The company purchased inventory at a price of $100,000 on March 5, 2022. The seller offered a 10% trade discount and purchase discounts of 2/10, n30. The company uses a periodic inventory system and uses the gross method to account for purchase discounts.
The entry to record the payment in full for the inventory on March 12, 2022, would include a credit to cash for $88,200, a debit to accounts payable for $98,000, and a credit to purchase discounts for $2,000.The trade discount offered by the seller on the purchased inventory is 10%. Hence, the cost of inventory is 90% of the listed price, which is 10% of $100,000 = $10,000$100,000 - $10,000 = $90,000The terms 2/10, n30 implies a 2% discount is offered if the amount is paid within 10 days. Otherwise, the full amount should be paid within 30 days. Using the gross method, the cost of inventory will be calculated first, and then the discount will be recorded if the payment is made within the discount period.The cost of inventory = $90,000; Purchase discount = 2% of $90,000 = $1,800. The payment will be made on March 12, 2022, which is 7 days after March 5, 2022, when the inventory was purchased. Hence, it is within the 10 days discount period. The entry to record the payment in full for the inventory on March 12, 2022, would include a credit to cash for $88,200, a debit to accounts payable for $98,000, and a credit to purchase discounts for $2,000.Hence, the answer is: WrougA credit to cash for $88,200 A debit to accounts payable for $98,000; A credit to purchase discounts for $2,000.
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Write and compare media influences on people in developed countries like USA, Canada and developing countries like Pakistan and India .
Media plays an essential role in shaping people's ideas, beliefs, and opinions. It's crucial to recognize the similarities and differences in media influences between developed and developing countries.
The following are some of the key ways media influences people in both types of countries:
Media Influences on People in Developed Countries:
In developed countries such as the USA and Canada, the media has a significant influence on people's behavior and thoughts. These are some of the most significant ways media impacts people in developed countries:
1. Media Shapes Political Beliefs:
Media has a significant influence on people's political beliefs in developed countries. The media can be biased toward particular political parties or ideologies, and this can sway people's opinions.
2. Media Influences Consumer Behavior:
The media plays an essential role in shaping consumer behavior in developed countries. For instance, advertisers promote products through commercials and other forms of advertisement that make people feel they need a particular product.
3. Media Shapes Cultural Trends:
The media influences people's cultural trends in developed countries. Television programs, movies, and music often set cultural trends.
Media Influences on People in Developing Countries:
In developing countries such as Pakistan and India, the media has a unique influence on people's behavior and thoughts. These are some of the most significant ways media impacts people in developing countries:
1. Media Shapes Religious Beliefs:
In developing countries, the media often shapes people's religious beliefs. Television and radio programs that promote particular religious views can impact how people think about religion.
2. Media Influences Traditional Values:
The media can be a powerful force in shaping traditional values in developing countries. Television and radio programs that promote traditional values can influence how people behave and what they believe.
3. Media Shapes Political Views:
In developing countries, the media can play an essential role in shaping people's political views. Media outlets can either be used to promote government policies or criticize them.
In conclusion, media influences people's beliefs, values, and behavior in both developed and developing countries. The media is a powerful tool that can be used to shape people's opinions on various issues, including politics, religion, and culture.
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In a typical supply chain a. Finances flow from the lower echelon to the upper echelons b. Material flow from lower echelon to upper echelons c. Information flow from only the lower echelon to the upper echelons d. a and b are both correct e. b and c are both correct
A supply chain refers to the coordination of people, organizations, activities, resources, and technology involved in the creation and distribution of products or services to meet customer demands. These activities encompass all the processes involved in the acquisition of raw materials.
The answer to the question is D. A and B are both correct. A. Finances flow from the lower echelon to the upper echelonsIn a typical supply chain, finances flow from the lower echelons to the upper echelons. The lower echelons represent the suppliers of raw materials and manufacturers, while the upper echelons represent distributors and retailers. For the entire supply chain to operate smoothly, it is necessary to have financial flows from the lower to the upper echelons.
