Business College

## Answers

**Answer 1**

**Answer:**

Question 1:

required investment $245,000

depreciation expense per year = ($245,00 - $23,200) / 5 = $44,360

you will also require $15,000 in working capital

annual cash costs = $68,500

what is the minimum amount of cash sales for accepting the project:

net cash flow₁ = {[(sales revenue - $68,500 - $44,360) x 0.65] + $44,360} / 1.14 = (0.65SR - $28,999) / 1.14 = 0.5702SR - $25,437.72

net cash flow₂ = {[(sales revenue - $68,500 - $44,360) x 0.65] + $44,360} / 1.14² = (0.65SR - $28,999) / 1.14² = 0.5002SR - $22,313.79

net cash flow₃ = {[(sales revenue - $68,500 - $44,360) x 0.65] + $44,360} / 1.14³ = (0.65SR - $28,999) / 1.14³ = 0.4387SR - $19,573.50

net cash flow₄ = {[(sales revenue - $68,500 - $44,360) x 0.65] + $44,360} / 1.14⁴ = (0.65SR - $28,999) / 1.14⁴ = 0.3849SR - $17,169.74

net cash flow₅ = {[(sales revenue - $68,500 - $44,360) x 0.65] + $44,360 + $15,000} / 1.14⁵ = (0.65SR - $13,999) / 1.14⁵ = 0.3376SR - $7,270.64

NPV = -initial outlay + cash flows

NPV = 0

initial outlay = cash flows

$260,000 = 0.5702SR - $25,437.72 + 0.5002SR - $22,313.79 + 0.4387SR - $19,573.50 + 0.3849SR - $17,169.74 + 0.3376SR - $7,270.64

$260,000 = 2.2316SR - $91,765.39

$351,765.39 = 2.2316SR

sales revenue = $351,765.39 / 2.2316 = $157,629.23

the closest answer is B = $155,119, but its NPV will be negative.

**so we have to select C = $162,515.75 that results in an NPV = $10,887. **

Question 2:

**The correct answer is D. return on equity will increase.**

If you lower your costs while your sales remain the same, your profits will increase as well as your ROE.

## Related Questions

Which of the following ratios indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

A. Margin of safety ratio

B. Costs and expenses ratio

C. Profit ratio

### Answers

**Answer:**

The correct answer is the** option A**: Margin of safety ratio.

**Explanation:**

To begin with, the name of ** "Margin of Safety"**, in the field of business and accounting, is refered to a ratio whose main purpose is to establish the point in where the company knows that it has to sale obligately due to the fact that at that point the company can be sure that they have covered the fixed costs of it and after that point every sale will became a profit for the company. So that is why that this ratio indicates the percentage of each sales dollar that is available to cover those costs.

In September 2009 a U.S. investor chooses to invest $500,000 in German equity securities at a then current spot rate of $1.30/euro. At the end of one year the spot rate is $1.35/euro.

1. Refer to Instruction, how many euros will the U.S. investor acquire with his initial $500,000 investment?

A) €650,000B) €370,370C) €500,000D) €384,6152. Refer to Instruction, at an average price of €60/share, how many shares of stock will the investor be able to purchase?A) 8333 sharesB) 6410 sharesC) 6173 sharesD) 10,833 shares3. Refer to Instruction, at the end of the year the investor sells his stock that now has an average price per share of €57. What is the investor's average rate of return before converting the stock back into dollars?A) 5.0%B) -3.0%C) -5.0%D) 3.0%

4. Refer to Instruction, at the end of the year the investor sells his stock that now has an average price per share of €57. What is the investor's average rate of return after converting the stock back into dollars?A) -1.35%B) 5.0%C) -5.0%D) -7.24%

### Answers

**Answer:**

1. Refer to Instruction, how many euros will the U.S. investor acquire with his initial $500,000 investment?

D) €384,615

$500,000 / $1.30 = €384,615.38

2. Refer to Instruction, at an average price of €60/share, how many shares of stock will the investor be able to purchase?

B) 6410 shares

€384,615 / €60 = 6,410.25

3. Refer to Instruction, at the end of the year the investor sells his stock that now has an average price per share of €57. What is the investor's average rate of return before converting the stock back into dollars?

C) -5.0%

(€57 - €60) / €60 = -5%

4. Refer to Instruction, at the end of the year the investor sells his stock that now has an average price per share of €57. What is the investor's average rate of return after converting the stock back into dollars?

A) -1.35%

[(6,410 x €57) + €15] x $1.35 = $493,269.75

($493,269.75 - $500,000) / $500,000 = -1.35%

Bob sells a car to Fred but Bob fails to mention that he disconnected the odometer, which reads 39,000 miles. Bob disconnected the odometer 20,000 miles ago. Which of the following is TRUE?

a. duress.

b. undue influence.

c. puffery.

d. Fraud in the inducement.

e. none of the above.

