Answer: $21,000
Explanation:
Financing activities refer to those that a company engages in, in relation to capital needed to run the affairs of the business which means it included Equity and Debt.
Financing Activities: Interest paid, dividends paid, money borrowed from bank, stock repurchase
Net cash flows from financing = Money borrowed from bank - Interest paid - dividends paid - Stock repurchase
= 50,000 - 6,000 - 8,000 - 15,000
= $21,000
A company expects a shortage of raw materials required for production. What kind of factor is influencing its buying decision?
A.
individual
B.
interpersonal
C.
environmental
D.
organizational
Answer:
C.) Enviromental
Explanation:
Got this right on plato
Answer:
C
Explanation: I got it right on edmentum
During its first year of operations, Riverbed Corp had these transactions pertaining to its common stock. Jan. 10 Issued 26,300 shares for cash at $4 per share. July 1 Issued 56,500 shares for cash at $7 per share. (a) Journalize the transactions, assuming that the common stock has a par value of $4 per share. (b) Journalize the transactions, assuming that the common stock is no-par with a stated value of $1 per share.
Answer and Explanation:
The journal entries are shown below:
1.
On Jan.10
Cash (26,300 shares × $4) $105,200
To Common stock $105,200
(Being the issuance of the common stock for cash is recorded)
On July 1
Cash (56,500 shares × $7) $395,500
To Common stock (56,500 shares × $4) $226,000
To Paid-in Capital in Excess of Par Value $169,500
(Being the issuance of the common stock for cash is recorded)
2.
On Jan.10
Cash (26,300 shares × $4) $105,200
To Common stock (26,300 shares × $1) $26,300
To Paid-in Capital in Excess of Stated Value $78,900
(Being the issuance of the common stock for cash is recorded)
On July 1
Cash (56,500 shares × $7) $395,500
To Common stock (56,500 shares × $1) $56,500
To Paid-in Capital in Excess of Stated Value $339,000
(Being the issuance of the common stock for cash is recorded)
The following note transactions occurred during the year for Towell Company: Nov. 25 Towell issued a 90-day, 10% note payable for $80,000 to Hyatt Company for merchandise. Dec. 7 Towell signed a 120-day, 9% note at the bank for $120,000. Dec. 22 Towell gave Barr, Inc., a 60-day, 9%, $120,000 note for payment of account. Prepare the general journal entries necessary to adjust the interest accounts at December 31. Use 360 days for calculations and round to the nearest dollar.
Answer:
Towell Company
Journal Entries:
Debit Interest Expense $1,790
Credit Interest Payable $1,790
To record the interest expense for the year.
Explanation:
a) Data and Calculations:
i) Nov. 25: Issue of 90-day, 10% Note Payable = $80,000
Interest on the note for the year = $80,000 * 10% * 36/360 = $800
ii) Dec. 7: Issue of 120-day, 9% Note Payable = $120,000
Interest on the note for the year = $120,000 * 9% * 24/360 = $720
iii) Dec. 22: Issue of 60-day, 9% Note Payable = $120,000
Interest on the note for the year = $120,000 * 9% * 9/360 = $270
Total interest payable for the year = $1,790
Three years ago, Adrian purchased 430 shares of stock in X Corp. for $70,950. On December 30 of year 4, Adrian sells the 430 shares for $64,070. (Leave no answers blank. Enter zero if applicable. Loss amounts should be indicated with a minus sign.)
a. Assuming Adrian has no other capital gains or losses, how much of the loss is Adrian able to deduct on her year 4 tax return?
Answer:
6,880
Explanation:
MacKenzie Corporation currently has 10 million shares of stock outstanding at a price of $40 per share. The company would like to raise money and has announced a rights issue. Every existing shareholder will be sent one right per share of stock that he or she owns. The company plans to require ten rights to purchase one share at a price of $40 per share. How much money will it raise if all rights are exercised
Answer: $40,000,000
Explanation:
There are 10 million shares and the company plans to require ten rights to purchase one share.