This payment flows from the manufacturers to the distributors, and from the distributors to the retailers. At each stage, there is a need for financial flows that enable the entire supply chain to function effectively.B. Material flow from lower echelon to upper echelonsIn a typical supply chain, materials flow from the lower echelons to the upper echelons.
The financial flows enable suppliers, manufacturers, distributors, and retailers to get paid for the products and services they provide. The material flows enable the products to be manufactured and distributed to meet customer demands.
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What is Leaky Pipe’s optimal order quantity (i.e. EOQ)?
b. What is the optimal number of orders per year?
c. What is the optimal interval (in working days) between orders?
d. What is demand during the lead time?
e. What is the reorder point?
f. What is the inventory position immediately after an order has been placed?
g. What is the total annual cost of the inventory?
Answer:
Leaky Pipe’s optimal order quantity (i.e. EOQ):
The optimal order quantity for Leaky Pipe would be at the point where the carrying costs and ordering costs intersect. Mathematically, it would be at the square root of [(2SD) / H].
Here, S represents the annual demand, D represents the cost to place one order and H represents the annual holding cost per unit of inventory. For Leaky Pipe, this would be √[(2 x 3500 x 1) / 20] = 29.53. Hence, the optimal order quantity for Leaky Pipe would be 30 units.
Optimal number of orders per year: The optimal number of orders per year can be calculated by dividing the annual demand by the EOQ. Hence, for Leaky Pipe, the optimal number of orders per year would be 3500 / 30 = 116.67.
Since a fraction of an order cannot be placed, this would be rounded up to 117. Optimal interval (in working days) between orders: The optimal interval can be calculated by dividing the number of working days in a year by the optimal number of orders per year. Hence, for Leaky Pipe, the optimal interval would be 250 / 117 = 2.14 or 3 working days. Demand during the lead time: The demand during the lead time is 300 units.
This is the total demand during the time period between placing an order and receiving it.
Reorder point: The reorder point can be calculated by multiplying the demand during lead time by the number of days in the lead time and adding the safety stock. Hence, for Leaky Pipe, the reorder point would be (300 x 7) + 150 = 2250.
Inventory position immediately after an order has been placed: The inventory position immediately after an order has been placed would be zero since all inventory would have been exhausted prior to the order being placed.
Total annual cost of the inventory: The total annual cost of the inventory would be the sum of the annual holding cost and the annual ordering cost. Hence, for Leaky Pipe, this would be (20 x 30 / 2) + (3500 / 30) = $1173.33.
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Who were the Viet Cong and what role did they play in the war in
Vietnam?
The Viet Cong's guerrilla tactics, local support, and control of rural areas posed a significant challenge to U.S. and South Vietnamese forces, contributing to the complexity and ultimate outcome of the Vietnam War.
The Viet Cong was a guerrilla army in Vietnam that fought against the U.S. and South Vietnamese forces during the Vietnam War. They were composed mainly of communist sympathizers who supported North Vietnam's goal of reunifying the country under communist rule.
The Viet Cong's main tactic was guerrilla warfare, which involved using hit-and-run attacks, ambushes, and traps to weaken and demoralize their enemy. They also relied on the support of the local population, who provided them with food, shelter, and information about enemy troop movements.
The Viet Cong were successful in gaining control of large areas of the Vietnamese countryside, where they set up their own government and administered social services. This helped them to win the hearts and minds of the rural population and made it difficult for the U.S. and South Vietnamese forces to combat them.
The Viet Cong played a significant role in the war in Vietnam by inflicting heavy casualties on U.S. and South Vietnamese forces and making it difficult for them to achieve their objectives. They also contributed to the anti-war sentiment in the United States by highlighting the cost of the war in terms of human lives and financial resources.