### Answers

**Answer:**

**d. **Fraud in the inducement.

**Explanation:**

In this scenario, there was Fraud in the inducement. Fraud refers to the wrongful or criminal deception intended to result in financial or personal gain. Which in this case, by selling a car to Fred and claiming that it has 39,000 miles on (which it does not) they are deceiving Fred in order to make a sale. In doing so they are selling Fred a car that has 20,000 extra miles on it and possibly more internal damage than advertised by the Seller.

Break-even EBIT (with and without taxes). Alpha Company is looking at two different capital structures, one an all-equity firm and the other a levered firm with $ million of debt financing at % interest. The all-equity firm will have a value of $ million and shares outstanding. The levered firm will have shares outstanding. a. Find the break-even EBIT for Alpha Company using EPS if there are no corporate taxes. b. Find the break-even EBIT for Alpha Company using EPS if the corporate tax rate is %. c. What do you notice about these two break-even EBITs for Alpha Company? a. What is the break-even EBIT for Alpha Company using EPS if there are no corporate taxes?

### Answers

**Complete Question:**

Alpha company is looking at two different capital structures, one an all-equity firm and the other a leverages firm with $2 million of debt financing at 8% interest. The all-equity firm will have a value of $4 million and 400,000 shares outstanding. The leveraged firm will have 200,000 shares outstanding.

a. Find the break even EBIT for Alpha company using EPS if there are no corporate taxes.

b.Find the break even EBIT for Alpha company using EPS if the corporate tax rate is 30%

c. What do you notice about these two break-even EBITs for Alpha company?

**Answer:**

Alpha Company

a. Break-even EBIT, using EPS without taxes:

= (EBIT - Interest 1) * (1 - taxes)/No. of shares = (EBIT - Interest 2) * (1 - taxes)/No. of shares

With alternative 1, there are no taxes, so:

= (EBIT - Interest 1)/No. of shares = EBIT - Interest 2)/No. of shares

= (EBIT - 0)/400,000 = EBIT - ($2,000,000 x 8%)/200,000

= (EBIT/400,000( = (EBIT - $160,000)/200,000

cross-multiplying:

EBIT200,000 = EBIT$64,000,000,000

dividing by 200,000:

EBIT = $64,000,000,000/200,000

EBIT = $320,000

b. Break-even EBIT, using EPS with taxes:

= (EBIT - Interest 1) * (1 - taxes)/No. of shares = (EBIT - Interest 2) * (1 - taxes)/No. of shares

= {(EBIT - $0) * (1 - 0.30)}/400,000 = {(EBIT - $160,000) * (1 - 0.30)}/200,000

= EBIT/400,000 = (EBIT - $112,000)/200,000

cross-multiplying:

= EBIT 200,000 = EBIT $44,800,000,000

EBIT = $44,800,000,000/200,000

= $224,000

c. The two break-even EBITs are not the same. When there are taxes, the break-even EBIT is $224,000, less by $96,000.

**Explanation:**

a) Data:

Alternative 1: All Equity:

No. of shares = 400,000

Value of shares = $4,000,000

Debt = $0

Interest on Debt = $0

Alternative 2: Equity + Debt:

No. of shares = 200,000

Value of shares = $2,000,000

Debt = $2,000,000

Interest on Debt = 8% or $160,000

b) Alpha's break-even EBIT is the point when the EBIT under alternative 1 are equal to the EBIT under alternative 2. This implies that under these given alternative financing options, the earnings before interest and taxes are before no matter the alternative chosen.

The project has been challenging to manage. Everyone has been on edge due to pressure to complete the project on time. Unfortunately, the tension has grown to the point where team meetings have become shouting matches and little work is accomplished during the meetings. One team member asks to be excused from future team meetings, as all the shouting upsets him. Meanwhile, the sponsor has asked to attend team meetings in order to better understand how the project is going and the issues involved in completing the project, and the customer has started discussions about adding scope to the project. In this situation, it would be BEST for the project manager to:

### Answers

**Answer: C. Involve the team in creating ground rules for the meetings.**

**Explanation:**

The meetings have seemingly descended into anarchy and as such needs to be controlled in an orderly manner to make any sort of progress. One way this can be done is through the setting of ground rules. These rules need to be accepted and inclusive of people's qualms or else the arguments will continue.