Number of shares to be purchased will be;
= 10,000,000/10
= 1,000,000 shares
Shares are to be sold at $40 so;
= 1,000,000 * 40
= $40,000,000
On July 1, 2021, Markwell Company acquired equipment. Markwell paid $175,000 in cash on July 1, 2021, and signed a $700,000 noninterest-bearing note for the remaining balance which is due on July 1, 2022. An interest rate of 5% reflects the time value of money for this type of loan agreement. (PV of $1, PVA of $1) (Use appropriate factor(s) from the tables provided.) For what amount will Markwell record the purchase of equipment? a) $834,048. b) $841,666. c) $741,666. d) $875,000.
Answer: b) $841,666.
Explanation:
Markwell will record the equipment at the present value of the amounts spent to purchase it.
Present value of the cash paid = $175,000
Present value of the noninterest-bearing note after a year = 700,000/(1 + 5%)
= $666,667
Total = 175,000 + 666,667
= $841,667
As per the options;
= $841,666
How can lessening utility bills reduce inflation?
Answer:
Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages. Thus, lessening utility bills will reduce.
Explanation:
Weather, Inc., a domestic corporation, operates in both Fredonia and the United States. This year, the business generated taxable income of $600,000 from foreign sources and $900,000 from U.S. sources. All of Weather’s foreign- source income is in the general limitation basket. Weather’s total taxable income is $1.5 million. Weather pays Fredonia taxes of $228,000. What is Weather’s FTC for the tax year? Assume a 34% U.S. income tax rate.
Answer:
$204,000
Explanation:
FTC for the tax year = US Tax liability*(Foreign taxable income/Worldwide taxable income)
FTC for the tax year = ($1,500,000*34%)*($600,000/$1,500,000)
FTC for the tax year = $510,000*0.4
FTC for the tax year = $204,000
So, Weather Inc's FTC for the tax year is $204,000
During March 2019, Alaska Corporation recorded $266,000 of costs related to factory overhead. Alaska's overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $250,000 would be incurred, and 12,500 direct labor hours would be worked. During March, 12,500 hours were actually worked. Use this information to determine the amount of overhead over or under applied. Enter overapplied overhead as a negative number. (round
Answer:
Underapplied overhead= $16,000
Explanation:
Because the estimated and real direct labor hours are the same, the estimated overhead equals the allocated overhead.
Allocated overhead= $250,000
Actual overhead costs= $266,000
To calculate the over/under allocation, we need to use the following formula:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 266,000 - 250,000
Underapplied overhead= $16,000
Cabell Products is a division of a major corporation. Last year the division had total sales of $21,720,000, net operating income of $1,346,640, and average operating assets of $4,778,400. The company's minimum required rate of return is 15%. The division's margin is closest to: Dacker Products is a division of a major corporation. The following data are for the most recent year of operations:
Sales $38,380,000
Net operating income $ 3,758,960
Average operating assets $ 9,900,000
The company's minimum required rate of return 15%
The division's residual income is closest to:
Agustin Industries is a division of a major corporation. Data concerning the most recent year appears below:
Sales
Net operating income
Average operating assets $17,540,000 $ 648,980 $ 4,560,000
The division's return on investment (ROI) is closest to:
Agustin Industries is a division of a major corporation. Data concerning the most recent year appears below:
Sales $ 17,810,000
Net operating income $ 783,640
Average operating assets $ 4,640,000
The division's turnover is closest to:__________.
