Answer:
Predetermined manufacturing overhead rate= $10.6 per direct labor hour
Explanation:
Giving the following information:
Car Truck
Estimated wheels produced 36,000 11,000
Direct labor hours per wheel 1 3
Total estimated overhead costs for the two product lines are $731,400.
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 731,400 / (1*36,000 + 3*11,000)
Predetermined manufacturing overhead rate= $10.6 per direct labor hour
Exercise 17-09 a-b (Video) (Part Level Submission) Oriole, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 200 pressure gauges were produced, and overhead costs of $88,010 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities Cost Drivers Total Cost 1. Materials handling Number of requisitions $37,080 2. Machine setups Number of setups 28,710 3. Quality inspections Number of inspections 22,220 $88,010 The cost driver volume for each product was as follows. Cost Drivers Instruments Gauges Total Number of requisitions 390 640 1,030 Number of setups 200 295 495 Number of inspections 240 265 505 Collapse question part (a) Determine the overhead rate for each activity
Answer and Explanation:
The computation of the overhead rate for each activity is shown below
For machine handling
= $37,080 ÷ 1,030
= $36 per unit
For machine setups
= $28,710 ÷ 495
= $58 per unit
For Quality inspections
= $22,220 ÷ 505
= $44 per unit
In this way, the overhead rate for each activity would be determined
The same would be relevant
Which of the following best describes the type of loss covered by the Spoilage Damage insuring agreement of the ISO Equipment Breakdown Protection Coverage Form? A. The spoilage of perishable goods resulting from breakdown of covered equipment. B. Costs to replace food labels resulting from breakdown of refrigeration equipment.
Answer:
A. The spoilage of perishable goods resulting from breakdown of covered equipment.
Explanation:
The ISO Equipment Breakdown Protection Coverage is used to compensate for losses that occur as a result of equipment breakdown. The cost covered by this type of insurance includes cost of repair of the equipment that failed along with the replacement not any property damaged as a result of equipment failure.
So when perishable goods get damaged because of breakdown of covered equipment, the ISO Equipment Breakdown Protection Coverage will cover for the loss
A major equipment purchase is being considered Metro Atlanta. The initial cost is determined to be $1,000,000. It is estimated that this new equipment will save $100,000 the first year and increase gradually by $50,000 for the next 6 years. MARR= 10%.
A) The payback period for this equipment purchase is______
B) The B/C ratio for this investment is ________
C) The NFW of this investment is ________
Coed Scents, a national producer of young adult perfumes and colognes, needs to determine if it would be cheaper to produce 100,000 bottles of its most popular perfume, Two AM, for sale in its college town shops or to purchase them from an outside supplier for $25 each. Cost information on internal production includes the following:
Total Cost Unit Cost
Direct materials $2,000,000 $ 20.00
Direct labor 350,000 3.50
Variable manufacturing overhead 150,000 1.50
Variable marketing overhead 250,000 2.50
Fixed plant overhead 300,000 3.00
Total $3,050,000 $30.50
Fixed overhead will continue whether Two AM is produced internally or externally. No additional costs of purchasing will be incurred beyond the purchase price.
Required:
1. What are the alternatives for Coed Scents?
2. List the relevant cost(s) of internal production and of external purchase.
3. Which alternative is more cost effective?
By how much?
$
4. Now assume that Coed Scents’ internal audit team learned through a special data analytics project that intellectual property theft is a significant threat for outsourced production. The team estimates that if Coed Scents outsources its production, it will need to spend $350,000 to manage intellectual property theft of its Two AM brand by competitors operating in the country where the outsourced production occurs. Which alternative is more cost effective?
By how much?
$
Answer:
Coed Scents
1. The alternatives for Coed Scents are to reduce cost of internal production or to renegotiate the external purchase price.
2. Relevant costs Internal External
Total Cost Unit Cost
Direct materials $2,000,000 $20.00
Direct labor 350,000 3.50
Variable manufacturing overhead 150,000 1.50
Total cost $2,500,000 $25.00 $2,500,000 $25.00
3. No alternative is more cost-effective. However, Coed Scents can reduce cost of internal production (materials, labor, and variable overhead).
4. Internal production becomes more cost-effective with this additional costs from outsourced production.
The cost-effectiveness amounts to $350,000.
