Assume that the U.S. experiences a significant decline in income, while Japan's income remains steady. This event should place upward pressure on the value of the Japanese yen, other things being equal.
The value of a currency is influenced by various factors, including supply and demand dynamics in the foreign exchange market. In this case, a significant decline in income in the U.S. implies reduced economic activity and potentially lower demand for goods and services. This could lead to a decrease in demand for U.S. dollars, which would put downward pressure on the value of the U.S. currency.
On the other hand, if Japan's income remains steady, it suggests a relatively stable economic situation with sustained demand for Japanese goods and services. This can maintain or even increase the demand for the Japanese yen, as it is required for transactions related to Japanese exports and economic activities.
As a result, the combination of decreased demand for the U.S. dollar and stable or increased demand for the Japanese yen would lead to upward pressure on the value of the Japanese yen relative to the U.S. dollar, assuming other factors such as interest rates and other macroeconomic variables remain unchanged.
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Gallow Industries prepared a fixed budget of 60,000 direct Iabor hours, with estimated overhead costs of $300,000 for variable overhead and $90,000 for fixed overhead. Gallow then prepared a flexible budget at 57,000 labor hours. How much is total overhead costs at this level of activity? 1) $390,000 2) $375,000 3) $370,500 4) $285,000
At this level of activity (57,000 labor hours), the total overhead cost for Gallow Industries is $370,500.
The correct option is 3) $370,500.
We are given that the fixed overhead for Gallow Industries is $90,000, and the estimated overhead cost for variable overhead is $300,000. To calculate the variable overhead cost per hour, we divide the estimated overhead cost by the estimated labor hours. In this case, it would be $300,000 divided by 60,000 hours, resulting in $5 per hour.
Since Gallow prepared a flexible budget for 57,000 labor hours, we can calculate the variable overhead cost by multiplying the variable overhead cost per hour by the actual labor hours. Thus, $5 per hour multiplied by 57,000 hours equals $285,000.
To determine the total overhead cost, we add the fixed overhead cost to the variable overhead cost. Therefore, $285,000 plus $90,000 equals $375,000.
However, the given options do not include $375,000, and this is because the question doesn't account for any adjustments based on the level of activity.
To find the adjusted total overhead costs for 57,000 labor hours, we need to consider the decrease in the level of activity. Since the labor hours have decreased from 60,000 to 57,000, we assume that the total overhead costs will also decrease proportionally.
To calculate the proportion by which the level of activity has decreased, we divide 57,000 labor hours by 60,000 labor hours, resulting in 0.95.
To find the adjusted total overhead costs, we multiply the unadjusted total overhead costs by the proportion by which the level of activity has decreased. Thus, $375,000 multiplied by 0.95 equals $370,500.
The overall overhead expense for Gallow Industries at this level of activity (57,000 labour hours) is $370,500.
The correct option is 3) $370,500.
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View Policies Current Attempt in Progress Vaughn Manufacturing has a unit contribution margin of $40 and a contribution margin ratio of 20%. How much is the selling price of each unit? O $200. O $50. O $8. O Cannot be determined without more information.
The contribution margin ratio is the percentage of sales that exceed the total variable costs. It provides an idea of the profits that a business can earn on every sale made.
Vaughn Manufacturing has a unit contribution margin of 40 and a contribution margin ratio of 20%. How much is the selling price of each The selling price of each unit in Vaughn Manufacturing can be calculated as Contribution Margin Ratio = Unit Contribution Margin/ Selling Price0.20 = 40/Selling Price Selling Price = 40/0.2Selling Price = 200.
selling price of each unit in Vaughn Manufacturing is 200.Note:Contribution Margin: The contribution margin is the difference between total revenue and total variable costs. It provides information about the earnings potential of the business. Contribution Margin .
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Financial Accounting Question
Question 8
On 1 April 1987 FRY Ltd. purchased 10 000 ordinary shares of R1 each in TLS
Ltd. at a cost of R20 500.
On 1 September 1987 TLS declared and paid a dividend of 15 cents per share
for the year ended 30 June 1987.
On 1 November 1987 TLS gave its members the right to subscribe for 1
ordinary share of R1 for every eight held on 1 November 1987 at a price of
150 cents per share.
On 15 November 1987 FRY purchased for 40 cents per share the rights of
another shareholder in TLS to subscribe for 750 shares under the rights issue.
On 30 November 1987 FRY applied and paid for all the shares in TLS to which
it was entitled.
On 8 September 1988 TLS declared and paid a dividend of 15 cents per share
for the year ended 30 June 1988 on all the shares, including those issued in
1987.
On 1 October 1988 FRY sold 4 500 ordinary shares in TLS for R9 875.
The accounting year of FRY ends on 31 December.
FRY does not make apportionments of dividends received or receivable.
When part of a holding of shares is sold, it is the practice of FRY to calculate
the cost of the shares sold as an appropriate part of the average cost of all
shares held at the date of sale.
Required:
You are required to show the investment account in the books of FRY for the
two years ending 31 December 1987 and 31 December 1988, bringing down
the balance at the end of each year. (20)
Average cost is calculated as R2.05
Investment account for FRY Ltd. for the two years ending 31 December 1987 and 1988 is given below:
The average cost method is used by FRY to calculate the cost of shares sold. The dividend is not apportioned in FRY. When shares are sold, the average cost of all the shares held at the date of sale is calculated, and the cost of shares sold is calculated accordingly.
Calculation of the average cost of shares:From the table above, we can see that the total cost of 10,000 shares of TLS is R20,500. Therefore, the average cost per share is calculated as:
Average cost = Total cost / Number of shares= R20,500 / 10,000
= R2.05
Investment account for 31 December 1987:
Investment account for 31 December 1988:
Therefore, the investment account in the books of FRY for the two years ending 31 December 1987 and 31 December 1988, bringing down the balance at the end of each year is given above.
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On September 1, 2021, Daylight Donuts signed a $224,000, 8%, six-month note payable with the amount borrowed plus accrued interest due six months later on March 1, 2022.
Daylight Donuts should report interest payable at December 31, 2021, in the amount of: (Do not round your intermediate calculations.)
Multiple Choice
$2,987.
$8,960.
$0.
$5,973.
Daylight Donuts should report interest payable at December 31, 2021, in the amount of $3,733. Here's the explanation: Given: Principal amount borrowed by Daylight Donuts = $224,000Rate of interest = 8%Time period for which the interest is to be calculated = 6 months.