Answer:
1. Cabell Product Margin = Net operating income / Sales
Cabell Product Margin = 1346640 / 21720000
Cabell Product Margin = 0.062
Cabell Product Margin = 6.20%
2. Dacker Products Residual income = Net operating income - ( Average operating assets * Minimum required rate of return)
Dacker Products Residual income = 3758960 - (9900000*15%)
Dacker Products Residual income = 3,758,960 - 1,485,000
Dacker Products Residual income = 2,273,960
3. Agustin Return on investment = Net operating income / Average operating assets
Agustin Return on investment = 648980 / 4560000
Agustin Return on investment = 0.142320175
Agustin Return on investment = 14.23%
Agustin Turnover = Sales / Average operating assets
Agustin Turnover = 17810000 / 4640000
Agustin Turnover = 3.838362068965517
Agustin Turnover = 3.84
You are planning to save for retirement over the next 25 years. To do this, you will invest $820 per month in a stock account and $420 per month in a bond account. The return of the stock account is expected to be 10.2 percent, and the bond account will pay 6.2 percent. When you retire, you will combine your money into an account with a return of 7.2 percent. How much can you withdraw each month from your account assuming a 20-year withdrawal period
Answer:
$10,460
Explanation:
You will contribute 25 x 12 = 300 monthly payments to your savings accounts. In order to determine their future value, we must first determine the effective interest rates:
stock account = 1.102 = (1 + r)¹²
¹²√1.102 = ¹²√(1 + r)¹²1.008127 = 1 + rr = 0.008127 = 0.81% monthly ratebond account = 1.102 = (1 + r)¹²
¹²√1.062 = ¹²√(1 + r)¹²1.0050 = 1 + rr = 0.005 = 0.5% monthly rateIn 25 years, you will have:
stock account = $820 x 1,265.21433 (PV annuity factor, 0.81%, 300 periods) = $1,037,475.75bond account = $420 x 692.99396 (PV annuity factor, 0.5%, 300 periods) = $291,057.46total = $1,328,533.21using the payout annuity formula:
P₀ = [d (1 - (1 + r/x)⁻ⁿˣ)] / (r/x)
P₀ = $1,328,533.21d = monthly withdrawal = ? r = annual interest rate = 0.072 x = number of compounding periods = 12n = number of years = 20$1,328,533.21 = [d (1 - (1 + 0.072/12)⁻²⁴⁰)] / (0.072/12)
$7,971.20 = d (1 - 0.23795)
$7,971.20 = d (0.762)
d = $7,971.20 / 0.762 = $10,460
Which factor would credit card companies most likely use to determine an
applicant's creditworthiness?
A. Hourly wages
B. Languages spoken
C. Political party
D. Size of family
A factor that credit card companies would most likely use to determine an applicant's creditworthiness is Hourly wages.
Credit card issue
When you apply for a credit card, you’re required to share an array of personal information on your application. This will include details like your name, address, Social Security number and current employment status. You’ll also be asked to list your income on your application, although the type of income card issuers ask for can vary depending on the card issuer.
Determination of hourly wages
Not all credit card issuers will ask for your annual net income. Some may explicitly ask for your gross income. If you are paid an hourly wage, on the other hand, you may need to figure out your gross income using last year’s tax return or by multiplying your gross weekly income by the number of weeks you work within a year.
Thus, A factor that credit card companies would most likely use to determine an applicant's creditworthiness is Hourly wages.
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Germany is capital abundant country and Japan is labor abundant country. If computers are produced mostly by capital and beer is produced mostly by labor, the H-O model predicts that Question 22 options: Japan will export computers in exchange for beer. Germany will export computers in exchange for beer. Germany is too small to be of economic interest to Japan. Computers and beer don't mix, so trade cannot increase either country's well-being.
Answer:
If computers are produced mostly by capital and beer is produced mostly by labor, the H-O model predicts that
Germany will export computers in exchange for beer.
Explanation:
The H-O model or Heckscher-Ohlin theory is an economic model about the comparative advantages of nations in international trade. The model tries to explain the equilibrium of trade existing between two countries that have varying specialties and natural resources. According to the H-O model, countries export more goods and services for which they have plenty resources than they do for goods and services for which they have scarce resources. For example, if a country has capital in abundance, it will export more of capital-intensive products while it will import labor-intensive products, because it has scarce labor resources.
A payroll tax is collected by which of the following methods?
A.
It is automatically deducted as a percentage of the paycheck.
B.
The paycheck is brought to the bank for the tax to be deducted.
C.
The payroll tax is paid with the income tax on April 15 of each year.
D.
The government deducts a percentage of your paycheck directly from your personal bank account.
Please select the best answer from the choices provided
A
B
C
D
Answer:
A.
It is automatically deducted as a percentage of the paycheck.
Explanation:
just did it on the exam
MANAGING THE HEWLETT-PACK..