When the rules are made therefore, the inputs of the entire team should be taken into consideration and this is what the Project manager needs to do. Setting all inclusive rules also helps the team understand each other better during the discussions are point of views will be seen and understood better.

hi , what is third-party companies??? thank

### Answers

**Answer:**

A 'third party', is any entity that a company does business with. This may include suppliers, vendors, contract manufacturers, business partners and affiliates, brokers, distributors, resellers, and agents.

if N lekin's beginning capital balance shown on a statement of owner's equity is 100,000. net income for the period is

### Answers

**Answer:**

**$125,000**

**Explanation:**

The computation of the owner's capital balance at the end of the period is shown below:-

**Owner's Capital balance at the end = Capital balance in the beginning + Additional investments + Net Income - Withdrawals**

= $100,000 + 0 + $50,000 - $25,000

= **$125,000**

Therefore for computing the owner's capital balance at the end we simply applied the above formula.

Joe-Bob wants to buy a car and will need to take out a loan in order to make the purchase. His current monthly income is $3,500 per month. His mortgage payment is $900 per month, and his student loan payment is $350 per month. Note: You do not need to take taxes into consideration for this journal.

a. According to the affordability formulas given, can he afford to take out another loan?

b. When should he follow the affordability formulas?

c. In what cases should he not?

d. How could taking out the car loan impact his other priorities?

### Answers

**Answer:**

A) according to the affordability formula Joe-Bob can take out another loan because his DTI is 36%

B) He should follow the affordability formula when he wants to take out loans

C) He should not follow DTI if he isn't taking out loans

D) Taking out a loan will negatively impact his other priorities if his DTI is very high or greater than 100%

**Explanation:**

using the affordability formula

The debt to income ratio = [tex]\frac{total debt}{gross income}[/tex]

total debt = mortgage payment + loan repayment = $900 + $350

= $1250

gross income = $3500

hence debt to income ratio = 1250 / 3500 = 0.3571 = 35.7%

A) according to the affordability formula Joe-Bob can take out another loan because his DTI is 36%

B) He should follow the affordability formula when he wants to take out loans

C) He should not follow DTI if he isn't taking out loans

D) Taking out a loan will negatively impact his other priorities if his DTI is very high or greater than 100%

a. According to the **affordability formulas,** **Joe-Bob ***cannot afford to take out a car loan.* His **current DTI** without the **auto loan **is almost **36%**.

b. **Joe-Bob** should follow the **affordability formulas** to guide his decisions in taking a **new loan**.

c. **Joe-Bo**b does not need to follow the **affordability formulas** when his **debt to income ratio (DTI**) is far below **36%**. He can also avoid the **affordability formulas** when he has the *prospect of increasing his **monthly income**. *

d. If **Joe-Bob** takes out the **car loan** despite his **poor rating** on the **affordability formulas,** he may *not afford to pay his bills for necessities.*

Thus, **Joe-Bob** should not take on more loans now until he improves his **income**. An **automobile** will require **routine maintenance** and some **repairs**, including **fuelling**.

**Data and Calculations:**

Current monthly income = $3,500

Monthly mortgage payment = $900

Monthly student loan payment = $350

Total current debts = $1,250 ($900 + $350)

The** Affordability Formula** (Current Debt Payment to Income Ratio) =

**35.7%** ($1,250/$3,500 x 100)

The **Affordability Rule** states that **Joe-Bob** should not spend more than **36%** of his **monthly income** **repaying loans**.

Learn more: https://brainly.com/question/20482529

You are planning to save for retirement over the next 25 years. To do this, you will invest $880 per month in a stock account and $480 per month in a bond account. The return of the stock account is expected to be an APR of 10.8 percent, and the bond account will earn an APR of 6.8 percent. When you retire, you will combine your money into an account with an APR of 7.8 percent. All interest rates are compounded monthly. How much can you withdraw each month from your account assuming a withdrawal period of 20 years

### Answers

**Answer:**

**$14,143.86** can be withdrawn each month from the account for 20 years.

**Explanation:**

To determine this, the first step is to use the formula for calculating the future value (FV) of ordinary annuity to calculate the FV of both stock and bond as follows:

**Calculation of Future Value of Stock**

FVs = M × {[(1 + r)^n - 1] ÷ r} ................................. (1)

Where,

FVs = Future value of the amount invested in stock after 25 years =?

M = Monthly investment = $880

r = Monthly interest rate = 10.8% ÷ 12 = 0.9%, or 0.009

n = number of months = 25 years × 12 months = 300

Substituting the values into equation (1), we have:

FVs = $880 × {[(1 + 0.009)^360 - 1] ÷ 0.009}

FVs = $880 × 1,522.3445923122

FVs = $1,339,663.24

**Calculation of Future Value of Bond**

FVd = M × {[(1 + r)^n - 1] ÷ r} ................................. (1)

Where,

FVd = Future value of the amount invested in bond after 25 years =?