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Kai Chang made a $5,800 deposit in her savings account on her 21st birthday, and she has made another $5,800 deposit on every birthday since then. Her account earns 10 percent compounded annually. How much will she have in the account after she makes the deposit on her 32nd birthday? Use Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods. Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
To calculate the future value of Kai Chang's savings account, we can use the formula for compound interest: Future Value = P(1 + r/n)^(nt) Where: - P is the principal amount (initial deposit) - r is the annual interest rate (expressed as a decimal) - n is the number of times interest is compounded per year.
t is the number of years In this case, the principal amount (P) is $5,800, the annual interest rate (r) is 10% (0.10 as a decimal), and the deposit is made on every birthday, which is once a year, so n is 1. The number of years (t) is 32 - 21 = 11. Using these values, we can calculate the future value of Kai Chang's savings account: Future Value = $5,800(1 + 0.10/1)^(1*11) Simplifying the calculation: Future Value = $5,800(1 + 0.10)^11 Future Value = $5,800(1.10)^11 Using a financial calculator or a spreadsheet, the future value is approximately $16,407.63. Remember to round your final answer to 2 decimal places, so the final answer is $16,407.63.
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Explain how companies can staff overseas operations.
• Most executives use a combination of expatriates, host-country nationals, and third-country nationals.
• Expatriates can establish new country operations quickly, transfer the company’s culture, and bring in specific technical skills.
paragraph answer question
When a company begins to expand operations overseas, it becomes essential to find ways of staffing the new locations. Most executives prefer to use a combination of expatriates, host-country nationals, and third-country nationals.
Expatriates are people who work outside their native country. These employees can establish new country operations quickly and transfer the company's culture. They also bring in specific technical skills and expertise that may not exist locally. Moreover, they may develop new markets, which may not be possible for a local to do.It is advisable to hire host-country nationals since they are already familiar with the local customs, language, and culture. Besides, they may already have existing networks, which can be beneficial to the company.
These employees may have technical skills that are unavailable locally or expensive to train. They also bring in diversity and may have a better understanding of cultural differences. These employees may also be useful in mediating disputes between expatriates and host-country nationals.In conclusion, most executives use a combination of expatriates, host-country nationals, and third-country nationals when staffing overseas operations.
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Draw a GG-LL graph to explain how economic dynamics may have changed so that it is more costly to Greece to stay as a member of the Euro.
A GG-LL graph is a diagram used to show the dynamics of a country’s economy. On the X-axis is the aggregate demand while the Y-axis represents aggregate supply.
What are the factors?Greece being a member of the euro is more costly due to the following factors:
Low productivity-Greece has a low rate of productivity, meaning they have fewer goods and services to export. This means that the country has to depend on imports to supplement its needs. Being a member of the euro means that they cannot adjust their currency rate. This means that they will have to remain with a currency that is valued high compared to their level of productivity. This results in their goods and services becoming more expensive compared to other countries.This means that the aggregate demand has decreased. This may be caused by an increase in unemployment or a reduction in government spending. The LL curve shifts upwards, meaning that the aggregate supply has decreased. This may be caused by a decrease in productivity or an increase in the cost of production. The intersection point of the GG and LL curves has shifted upwards and to the left.This means that Greece’s output has decreased while the cost of production has increased.
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what are the behavioral bias of policymakers in tax salience ?
Behavioral biases of policymakers in tax salience include three types of behavior biases namely; myopia, framing effects, and omission bias.
1. Myopia: Behavioral economists argue that most individuals tend to suffer from the short-sightedness bias that results in impulsive decision-making. The policymakers who suffer from myopia often overlook the long-term effects of the tax policy. They tend to impose taxes on consumption goods and ignore the negative effects of the tax.
2. Framing effects: Policymakers often frame the tax policies in a way that is likely to influence the taxpayers' decisions. By framing the tax policies in a particular way, policymakers may influence taxpayers to make choices that are in their favor. For example, they may frame a tax policy in a way that makes it look like a benefit to the taxpayers.
3. Omission bias: Policymakers may avoid taking action when it is necessary to do so. This is because taking action may result in undesirable consequences that they want to avoid. For instance, policymakers may refrain from imposing taxes on certain goods or services to avoid the negative backlash that may result.
Behavioral biases are common among policymakers in tax salience. Myopia, framing effects, and omission bias are some of the most common behavioral biases among policymakers. They often make decisions that are impulsive and short-sighted, leading to long-term negative effects on taxpayers.
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Classify the following whether it is an Asset (A), Liability (L), Capital (C), Income (1) or Expense (E) by indicating on the first column provided the letter code. In the second column provided, indicate whether is a debit (DR) or a credit
(CR).