William R. Hewlett and David Packard, two organisational leaders who demonstrated
a
Eventually they built a very successful company that now produces more than 10,000
products, such as computers, peripheral equipment, test and measuring instruments, and
handheld calculators. Perhaps even better known than its products is the distinct managerial
style preached and practiced at Hewlett-Packard (HP). It is known as the HP way.
The values of the founders - who withdrew from active management in 1978 - still
permeate the organization. The HP way emphasizes honesty, a strong belief in the value of
people, and customer satisfaction. The managerial style also emphasizes an open-door policy,
which promotes team effort. Informality in personal relationships is illustrated by the use of
first names. Management by objectives is supplemented by what is known as managing by
wandering around. By strolling through the organization, top managers keep in touch with
what is really going on in the company.
This informal organizational climate does not mean that the organization structure has
not changed. Indeed, the organizational changes in the 1980s in response to environmental
changes were quite painful. However, these changes resulted in extraordinary company
growth during the 1980s.
Questions :
1.Is the Hewlett-Packard way of managing creating a climate in which employees are
motivated to contribute to the aims of the organization? What is unique abot the HP way?
2.Would the HP managerial style work in any organization? Why, or why not? What are
the conditions for such a style to work
Answer:
Hewlett-Packard (HP)
1. Yes. The HP way of managing is creating a climate in which employees are motivated to contribute to the organizational goals, aims, and objectives. The HP way encourages informality in personal relationships.
2. The HP managerial style would work in any organization if the organization's culture is developed to accept the style. This implies that if the organization's culture does not promote informality, it may not work.
Explanation:
Every organization develops its own cultural practices to suit its climate and structure. These will detect how the organization achieves its objectives and goals. Some organizations develop very formal structures, while others work better in informal climates. The choice depends on the business strategy that the organizations adopt to pursue their business goals.
Mr. Dealer bought a fleet of SUVs (sport utility vehicles) from General Motors (GM) on credit, GM agreeing not to assign the resulting account receivable without Dealer's consent. GM later, without debtor dealer's consent, assigned the account to The Bank of New York (BNY) for consideration. Dealer made payments to BNY, but claimed damages from GM for breach of contract. 1. Could Dealer collect damages from GM
Answer:
Yes, Dealer could collect damages from GM because basically GM breached the contract. Any time a contract is breached, the non-breaching party can sue. But the real question here is what amount could the court assign to Dealer as compensation for damages incurred. If you want to rephrase this question, it would be: What damages did Dealer suffer due to GM's breach.
If the damages are not significant, then the court will probably assign some amount for nominal damages. To be honest, the greatest expenses here are actually the legal costs of the lawsuit. Unless Dealer can prove that assigning the contract actually hurt them (which I doubt), then the court will assign a small amount. Sometimes nominal damages can be very small and mostly symbolic, e.g. $1.
The Dealer could not collect damages from GM because he did not suffer any harm from the assignment of the account receivable.
The Dealer could have refused to pay the Bank of New York and claimed a breach of contract against GM Motors. But it was not a material breach.
Secondly, the sales agreement with GM Motors only required the debtor dealer's consent before the assignment. It did not forbid GM Motors from assigning the account. It does not seem that any penalty was agreed upon for breach of this clause.
Thus, the Debtor Dealer could not collect damages from GM Motors because he cannot substantially prove that GM's action put him in financial loss.
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What is the fundamental economic problem?
..........................
Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the year. Below is a list of all the jobs for the quarter: Job. No. Balance 356 $ 450 357 1,235 358 378 359 689 360 456 Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of $500 on each job. What is the balance of Sales for Adams Company at the end of the first quarter
Answer: $2,685
Explanation:
For the balance of Sales, look at Jobs that were sold in the first quarter.
Jobs 356 and 357.
They were sold at $500 profit each.