M = Monthly investment = $480

r = Monthly interest rate = 6.8% ÷ 12 = 0.566666666666667%, or 0.00566666666666667

n = number of months = 25 years × 12 months = 300

Substituting the values into equation (1), we have:

FVd = $480 × {[(1 + 0.00566666666666667)^300 - 1] ÷ 0.00566666666666667}

FVd = $480 × 784.895879465925

FVd = $376,750.02

**Calculation of the amount that can be withdrawn monthly for 20 years**

To calculate this, the formula for calculating the present value of an ordinary annuity is used as follows:

PV = P × [{1 - [1 ÷ (1+r)]^n} ÷ r] …………………………………. (3)

Where;

PV = Combined present values of stock and bond investments after retirement = FVs + FVb = $1,339,663.24 + $376,750.02 = $1,716,413.26

P = Monthly withdrawal = ?

r = Monthly interest rate = 7.8% ÷ 12 = 0.65%, or 0.0065

n = number of months = 20 years * 12 months = 240

Substitute the values into equation (3) and solve for P to have:

PV = P × [{1 - [1 ÷ (1+r)]^n} ÷ r]

$1,716,413.26 = P × [{1 - [1 ÷ (1 + 0.0065)]^240} ÷ 0.0065]

$1,716,413.26 = P × 121.353915567094

P = $1,716,413.26 / 121.353915567094

P = $14,143.86

Therefore, **$14,143.86** can be withdrawn each month from the account for 20 years.

you decided to get a summer job since you were 14 as a lifeguard. you have made 2000 each summer. you placed all your earning in your savings account each year. It's 5 years later and you want to determine how much interest you have made. use the calculator to determine this

### Answers

**Answer:**

Determine of interest made by placing $2,000 earnings each summer in savings account each year:

**Total Interest$1,265.95**

at 4% interest per annum.

**Explanation:**

a) Data and Calculations:

1. Data:

Earnings each summer = $2,000

Period = 5 years

Interest Rate = 4%

2. Using online calculator:

V (Future Value)$11,265.95

PV (Present Value)$9,259.79

N (Number of Periods)5.000

I/Y (Interest Rate)4.000%

PMT (Periodic Payment)$2,000.00

Starting Investment$0.00

Total Principal$10,000.00

Total Interest$1,265.95

3. By placing all your earning in your savings account each year after 5 years, you will get an interest of $1,265.95 and a total future value of $11,265.95, having deposited $10,000 ($2,000 each for 5 years).

If someone has a power of attorney to sign the purchase agreement on behalf of the seller, which of the following would be the proper way to sign?

a. Philip Adams, seller

b. Philip Adams, by Alice Jackson, his attorney in fact

c. Alice Jackson, attorney in fact for the seller

d. Philip Adams, by his attorney in fact

### Answers

**Answer:**

**b. Philip Adams, by Alice Jackson, his attorney in fact**

**Explanation:**

A power of attorney is the legal document in which it allows someone to act on behalf of you. In this, the person has the authority to act on behalf of the other person with respect to the legal, financial matters, etc

Here the proper way to sign is the option B

Philip Adams, by Alice Jackson, his attorney in fact

Therefore all the other options are wrong

Company X was expected to have earnings per share of $0.52 for the upcoming quarter. On the day of the results, the company reported earnings per share of $0.83. What happened to the share price when the stock market opened?

### Answers

**Answer:**

**Rise in stock price.**

**Explanation:**

In general, the stock price has increased because the expected earning was $0.52 per share but the actual earnings were $0.83. therefore, we can say that stock prices have increased. moreover, there are other factors that may affect the stock price. But in this case. A positive surprise in the earnings per share results in stock price going up.

Simon Company's year-end balance sheets follow.

At December 31 2015 2014 2013

Assets

Cash $25,267 $30,131 $31,387

Accounts receivable, net 75,450 50,642 41,435

Merchandise inventory 92,074 68,299 44,128

Prepaid expenses 8,301 8,066 3,418

193,532

Plant assets, net 231,487 215,775

Total assets $432,579 372,913 313,900

Liabilities and Equity

Accounts payable $106,635 $62,392 $41,849

Long-term notes payable secured by

mortgages on plant assets 79,698 84,912 71,453

Common stock, $10 par value 163,500 163,500 163,500

Retained earnings 82,746 62,109 37,098

Total liabilities and equity $432,579 $372,313 313,900

Express the balance sheets in common-size percents.