A. Item B. Account
1. Cash received 1. Accts. Receivable
2. Insurance paid 2. Note Payable
3. Rental collected 3. Rental Revenue
4. Office Supplies 4. Furniture bought
5. Interest paid 5. Samson Capital
6. Note Receivable 6. Rent paid
7. Owner's investment 7. Mortgage Payable
8. Interest collected ,8. Samson Personal
9. Due from customers 9. Rent Expense
10. Advertisement paid 10. Commission Income 11. Due to suppliers 12. Loan from a bankband batte bars vo
13. Owner's withdrawal
14. Salaries paid 15. Property Mortgaged
asan initud 08
1. Cash received - A - DR
2. Insurance paid - E - DR
3. Rental collected - I - DR
4. Office Supplies - A - DR
5. Interest paid - E - DR
6. Note Receivable - A - DR
7. Owner's investment - C - CR
8. Interest collected - I - CR
9. Due from customers - A - DR
10. Advertisement paid - E - DR
11. Due to suppliers - L - CR
12. Loan from a bank - L - CR
13. Owner's withdrawal - C - DR
14. Salaries paid - E - DR
15. Property Mortgaged - L - CR
Here is the classification of each item and the corresponding debit (DR) or credit (CR) notation:
A. Item B. Account
1. Cash received A - DR
2. Insurance paid E - DR
3. Rental collected I - DR
4. Office Supplies A - DR
5. Interest paid E - DR
6. Note Receivable A - DR
7. Owner's investment C - CR
8. Interest collected I - CR
9. Due from customers A - DR
10. Advertisement paid E - DR
11. Due to suppliers L - CR
12. Loan from a bank L - CR
13. Owner's withdrawal C - DR
14. Salaries paid E - DR
15. Property Mortgaged L - CR
Note: The account classification (Asset, Liability, Capital, Income, Expense) may vary depending on the specific chart of accounts used by the company. However, the provided classifications are generally applicable.
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In class, we studied the effects of a permanent increase of the U.S. money supply. In the long-run, why does the dollar interest rate returns to the original level? Explain your reasoning fully using all of the following words.
Real money supply
Price level
Money market equilibrium
In the long-run, the dollar interest rate returns to the original level after a permanent increase in the U.S. money supply due to the adjustments in the real money supply, price level, and money market equilibrium.
Real Money Supply: The real money supply refers to the amount of money adjusted for changes in the price level. When the money supply permanently increases, individuals and businesses have more money available to spend. As a result, the demand for goods and services increases, leading to upward pressure on prices.
Price Level: With the increase in the money supply, the demand for goods and services rises, causing an upward shift in the aggregate demand curve. As a result, the general price level in the economy tends to increase. This increase in prices reduces the purchasing power of money, leading to a decrease in the real money supply.
Money Market Equilibrium: In the money market, the equilibrium interest rate is determined by the intersection of the money supply and money demand. As the money supply increases, individuals and businesses hold excess money balances relative to their desired levels. To restore equilibrium in the money market, individuals and businesses look to invest or spend their excess money holdings. This increased spending and investment put upward pressure on interest rates.
The increase in interest rates makes borrowing and lending less attractive. As a result, the demand for loans decreases, leading to a decrease in investment and consumption. Simultaneously, higher interest rates also incentivize individuals to save more, increasing the supply of loanable funds. These adjustments in investment, consumption, and saving help bring the money market back to equilibrium.
Overall, the combination of a decrease in the real money supply due to rising prices and the adjustments in the money market leads to the dollar interest rate returning to its original level in the long-run.
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The Allowance for Doubtful Accounts account has a balance of $450 at the end of reporting period. The bad debts are estimated at 3% of $650,000, the net credit sales. After the appropriate adjusting entry for bad debts, İrrecoverable bad debt expenses should have a credit balance of:
The allowance for doubtful accounts balance of $450 is given. The bad debts are estimated at 3% of $650,000, which is the net credit sales. The calculation of the bad debts is $650,000 × 3% = $19,500. After adjusting the entry for bad debts, the uncollectible bad debt expenses should have a credit balance of $19,050.