Balance of sales = (450 + 500) + (1,235 + 500)
= $2,685
Blossom Inc. uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) were $403500 ($604000), purchases during the current year at cost (retail) were $3608000 ($5393600), freight-in on these purchases totaled $169500, sales during the current year totaled $4866000, and net markups were $424000. What is the ending inventory value at cost
Answer:
$1,012,696
Explanation:
The computation is shown below:
At Cost method:
Merchandise available for sale is :
= Beginning inventory + Purchases + Fright-in
= $403,500 + $3,608,000 + $169,500
= $4,181,000
At Retail method:
Merchandise available for sale:
= Beginning inventory + Purchases + Markups
= $604,000 + $5,393,600 + $424,000
= $6,421,600
Now
Ending inventory at retail is
= Retail - Markdowns - Net sales
= $6,421,600 - $0 - $4,866,000
= $1,555,600
Now
Cost to retail ratio is
= $4,181,000÷ ($4,866,000 + $1,555,600)
= 65.10%
And finally the ending inventory at cost is
= $1,555,600 × 65.10%
= $1,012,696
Proponents of rational expectations argued that the sacrifice ratio:______.a. could be high because people might adjust their expectations quickly if they found anti-inflation policy credible. b. could be low because people might adjust their expectations quickly if they found anti-inflation policy credible. c. could be low because it was rational for people not to immediately change their expectations. d. could be high because it was rational for people not to immediately change their expectations.
Answer:
b. could be low because people might adjust their expectations quickly if they found anti-inflation policy credible
Explanation:
In the given situation, it is mentioned that the rational expectations proponets said that the sacrified ratio would be lesser as the people wants to adjust their expectations in a fastest way in the case when they found that the anti-inflation policy is credible
Therefore as per the given situation, the option b is correct
Doing the right task is known in management as what
Answer:
Doing the right task is known in management as performance.
Explanation:
Management ensures that the right tasks are performed by coordinating the various activities that help it to achieve goals. It also plans the right tasks to be carried out in order to achieve set goals and objectives. In doing all these, it also considers the cost and benefit to be incurred and derived respectively from executing its responsibilities. Management is always interested in minimizing costs while maximizing benefits. Management is also concerned with efficiency, by which it minimizes the wastage of resources (such as time, money, and efforts) and ensures optimum utilization of all its resources.
8-4 Valuing Commercial Real Estate BuildingOne Properties is a limited partnership formed with the express purpose of investing in commercial real estate. The firm is currently considering the acquisition of an office building that we refer to simply as building B. Building B is very similar to building A, which recently sold for $36,960,000. BuildingOne has gathered general information about the two buildings, including valuation information for building A:
Answer:
the question is incomplete:
Buildings A and B are similar in size (80,000 and 90,000 square feet, respectively). However, the two buildings differ both in maintenance costs ($23 and $30 per square foot) and rental rates ($100 versus $120 per square foot). At this point, we do not know why these differences exist. Nonetheless, the differences are real and should somehow be accounted for in the analysis of the value of building B using data based on the sale of building A. Building A sold for $462 per square foot, or $36,960,000. This reflects a sales multiple of six times the building’s net operating income (NOI) of $6,160,000 per year and a capitalization rate of 16.67%.
NOI of building A = ($100 x 80,000 ft²) - ($23 x 80,000 ft²) = $6,160,000
NOI of building B = ($120 x 90,000 ft²) - ($30 x 90,000 ft²) = $8,100,000
building B's market value = NOI / capitalization rate = $8,100,000 / 0.1667 = $48,600,000
property value = $48,600,000 / 90,000 ft² = $540 per ft²
Please choose one of following answers that are in quote
What is the opportunity cost in this scenario?
Harry has been very busy at work for the past two weeks. He has been working weekends too. Finally, he is going to get a weekend off. "Originally, he planned to paint his apartment that weekend." "He also considered going fishing for the weekend." "But then his parents called and asked him to come for dinner because it has been a while since they have seen each other."
"Later on, his friend Theo informed him about a surprise birthday party for another friend." Theo plans to reserve a room at a restaurant for the celebration, with the cost to reserve the room split between Theo, Harry, and three other friends.
Now Harry is confused about what he should do over the weekend. He decides that, for him, the most important commitments are going over to his parent's house and attending his friend's birthday party. In the end, Harry decides to see his parents.