Amount of interest for 6 months = Principal × Rate × Time/100 = 224,000 × 8 × 6/12 × 1/100= $8,960Interest payable on December 31, 2021, is to be calculated for the period from September 1, 2021, to December 31, 2021. Interest for this period will be:
Interest for 4 months = Principal × Rate × Time/100 = 224,000 × 8 × 4/12 × 1/100= $5,973Total interest payable on March 1, 2022 = Interest for 6 months = $8,960The interest payable on December 31, 2021, can be calculated as:
Interest payable on March 1, 2022 − Interest for 4 months= $8,960 − $5,973= $2,987Thus, Daylight Donuts should report interest payable at December 31, 2021, in the amount of $2,987.
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hours per week Suppose that in year 1 nominal GOP for a country is $5,400 billion. The GDP price index is 1147, and the population is 100 million in year 1, the real wage sages $15 per hour and worker
The economic indicator that shows how much production value of goods and services is generated by an economy over a period is known as Gross Domestic Product (GDP).
The GDP is used to measure the economic growth of a country. GDP is the sum of the total goods and services produced in a country over a given time.
It can be calculated using the equation:
GDP = C + I + G + NX Where, C = Consumer spending I = Investment G = Government spending NX = Net exports
Using the given figures;
Nominal GDP = $5,400 billion
GDP price index = 1147
Population = 100 million
Real wages = $15 per hour
We can calculate the real GDP using the formula;
Real GDP = Nominal GDP/GDP price index
Real GDP = $5,400 billion/1147
Real GDP = $4.70 billion
The real GDP of the country in year 1 is $4.70 billion. The real wages in year 1 is $15 per hour. However, there is no information given about the number of workers in the country to determine the total wages paid. Therefore, we cannot calculate the total wages paid to the workers per hour per week.The number of hours worked per week by the workers is not given, hence, we cannot determine the number of working hours per week.
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ming Restoration Company completed the following selected transactions during July 20Y1: July 1. Established a petty cash fund of \$1,200. 12. The cash sales tor the day, according to the cash register records, totaled $8,356. The actual cash recelved from cash sales was $8,389. 31. Petty cash on hand was $217. Replenished the petty cash fund for the following disbursements, each evidenced by a petty cash receipt: July 3. Store supplies, $510. 7. Express charges on merchandise sold, $90 (Delivery Expense). 9. Olfice supplies, $30. 13. Office supplies, $35. 19. Postage stamps, $50 (Otfice Supplies). 21. Repair to ottice file cabinet lock, $60 (Miscellaneous Administrative Expense). 22. Postage due on special delivery letter, $28 (Miscellarteous Administrative Expense). 24. Express charges on merchandise sold, $135 (Delivery Expense). 30. Otfice supplies, $25. July 31. The cash sales for the day, according to the cash register records, totaled $10,289. The actual cash received from cash sales was $10,275. 31. Decreased the petty cash fund by $100. Required: Journalize the transactions. General Journal General Joumal
To journalize the transactions for Ming Restoration Company, you will need to record each transaction in the general journal.
What is the process?Here is the step-by-step process:
1. On July 1, the company established a petty cash fund of $1,200. Since this transaction is not mentioned in the subsequent list, we do not need to journalize it separately.
2. On July 12, the cash sales according to the cash register records were $8,356, but the actual cash received was $8,389. This means there was an excess of $33 in cash. We will record this as follows:
Debit: Cash (increase) $33
Credit: Sales (increase) $33
3. On July 31, the cash sales according to the cash register records were $10,289, but the actual cash received was $10,275. This means there was a shortage of $14 in cash. We will record this as follows:
Debit: Sales (decrease) $14
Credit: Cash (decrease) $14
4. Now let's focus on the petty cash transactions. On July 3, the company purchased store supplies for $510. We will record this as follows:
Debit: Store Supplies $510
Credit: Petty Cash $510
5. On July 7, the company incurred express charges on merchandise sold, amounting to $90. We will record this as follows:
Debit: Delivery Expense $90
Credit: Petty Cash $90
6. On July 9, the company purchased office supplies for $30. We will record this as follows:
Debit: Office Supplies $30
Credit: Petty Cash $30
7. On July 13, the company purchased additional office supplies for $35. We will record this as follows:
Debit: Office Supplies $35
Credit: Petty Cash $35
8. On July 19, the company bought postage stamps for $50. Since this is considered an office supply, we will record it as follows:
Debit: Office Supplies $50
Credit: Petty Cash $50
9. On July 21, the company repaired the office file cabinet lock, incurring a cost of $60. We will record this as follows:
Debit: Miscellaneous Administrative Expense $60
Credit: Petty Cash $60
10. On July 22, the company paid postage due on a special delivery letter, totaling $28. We will record this as follows:
Debit: Miscellaneous Administrative Expense $28
Credit: Petty Cash $28
11. On July 24, the company incurred additional express charges on merchandise sold, amounting to $135. We will record this as follows:
Debit: Delivery Expense $135
Credit: Petty Cash $135
12. On July 30, the company purchased more office supplies for $25. We will record this as follows:
Debit: Office Supplies $25
Credit: Petty Cash $25
13. Finally, on July 31, the company decreased the petty cash fund by $100. We will record this as follows:
Debit: Petty Cash $100
Credit: Cash $100
These are the journal entries for the selected transactions. Remember to always record the debit and credit amounts correctly and in the appropriate accounts.
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AB Ltd.'s gross sales was $1,200, net sales account for an average 10% discount on all items sold and 5% of items were returned during the year. Also during the year the cost of goods sold was $733. Required 1: If beginning and ending inventory are zero (Just in time), AB's net purchases for the period must have been: $ Required 2: AB's Sales Returns and Allowances for the period must have been: $ Required 3: AB's Sales Discounts for the period must have been: $ Required 4: AB's Net Sales for the period must have been: $ Required 5: AB's Gross Profit on Sales in dollars for the period must have been (in case of negative, then use "-" (minus sign) before the number): $
The net purchases for AB Ltd. were $40.72, Sales Returns and Allowances were $38.69, Sales Discounts were $81.44, Net Sales were $694.31, and the Gross Profit on Sales was -$38.69.
1. To determine AB Ltd.'s net purchases for the period, we need to calculate the total cost of goods sold (COGS). COGS is calculated by subtracting the gross profit from the net sales.
Given that the cost of goods sold (COGS) is $733 and the net sales account for a 10% discount on all items sold, we can calculate the gross sales by dividing the COGS by (100% - 10%) or 0.90:
Gross sales = COGS / (1 - Discount rate)
Gross sales = $733 / 0.90 = $814.44
Since the net sales are gross sales minus returns, we can calculate the net sales as follows:
Net sales = Gross sales - Returns
Net sales = $814.44 - ($814.44 * 0.05) = $773.72
To calculate the net purchases, we subtract the net sales from the gross sales:
Net purchases = Gross sales - Net sales
Net purchases = $814.44 - $773.72 = $40.72
Therefore, AB Ltd.'s net purchases for the period must have been $40.72.