### Answers

**Answer:**

Simon Company

Common-size percents Balance Sheet as of the years ended December 31 2015 2014 2013:

2015 % 2014 % 2013 %

Assets

Cash $25,267 5.8% $30,131 8.1% $31,387 10%

Accounts receivable, net 75,450 17.4% 50,642 13.6% 41,435 13.2%

Merchandise inventory 92,074 21.3% 68,299 18.3% 44,128 14.1%

Prepaid expenses 8,301 1.9% 8,066 2.2% 3,418 1.1%

201,092 46.5% 157,138 42.1% 120,368 38.3%

Plant assets, net 231,487 53.5% 215,775 57.9% 193,532 61.7%

Total assets $432,579 100% 372,913 100% 313,900 100%

Liabilities and Equity

Accounts payable $106,635 24.7% $62,392 16.7% $41,849 13.3%

Long-term notes payable secured by mortgages

on plant assets 79,698 18.4% 84,912 22.8% 71,453 22.8%

Total Liabilities $186,333 43.1% $147,304 39.5 $113,302 36.1%

Common stock, $10

par value 163,500 37.8% 163,500 43.8% 163,500 52.1%

Retained earnings 82,746 19.1% 62,109 16.7% 37,098 11.8%

Total liabilities and

equity $432,579 100% $372,913 100% 313,900 100%

**Explanation:**

Simon Company's balance sheets in common-size percents shows the relative values of assets and liabilities and equity in numeric and percentage terms to enable comparison. The company's balance sheet line items are expressed as percentages of the total, usually the total assets in each period. From the analysis, the management, investors, and other parties of Simon Company can understand the changes in the line items from year to year, thus making it possible for Simon Company to undertake a trend analysis.

The beta of company Myers’s stock is 2. The annual risk-free rate is 2% and the annual market premium is 8%. What is the expected return for Myers’ stock? A. 14% B. 25% C. 20% D. 18

### Answers

Answer:

18%

Explanation:

Myers's stock has a beta of 2

The annual risk free rate is 2%

The annual market premium is 8%

Therefore, the expected return for Myers's stock can be calculated as follows

= 2% + (2×8%)

= 2% + 16%

= 18%

Hence the expected return for Myers's stock is 18%

Seacrest Company has 15,000 shares of cumulative preferred 2% stock, $50 par and 50,000 shares of $5 par common stock. The following amounts were distributed as dividends:

Year 1 $30,000

Year 2 12,000

Year 3 45,000

Required:

Determine the dividends per share for preferred and common stock for each year.

### Answers

Answer:

Cumulative Preferred Stock must always pay out Dividends and when they cannot, the amount unpaid will be accrued for payment to another year when it can be paid.

When Dividends are declared, Preference Shareholders are paid first and then common shareholders follow.

Year 1

Preference Shares = Number of shares * Par value * %

= 15,000 * 50 * 2%

= $15,000

Common Shareholders will get the rest;

= 30,000 - 15,000

= $15,000

Year 2.

Preference Shareholders are still due $15,000 however only $12,000 is available. They will take all of it and be owed $3,000.

Preference Shares, Year 2 = $12,000

Common Shareholders get nothing.

Year 3.

Preference Shareholders are owed $15,000 for the year. They are also owed $3,000 from the previous year.

Preference Shares = 15,000 + 3,000

= $18,000

Common Shareholders will get the remainder;

= 45,000 - 18,000

= $27,000

The revenue is $94,000, the cost of goods sold is $51,000, other expenses (from selling and administration) are $21,000, and depreciation is $12,000. What is the EBIT?

### Answers

**Answer:**

$10,000

**Explanation:**

EBIT is earnings before interest and tax

EBIT = Revenue - cost of goods sold - other expenses - depreciation

$94,000 - $51,000 - $21,000 - $12,000 = $10,000

A project has an initial cost of $60,000, expected net cash inflows of $14,000 per year for 7 years, and a cost of capital of 13%. What is the project's discounted payback period

### Answers

**Answer:**

Discounted payback period = 6.68 years

**Explanation:**

**Year Cash inflow$ Discounted cash Cumulative discounted **

** inflow$ cash inflow$**

1 14,000 12,389 12,389

2 14,000 10,964 23,353

3 14,000 9,703 33,056

4 14,000 8,586 41,643

5 14,000 7,599 49,241

6 14,000 6,724 55,966

7 14,000 5,951 61,917

Discounted cash inflow is calculated by discounting cash inflow at 13%. For example, discounted cash-flow in year 1 = 14,000 / (1+13%)^1 = 12,389.

Similarly, discounted cash-flow in year 2 = 14,000 / (1+13%)^2 = 10,964. And so on.

Cumulative cash-flows are sum of all cashflows till that year. For example, year 2 cumulative cashflow = 12,389 + 10,964 = 23,353.

Similarly, year 3 cumulative cash-flow = 23,353 + 9,703 = 33,056.