Answer:
it would be better to go the his parents house so it would be cheaper, probably around $10
Explanation:
ABC Company issues $425,000 of bonds on January 1, 2021 that pay interest semiannually on June 30 and December 31. A portion of the bond amortization schedule appears below:
Cash Interest Change in Carrying
Date Paid Expense Carrying Value Value
01/01/2021 $599,391
06/30/2021 $14,875 $11,988 $-2,887 596,504
12/31/20211 4,875 11,930 -2,945 593,559
What is the original issue price of the bonds?
a. $592,557
b. $440,000
c. $590,534
d. $459,800
Answer:
$599,391
Explanation:
Based on the information given we were told that the bonds amount of $425,000 which is the Face Value of Bonds were issued by the company on January 1, 2021 which means that ORIGINAL ISSUE PRICE of the bonds will be the Carrying Value or the Issues Value of Bonds of the amount of $599,391 that was issued on the same date the Company issues the face value bonds of the amount of $425,000 which is January 1, 2021 ( 01/01/2021).
Therefore the original issue price of the bonds will be $599,391
Drag the tiles to the correct boxes to complete the pairs.
Determine the management style that corresponds with each term.
Lila has complete faith in her team. She believes in
empowering them to make decisions.
Jacob prefers to make all decisions himself. He does
not like it when his employees question his decisions
Hannah makes a final decision after listen to
and considering her employees' suggestions
bureaucratic
laissez-faire
11
autocratic
Answer:
Lila: laissez-faire Jacob: autocratic Hannah: bureaucratic
Explanation:
Lila lets her team do their part and does not intervene.
Jacob wants complete control and would rather make all decisions, giving his employees no say.
Hannah considers all employee decisions, but makes the final choice.
How does a subsidy provided for a good affect consumers?
A
It protects consumers from an unsafe good.
B
It lowers prices for the good but may reduce choice.
C
It decreases supply of the good, so consumers pay more for it.
D
It increases consumers’ incomes and encourages consumers to buy the good.
Answer: D. It increases consumers’ incomes and encourages consumers to buy the good
Explanation:
A subsidy is an amount of money that is given by the government to producers or farmers so as to increase the production of a particular good and also to reduce the price of the good.
Subsidies affect consumers as it increases consumers’ incomes and encourages consumers to buy the good. This is because the subsidized goods will be sold at a cheaper price which means that the income of the consumer is increased and also encourages more purchases of the good.
Solve for the unknown number of years in each of the following (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):
Present Value Years Interest Rate Future Value
$600 8% $1,393
850 12 2,330
18,800 18 367,247
21,900 14 382,983
Answer:1)10.94years , 2.) 8.90 years 3) 17.96years 4) 21.84years
Explanation:
Using the formula
FV = PV (1 + r)ⁿ
where
PV=present value
r=interest rate
n =number of periods
FV = future value.
Present Value Years Interest Rate Future Value
$600 ? 8% $1,393
850 ? 12 2,330
18,800 ? 18 367,247
21,900 ? 14 382,983
Using FV = PV (1 + r)ⁿ, The number of years can be calculated
FV/PV = (1 + r)ⁿ
FV/PV/ 1+r = eⁿ
In FV/PV / In ( 1+ r) = n
1)
n ( Number of years )=In FV/PV / In ( 1+ r)
=In ( 1,393/600) / In ( 1+ 0.08)
0.84228/0.07696
=10.94years
2.
n ( Number of years )=In FV/PV / In ( 1+ r)
=In (2330/850) / In ( 1+ 0.12)
1.00837625/0.113328685
=8.90 years
3.
n ( Number of years )=In FV/PV / In ( 1+ r)
=In (367,247/ 18,800) / In ( 1+ 0.18)
2.97217778/0.165514438
=17.96years
4.
n ( Number of years )=In FV/PV / In ( 1+ r)
=In ( 382,983/ 21,900) / In ( 1+ 0.14)
2.86150396/0.131028262
=21.84 years
Brad's Diner is expanding and expects operating cash flows of $32,000 a year for 4 years as a result. This expansion requires $39,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires $3,000 of net working capital throughout the life of the project. What is the net present value of this expansion project at a required rate of return of 12 percent
Answer: $57,101.73
Explanation:
First find the present value of the cash inflows. The $32,000 is a constant payment so is an annuity. The net working capital will be realized at the end of the project as well.
