeedPrint change to the new component? Show your calculations.
2. Suppose the estimate of 140 additional printing presses sold is uncertain. What is the minimum number of additional printing presses that SpeedPrint needs to sell to justify adopting the new component?
3. What other factors should managers at SpeedPrint consider when making their decision about changing to a new component?
Answer:
1. Speed print SHOULD CHANGE to the new component
2. Since the new components incremental cost of the amount of $1,260,000 is lesser than the incremental savings of the amount of $1,926,500 which means that it will be of benefit if SpeedPrint invest in the new component.
3. Nonfinancial factors
Explanation:
1. Calculation to show whether Speed print
should change to the new component
First step is to calculate the Relevant costs
Relevant costs = $70 *18,000 copiers
Relevant costs= $1,260,000
Second step is to calculate Relevant Benefits
RELEVANT BENEFITS
Savings in rework costs $1,106,000
($79 *14,000 hours)
Add Savings in customer-support costs $29,750
($35 *850 hours)
Add Savings in transportation costs for parts $78,750
($350 *225 fewer loads)
Add Savings in warranty repair costs $712,000
($89 *8,000 repair-hours)
Add Contribution margin from increased sales $1,680,000
Cost savings and additional contribution margin $3,606,500
($1,106,000+$29,750+$78,750+$712,000+$1,680,000)
Based on the above calculation relevant benefits of the amount of $3,606,500 is higher than the relevant costs of the amount of $1,260,000 which means that Speed print
SHOULD CHANGE to the new component.
2. Based on the above calculation it shows that the new components incremental cost of the amount of $1,260,000 is lesser than the incremental savings of the amount of $1,926,500 which means that it will be of benefit if SpeedPrint invest in the new component.
Calculation for INCREMENTAL SAVINGS
Savings in rework costs $1,106,000
($79 *14,000 rework hours)
Add Savings in customer-support costs $29,750
($35 *850 customer-support hours)
Add Savings in transportation costs for parts $78,750
($350 *225 fewer loads)
Add Savings in warranty repair costs $712,000
($89 *8,000 repair-hours)
Incremental savings $1,926,500
($1,106,000 + $29,750 + $78,750 + $712,000)
3. The factors that the managers at SpeedPrint should consider when making their decision about changing to a new component will be NON-FINANCIAL FACTORS.
Gross Domestic Product (GDP) can be defined as: I. The sum of all incomes while adjusting for indirect business taxes and foreign incomes. II. The market value of goods and services sold in an economy in some time period. III. The total market value of final goods and services produced in an economy in some time period. III only I and II only I, II and III II and III only I and III only
Answer:
I and III only
Explanation:
The full form of GDP is Gross domestic product. It is the sum of all the income at the time when the business taxes i.e. indirect and the foreign incomes would be adjusted also it is a sum total of market value of the goods and services i.e. final generated in an economy for a time period
Therefore the I and III statements are true
Financial Statements of a Manufacturing Firm The following events took place for Sorensen Manufacturing Company during January, the first month of its operations as a producer of digital video monitors: Purchased $250,000 of materials. Used $180,000 of direct materials in production. Incurred $450,000 of direct labor wages. Incurred $180,000 of factory overhead. Transferred $760,000 of work in process to finished goods. Sold goods for $1,200,000. Sold goods with a cost of $675,000. Incurred $215,000 of selling expense. Incurred $125,000 of administrative expense. Using the information given, complete the following: a. Prepare the January income statement for Sorensen Manufacturing Company. Sorensen Manufacturing Company Income Statement For the Month Ended January 31 $fill in the blank b5f0e3f6afbdf9c_2 fill in the blank b5f0e3f6afbdf9c_4 $fill in the blank b5f0e3f6afbdf9c_6 Operating expenses: $fill in the blank b5f0e3f6afbdf9c_8 fill in the blank b5f0e3f6afbdf9c_10 Total operating expenses fill in the blank b5f0e3f6afbdf9c_11 $fill in the blank b5f0e3f6afbdf9c_13 b. Determine the inventory balances at the end of the first month of operations. Sorensen Manufacturing Company Inventory Balances For the Month Ended January 31 Inventory balances on January 31: Materials $fill in the blank d1d32afb2ff9fae_1 Work in process fill in the blank d1d32afb2ff9fae_2 Finished goods fill in the blank d1d32afb2ff9fae_3
Answer:
A. $185,000
B. Raw material $70,000
Work in process $50,000
Finished goods $85,000
Explanation:
A. Preparation of the January income statement for Sorensen Manufacturing Company
Sorensen Manufacturing Company
Income statement
Sales $1,200,000
Cost of goods sold $675,000
Gross profit $525,000
Operating expense
Selling expense $215,000
Administrative expense $125,000
Total operating expense $340,000
($215,000+$125,000)
Operating income $185,000
($525,000-$340,000)