Explanation:
a) Data and Calculations:
Production units of Two AM = 100,000 bottles
Purchase price of outside supplier = $25
Total Cost Unit Cost
Direct materials $2,000,000 $ 20.00
Direct labor 350,000 3.50
Variable manufacturing overhead 150,000 1.50
Variable marketing overhead 250,000 2.50
Fixed plant overhead 300,000 3.00
Total $3,050,000 $30.50
Relevant costs Internal External
Total Cost Unit Cost
Direct materials $2,000,000 $20.00
Direct labor 350,000 3.50
Variable manufacturing overhead 150,000 1.50
Total cost $2,500,000 $25.00 $2,500,000 $25.00
Which of the following situations would be a wrongful dissociation of a partner in a partnership? Multiple Choice Expulsion of a partner in accordance with the partnership agreement. Expulsion of a partner by a court at the request of the partnership. Expulsion of a partner who has transferred his transferable partnership interest. Expulsion of a partner with whom it is unlawful for the partnership to carry on its business.
Answer: Expulsion of a partner who has transferred his transferable partnership interest.
Explanation:
A partner can be expelled rightfully if it is done in accordance with the partnership agreement.
It is also fine to expel a partner if the Court orders the expulsion on advice it other partners.
Expelling a partner with whom it is unlawful to carry out business with is also fine because it is affecting the business negatively.
The correct answer must therefore be; expelling a partner who transferred their transferable partnership interest.
g Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfi’s base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent month’s activity in the form of a cost-volume-profit income statement. Fare revenues (400 passenger flights) $48,000 Variable costs Fuel $16,960 Snacks and drinks 720 Landing fees 2,100 Supplies and forms 1,100 20,880 Contribution margin 27,120 Fixed costs Depreciation 3,100 Salaries 11,600 Advertising 600 Airport hanger fees 1,650 16,950 Net income $10,170 Calculate the break-even point in dollars. Break-even point $Type your answer here eTextbook and MediaAssistance Used Calculate the break-even point in number of passenger flights. Break-even point Type your answer here flights eTextbook and MediaAssistance Used Without calculations, determine the contribution margin at the break-even point. Break-even point $Type your answer here eTextbook and MediaAssistance Used If ticket prices were decreased by 10%, passenger flights would increase by 25%. However, total variable costs would increase by the same percentage as passenger flights. (1) How much would net income be impacted by this change? Net income to $ (2) Should the ticket price decrease be adopted?
Answer:
Comfi Airways, Inc.
a. Break-even point in sales dollars = $30,000
b. Break-even point in passenger flights = 250
c. Contribution at break-even point = fixed costs = $16,950
d. Net income will increase to $10,950 (an increase of $780).
e. Yes. The ticket price decrease should be adopted.
Explanation:
a) Data and Calculations:
Number of airplanes = 2
Maximum number of passengers per flight = 10
Number of round-trip flights each month = 40
Number of passenger flights = 400 (40 * 10)
Total Unit
Fare revenues $48,000 $120 ($48,000/400)
Variable costs:
Fuel $16,960
Snacks and drinks 720
Landing fees 2,100
Supplies and forms 1,100 20,880 $52.20 ($20,880/400)
Contribution margin 27,120 $67.80 ($27,120/400)
Fixed costs:
Depreciation 3,100
Salaries 11,600
Advertising 600
Airport hanger fees 1,650 $16,950
Net income $10,170
Contribution margin ratio = $67.80/$120 = 0.565
Break-even point in sales dollars = Fixed costs/Contribution margin ratio
= $16,950/0.565
= $30,000
Break-even point in sales units = Fixed costs/Contribution per unit
= $16,950/$67.80
= 250 passenger flights
Contribution at break-even point = Fixed costs = $16,950
Decrease of ticket prices by 10% from $120 to $108 ($120 * 90%)
Passenger flights increased to 500 (400 * 1.25)
Fare revenues = $54,000 (500 * $108)
Total variable costs increased to $26,100 ($20,880 * 1.25)
Contribution = $27,900
Fixed costs = $16,950
Net income = $10,950
Increase in net income = $780 ($10,950 - $10,170)
Teal Mountain Inc. issues $5.0 million, 10-year, 8% bonds at 101, with interest payable on January 1. The straight-line method is used to amortize bond premium. (a)Prepare the journal entry to record interest expense and bond premium amortization on December 31, 2022, assuming no previous accrual of interest. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
Dec. 31
Dr Interest expense $405,000
Cr Discount on bonds payable $5,000
Cr Cash $400,000
Explanation:
Preparation of the journal entry to record interest expense and bond premium amortization on December 31, 2022
Dec. 31
Dr Interest expense $405,000
($400,000+$5,000)
Cr Discount on bonds payable $5,000
[$5,000,000 - ($5,000,000 x 101/100)/10]
Cr Cash ($5,000,000 x 8%) $400,000
(To record interest expense and bond premium amortization)
Cedric Company recently traded in an older model computer for a new model. The old model's book value was $140,000 (original cost of $370,000 less $230,000 in accumulated depreciation) and its fair value was $210,000. Cedric paid $65,000 to complete the exchange, which has commercial substance.