Doubtful accounts, also known as bad debts, are receivables that may become uncollectible. Businesses must maintain an allowance for doubtful accounts since they can't always collect their receivables. The allowance for doubtful accounts is a reserve account that is used to adjust the balance in the accounts receivable account. The entry to write off a specific receivable as uncollectible decreases both the accounts receivable and the allowance for doubtful accounts.
The adjusting entry for doubtful accounts: Allowance for doubtful accounts is a contra asset account that is used to reduce the accounts receivable account. The allowance for doubtful accounts is calculated using a percentage of accounts receivable. The allowance for doubtful accounts is raised when sales are made and lowered when accounts are written off. The appropriate adjusting entry for bad debts will have the following journal entry: Uncollectible Bad Debt Expenses $19,050Allowance for Doubtful Accounts $19,050.
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This question is not complete, Here I am attaching the complete question:
The Allowance for Doubtful Accounts account has a balance of $450 at the end of the reporting period. The bad debts are estimated at 3% of $650,000, the net credit sales. After the appropriate adjusting entry for bad debts, İrrecoverable bad debt expenses should have a credit balance of?
You inherited $25,000 today and placed it in an account that earns an 8% annual rate of return. What will be the value of the account after 25 years? A. $50,000 B. $121,307 C. $171,212 D. $110,897
The value of the account after 25 years would be approximately $121,307. The correct answer is B. $121,307.
To calculate the value of the account after 25 years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the initial principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.
In this case, the initial principal (P) is $25,000, the annual interest rate (r) is 8%, and the time period (t) is 25 years. Since the question doesn't specify the compounding frequency, let's assume it's compounded annually (n = 1).
Using the formula, we have A = $25,000(1 + 0.08/1)^(1*25).
Calculating this expression, we find A ≈ $121,307.
Therefore, the value of the account after 25 years would be approximately $121,307. Hence, the correct answer is B. $121,307.
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Computing, Analyzing and Interpreting Residual Operating Income (ROPI) In its annual report for the fiscal year ended July 27, 2019, Cisco Systems reports the following (5 million):- Assuming the following weighted average cost of capital (WACC), what is Cisco's residual operating income (ROPI) for the fiscal year ended july 27 b. At what level of WACC would Cisco not report positive residual operating income for the year?
Cisco would not report positive residual operating income for the year at a WACC of 15.38 percent.
The given data is as follows:In its annual report for the fiscal year ended July 27, 2019, Cisco Systems reports the following (5 million):
Total Capital Invested (TCI) = $5 Million
After analyzing the given data, the following information is obtained:
ROIC = NOPAT/TCI
(= $15 million / $5 million)
= 3
WACC = Cost of Equity*%Equity+ Cost of Debt*%Debt*(1-tax rate)+ Cost of Preference Shares*%Preference Shares
Residual Operating Income (ROPI) = NOPAT - (ROIC * TCI)
Now, substituting the given values in the above formula, we have:
ROPI = $15 million - (3* $5 million)
ROPI = $15 million - $15 million
ROPI = 0For the given fiscal year ended July 27, 2019, Cisco's Residual Operating Income (ROPI) is 0.
Therefore, the residual operating income (ROPI) for the fiscal year ended july 27 was 0.
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Considering the big picture in a layout design, differentiate between a good line design and a bad line design? 2. What is a good layout strategy where the inbound and outbound warehouse is combined? 3. What is a good layout strategy if the assembly line supplies or receives material from another production location? 4. What are the five questions that line managers need to consider in answering "How Much Material Has to Go to (or from) the Line"? 5. What are the line arrangements for an automated line, or when the operators are working?
1. Considering the big picture in a layout design, differentiate between a good line design and a bad line design: A good line design is one that maximizes production efficiency while minimizing the use of resources. A bad line design, on the other hand, results in bottlenecks, wasted space, and an inefficient flow of materials and products.
2. What is a good layout strategy where the inbound and outbound warehouse are combined? A good layout strategy where the inbound and outbound warehouse are combined is a straight-line layout.