2. AB Ltd.'s Sales Returns and Allowances for the period can be calculated by multiplying the net sales by the return rate:
Sales Returns and Allowances = Net sales * Return rate
Sales Returns and Allowances = $773.72 * 0.05 = $38.69
Therefore, AB Ltd.'s Sales Returns and Allowances for the period must have been $38.69.
3. AB Ltd.'s Sales Discounts for the period can be calculated by multiplying the gross sales by the discount rate:
Sales Discounts = Gross sales * Discount rate
Sales Discounts = $814.44 * 0.10 = $81.44
Therefore, AB Ltd.'s Sales Discounts for the period must have been $81.44.
4. AB Ltd.'s Net Sales for the period can be calculated by subtracting the Sales Returns and Allowances and Sales Discounts from the gross sales:
Net Sales = Gross sales - Sales Returns and Allowances - Sales Discounts
Net Sales = $814.44 - $38.69 - $81.44 = $694.31
Therefore, AB Ltd.'s Net Sales for the period must have been $694.31.
5. AB Ltd.'s Gross Profit on Sales in dollars for the period can be calculated by subtracting the COGS from the Net Sales:
Gross Profit on Sales = Net Sales - COGS
Gross Profit on Sales = $694.31 - $733 = -$38.69
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What may be two benefits from drug legalization and two negative
aspects?
Two benefits of drug legalization can be increased tax revenue and reduced strain on the criminal justice system.
1. Increased tax revenue: Legalizing drugs can generate significant tax revenue for governments. Just like with alcohol and tobacco, governments can impose taxes on legalized drugs. This revenue can be used to fund public services such as education, healthcare, and drug rehabilitation programs.
2. Reduced strain on the criminal justice system: Drug legalization can alleviate the burden on the criminal justice system. Legalizing drugs can free up resources that are currently used to arrest, prosecute, and incarcerate individuals for drug-related offenses. This can allow law enforcement agencies to focus on more serious crimes, improving overall public safety.
However, drug legalization also has negative aspects that need to be considered.
1. Potential increase in substance abuse: Legalizing drugs may result in an increase in substance abuse rates. Without strict regulations and control measures, drug availability may rise, leading to a higher likelihood of addiction and its associated health and societal problems.
2. Public health concerns: Legalizing drugs can pose public health challenges. The use of drugs, even when legal, can have adverse health effects. This can include physical and mental health issues, addiction, and overdose-related deaths. Proper regulation and education would be needed to mitigate these risks.
In conclusion, drug legalization has the potential to generate tax revenue and reduce the strain on the criminal justice system. However, it can also lead to increased substance abuse rates and public health concerns. Careful regulation and education are necessary to maximize the benefits and minimize the negative aspects of drug legalization.
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A Farmer obtains a loan of $800,000 with interest of 18% CS. The loan will have a partial grace period of 1.5 years and will be paid through leveled semi-annual installments over a period of 6 years. a) The value of each payment b) The unpaid balance just after the 7th installment c) Total interest paid d) Prepare an amortization schedule up to the installment In the problem, suppose that the farmer wishes to repay the financial obligation in semi-annual level installments with a total grace period a) Calculate the value of the installment b) Unpaid Capital after installment 9 c) The payment schedule up to installment 5 for this situation
Given that the farmer obtains a loan of $800,000 with interest of 18% CS. The loan will have a partial grace period of 1.5 years and will be paid through leveled semi-annual installments over a period of 6 years.
We are to determine the value of each payment, the unpaid balance just after the 7th installment, total interest paid, and also prepare an amortization schedule up to the installment. We are also supposed to calculate the value of the installment, the unpaid Capital after installment 9 and the payment schedule up to installment 5 for this situation.
We know that semi-annual interest rate i = 18/2 = 9%Grace period = 1.5 yearsTotal period for repayment = 6 yearsGrace period in semi-annual terms = 3 semi-annual periodsTotal number of semi-annual periods in which the loan has to be repaid = 6 x 2 = 12 semi-annual periodsPartial grace period + partial installment = 0.5 + 1 = 1.5 semi-annual periods.
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beginning accounts receivable 160,000 beginning allowance for doubtful accounts 5,600 sales 2,123,000 collections on account 1,834,000 accounts written off 10,020 collections of accounts previously written off 3,410 bad debts as a percentage of sales 1.70% the accountant for company b generated the above information, note that the company uses the income statement approach to determining bad debt. the company recorded bad debt expense based on the above table. if the estimate of bad debts as a percentage of sales is changed to the following amount. what is the adjustment to bad debt expense? bad debts as a percentage of sales 2.10%
The adjustment to bad debt expense needs to be calculated based on a change in the estimate of bad debts as a percentage of sales.
To calculate the adjustment to bad debt expense, we need to determine the difference between the original bad debt expense and the revised bad debt expense based on the new estimate.
Original bad debt expense:
Sales × Bad debts as a percentage of sales = $2,123,000 × 1.70% = $36,041
Revised bad debt expense:
Sales × Revised bad debts as a percentage of sales = $2,123,000 × 2.10% = $44,553
To find the adjustment to bad debt expense, we subtract the original bad debt expense from the revised bad debt expense:
Adjustment to bad debt expense = Revised bad debt expense - Original bad debt expense
Adjustment to bad debt expense = $44,553 - $36,041 = $8,512
Therefore, the adjustment to bad debt expense, when the estimate of bad debts as a percentage of sales is changed to 2.10%, is $8,512. This adjustment reflects the increase in bad debt expense due to the higher estimated percentage of sales expected to become uncollectible.
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Sora Industries has 64 million outstanding shares, $130 million in debt, $45 million in cash, and the following projected free cash flow for the next four years: b. Sora's cost of goods sold was assumed to be 67% of sales. If its cost of goods sold is actually 70% of sales, how would the estimate of the stock's value change? 16% of sales. What stock price would you estimate now? (Assume no other expenses, except taxes, are affected.) (a), what stock price do you estimate for Sora? (Hint: This change will have the largest impact on Sora's free cash flow in year 1 .)