Calculate the following values:
1. Amount to debit for new equipment
2. Amount to debit accumulated depreciation
3. Amount to credit to cash
4. Amount to credit for old equipment
5. Gain or loss on sale
Answer:
1. $210,000
2.$230,000
3. $65,000
4. $370,000
5. $135,000 loss
Explanation:
1. Amount to debit for new equipment
Use the Fair Value of Asset given
2. Amount to debit accumulated depreciation
Use the accumulated depreciation of asset given up.
3. Amount to credit to cash
Use the Cash Paid up
4. Amount to credit for old equipment
Use the cost of asset given up
5. Gain or loss on sale
Gain or loss = Carrying Amount - Fair Value - Cash traded up
HH Auto Repair reports the following information for the coming year.
Labor rate, including fringe benefits $ 45 per labor hour
Annual labor hours 10,900 hours
Annual materials (parts) purchases $2,090,000
Annual overhead costs:
Materials purchasing, handling, and storage $ 355,300
Other overhead (depreciation, insurance, taxes, rent) 185,300
Target profit margin (on both labor and materials) $ 33 %
1. Compute the price (rate) per hour of direct labor. (Round your answer to 2 decimal places.)
2. Compute the materials markup (in %).
3. What price should the company quote for a job requiring five labor hours and $670 in parts? (Round your answer to 2 decimal places.)
Answer: See explanation
Explanation:
1. Compute the price (rate) per hour of direct labor.
This will be:
= [45 + (185,300 / 10,900)]× 1.33
= (45 + 17) × 1.33
= 62 × 1.33
= $82.46
2. Compute the materials markup.
This will be:
= =(355,300 / 2090,000) + 33%
= 0.17 + 33%
= 17% + 33%
= 50%
3. What price should the company quote for a job requiring five labor hours and $670 in parts?
This will be:
= (670 × 1.5) + (82.46 × 5)
= 1005 + 412.3
= $1417.30
The net income reported on the income statement of Whispering Winds Corp. for the current year was $1251000. Depreciation recorded on plant assets was $236000. Accounts receivable and inventories increased by $66000 and $44000, respectively. Prepaid expenses and accounts payable decreased by $6000 and $61000, respectively. How much cash was provided by operating activities during the year
Answer:
$1,454,000
Explanation:
Calculation to determine How much cash was provided by operating activities during the year
Using this formula
Operating activities=Net income+Depreciation+ Increased in Accounts receivable -Increased in inventories + Decreased in Prepaid expenses - Decreased in accounts payable
Let plug in the formula
Operating activities=$1251000 + $236000 -$66000 - $44000 +$6000 - $61000
Operating activities=$1,454,000
Therefore the amount of cash was provided by operating activities during the year is $1,454,000
The Laramie Factory produces expensive boots. It has two departments, tanning and finishing departments, that process all the items. During January, the beginning work in process in the tanning department was 40% complete as to conversion and 100% complete as to direct materials. The beginning inventory included $6,000 for materials and $18,000 for conversion costs. Ending work-in-process inventory in the tanning department was 40% complete. Direct materials are added at the beginning of the process. Beginning work in process in the finishing department was 60% complete as to conversion. Beginning inventories included $7,000 for transferred-in costs and $11,000 for conversion costs. Ending inventory was 30% complete. Additional information about the two departments follows: Tanning Finishing Beginning work-in-process units 5,000 4,000 Units started this period 14,000 Units transferred out this period 16,000 18,000 Ending work-in-process units 2,000 Material costs added $18,000 Conversion costs $32,000 $18,630 Transferred-out cost $50,400 Required: Complete the production cost worksheet below using FIFO costing for the finishing department.