This cumulative cash-flow crosses 60,000 in year 7, so discounted payback period = 6 + (60,000-55,966) / 5,951

Discounted payback period = 6.68 years

All-Mart Discount Stores Corporation contracts to buy ten acres from Suburban Enterprises, Inc., as a site for a new store. The contract calls for a "warranty deed." According to a survey that All-Mart commissions, one corner of an adjacent, enclosed parking lot is on part of the property that Suburban is attempting to convey. Can All-Mart avoid the contract? If so, on what basis? If not, why not?

### Answers

**Answer:**

All-Mart can avoid the contract since it didn't meet their specification for the siting of their new store which they planned for. **The warranty deed** which they called for was to ensure that, all land purchased has guarantee that it would not become an issue for them in the future.

**Since one part is an enclosed parking lot which is a public property that Suburban is trying to sell to them, the best would be to avoid it.**

**Explanation:**

The failure to record a purchase of mer chandise on account even though the goods are properly included in the physical inven tory results in

### Answers

**Answer: D. an understatement of expenses and an overstatement of owners' equity **

**Explanation:**

If a purchase of merchandise was not recorded, it would mean that Purchases being an expense that contributes to the Cost of Goods sold would be understated.

This understatement would mean that the the Net income is overstated because the purchase expenses were never deducted from it. Net Income is part of owners' equity so if it is overstated, so is owners' equity .

Cash balance, September 1 (from a summer job) $7,560

Purchase season football tickets in September 100

Additional entertainment for each month 260

Pay fall semester tuition in September 4,100

Pay rent at the beginning of each month 370

Pay for food each month 210

Pay apartment deposit on September 2 (to be returned December 15) 500

Part-time job earnings each month (net of taxes) 940

Personal Budget:

At the beginning of the 2016 school year, Katherine Malloy decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:

Required:

Prepare a cash budget for September, October, November, and December.

### Answers

**Answer:**

Katherine Malloy

Personal Cash Budget for September, October, November, and December:

September October November December

Balance $7,560 $2,960 $3,060 $3,160

Apartment deposit return 500

Earnings (net of taxes) 940 940 940 940

Borrowing 340

Total Cash Receipts $8,500 $3,900 $4,000 $4,940

Season football tickets 100

Additional entertainment 260 260 260 260

Semester Tuition 4,100 4,100

Rent 370 370 370 370

Food 210 210 210 210

Apartment deposit 500

Total cash payment $5,540 $840 $840 $4,940

Balance $2,960 $3,060 $3,160 $0

**Explanation:**

Katherine Malloy's cash budgets for the months of September, October, November, and December give some snapshots of her cash receipts and payments, including the planned borrowing of no less than $340 that she must arrange in December in order to pay for her spring semester tuition on December 31. From the budget, she gets a clearer picture of her cash needs, receipts and expenses. She is comfortable from September till the end of the year. But, Katherine must arrange for some cash receipts, either in student loan or support or get another part-time work to increase her income, to enable settle her tuition in December.

Informal groups: Group of answer choices exist primarily for the benefit of their members. perform routine organizational goals. perform uncommon tasks of the organization. always have a high level of interdependence. are initiated by the organization for special purposes.

### Answers

**Answer:**

exist primarily for the benefit of their members.

**Explanation:**

Informal groups in an organization are created when individuals form a bond based on the experience that they share, they appear from friendship and not by rules inside the company but they influence how people interact and how they perform their job. Also, companies promote the apperance of these groups because they help people interact and improve their communication. According to that, the answer is that informal groups exist primarily for the benefit of their members as they are created by the friendship between employees and not by the company.

The other options are not right because informal groups don't perform routine organizational goals or uncommon tasks of the organization, they don't have a high level of interdependence and they are not initiated by the organization for special purposes because they are created by the employees and are not part of the company's structure.

The linear correlation coefficient of a set of data points is -0.9.

a. Is the slope of the regression line positive or negative?

b. Determine the coefficient of determination.

### Answers

Answer:

1. The slope is negative.

2. 0.81

Explanation:

The slope of the regression line is definitely negative

A linear equation has its regression line as

T = a + bc

The slope of the regression line is known as b.

From the question, b = -0.9

Therefore the slope of the regression line is negative.

B. Coefficient of determination = r²

r =(-0.90)

r² = 0.81

Almost certainly you have seen vending machines being serviced on your campus and elsewhere. On a predetermined schedule the vending company checks each machine and fills it with various products. This is an example of which category of inventory model?