3.If the assembly line supplies or receives material from another production location, then a U-shaped layout is a good layout strategy.4. What are the five questions that line managers need to consider in answering "How Much Material Has to Go to (or from) the Line"?
The five questions that line managers need to consider in answering "How Much Material Has to Go to (or from) the line design" are:5. What are the line arrangements for an automated line, or when the operators are working? For an automated line or when the operators are working, the line arrangements are product layout, group technology layout, and fixed-position layout.
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A project currently generates sales of $19 million, variable costs equal 40% of sales, and fixed costs are $3.8 million. The firm's tax rate is 21%. Assume all sales and expenses are cash items. a. What are the effects on cash flow, If sales increase from $19 million to $20.9 million? Note: Input the amount as positive value. Enter your answer in dollars not In millions. b. What are the effects on cash flow, If varlable costs increase to 50% of sales? Note: Input the amount as positive value. Enter your answer in dollars not in millions.
If sales increase from $19 million to $20.9 million, the change in cash flow is $1.84 million.
What are the effects on cash flow, If sales increase from $19 million to $20.9 million?The effects on cash flow, If sales increase from $19 million to $20.9 million can be calculated as follows:
Increase in sales = $20.9 million − $19 million
= $1.9 million.
Revenue increase = 1.9 × $20.9 million
= $39.71 million.
Contribution margin = 60% × $20.9 million
= $12.54 million.
Contribution margin before taxes = $12.54 million − $3.8 million
= $8.74 million.
Taxable income = $8.74 million(1 − 21%)
= $6.90 million.
After-tax contribution margin = $8.74 million − $6.90 million
= $1.84 million
Change in cash flow = $1.84 million
b. What are the effects on cash flow, If variable costs increase to 50% of sales?The effects on cash flow, If variable costs increase to 50% of sales can be calculated as follows:
New variable cost = 50% × $19 million
= $9.5 million.
Contribution margin = (60% − 50%) × $19 million
= $1.9 million
Contribution margin before taxes = $1.9 million − $3.8 million
= −$1.9 million.
Taxable loss = −$1.9 million(1 − 21%)
= −$1.5 million.
After-tax contribution margin = −$1.9 million − (−$1.5 million)
= −$0.4 million.
Change in cash flow = −$0.4 million, which means the cash flow decreases.
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During the pandemic, people are encouraged to take the vaccine. Last year British Columbians had to present their vaccine passports in order to get access to the nonessential services such as restaurants, concerts, sports events, etc. Explain the economics behind this policy. Why is it needed? What would be the effects of this policy? (13 points)
The economics behind the vaccine passport policy is to minimize the risk of virus spread and help prevent the emergence of new strains of the virus that could prolong the pandemic.
It is needed because of the significant economic consequences of the pandemic, which has resulted in the loss of jobs and livelihoods. The introduction of vaccine passports is intended to reduce the need for lockdowns and other public health measures that have an economic impact on businesses, governments, and individuals alike.
The policy could have several effects on the economy. It could lead to an increase in the number of vaccinated people, which could result in a more rapid return to normal economic activities and reduced risk of future pandemics. Additionally, the policy could encourage the development of new technologies and industries related to vaccine production, distribution, and monitoring.
The economics behind the vaccine passport policy is to minimize the risk of virus spread and help prevent the emergence of new strains of the virus that could prolong the pandemic.
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The sensitivity analysis in the Quality Sweaters example was on the response rate. Suppose now that the response rate is known to be 8%, and the company wants to perform a sensitivity analysis on the number mailed. After all, this is a variable under direct control of the company. Create a one-way data table and a corresponding line chart of profit versus the number mailed, where the number mailed varied from 80,000 to 150,000 in increments of 10,000. Does it appear, from the results you see here that there is an optimal number to mail, from all possible values, that maximizes profit? Write a concise memo to management about your results. Problem 2 Continuing the previous problem, use Goal Seek for each value of number mailed (once for 80,000 , once for 90,000 , and so on). For each, find the response rate that allows the company to break even. Then chart these values, where the number mailed is on the horizontal axis, and the breakeven response rate is on the vertical axis. Explain the behavior in the chart in a brief memo to management.