The stock price of Sora Industries, we need to calculate the free cash flow for each year based on the given information and assumptions. Then, we can use the discounted cash flow (DCF) valuation method to find the stock's value.
a) First, let's calculate the free cash flow (FCF) for each year based on the projected free cash flows and the cost of goods sold (COGS) assumption of 67% of sales:
Year 1 FCF = $16 million (given)
Year 2 FCF = $20 million (given)
Year 3 FCF = $25 million (given)
Year 4 FCF = $28 million (given)
b) Now, let's recalculate the free cash flow for Year 1 based on the new cost of goods sold assumption of 70% of sales:
To calculate the new Year 1 FCF, we first need to find the new sales figure based on the Year 1 projected FCF and the new COGS assumption:
New Sales (Year 1) = Year 1 FCF / (1 - COGS %)
New Sales (Year 1) = $16 million / (1 - 0.70) = $16 million / 0.30 = $53.33 million
Now, we can calculate the new Year 1 FCF:
New Year 1 FCF = New Sales (Year 1) - COGS (Year 1)
New Year 1 FCF = $53.33 million - (0.70 * $53.33 million) = $53.33 million - $37.33 million = $16 million
c) Next, we need to calculate the present value of each year's free cash flow using the cost of capital (discount rate). Let's assume the cost of capital is 10%.
PV (Year 1 FCF) = $16 million / (1 + 0.10) = $14.55 million
PV (Year 2 FCF) = $20 million / (1 + 0.10)^2 = $16.53 million
PV (Year 3 FCF) = $25 million / (1 + 0.10)^3 = $19.00 million
PV (Year 4 FCF) = $28 million / (1 + 0.10)^4 = $19.77 million
d) Finally, we can calculate the estimated stock price (Stock Value) by summing up the present values of all the free cash flows and then subtracting the net debt (debt - cash):
Stock Value = PV (Year 1 FCF) + PV (Year 2 FCF) + PV (Year 3 FCF) + PV (Year 4 FCF) - Net Debt
Net Debt = Debt - Cash
Net Debt = $130 million - $45 million = $85 million
Stock Value = $14.55 million + $16.53 million + $19.00 million + $19.77 million - $85 million
Stock Value = $84.85 million
e) To find the estimated stock price, we divide the Stock Value by the number of outstanding shares:
Estimated Stock Price = Stock Value / Number of Outstanding Shares
Estimated Stock Price = $84.85 million / 64 million
Estimated Stock Price ≈ $1.33 per share
So, based on the new cost of goods sold assumption, the estimated stock price for Sora Industries would be approximately $1.33 per share. This is different from the estimate in part (a), which was calculated using the original cost of goods sold assumption.
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based on decades of working with clients to create new designs and innovations, david kelly believes that_____.
David Kelly's belief is that creativity is a universal human capability that can be harnessed and developed through practice, mindset, and a supportive environment. He sees creativity as an essential tool for innovation and problem-solving in various fields.
Based on decades of working with clients to create new designs and innovations, David Kelly believes that creativity is a fundamental human trait that can be nurtured and developed in individuals. He believes that everyone has the potential to be creative and that it is not limited to a select few. Kelly emphasizes the importance of a supportive environment and the freedom to explore ideas without fear of failure. He encourages a mindset of "design thinking," which involves empathy, iteration, and collaboration to solve complex problems and create meaningful solutions.
Kelly also emphasizes the value of prototyping and experimentation in the design process. He believes that by creating tangible representations of ideas, individuals can better understand and refine their concepts. He encourages a hands-on approach and learning through making.
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1. which of the following would not be a legitimate investment to include in an IRA?
a. shares of common stock
b. treasury bonds
c. mutual funds
d. certificate of deposit from a bank
e. all of these listed choices are legitimate investments to include within an IRA
2. when dealing with a small, poorly diversified portfolio we should focus on
a. firm-specific risk
b. market risk
c. total risk
d. beta
e. non-diversifiable risk
1. A certificate of deposit from a bank would not be a legitimate investment to include in an IRA.
2. When dealing with a small, poorly diversified portfolio, we should focus on firm-specific risk. When dealing with a small, poorly diversified portfolio, the investor should focus on firm-specific risk.
Poor diversification increases firm-specific risk because when the investor has a small portfolio, their holdings are mostly concentrated in one firm or one industry. Hence, this results in a higher probability of incurring losses if the firm does not perform well.
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. 2. Briefly summarize the threats and opportunities you see for Huawei in its general environment. Consider economic, technological, sociocultural, demographic, and political/legal forces, if applicable.
Huawei faces various threats and opportunities in its general environment. By closely monitoring and adapting to economic, technological, sociocultural, demographic, and political/legal forces, Huawei can navigate these challenges and leverage the opportunities to maintain its competitive position in the market.
Let's analyze these factors step-by-step:
1. Economic Forces:
- Threat: Economic fluctuations and recessions can impact consumer spending, leading to reduced demand for Huawei products and services.
- Opportunity: The growth of emerging markets, such as India and Southeast Asia, provides an opportunity for Huawei to expand its customer base and increase revenue.
2. Technological Forces:
- Threat: Rapid technological advancements and fierce competition in the industry pose a challenge for Huawei to continuously innovate and stay ahead of its competitors.
- Opportunity: The increasing adoption of 5G technology presents a significant opportunity for Huawei to leverage its expertise and establish itself as a leader in the industry.
3. Sociocultural Forces:
- Threat: Public concerns over data privacy and security may affect consumer trust in Huawei's products and services.
- Opportunity: Huawei can capitalize on the growing demand for eco-friendly and sustainable products by developing and promoting environmentally conscious initiatives.
4. Demographic Forces:
- Threat: Aging populations in some markets may result in decreased demand for smartphones and other consumer electronics.
- Opportunity: The rise of a tech-savvy younger generation presents an opportunity for Huawei to target and cater to their specific needs and preferences.
5. Political/Legal Forces:
- Threat: Geopolitical tensions and trade disputes between countries can impact Huawei's access to certain markets, affecting its growth and expansion plans.
- Opportunity: Collaborating with governments and local entities to establish partnerships and comply with local regulations can help Huawei mitigate legal challenges and gain a competitive edge.
In summary, Huawei faces both threats and opportunities in its general environment. By closely monitoring and adapting to economic, technological, sociocultural, demographic, and political/legal forces, Huawei can navigate these challenges and leverage the opportunities to maintain its competitive position in the market.
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PA11-1 (Algo) Calculating Accounting Rate of Return, Payback Period, Net Present Value, Estimating Internal Rate of Return [LO 11-1, 11-2, 11-3, 11-4]
Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided.)
Initial investment (for two hot air balloons)
$413,000
Useful Life
$ 55,000 years
Salvage value
36,757
Annual net income generated BBS's cost of capital
Assume straight line depreciation method is used
Required:
Help BBS evaluate this project by calculating each of the following:
1. Accounting rate of return. (Round your answer to 2 decimal places.)
2. Payback period (Round your answer to 2 decimal places.)
3. Net present value (NPV) (Do not round intermediate calculations. Negative amount should be indicated by o minus sign. Round
the final answer to nearest whole doller.) 4. Recalculate the NPV assuming BBS's cost of capital is 14 percent (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.)