### Answers

Answer:

Fixed Time Period Model

Explanation:

a fixed time period model ensures that level of inventory is checked regularly for all items. therefore from the question, if the vending company checks each machine and fills it with various product the inventory method is **Fixed Time Period Model****.**

Exercise 10-1 Recording bond issuance and interest LO P1 On January 1, 2017, Boston Enterprises issues bonds that have a $3,400,000 par value, mature in 20 years, and pay 9% interest semiannually on June 30 and December 31. The bonds are sold at par. 1. How much interest will Boston pay (in cash) to the bondholders every six months

### Answers

**Answer:**

**Semi-annual interest payment=$153,000**

**Explanation:**

*The interest payment on the bond is an expense which would be incurred twice a year because the terms and conditions of the bond contract is that interest be paid semi-annually, that is every six month.*

This implies that we would need to work out the interest rate applicable for every six month. This is doe as follows:

Semi-annual interest rate = Annual interest rate / 2

Annual interest rate = 9%

Semi-annual interest rate = 9%/2= 4.5%

**Semi-annual interest payment = Interest rate × Nominal value of Bond**

Semi-annual interest payment = 4.5% × $3,400,000=$153,000

**Semi-annual interest payment= $153,000**

The ratio of sales to invested assets, which is also a factor in the DuPont formula for determining the rate of return on investment, is called

### Answers

Answer:

Investment turnover

Explanation:

Investment turnover is used to compare the revenue earned by a business to the invested assets (equity or debt). It measures how effectively the business is using investment to generate profit.

The number of times investment is converted to revenue is calculated using this method (that is the turnover).

This metric is used in the Dupont formula.

Dupont formula is a financial ratio that evaluates a company's ability to increase return on equity.

Three main components of the Dupont formula are: profit margin, total asset turnover, and financial leverage.

Selected data concerning operations of Cascade Manufacturing Company for the past fiscal year follow:

Raw materials used ..... $300,000

Total manufacturing costs charged to production during the year (includes raw materials, direct labor, and manufacturing overhead applied at a rate of 60 percent of direct labor costs) ..... 681,000

Cost of goods available for sale ...... 826,000

Selling and general expenses ...... 30,000

Beginning Inventories

Raw materials ...... $70,000

Work-in-process...... 85,000

Finished goods ...... 90,000

Ending Inventories

Raw materials ...... $80,000

Work-in-process ...... 30,000

Finished goods ....... 110,000

Determine each of the following:

a. Cost of raw materials purchased

b. Direct labor costs charged to production

c. Cost of goods manufactured

d. Cost of goods sold

### Answers

**Answer:**

**a. Purchases $310,000**

**b. Direct labor $ 238,125**

**c. Cost of goods manufactured $ 736,000**

**d.** **Cost of goods sold $ 716,000**

**Explanation:**

**Cascade Manufacturing Company **

Raw materials used ..... $300,000

Add Raw materials Ending ...... $80,000

Less Raw materials Beginning...... $70,000

**a. Purchases $310,000**

**Add Raw materials Ending to Raw materials used and subtract Raw materials Beginning to get Raw materials Purchases.**

Total manufacturing costs $ 681,000

Less Raw materials used ..... $300,000

Conversion Costs $ 381,000

Conversion Costs = Direct Labor + Factory Overhead

$ 381,000= x + 0.6 x

$ 381,000= 1.6x

**b. x= Direct labor = $ 381,000/1.6= $ 238,125**

Factory Overhead= 0.6 *$ 238,125= $ 142875

**Find Conversion Costs and then apply the ratio to get the direct labor costs.**

c.

**Cascade Manufacturing Company **

**Cost of goods manufactured**

Raw materials Beginning...... $70,000

Add **Purchases $310,000**

**Less ** Raw materials Ending ...... $80,000

Raw materials used ..... $300,000

Add **Direct labor $ 238,125**

Factory Overhead $ 142875

Total manufacturing costs $ 681,000

Add Work-in-process Beginning...... 85,000

Cost of goods available for manufacture $ 766,000

Less Work-in-process Ending...... 30,000

**Cost of goods manufactured $ 736,000**

**Add and subtract as above to get the Cost of goods manufactured.**

**d. ****Cascade Manufacturing Company **

**Cost of goods sold**

Raw materials Beginning...... $70,000

Add **Purchases $310,000**

**Less ** Raw materials Ending ...... $80,000

Raw materials used ..... $300,000

Add **Direct labor $ 238,125**

Factory Overhead $ 142875

Total manufacturing costs $ 681,000

Add Work-in-process Beginning...... 85,000

Cost of goods available for manufacture $ 766,000

Less Work-in-process Ending...... 30,000

Cost of goods manufactured $ 736,000

Add Finished goods Beginning...... 90,000

** Cost of goods available for sale $ 826,000**

Less Finished goods Ending....... 110,000

**Cost of goods sold $ 716,000**

**Add and subtract as above to get the Cost of goods sold.**

HSS Company provides security services to senior executives of prominent corporations when they travel outside the United States. HSS applies both fixed and variable overhead using direct labor hours. The annual budget for one if its customers is as follows: Budgeted hours 800 hours Direct labor $50.00 per hr. Variable overhead $30.00per hr. Fixed overhead $15.00 per hr. During the year, HSS had the following activity related to this customer: Actual hours were 850 at a total cost of $44,200. Actual fixed overhead was $12,750. Actual variable overhead was $22,950. What is the Variable Overhead Flexible Budget Variance?