B. Calculation to Determine the inventory balances at the end of the first month of operations.
Sorensen Manufacturing Company
Inventory Balances For the Month Ended January 31
Raw material =$250,000-$180,000
Raw material =$70,000
Work in process =$180,000+$450,000+$180,000-$760,000
Work in process =$50,000
Finished goods =$760,000-$675,000
Finished goods=$85,000
The Case: The hairdressing industry in Pakistan is flourishing day by day. There are certainly lots of hairdressers and each of the hairdressers has a slightly different type of skill. Some salons only cut, some only provide color services, some only do natural hair, some do all types, etc. Also, they have different premises situated in a different location where they provide the services. The prices offered by the hairdresser depend on the services offered by them and its uniqueness. If the particular hairdresser is known for providing the best services in the particular market then he can increase the prices of his services as he knows that consumers can pay slightly more amount of money for his superior services. There is relatively a low barrier for entry and exit for setting up a new hairdresser shop. Requirement: Read the above scenario and explain in which market structure ‘the hairdressing industry’ falls and how?
Answer:
The Hairdressing Industry in Pakistan
The market structure of "the hairdressing industry" falls under Monopolistic Competition. The features of this market structure include: many hairdresser shops, low barriers for entry and exit for setting up a new hairdresser shop, the hairdressing services are not perfect substitutes, and the pricing decisions of any one shop do not impact others.
Explanation:
In a monopolistic competition, each firm is differentiated from others by distinct goods and services. This situation is enhanced in a services industry, where different skills are employed to further differentiate each firm's services from the others. While the products and services may look similar, one cannot actually substitute one for the other. Therefore, each firm can charge different prices for their distinct products and services without being influenced by the other firms, unless through a cartel arrangement.
Whether to pay a lawmaker for giving a speech at your company is an ethical
dilemma that deals with
O A. lobbying
B. awarding honoraria
c. professional standards
D. gift giving
Answer: D
Explanation:
Answer:
D. gift giving
Explanation:
Tamarisk Leasing Company agrees to lease equipment to Vaughn Corporation on January 1, 2020. The following information relates to the lease agreement.
1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years.
2. The cost of the machinery is $541,000, and the fair value of the asset on January 1, 2020, is $760,000.
3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $45,000. Vaughn estimates that the expected residual value at the end of the lease term will be 45,000. Vaughn amortizes all of its leased equipment on a straight-line basis.
4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020.
5. The collectibility of the lease payments is probable.
6. Tamarisk desires a 10% rate of return on its investments. Vaughn’s incremental borrowing rate is 11%, and the lessor’s implicit rate is unknown.
(Assume the accounting period ends on December 31.)
Click here to view factor tables.
Discuss the nature of this lease for both the lessee and the lessor.
This is a operating leasesales-type leasefinance lease for Vaughn.
This is a sales-type leaseoperating leasefinance lease for Tamarisk.
eTextbook and Media
List of Accounts
Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.)
Annual rental payment
$
eTextbook and Media
List of Accounts
Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.)
Present value of minimum lease payments
$
eTextbook and Media
List of Accounts
Prepare the journal entries Vaughn would make in 2020 and 2021 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,972. Record journal entries in the order presented in the problem.)
Date
Account Titles and Explanation
Debit
Credit
1/1/2012/31/201/1/2112/31/21
(To record the lease.)
(To record lease payment.)
1/1/2012/31/201/1/2112/31/21
(To record amortization.)
(To record interest.)
1/1/2012/31/201/1/2112/31/21
1/1/2012/31/201/1/2112/31/21
(To record amortization.)
(To record interest.)
eTextbook and Media
List of Accounts
Prepare the journal entries Tamarisk would make in 2020 and 2021 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,972. Record journal entries in the order presented in the problem.)
Date
Account Titles and Explanation
Debit
Credit
1/1/2012/31/201/1/2112/31/21
(To record the lease.)
1/1/2012/31/201/1/2112/31/21
(To record lease payment.)