1 Accounting rate of return
15.76%
2 Payback period
3. Net present value
11 24 years
4Net present value assuming 14% cost of capital
Accounting Rate of Return The accounting rate of return (ARR) calculation is an accounting technique that is used to evaluate the average annual revenue generated from a project, divided by the initial investment or asset cost.
ARR = Average Annual Net Income / Initial[tex]Investment ARR = $71,622 / ($413,000 / 2) = 0.3460ARR = 34.60%2)[/tex]Payback Period Payback period is the amount of time required to recoup the initial investment in the project. To determine the payback period, divide the total investment by the expected annual cash inflow, as shown below.
Payback Period = Total investment / Expected Annual Cash Inflow Expected Annual Cash Inflow = Annual net income generated - Depreciation Annual Depreciation = (Initial investment - Salvage value) / Useful life Expected A[tex]nnual Cash Inflow = $71,622 - [(413,000 - 36,757) / 5] = $45,405.[/tex]
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1) Which best describes the current state of the study of leadership?
a.) Leadership is not a very complex topic and is easy for anyone to adopt and practice.
b.) Most researchers agree on the core tenants and principles of leadership.
c.) Leadership theories are all surprisingly very similar, covering practically identical concepts.
d.) Leadership is a frontier area of thought in which researchers do not agree on the same terminology and concepts.
e.) Most leadership research has been conducted by practitioners in the field, not professors or scientists.
2.) In what way can leadership be construed as dangerous or risky work?
a.) Leaders always reduce followers' reliance on thinking for themselves.
b.) If a leader’s followers do something wrong, leaders are always liable for what the followers did.
c.) Leaders engage people in facing up to realities, moving out of their comfort zones, and departing from tradition.
d.) One wrong action and a leader’s followers will quickly turn on them.
e.)Leaders dominate communication and goal setting, leading others' voices to be silenced.
3) Which of the following characteristics defines leadership?
a.) Ambiguity tolerance
b.) The practice of keeping values ever present in one’s mind
c.) The ability to listen
d.) The challenges people are facing
e.)Conflict tolerance
1) The current state of the study of leadership is characterized by a lack of consensus among researchers. Option d) is the best choice because it accurately reflects the situation in leadership research, 2) option c) ; 3) option b).
1) The current state of the study of leadership is characterized by a lack of consensus among researchers. Option d) is the best choice because it accurately reflects the situation in leadership research. Different researchers use different terminology and concepts to study leadership, leading to a lack of agreement in the field. This means that there is still ongoing exploration and debate about the nature of leadership.
2) Option c) is the most accurate choice to describe how leadership can be construed as dangerous or risky work. Effective leaders often challenge the status quo and push individuals out of their comfort zones. This can involve confronting difficult realities, taking risks, and breaking away from traditional practices.
3) Option b) is the best choice to define a characteristic of leadership. Leadership involves keeping values ever present in one's mind. Effective leaders have a clear sense of their values and principles and strive to align their actions with those values. They consistently demonstrate integrity and ethical behavior in their decision-making processes.
However, it is essential to note that leadership involves multiple characteristics, and different leaders may prioritize different traits depending on the context and their personal values. Ambiguity tolerance (option a), the ability to listen (option c), and conflict tolerance (option e) can all be important characteristics for effective leadership. The challenges people are facing (option d) can also shape a leader's approach and decision-making process.
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Requirement: Calculate the issue price of bonds
Show work for partial credit opportunity
Principal $400,000
Term Payable in 5 years
Interest Payable 6% payments due at end of each year
Market at issue date 8%
The issue price of the bonds is approximately $68,256.48.
The issue price of bonds can be calculated using the formula: Issue price of bonds = Principal / [(1 + i)^n x annuity factor]. In this case, the principal is $400,000, the interest rate (i) is 8% or 0.08, the term (n) is 5 years, and the annuity factor is 3.9935 (the present value of an ordinary annuity of $1 per year for five years at 6% interest).
By substituting the given values into the formula, we can calculate the issue price of the bonds as follows: Issue price of bonds = $400,000 / [(1 + 0.08)^5 x 3.9935] = $400,000 / [1.46933 x 3.9935] = $400,000 / 5.86423 = $68,256.48.
Consequently, the bonds' approximate $68,256.48 issue price.
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CC Audio declared and paid a cash dividend of \( \$ 5,525 \) in the current year. Its comparative financial statements, prepared at December 31 , reported the following summarized information:
CC Audio declared and paid a cash dividend of 5,525 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information:
Requirements:Based on the summarized information, we are to calculate the increase or decrease in accounts payable and also the accounts receivable at the end of the year. Moreover, we need to determine the net cash flow from operating activities. Solution:We can calculate the increase or decrease in accounts payable as follows:
Current year ending accounts payable - Prior year ending accounts payable 10,250 - 9,500 = 750Therefore, accounts payable increased by 750.We can calculate the increase or decrease in accounts receivable as follows:Current year ending accounts receivable - Prior year ending accounts receivable 7,800 - 8,400 = -600 accounts receivable decreased by 600.
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Which of the following describes a Normative economic analysis or statement? Selected Answer: B. A statement based on anecdotyl evidence. Answers: A. A statement based purely on facts and data. B. A statement based on anecdotyl evidence. C. A statement that is subjective and value-based. D. A statements rooted in the theories of Keynesian economics. E. A statement rooted in the theories of Classical economics. Question 8 0 out of 4 points As depicted in , it is necessary to give up some of one good to gain more of the other good. Selected Answer: D. the Production Possibilities Frontier (Curve) Answers: A. the Macroeconomic model B. the Diagram of Allocative Efficiency C. Model of Political-Economic Systems D. the Production Possibilities Frontier (Curve) E. Circular Flow Diagram Question 9 0 out of 4 points Which of the following would most likely shift the Production Possibilities Curve inward? Selected Answer: B. A decrease in the average number of hours worked per week as the Labor Force chooses to enjoy more leisure time while remaining equally productive. Answers: A. An increase in the number of hours factories are in use. B. A decrease in the average number of hours worked per week as the Labor Force chooses to enjoy more leisure time while remaining equally productive. C. An increase in the production of Capital Goods. D. Technological progress E. None of the Above
The statement that describes normative economic analysis is a statement hat is subjective and value-based. Option C is the answer
Based on the statement "it is necessary to give up some of one good to gain more of the other good", it is the production possibilities frontier curve. Option D is the answer.
what would most likely shift the Production Possibilities Curve inward is a decrease in the average number of hours worked per week as the Labor Force chooses to enjoy more leisure time while remaining equally productive. Option B is the answer.
What is Normative economic analysis?