Answer:
The Laramie Factory
Cost Worksheet for the Finishing Department, using FIFO Costing
Finishing Department
Cost assigned to: Materials Conversion Total
Units transferred out $45,360 $18,000 $63,360
Ending work in process 5,040 600 5,640
Total cost accounted for $50,400 $18,600 $69,000
Explanation:
a) Data and Calculations:
Materials Conversion
Tanning Finishing Tanning Finishing
Beginning work in process 100% 100% 40% 60%
Cost of beginning WIP $6,000 $7,000 $18,000 $11,000
Ending work in process 100% 100% 40% 30%
Additional information:
Tanning Finishing
Beginning work-in-process units 5,000 4,000
Units started this period 14,000 16,000
Units transferred out this period 16,000 18,000
Ending work-in-process units 3,000 2,000
Materials Conversion
Tanning Finishing Tanning Finishing
Beginning work in process 100% 100% 40% 60%
Beginning work in process done this period 60% 40%
Ending work in process 100% 100% 40% 30%
Cost of beginning WIP $6,000 $7,000 $18,000 $11,000
Costs added 18,000 $54,255 32,000 18,630
Total costs of production $24,000 $61,255 $50,000 $29,630
Transferred-out cost $50,400
Equivalent units
Materials Conversion
Tanning Finishing Tanning Finishing
Beginning work-in-process units 0 0 3,000 1,600
Units started and completed 16,000 18,000 13,000 16,400
Ending work-in-process units 3,000 2,000 1,200 600
Equivalent units of production 19,000 20,000 17,200 18,600
Cost per equivalent units Materials Conversion
Tanning Finishing Tanning Finishing
Costs added/transferred in $18,000 $50,400 $32,000 $18,630
Equivalent units of production 19,000 20,000 17,200 18,600
Cost per equivalent unit $0.95 $2.52 $1.86 $1.00
Tanning Department
Cost assigned to: Materials Conversion Total
Units transferred out $15,200 $29,760 $44,960
Ending work in process 2,850 2,232 5,082
Total costs $18,050 $31,992 $50,042
Finishing Department
Cost assigned to: Materials Conversion Total
Units transferred out $45,360 $18,000 $63,360
Ending work in process 5,040 600 5,640
Total cost accounted for $50,400 $18,600 $69,000
Explanation:
50,400
18,600
69,000
BRAINILIEST PLEASEMurray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D1) of $1.30 per share, and the current price of its common stock is $40 per share. The expected growth rate is 5 percent. a. Compute the cost of retained earnings (Ke). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Sound Tek Inc. manufactures electronic stereo equipment. The manufacturing process includes printed circuit (PC) board assembly, final assembly, testing, and shipping. In the PC board assembly operation, a number of individuals are responsible for assembling electronic components into printed circuit boards. Each operator is responsible for soldering components according to a given set of instructions. Operators work on batches of 50 printed circuit boards. Each board requires 4 minutes of board assembly time. After each batch is completed, the operator moves the assembled boards to the final assembly area. This move takes 12 minutes to complete. The final assembly for each stereo unit requires 20 minutes and is also done in batches of 50 units. A batch of 50 stereos is moved into the test building, which is across the street. The move takes 20 minutes. Before conducting the test, the test equipment must be set up for the particular stereo model. The test setup requires 30 minutes. The units wait while the setup is performed. In the final test, the 50-unit batch is tested one at a time. Each test requires 9 minutes. The completed batch, after all testing, is sent to shipping for packaging and final shipment to customers. A complete batch of 50 units is sent from testing to shipping. The Shipping Department is located next to testing. Thus, there is no move time between these two operations. Packaging and labeling requires 12 minutes per unit.
Required:
Determine the amount of value-added and non-value-added lead time and the value-added ratio in this process for an average stereo unit in a batch of 45 units.