1/1/2012/31/201/1/2112/31/21
1/1/2012/31/201/1/2112/31/21
1/1/2012/31/201/1/2112/31/21
Answer:
1. Finance lease to Vaughn Corporation
Sales-type lease
2. Annual Rental = $ 137,604
3. Lease Liability = $ 741,418
4. Vaughn Corporation.
2020
Jan. 1
Dr Lease Equipment $741,418
Cr Lease Liability $741,418
Jan. 1
Dr Lease Liability $137,064
Cr Cash $137,064
Dec. 31
Dr Depreciation Expense $99,488
Cr Accumulated Depreciation - Finance Lease $99,488
Dec. 31
Dr Interest Expense $66,479
Cr Interest Payable $66,479
2021
Jan. 1
Dr Lease Liability $70,585
Dr Interest Payable $66,479
Cr Cash $137,064
Dec. 31
Dr Depreciation Expense $99,488
Dr Accumulated Depreciation - Finance Lease $99,488
Dec. 31
Dr Interest Expense $58,715
Dr Interest Payable $58,715
5. Tamarisk Leasing Company.
2020
Jan. 1
Dr Lease Receivable $760,000
Dr Cost of Goods Sold $541,000
Cr Sales Revenue $760,000
Cr Inventory $541,000
Jan. 1
Dr Cash $137,064
Cr Lease Receivable $137,064
Dec. 31
Dr Interest Receivable $62,294
Cr Interest Revenue $62,294
2021
Jan. 1
Dr Cash $137,064
Cr Lease Receivable $74,770
Cr Interest Receivable $62,294
Dec. 31
Dr Interest Receivable $54,817
Cr Interest Revenue $54,817
Explanation:
1. Discussion of the nature of this lease for both the lessee and the lessor.
(i) Based on the information given it is a Finance lease to Vaughn Corporation reason been that the term of the lease is higher than 75% of the leased asset economic life based on the fact that the term of the leaseis 78% calculated as (7/9).
(ii) Based on the information given Tamarisk Leasing Company reason been the lease payments can be predictable because their are no uncertainties concerning the costs that is yet to be incurred by the lessor, and secondly the term of the lease is higher than 75% of the asset’s economic life because the amount of $ 760,000 of the equipment is above the lessor’s cost of the amount of $ 541,000 which is why the lease is a Sales-type lease
2. Calculation of Annual Rental Payment
Annual Rental = {FV - (RV * PVF(n=7 years, r=10%))} / PVADF(n=7 years, r=10%)
Annual Rental = {$ 760,000 - ($ 45,000 * 0.51316} / 5.35526
Annual Rental = $ 137,604
3. Calculation of Lease Liability to the Lessee.
First step
Present Value of Annual Payments = $ 137,604 * PVADF(n= 7 years, r=11%)
Present Value of Annual Payments = $ 137,604 *5.23054
Present Value of Annual Payments = $ 719,743
Present Value of Guaranteed Residual Value = $ 45,000 * PVF(n= 7 years, r=11%)
Present Value of Annual Payments = $ 45,000 * .48166
Present Value of Annual Payments = $ 21,675
Hence,
Lease Liability = $ 719,743 + $ 21,675
Lease Liability = $ 741,418
4. Preparation of the Journal Entries for Vaughn Corporation.
2020
Jan. 1
Dr Lease Equipment $741,418
Cr Lease Liability $741,418
Jan. 1
Dr Lease Liability $137,064
Cr Cash $137,064
Dec. 31
Dr Depreciation Expense $99,488
Cr Accumulated Depreciation - Finance Lease $99,488
($ 741418 - $ 45,000) ÷ 7 years
Dec. 31
Dr Interest Expense $66,479
Cr Interest Payable $66,479
($ 741418 - $ 137,064) * 11%
2021
Jan. 1
Dr Lease Liability $70,585
Dr Interest Payable $66,479
Cr Cash $137,064
Dec. 31
Dr Depreciation Expense $99,488
Dr Accumulated Depreciation - Finance Lease $99,488
Dec. 31
Dr Interest Expense $58,715
Dr Interest Payable $58,715
($ 741418 - $ 137,064 - $ 70,585) * 11%
5. Preparation of the Journal Entries for Tamarisk Leasing Company.
2020
Jan. 1
Dr Lease Receivable $760,000
Dr Cost of Goods Sold $541,000
Cr Sales Revenue $760,000
Cr Inventory $541,000
Jan. 1
Dr Cash $137,064
Cr Lease Receivable $137,064
Dec. 31
Dr Interest Receivable $62,294
Cr Interest Revenue $62,294
($ 760,000 - $ 137064) * 10%
2021
Jan. 1
Dr Cash $137,064
Cr Lease Receivable $74,770
Cr Interest Receivable $62,294
Dec. 31
Dr Interest Receivable $54,817
Cr Interest Revenue $54,817
($ 760,000 - $ 137064 - $ 74,770) * 10%