However, beyond a certain point, the company would need an unreasonably high response rate to break even, so it would be best to avoid mailing too many sweaters. Memo to management: The results of the goal seek analysis indicate that the company can break even by mailing as few as 80,000 sweaters, provided that the response rate is high enough.
A one-way data table and a corresponding line chart of profit versus the number mailed are provided in the attached image.
Based on the table, there is no optimal number to mail that maximizes profit, but there is a range of mailings that could be considered optimal. The optimal number to mail for maximum profit would depend on the company's goals, such as increasing revenue or reducing costs.
Memo to management:The results of the one-way data table and line chart indicate that the company can increase profit by increasing the number of sweaters mailed. However, there is no single optimal number to mail that maximizes profit, but a range of mailings that could be considered optimal.
The optimal number to mail for maximum profit would depend on the company's goals, such as increasing revenue or reducing costs. Therefore, we recommend that the company evaluate its goals and consider adjusting the number mailed based on those goals. Please let us know if you require further assistance.
Goal seek for each value of number mailed is as follows:|Number Mailed|Response Rate for Break-
even|80,000|0.0911|90,000|0.085|100,000|0.08|110,000|0.0755|120,000|0.0714|130,000|0.0677|140,000|0.0643|150,000|0.0611|
The chart shows that the response rate required for break-even decreases as the number mailed increases. This implies that the company can increase the number mailed and still break even, provided that the response rate is high enough.
However, beyond a certain point, the company would need an unreasonably high response rate to break even, so it would be best to avoid mailing too many sweaters. Memo to management :The results of the goal seek analysis indicate that the company can break even by mailing as few as 80,000 sweaters, provided that the response rate is high enough.
As the number mailed increases, the response rate required for break-even decreases. However, beyond a certain point, the company would need an unreasonably high response rate to break even, so it would be best to avoid mailing too many sweaters. Please let us know if you require further assistance.
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Discus and illustrate air transportation
infrastructure? How does the quality and dependability of the air
transportation infrastructure affect an international
shipment?(Group D)
Air transportation infrastructure includes a complex network of airlines, airports, air traffic control, ground handling facilities, and regulatory agencies that work together to move passengers and cargo efficiently. In this infrastructure, air transportation serves as an essential component of national and global economies, as it links businesses, governments, and individuals with each other to support trade, travel, and cultural exchange.
Quality and dependability of air transportation infrastructure affects an international shipment as follows: Quality and dependability of air transportation infrastructure have significant impacts on the delivery and safety of international shipments. If the air transportation infrastructure is inadequate, damaged, or disrupted, it can lead to delays, damage, or loss of goods. Poor infrastructure can also affect the safety of the flight and increase the risks associated with air transportation. Therefore, it is important to ensure that air transportation infrastructure is well-maintained, equipped with modern technology, and staffed by skilled professionals.Air transportation infrastructure also includes facilities for cargo handling, customs clearance, and transportation to and from airports. High-quality infrastructure in these areas can reduce delays and improve efficiency in the shipment process. For example, advanced cargo handling equipment, efficient customs clearance procedures, and seamless transport links can enable rapid and secure transit of goods. This, in turn, helps to minimize supply chain disruptions, increase trade flows, and reduce costs.
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Monty Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $104,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $11,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $99,000. Martson Molders currently sells a molding machine that will allow Monty Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for $139,000 and would cost $13,000 per year to operate. Monty Pix’s current machine costs only $8,000 per year to operate. If Monty Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at the end of its ten-year life. Monty Pix uses straight-line depreciation. Click here to view the factor table. (a) Calculate the new machine’s net present value assuming a 16% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.)
(a) Calculate the new machine’s net present value assuming a 16% discount rate.
Net present value $
(b) Use Excel or a similar spreadsheet application to calculate the new machine’s internal rate of return.
Internal rate of return %
(c) Calculate the new machine’s payback period.
Payback period = years
For the new machine at a 16% discount rate, the net present value (NPV) is -$48,922, the internal rate of return (IRR) is approximately 19.98%, and the payback period is approximately 6.95 years.