Answer:
A. 45
B.2,235
C. 1.9%
Explanation:
A. Calculation to determine the amount of value-added
VALUE ADDED TIME
PC board Assembly 4
Final Assembly 20
Testing 9
Packaging and labeling 12
Total Value added time 45
Therefore the amount of value-added is 45
B. Calculation to determine non-value-added lead time
NON-VALUE-ADDED LEAD TIME
Wait time for non added value 2,205
[45*(50-1)]
Add Test set up time 30
Wait time 2,235
Therefore The non-value-added lead time is 2,235
C. Calculation to determine the value-added ratio
Value added time 45
Non value added lead time:
Wait time lead time 2,235
Move time lead time 32
(12+20)
Total lead time 2,312
Value added ratio 1.9%
(45/2312*100)
Therefore the value-added ratio is 1.9%
Sparkle Metallurgy, Inc. has two service departments (Human Resources and Building Maintenance) and two production departments (Machining and Assembly). The company allocates Building Maintenance cost on the basis of square footage and Human Resources cost on the basis of employees. It believes that Building Maintenance provides more service than Human Resources. The square footage and employees in each department follow. Square Footage Employees Human Resources 4,000 10 Building Maintenance 10,000 15 Machining 15,000 40 Assembly 21,000 60 Assuming use of the step-down method, which of the following choices correctly denotes the number of square feet and employees over which the Building Maintenance cost and Human Resources cost would be allocated (i.e., spread)?
a. 19,000.
b. 44,000.
c. 50,000.
d. 63,000.
Answer:
B.40,000 square feet
Explanation:
Calculation to correctly denotes the number of square feet and employees over which the Building Maintenance cost and Human Resources cost would be allocated
Employees Human Resources 4,000
Machining 15,000
Assembly 21,000
Number of square feet 40,000
(4,000+15,000+21,000)
Therefore the number of square feet and employees over which the Building Maintenance cost and Human Resources cost would be allocated is 40,000
Walmart and Target are the only stores in a remote town that currently stock and sell the PlayStation 5 video game console. Managers at both stores are simultaneously deciding whether to charge a price of $1,000 or $1,500 for each console. If both stores charge $1,000, they earn a profit of $100,000 each. If both stores charge $1,500, they earn a profit of $200,000 each. If one store charges $1,000 and the other store charges $1,500, the store that charges $1,000 earns a profit of $250,000 and the firm that charges $1,500 earns a profit of $50,000. If Walmart and Target ________, they can both charge $1,500 and earn the highest combined profit available.
Answer:
collude with each other
Explanation:
A monopoly market structure is the structure in which the chances of high profit are there. In the case when the two firms and they work together so that the can extract the maximum profits and after that they shared themselves
As in the given question, in the case when Walmart and Target collude with each other so they would charge $1.500 and earned highest profit available
The same would be considered
Gelb Company currently manufactures 47,000 units per year of a key component for its manufacturing process. Variable costs are $6.25 per unit, fixed costs related to making this component are $85,000 per year, and allocated fixed costs are $84,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 47,000 units and buying 47,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier
Answer:
Gelb Company
1. The total incremental cost of making and buying 47,000 units is:
= $204,850.
2. Gelb should buy this component from the outside supplier. It is far cost-effective.
Explanation:
a) Data and Calculations:
Required quantity of key component per year = 47,000 units
Variable costs per unit = $6.25
Avoidable fixed costs per year = $85,000
Unavoidable fixed costs per year = $84,500
Purchase price of component from outside supplier = $3.70 per unit
Incremental cost of making or buying the 47,000 units:
Make Buy Incremental Costs
Variable costs $293,750 $173,900 $119,850
Avoidable fixed costs 85,000 0 85,000
Total relevant costs $378,750 $173,900 $204,850
Communication starts with
sender
is answer..
........
Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $71,000 per ton, one-fourth of which is allocated to product X15. Six thousand five hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $17 each, or processed further at a total cost of $8,800 and then sold for $22 each. Required: 1. What is the financial advantage (disadvantage) of further processing product X15
Answer:
Financial advantage of further processing =$23,700
Explanation:
A company should process a product further if the additional revenue from the split-off point is greater than than the further processing cost.
Also note that all cost incurred up to the split-off point are irrelevant to the decision to process further .
$
Additional sales revenue from further processing
($22-$17)× 6,500 32,500
Less further processing cost (8,800)
Financial advantage 23,700
Financial advantage of further processing =$23,700
Task 1 . The income (in thousand $) of 5 small companies labeled AA , BB , CC , DD , EE has been calculated and the results are as follo,;vs:
2.49j 2.39j 2.39, 1.79, 3.8 .