Present value of cash inflows = (32,000 * Present value interest factor of an annuity, 4 years, 12%) + 3,000/ (1 + 12%)⁴
= (32,000 * 3.0373) + 1,906.55
= $99,101.73
NPV = Present value of inflows - Outflows
= 99,100.15 - (39,000 + 3,000)
= $57,101.73
Your neighbor never mows his lawn. You don’t have any legal right to force him to mow, but the mess in his front yard is making your neighborhood unsightly and reducing the value of your house. The reduction in the value of your house is $5,000, and the value of his time to mow the lawn once a week is $1,000. Suppose you offer him a deal in which you pay him $3,000 to mow. How does this deal affect surplus?
Answer: The deal will have the effect of increasing both your surplus as well as your neighbor's
Explanation:
Assuming your neighbor accepts the deal, you would have paid $3,000 when in fact your house value had reduced by $5,000. This give you a surplus of $2,000 because you paid $2,000 less than the cost to you if your neighbor did not mow the lawn.
Your neighbor also makes a surplus because where normally it would cost them $1,000 to mow the lawn, they got $3,000. They also make a surplus of $2,000 over the cost to mow.
Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 40,000 units next year and Product L is expected to sell 8,000 units. A unit of either product requires 0.4 direct labor-hours.
The company's total manufacturing overhead for the year is expected to be $1,632,000.
Required:
1-a. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method is followed, how much overhead cost per unit would be applied to each product? Product H Product L Overhead cost per unit
1-b. Compute the total amount of overhead cost that would be applied to each product Product H Product L Total Total overhead cost
2. Management is considering an activity-based costing system and would like to know what impact this change might have on product costs. For purposes of discussion, it has been suggested that all of the manufacturing overhead be treated as a product-level cost. The total manufacturing overhead would be divided in half between the two products, with $816,000 assigned to Product H and $816,000 assigned to Product L If this suggestion is followed, how much overhead cost per unit would be assigned to each product? (Round your answers to 2 decimal places.)
Product H Product L
Overhead cost per unit
Answer:
1a. Product H $16,000
Product L $3,200
1b. Product H $1,360,000
Product L $272,000
Total $1,632,000
2. Product H $20.40
Product L $102.00
Explanation:
1-a. Calculation for how much overhead cost per unit would be applied to each product
Product H Product L
Number of units produced 40,000 8,000( a)
Direct labor-hours per unit (b) 0.40 0.40 (b)
(a) × (b)=Total direct labor-hours 16,000 3,200 Total =$19,200
Therefore Amount of hoverhead cost per unit applied to each product is :
Product H $16,000
Product L $3,200
1-b. Computation for the total amount of overhead cost that would be applied to each product
Product H Product L Total
Manufacturing overhead applied per unit
0.40 DLH per unit × $85.00 per DLH= $34.00 (a)
Number of units produced 40,000 8,000 (b)
(a) × (b)=Total manufacturing overhead applied $1,360,000 $272,000
Total=Product H $1,360,000+Product L $272,000
Total= $1,632,000
Predetermined overhead rate of $ 85.00 per DLH is calculated as:
Total manufacturing overhead $ 1,632,000(a)
Total direct labor-hours 19,200 DLHs(b)
(a) ÷ (b) =Predetermined overhead rate $ 85.00 per DLH
Therefore the total amount of overhead cost that would be applied to each product is :
Product H $1,360,000
Product L $272,000
Total $1,632,000
C. Calculation for how much overhead cost per unit would be assigned to each product
Product H Product L Total
Total manufacturing overhead assigned (a)
$816,000 $816,000 =$1,632,000
Number of units produced (b) 40,000 8,000
(a) ÷ (b) =Manufacturing overhead per unit $20.40 $102.00
Therefore the amount of overhead cost per unit would be assigned to each product is :
Product H $20.40
Product L -$102.00