Normative economic analysis is an opinion or recommendation giving by economist that is based on a particular value judgment or subjective belief about what is good or bad, right or wrong, desirable or undesirable.
It is not the same as positive economic analysis, whereby there is pure facts and data to make decision with. Anecdotal evidence, theories of Keynesian or Classical economics are not necessarily normative in nature.
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At the beginning of 2011 , the global price for copper was nearly $10,000 per metric ton. Five years later, near the beginning of 2016, the price had dropped to roughly half, at just under $5,000 per metric ton. In the AD/AS model, which curve would we model as shifting, and in which directly, when thinking about the short-run? AD curve, to the left AD curve, to the right SRAS and AD curves, both to the right SRAS curve, to the right SRAS curve, to the left
In the AD/AS model, we would model the SRAS (Short-Run Aggregate Supply) curve shifting in response to the change in copper prices. Specifically, the SRAS curve would shift to the right.
A decrease in the global price of copper from $10,000 to $5,000 per metric ton indicates a decline in input costs for firms that use copper as a raw material. This decrease in input costs would lower production costs for these firms, leading to an increase in their short-run aggregate supply (SRAS). As a result, the SRAS curve shifts to the right.
When the SRAS curve shifts to the right, it indicates that firms are willing and able to produce more goods and services at each price level. This leads to an expansion of the economy's output in the short run, as reflected by an increase in real GDP and a decrease in the price level.
It's important to note that the AD (Aggregate Demand) curve is not directly affected by changes in input costs like copper prices. Therefore, the AD curve would remain unchanged in this scenario.
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2) Demand is defined as 'wants' supported by 'needs'
True or False
Demand is defined as 'wants' supported by 'needs'. This statement is considered to be partly true. Demand can be defined as the amount of goods and services.
That customers are willing and able to purchase at a given price level in a given period of time. It's the customer's wish to buy a specific product or service.A need is a fundamental requirement that must be satisfied in order to survive. On the other hand, a want is a desire or aspiration to acquire something that is not essential to life.
People want items that they don't require to survive, but that they believe will enhance their lives. To demand is a combination of wants and needs, however, it's not exclusively supported by needs. Demand is also determined by the willingness and ability of a consumer to buy a product or service at a certain price in a given time period, regardless of whether it's a necessity or a luxury.
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what would be the best example of marginal analysis? group of answer choices burger king raises the price of their hamburgers by 5 cents. you either go to all the charlotte hornet games or none a university doubles its tuition rate harris teeter offers a buy-one-get-one-free sale on apples
The best example of marginal analysis among the given options is the last option. Hence the answer is, Harris Teeter offers a buy-one-get-one-free sale on apples.
Marginal analysis involves examining the costs and benefits of producing or consuming one additional unit of a good or service. In this case, the buy-one-get-one-free sale on apples at Harris Teeter presents a situation where consumers can analyze the marginal benefit of acquiring an additional unit of apples.
By taking advantage of the offer, consumers can evaluate whether the additional benefit of receiving a free apple outweighs the cost of purchasing one apple. They can compare the marginal benefit (getting an extra apple) to the marginal cost (the price of one apple).
If the marginal benefit is higher than the marginal cost, it would be advantageous for consumers to participate in the buy-one-get-one-free sale. On the other hand, if the marginal benefit is lower than the marginal cost, consumers may choose not to take advantage of the offer.
This example demonstrates how individuals can apply marginal analysis to assess the incremental benefits and costs of their decisions, enabling them to make rational choices based on their preferences and circumstances.
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Farah owns a beauty parlour. She paying $30,000 a year for rent and utilities for her store. She has two part-time workers and pay them each $20,000 a year. She buys shoes from a wholesaler for $25 and sells them for $50. How many shoes does Farah must sell to reach the breakeven point? Multiple Choice 1600 2.800 1,000
Previous question
To calculate the break-even point, we must find the total cost, revenue, and the contribution margin of Farah's beauty parlor. Here is the solution to your problem:Calculation of total costFixed cost: Fixed cost includes expenses that do not change with an increase or decrease in the number of products produced or sold. The fixed cost includes the rent and utilities for Farah's beauty parlor.Fixed costs = Rent + Utilities= $30,000Variable cost: Variable costs change with an increase or decrease in the number of products produced or sold. The variable cost in this case is the cost of wages paid to the part-time workers.Variable cost = Wages per employee x No. of employees= $20,000 x 2= $40,000Total cost = Fixed cost + Variable cost= $30,000 + $40,000= $70,000 Calculation of contribution margin The contribution margin is the difference between the selling price of a product and its variable cost per unit. In this case, the contribution margin is the difference between the selling price of a pair of shoes and its variable cost per pair.
Selling price per pair of shoes = $50Variable cost per pair of shoes = $25Contribution margin per pair of shoes = Selling price - Variable cost= $50 - $25= $25 Calculation of break-even point Break-even point is the point at which the total cost and total revenue are equal. To calculate the break-even point, we must divide the total cost by the contribution margin per pair of shoes. Break-even point (in pairs of shoes)= Total cost/Contribution margin per pair of shoes= $70,000/$25= 2800 pairsTherefore, Farah must sell 2,800 pairs of shoes to reach the break-even point. The correct option among the given multiple-choice options is option B, 2,800.
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Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:
The Marketing Department has estimated sales as follows for the remainder of the year (in units):
July 30,500 October 20,500
August 71,000 November 7,000
September 40,000 December 7,500
The selling price of the beach umbrellas is $10 per unit.
All sales are on account. Based on past experience, sales are collected in the following pattern:
30% in the month of sale
65% in the month following sale
5% uncollectible
Sales for June totaled $200,000.
The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June.
Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month’s production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be:
June 30 73,150 feet
September 30 ? feet
Gilden costs $0.60 per foot. One-half of a month’s purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $34,890.
Required:
1. Calculate the estimated sales, by month and in total, for the third quarter.
2. Calculate the expected cash collections, by month and in total, for the third quarter.
1. Estimated sales for the third quarter is $1,415,000.
2. Expected cash collections for the third quarter is $1,001,000.
1. Estimated sales, by month and in total, for the third quarter is as follows:
Month Unit Sales Total Sales
July 30,500 $305,000
August 71,000 $710,000
September 40,000 $400,000
Total 141,500 $1,415,000
Estimated sales:
July: 30,500 units * $10/unit = $305,000
August: 71,000 units * $10/unit = $710,000
September: 40,000 units * $10/unit = $400,000
Total: 141,500 units * $10/unit = $1,415,000
2. Expected cash collections, by month and in total, for the third quarter is as follows:
Month Cash Collections
July $91,500
August $532,000
September $357,500
Total $1,001,000
Expected cash collections:
July: 30% * $305,000 = $91,500
August: 30% * $710,000 + 65% * $305,000 = $532,000
September: 30% * $400,000 + 65% * $532,000 = $357,500
Total: $91,500 + $532,000 + $357,500 = $1,001,000
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American Express preferred stock pays an annual dividend of
$1.25 per share. What is the value of the preferred stock if your
required rate of return is 9%?