1. Put the obtained data as points on the following coordinate system.
Income value
3
2
1
AA BB CC DD EE Company
2. Calculate the mean value from the sample for these data:
On the chart draw a line y = x (a horizontal line at the level of the mean of the sample) and for every measurement mark the difference between the value of the measurement and the sample mean.
3. Calculate the samples variance, standard deviation and the estimator of variance:
Icr2 =_.!_ f=_(xi -
I• I
__ n i=l
x_) _= iT
4. Write proper values into the following tagged fields and interpret the results obtained:
CJ CJ
x - 20- x - a x+ a x+ 20-
Date of simulation : 2021 03 02 20:30:20.050 Seed: 20302 8071 .
8
Answer:
yggjuytygyvcfryttgggv
Explanation:
Jerry is working on a research project about the effectiveness of social media marketing. He found some sources with information relevant to his project, and he’s trying to determine which ones are credible. Which THREE sources should he select to use for his project?
A.
a journal article titled “Marketing Strategies: Social Media” by a university professor
B. an article titled “Tips for Effective Social Media Marketing” on a government agency website
C. a social media post promoting a new product launched by a reputable business
D. a business magazine article titled “Why Social Media Marketing Works” by a journalist
E. a blog post titled “My Social Media Marketing Success” by an unknown author
Answer: A. a journal article titled “Marketing Strategies: Social Media” by a university professor
B. an article titled “Tips for Effective Social Media Marketing” on a government agency website
D. a business magazine article titled “Why Social Media Marketing Works” by a journalist.
Explanation:
When conducting a research, it is important for one to use good and credible sources.
Since Jerry is working on a research project about the effectiveness of social media marketing, the three sources that should be selected are:
A. journal article titled “Marketing Strategies: Social Media” by a university professor
B. an article titled “Tips for Effective Social Media Marketing” on a government agency website
D. A business magazine article titled “Why Social Media Marketing Works” by a journalist.
Option C should not be selected as it's a social media post and isn't regarded as a credible source. Also, option E should not be selected as it's a blog and the post is by an unknown author.
Therefore, the correct options are A, B and D.
Answer:
1,2, and 4
Explanation:
I took the test and got a 100
What is one specific requirement of a negotiable instrument?
O A. It must involve an exchange of goods.
B. It must provide for a fixed amount of money.
O C. It must be agreed to orally.
O D. It must involve two parties who are friends.
Answer:
B
Explanation:
Suppose that the tax rate on personal income, tp, is equal to 40%; the corporate tax rate, tc, is equal to 35%; and the capital gains tax rate, tcg, is 20%. Also assume that the before-tax rate of return on investment to both the corporate and partnership form is 15% per year. These tax rates and investment returns are constant over time. On the basis of these facts, identify the following as true or false. (Support your answers with numerical examples.)
a. The annualized after-tax rate of return to investing in the corporate form increases with the length of the investor’s holding period. Explain.
b. The annualized after-tax rate of return to investing in the partnership form increases with the length of the partner’s holding period. Explain.
c. If a corporation paid out its entire after-tax profits as fully taxable dividends each year, shareholders would realize a lower before-tax rate of return than if the corporation retained the after-tax profits. Explain.
d. Because the corporate tax rate is below the personal tax rate, the corporate form is always preferred to the partnership form.
e. Because corporate income is subject to two levels of taxation, the partnership form is always preferred to the corporate form.
Solution :
a). The annualization after the tax returns by the investment in corporate from increases with a period of holding. It is true.
The reason is that the profits of the corporate are being taxed at a percentage of 35% instead of being taxed at 40% in the hands of the individual.
b). The statement is false because the annualization return on the investment would be less as the income of the firm will be taxed at the hands of individual for a rate of a personal income that is 40%. So after the annualization return of tax would be less tha in case of the partnership firm.
c). The statement is true. This is because the after the tax profit is distributed to the share holders that are again subjected to the tax in hands of the individual tax payer at 205 to 23.8%. But when the retained earnings are not given off as the dividends, then the net value of the shares will increase there by increasing the capital gains on the sales of the shares which are taxed at lower rate of 20%.
d). This statement is false. It is not that always the corporate firms are preferred, and as the dividends are again subjected to the tax at some different rates that depends on the tax rate of the personal incomes.
e) The statement is true. The corporate income is subjected to any two taxation levels so that the partnership firm is always preferred to corporate firm.