a. U $2,550

b. U $1,050

c. F $2,550

d. F $1,050

### Answers

**Answer:**

**Variable overhead variance = $2,550 favorable**

**Explanation:**

*Flexible budget is that which is that which recognizes the cost behavior and is used for control purpose. It is prepared based on the actual level of activity achieved.*

*The variable overhead rate variance is the difference between the actual variable overhead cost and the actual hours multiplied by the standard variable overhead rate.*

Actual hours of labour should have cost

($30× 850) 25500

but did cost 22,950

Variable overhead variance 2,550 favorable

**Variable overhead rate variance = $2,550 favorable**

**Variable overhead deficiency variance**

Companies whose stock is traded in a public market must report EPS in the notes of their financial statements. must report EPS on their income statement. must report EPS on their balance sheet. are not required to report EPS.

### Answers

Answer:

The answer is B. must report EPS on their income statement

Explanation:

If a company's share is being traded publicly, its Earnings Per Share (EPS) must be shown on its income statement(Statement of profit or loss and other comprehensive income).

Earnings Per Share (EPS) is calculated as follows:

Earnings (profit after tax) ÷ total number of shares outstanding.

Note: EPS does not recognize/consider discontinue operations.

Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 5,900 units per year. The cost of each unit is $102, and the inventory carrying cost is $9 per unit per year. The average ordering cost is $29 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 118 units. (This is a corporate operation, and there are 250 working days per year).

Required:

a. What is the EOQ?

b. What is the average inventory if the EOQ is used?

c. What is the optimal number of orders per year?

d. What is the optimal number of days in between any two orders?

e. What is the annual cost of ordering and holding inventory?

f. What is the total annual inventory cost, including cost of the 6,000 units?

### Answers

**Answer: Please find answers below**

**Explanation:**

(a)**Economic order quantity EOQ**=[tex]\sqrt{2 X Annual Demand X Ordering Cost) / Carrying Cost)}[/tex]

=[tex]\sqrt{2 X 5,900 X 29 / 9 }[/tex] = [tex]\sqrt{38,022.222}[/tex]

=**194.99 units **

(b)Average number of units=Economic order quantity / 2

=194.99 / 2

=**97.496 units **

(c)Optimal number of orders=Annual Demand / Economic order quantity

=5,900units / 194.99 units =30.26

(d)Optimal number of days between two orders=Number of working days / Optimal number of orders

=250 days / 30.26

=8.26

Total ordering cost=Cost per order X Number of orders

=$29 X 30.26

=**$ 877.54**

Total holding cost=Average inventory X carrying cost per unit

=194.99 /2 X $9

=**$877.455**

(e)Annual cost of ordering and holding inventorY =Total ordering cost + Total carrying cost

=$ 877.54 + $877.455

=$ 1,754.995 ≈ $1,755

(f)**Total annual inventory cost**=Total ordering cost +Total holding cost + Actual cost of 5900 units at $102 per unit

= $ 877.54 + $877.455 + (5,900 x 102) = $1754.995 +601,800= $603,554.995≈**$603,555**

**Total annual inventory cost**=Total ordering cost +Total holding cost + Actual cost of 6000 units at $102 per unit

= $ 877.54 + $877.455 + (6000 x 102) = $1754.995 +612,000= $613,754.995≈**$613,755**

The master budget of Sheffield Corp. shows that the planned activity level for next year is expected to be 50000 machine hours. At this level of activity, the following manufacturing overhead costs are expected: Indirect labor$730000 Machine supplies200000 Indirect materials220000 Depreciation on factory building120000 Total manufacturing overhead $1270000 A flexible budget for a level of activity of 60000 machine hours would show total manufacturing overhead costs of

### Answers

**Answer:**

Total overhead= $1,500,000

**Explanation:**

Giving the following information:

**First, we need to separate the variable overhead and the fixed overhead:**

**Variable overhead:**

Indirect labor 730,000

Machine supplies 200,000

Indirect materials 220,000

Total variable overhead= $1,150,000

**Fixed overhead:**

Depreciation on factory building $120,000

**Now, we need to calculate the unitary variable overhead:**

unitary variable overhead= 1,150,000/50,000= $23

**Finally, the total overhead for 60,000 units:**

Total overhead= 23*60,000 + 120,000

Total overhead= $1,500,000