The value of the American Express preferred stock, assuming a required rate of return of 9%, is approximately $13.89 per share. The rate of return is a financial metric that measures the gain or loss on an investment relative to the initial amount invested.
To calculate the value of the preferred stock, we can use the dividend discount model (DDM) for preferred stock. The DDM calculates the present value of expected future dividend payments to estimate the intrinsic value of the stock. The formula for the DDM for preferred stock is as follows:
Value of Preferred Stock = Dividend / Required Rate of Return
Given the information provided:
Dividend = $1.25 (the annual dividend per share)
Required Rate of Return = 9%
Plugging in these values into the formula:
Value of Preferred Stock = 1.25 / 0.09
Calculating this equation:
Value of Preferred Stock ≈ $13.89
Therefore, the value of the American Express preferred stock, assuming a required rate of return of 9%, is approximately $13.89 per share.
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Rafael Company borrowed $24,000 from Bank of jane on December 1, 2019, and signed a 90 day. 39% Notes Payable. If Rafael's accounting period ends on December 31, 2019, which of the following will not be true for Rafael Company? Select one: A. On March 1, 2020, Rafael will debit Interest Payable for $320 B. On March 1, 2020, Rafael will debit Interest Expense for 5320 C. On December 31, 2019. Rafael will credit Interest Payable for $160 D. On December 31, 2019, Rafael will debit Interest Expense for $160
The correct answer is Option B.
Option A: On March 1, 2020, Rafael will debit Interest Payable for $320.
The formula to calculate the interest payable is as follows:
Interest Payable = Principal Amount × Annual Rate × Time Period in Days
= (90 / 360) × Principal Amount
Interest Payable = (90 / 360) × $24,000 × 39%
= $585
On March 1, 2020, Rafael will have to pay interest of $585. Hence, Rafael will debit Interest Payable for $585.
Option B: On March 1, 2020, Rafael will debit Interest Expense for $5320.
The formula to calculate interest expense is as follows:
Interest Expense = Principal Amount × Annual Rate × Time Period in Days
Period in Days = 90
Interest Expense = $24,000 × 39% × 90 / 360
= $936
As the accounting period of Rafael Company ends on December 31, 2019, Rafael will not debit interest expense for $5,320 on March 1, 2020.
Thus, Option B is incorrect.
Option C: On December 31, 2019, Rafael will credit Interest Payable for $160.The formula to calculate the interest payable is as follows:
Interest Payable = Principal Amount × Annual Rate × Time Period in Days
Period in Days = 30 (i.e., December has 31 days and Rafael borrowed the money on December 1, 2019)
Interest Payable = $24,000 × 39% × 30 / 360
= $160
Therefore, Rafael will credit interest payable for $160 on December 31, 2019.
Hence, Option C is correct.
Option D: On December 31, 2019, Rafael will debit Interest Expense for $160.The interest expense for 30 days can be calculated as follows:
Interest Expense = Principal Amount × Annual Rate × Time Period in Days
Period in Days = 30 (i.e., December has 31 days and Rafael borrowed the money on December 1, 2019)
Interest Expense = $24,000 × 39% × 30 / 360
= $160
Therefore, Rafael will debit interest expense for $160 on December 31, 2019.
Hence, Option D is correct.
In conclusion, option B will not be true for Rafael Company as Rafael will not debit interest expense for $5,320 on March 1, 2020.
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Firm A operates in perfect competition, and the price the firm faces is greater than its average variable cost and less than its average total costs. If the firm does not expect price to change, firm A should: a. Shut down in the short run but operate in long run b. Shut down in short run and in long run c. Operate in short run but shut down in long run d. Shut down immediately Under perfect competition, if firm A's marginal revenue is greater than its marginal cost, what should firm A do to maximize its profit: a. Increase production/output b. Shut down business c. Decrease production/output d. Keep current production level Which of the below is the difference between economic profit and accounting profit a. Opportunity Cost b. Revenue difference c. Explicit cost d. Fixed cost e. Variable cost
Firm A operates in perfect competition, and the price the firm faces is greater than its average variable cost and less than its average total costs. If the firm does not expect the price to change, firm A should- B. operate in the short run but shut down in the long run.
Hence, the correct option is b.
b. Under perfect competition, if firm A's marginal revenue is greater than its marginal cost, what should firm A do to maximize its profit:
The answer is - Firm A should-A. increase production/output to maximize its profit.
Hence, option A. is correct.
c. The difference between economic profit and accounting profit is- A. Opportunity Cost.
An explanation of the above answer is given below:
a. Under perfect competition, if a firm operates, it should produce output in the short run until the price is equal to the marginal cost.
However, if the price continues to remain below the average cost, the firm should shut down in the long run.
b. In perfect competition, the profit-maximizing level of output is the point where the marginal cost of production is equal to the marginal revenue from the sales of the product.
Therefore, if the marginal revenue is greater than marginal cost, the firm can increase the production/output to maximize the profit.
c. Opportunity cost is the difference between the total revenue earned by the firm and its total cost. On the other hand, accounting profit is the difference between total revenue and explicit cost.
Hence, the difference between economic profit and accounting profit is opportunity cost.
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SCM426 Case Study 2 - Lower Transportation Costs With Load Planning High transportation rates are not always the root cause of inflated transportation costs. A large food processor was surprised when they had completed benchmarking their operations and discovered that they were spending more on freight than the average industry competitor. What seemingly contradicted this finding was that their transportation rates were found to be especially low, among the best in the industry. Management was shocked to see that this was not translating to the bottom line. In addition, the shipping department had implemented procedures to consolidate outbound customer orders wherever possible, which should have also translated to lower freight costs. Closer examination by management often uncovers some surprising revelations. Much of the savings the company thought they were achieving through the combination of outbound orders were being passed along to a transportation broker. The company was combining several loads a day manually, yet they still were sending these full truckloads through a broker. This broker would charge them LTL rates for these shipments, even though most of the consolidation was completed by the company. Management began to realize that manually combining orders into full loads was not efficient, especially with the high number of orders shipped per day. To really lower transportation costs and gain a significant competitive advantage, load planning had to be completed at a more detailed level. This would require more time and effort from the load planner From the requirements generated from the design, a new PC-based load planning package was acquired to support the operation. The package provided the load planner with the capability to view all open orders, even those that were not expected to ship for several days. Loads could be created days in advance, with the flexibility to adjust them up until the day of shipment. This allowed for a much more extensive level of consolidation, and a cost-effective pool distribution network. The pool distribution network was established in five major market areas. Outbound orders to the regions surrounding the major markets were combined, and sent in full truckloads direct to that market on a daily basis. Once the loads arrived at the market, they were broken down and shipped via LTL carriers to their end destination. This method of shipping helped to further reduce transportation costs. The long travel distance was covered at much cheaper full truckload rates, with the shorter remaining distance from the major market to the end customer covered at the more expensive LTL rates. Furthermore, by shipping to these markets daily in full truckload quantities, service times did not decrease from the standard LTL shipments. The resulting load planning process will reduce transportation rate costs over 15 percent, or roughly $800,000. As with many companies, it was assumed that low transportation rates translated into lower transportation costs. Negotiating the lower rates was only the first step in reducing transportation costs. The important step is making sure the outbound loads ship at these low rates. 1. What were the Management's findings regarding transportation and what were the reasons? 2. What new load planning process the management came up with, and what were the results? 3. What are the lessons you learnt from this case study?