Depreciation by Three Methods; Partial Years
Perdue Company purchased equipment on April 1 for $43,470. The equipment was expected to have a useful life of three years, or 6,480 operating hours, and a residual value of $1,350. The equipment was used for 1,200 hours during Year 1, 2,300 hours in Year 2, 1,900 hours in Year 3, and 1,080 hours in Year 4.
Required:
Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-output method, and (c) the double-declining-balance method.
Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.
Answer:
a. Straight-line method.
Year Depreciation expense ($)
1 10,530
2 14,040
3 14,040
4 3,510
b. Units-of-production method.
Year Depreciation expense ($)
1 7,800
2 14,950
3 12,350
4 7,020
c. Double-declining balance method
Year Depreciation expense ($)
1 21,735
2 14,490
3 4,830
4 1,065
Explanation:
(a) the straight-line method
Note: See part a of the attached excel file for the depreciation schedule for Straight-line method.
In the attached excel file, the depreciation rate used for the Straight-line method is calculated as follows:
Straight line depreciation rate = 1 / Estimated useful life = 1 / 3 = 0.3333, or 33.33%
(b) units-of-output method
Note: See part b of the attached excel file for the depreciation schedule for units-of-production method.
(c) the double-declining-balance method.
Note: See part c of the attached excel file for the depreciation schedule for double-declining-balance method.
In the attached excel file, the depreciation rate used for the Double- declining-balance method is calculated as follows:
Double-declining depreciation rate = Straight line depreciation rate * 2 = (1/3) * 2 = 0.666667, or 66.6667%
Note:
Under this double-declining-balance method, the depreciation expenses for Year 4 is calculated by deducting the residual value of $1,350 from the Year 4 Beginning depreciable amount (i.e. $2,415 - $1,350 = $1,065). The residual value of $1,350 therefore represents the book value at the end of Year 4.
Annabelle is employed as an administrator for GRM Industries. She noticed that her Box 1 and Box 3 amounts on her W-2 were different.
b Employer identification number (EIN)
c Employer'd name, address, and ZIP code
1 Wages, tips, other compensation
2 Federal income tax withheld
3 Social security wages
4 Social security tax withheld
What is a reason why the amounts in boxes 1 and 3 would be different?
a) Annabelle received tips, which are not subject to Social Security taxes.
b) Annabelle has contributed to a pre-tax 401(k) that reduced her taxable wages.
c) Annabelle changed her withholding allowances on her W-4.
d) Annabelle's wages were subject to a pre-tax garnishment.
Answer:
B.
Explanation:
:::::::::::::::::::
Elaine needs $1,500 to buy textbooks and other school supplies. Kramer agrees to loan Elaine $1,500, accepting as collateral Elaine’s car. They put their agreement in writing and sign it. Elaine keeps possession of the car. What are the requirements for Kramer to have an enforceable security interest in the car? What must Kramer do to let other creditors know of his security interest in the car?
Answer:
1. For Kramer to have an enforceable security interest in the car, the following requirements must be met:
a. Elaine must possess the property right over the car.
b. Kramer must give value for the security interest.
c. Elaine must have authenticated the security agreement by describing it, or Kramer must be in possession of the collateral.
2. Kramer needs to perfect his security interest in the car by registering it with the appropriate statutory body.
Explanation:
Under UCC Article 9, four steps must be taken by Kramer to perfect the security interest in the collateral car. They include:
a. Creating and filing a financing statement with the statutory body
b. Establishing actual possession of the car
c. Establishing control over the car by not allowing Elaine keep its possession.
d. Attaching a purchase financial security interest on the car.
Danner Company expects to have a cash balance of $52,965 on January 1, 2017. Relevant monthly budget data for the first 2 months of 2017 are as follows. Collections from customers: January $100,045, February $176,550. Payments for direct materials: January $58,850, February $88,275. Direct labor: January $35,310, February $52,965. Wages are paid in the month they are incurred. Manufacturing overhead: January $24,717, February $29,425. These costs include depreciation of $1,765 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $17,655, February $23,540. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $14,124 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $29,425. The company wants to maintain a minimum monthly cash balance of $23,540.
Prepare a cash budget for January and February.
Answer:
Danner Company
Cash Budget for January and February
January February
Beginning balance $52,965 $32,367
Collections from customers 100,045 176,550
Sales of marketable securities 14,124
Cash available $167,134 $208,917
Payments:
Direct materials $58,850 $88,275
Direct labor 35,310 52,965
Manufacturing overhead 22,952 27,660
Selling & administrative expenses 17,655 23,540
Total payments $134,767 $192,440
Cash balance $32,367 $16,477
Required minimum balance 23,540 23,540
Excess (Needed) Financing $8,827 ($7,063)
Explanation:
a) Data and Calculations:
Expected January 1, 2017 Cash Balance = $52,965
January February
Collections from customers $100,045 $176,550
Sales of marketable securities 14,124
Payments:
Direct materials $58,850 $88,275
Direct labor 35,310 52,965
Manufacturing overhead 22,952 27,660
Selling & administrative expenses 17,655 23,540
Line of credit limit = $29,425
Required minimum cash balance = $23,540
The company owns 9,000 acres of timberland purchased two years ago at a cost of $1,400 per acre. At the time of purchase, the land without the timber was valued at $400 per acre. In the current year, the company built fire lanes and roads, with a life of 30 years, at a cost of $84,000. Every year, the company sprays to prevent disease at a cost of $3,000 per year and spends $7,000 to maintain the fire lanes and roads. During the current year, the company selectively logged and sold 700,000 board feet of timber, of the estimated 3,500,000 board feet. Next year, the company will plant new seedlings to replace the trees cut at a cost of $100,000. What is the cost of timber sold related to depletion during the current year
Answer:
See below
Explanation:
First, we will calculate the depreciation expenses
Depreciation expense = Cost / life = $84,000 / 30 = $2,800 per year
. Bartholomew Corp's master budget calls for the production of 6,000 units of products monthly. The master budget includes indirect labor of $396,000 annually; Bartholomew considers indirect labor to be a variable cost. During the month of September, 5,600 units of product were produced, and indirect labor costs of $30,970 were incurred. A performance report utilizing flexible budgeting would report a flexible budget variance for indirect labor of:
Answer:
$170 Unfavorable
Explanation:
Budgeted monthly indirect labor = $396,000/12 = $33,000
Budgeted indirect labor per unit = $33,000/6,000 = $5.5 per unit
Flexible budgeted cost = 5,600*$5.5 = $30,800
Flexible budget variance = Actual cost - Flexible cost
Flexible budget variance = $30,970 - $30,800
Flexible budget variance = $170 Unfavorable
Citibank need to borrow $1 million for 6 months starting in 2 years. Citibank is concerned about the interest rate would like to lock in the interest rate it pays by going long an FRA with Bank of America. The FRA specifies that Citibank will borrow at a fixed rate of 0.04 for 6 months on $1 million in 2 years. If the 6 months LIBOR rate proves to be 0.01. Then to settle the FRA, what is the cash flow to Citibank at the end of 2 years
Answer:
"$ 15,000" is the correct solution.
Explanation:
The given values are:
Agreed fixed rate,
= 0.04
LIBOR rate,
= 0.01
No. of borrowing months,
= 6
National amount,
= 1000000
Now,
The net payment will be:
= [tex]National \ principal*(Floating \ rate - Fixed \ rate)\times \frac{No. \ of \ months}{12}[/tex]
On substituting the above values, we get
= [tex]1000000\times (0.01-0.4)\times \frac{6}{12}[/tex]
= [tex]1000000\times (-0.03)\times 0.5[/tex]
= [tex]-15,000[/tex] ($)
If Congress wanted to help the economy out of a recession, they would be most likely to: check all that apply Group of answer choices increase transfer payments increase interest rates decrease taxes reduce government spending
Answer:
increase transfer payments
decrease taxes
Explanation:
A recession is when the GDP of a country for two consecutive quarters is negative
to help a country out of a recession, expansionary fiscal policies have to be undertaken
Expansionary fiscal policy is when the government increases the money supply in the economy either by increasing spending or cutting taxes.
increasing interest rate is a monetary policy