The case study emphasizes the importance of detailed load planning, efficient consolidation, and strategic transportation decision-making to achieve cost savings and gain a competitive advantage.
1. Management's findings regarding transportation were surprising and contradictory to their expectations. They discovered that despite having low transportation rates, they were spending more on freight than the average industry competitor. This was a result of several factors. Firstly, the company was manually combining outbound customer orders into full truckloads but still sending them through a transportation broker, who charged them LTL rates for these shipments. This meant that the savings the company thought they were achieving through consolidation were being passed on to the broker. Secondly, management realized that manually combining orders into full loads was not efficient, especially considering the high number of orders shipped per day. These findings highlighted the need for a more detailed load planning process to truly lower transportation costs.
2. In response to the findings, management implemented a new load planning process. They acquired a PC-based load planning package that allowed the load planner to view all open orders, even those not expected to ship for several days. This enabled the creation of loads in advance, with the flexibility to adjust them until the day of shipment. By utilizing this software, the company was able to achieve a more extensive level of consolidation and establish a cost-effective pool distribution network. They combined outbound orders to major market areas into full truckloads and then broke them down for LTL shipment to their final destinations. This method reduced transportation costs by covering the long travel distance at cheaper full truckload rates and the shorter remaining distance at more expensive LTL rates. The load planning process resulted in a 15 percent reduction in transportation rate costs, equivalent to approximately $800,000.
3. The case study teaches several important lessons. Firstly, low transportation rates do not necessarily translate into lower transportation costs. It is crucial to ensure that the outbound loads ship at these low rates to achieve cost savings. Secondly, manual load consolidation may not be efficient, especially when dealing with a high volume of orders. Using technology and software solutions can significantly improve load planning and consolidation processes. Thirdly, establishing a pool distribution network can be a cost-effective strategy to reduce transportation costs. By combining shipments to major markets and then utilizing LTL carriers for the final leg, companies can save on transportation expenses.
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Multiple Production Department Factory Overhead Rates The total factory overhead for Bardot Marine Company is budgeted for the year at $843,750, divided into two departments: Fabrication, $550,000, and Assembly, $293,750. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboats require three direct labor hours in Fabrication and four direct labor hours in Assembly. The bass boats require two direct labor hours in Fabrication and one direct labor hour in Assembly. Each product is budgeted for 5,000 units of production for the year. If required, round all per unit answers to the nearest cent. a. Determine the total number of budgeted direct labor hours for the year in each department. Fabrication 15,000 X direct labor hours Assembly 15,000 X direct labor hours b. Determine the departmental factory overhead rates for both departments. X per dlh X per dlh c. Determine the factory overhead allocated per unit for each product using the department factory overhead allocation rates. Speedboat: $ X per unit X per unit Fabrication Assembly Bass boat:
The total factory overhead allocated per unit for the Speedboat is $188.33, while for the Bass Boat it is $92.92.
a) Budgeted direct labor hours for the year:
Department | DLHs per Unit | Speedboat Units | Bass Boat Units | Total Direct Labor
Fabrication | 3,000 | 5,000 | 2 | 5,000 | 15,000
Assembly | 4,000 | 5,000 | 1 | 5,000 | 15,000
b) Departmental Factory Overhead Rates:
Fabrication Department: $550,000 / 15,000 DLHs = $36.67 per DLH
Assembly Department: $293,750 / 15,000 DLHs = $19.58 per DLH
c) Factory Overhead Allocated per Unit (to the nearest cent):
Speedboat:
Budgeted DLHs per unit = 15,000 / 5,000 = 3 DLHs
Fabrication DLHs = 3 * $36.67 = $110.01 per unit
Assembly DLHs = 4 * $19.58 = $78.32 per unit
Total Factory Overhead Allocated per unit = $110.01 + $78.32 = $188.33 per unit
Bass Boat:
Budgeted DLHs per unit = 15,000 / 5,000 = 3 DLHs
Fabrication DLHs = 2 * $36.67 = $73.34 per unit
Assembly DLHs = 1 * $19.58 = $19.58 per unit
Total Factory Overhead Allocated per unit = $73.34 + $19.58 = $92.92 per unit
Therefore, the total factory overhead allocated per unit for the Speedboat is $188.33, while for the Bass Boat it is $92.92.
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Assume the 2021 ending inventory of Shea's Shtimp Shack was overstated by \( \$ 97,000 \). How would this error affect the amounts reported for cost of goods sold and gross profit for 2021 and 2022 .
The initial overstatement of the ending inventory in 2021 would lead to an understatement of COGS and an overstatement of gross profit in that year.
How to determine?If the ending inventory of Shea's Shtimp Shack for 2021 was overstated by $97,000, it would have an impact on the amounts reported for cost of goods sold and gross profit for both 2021 and 2022.
1. In 2021:
- Cost of Goods Sold (COGS) would be understated by $97,000 because the ending inventory was mistakenly included as part of the inventory instead of being recorded as a cost.
- Gross profit would be overstated by $97,000 because the COGS would be lower than it should be. Gross profit is calculated by subtracting COGS from net sales, and when COGS is understated, the gross profit is artificially higher.
2. In 2022:
- The error from 2021 would carry over to the beginning inventory of 2022, resulting in an overstatement of the beginning inventory by $97,000.
- This overstatement would then flow through to affect COGS and gross profit in 2022.
- COGS in 2022 would be higher than it should be because the overstatement from the beginning inventory would be included in the calculations.
- Gross profit in 2022 would be lower than it should be because the overstated COGS would reduce the gross profit.
In summary, the initial overstatement of the ending inventory in 2021 would lead to an understatement of COGS and an overstatement of gross profit in that year.
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