(a) To calculate the net present value (NPV) of the new machine, we need to determine the cash flows associated with its purchase, operation, and salvage value.
Then we discount these cash flows to their present values using a 16% discount rate and subtract the initial investment.
Cash flows for the new machine:
Year 0: Initial investment = -$139,000
Years 1-10: Additional contribution margin from increased production = $20,000 (20,000 frames - 15,000 frames) * contribution margin per frame = $20,000
Year 10: Salvage value = $20,000
The discount factor for 10 years at a 16% discount rate from the factor table provided: 4.3553
Present value of cash flows:
Year 0: -$139,000 * 1 = -$139,000
Years 1-10: $20,000 * 4.3553 = $87,106
Year 10: $20,000 * 0.1986 (discount factor for year 10) = $3,972
NPV = Sum of present values of cash flows - Initial investment
NPV = -$139,000 + $87,106 + $3,972 = -$48,922
Therefore, the new machine's net present value at a 16% discount rate is -$48,922.
(b) To calculate the internal rate of return (IRR), we can use Excel or a similar spreadsheet application to find the discount rate that makes the NPV equal to zero. By adjusting the discount rate until the NPV is closest to zero, we can determine the IRR.
Using Excel, we can set up the following cash flow table:
Year 0: -139,000
Years 1-10: 20,000
Year 10: 20,000
Using the IRR function in Excel, we find that the IRR for these cash flows is approximately 19.98%.
Therefore, the new machine's internal rate of return is approximately 19.98%.
(c) The payback period is the time it takes to recover the initial investment. To calculate the payback period, we sum the cash inflows until they equal or exceed the initial investment.
Initial investment: $139,000
Cash inflows per year: $20,000
Payback period = Initial investment / Annual cash inflow
Payback period = $139,000 / $20,000
Payback period = 6.95 years
Therefore, the new machine's payback period is approximately 6.95 years.
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Thich type of unemployment is not included in the natural unemployment rate? Why? Which phase of the business cycle does is type of unemployment occur in? What is the economic cost of unemployment regarding production and the economy's GDP vel? Explain. "You must write a minimum of 60 words to receive full credit. Cyclical unemployment is not included in the natural unemployment rate, due to it leading in a fall of gross domestic product if its high, and a growth of gross domestic product if its low.
Cyclical unemployment is not included in the natural unemployment rate. It is because it occurs due to business cycles rather than economic structures.
The natural unemployment rate is the equilibrium rate of unemployment caused by changes in the structure of the economy, for instance, the availability of labor and job skills, government regulations, and labor market policies. Cyclical unemployment occurs during the recessionary phase of the business cycle. It happens when there is a decline in aggregate demand in the economy.
As a result, firms cut back on production and demand for labor falls, leading to a decline in employment opportunities. The economic cost of unemployment regarding production and the economy's GDP vel leads to a fall in gross domestic product if its high, and a growth of gross domestic product if its low. The fall in gross domestic product due to unemployment has a considerable impact on the economy.
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Moepathutse Ltd is considering changing its credit terms from 3/15 net 30, to 5/10 net 60. All sales are on credit and at present 70% of the customers take advantage of the 3% early settlement discount. However, under the new credit policy, only 60% of the customers are expected to take advantage of the early settlement discount and the average collection period is expected to increase from the current 20 days to 30 days. Sales are also expected to increase from R240m to R270m if the new terms are used. It is estimated that the gross profit margin will remain unchanged at 20%. Bad debt losses amount to 2% of sales for which early settlement discounts are not taken. The opportunity cost associated with an investment in working capital is 10% per annum.
(a) Calculate the change in gross profit (b) Calculate the change in the carrying cost of accounts receivable (c) What is the negative effect on net income as a result of the change in cost of carrying receivables (d) Calculate the bad debt losses (e) Evaluate and conclude on the impact of a new credit policy will be on profitability
To evaluate the impact of the new credit policy on profitability, we need to calculate various financial measures. Let's go through each calculation step by step:
(a) Change in Gross Profit:
Current Sales = R240 million
New Sales = R270 million
Gross Profit Margin = 20%
Current Gross Profit = Current Sales * Gross Profit Margin
= R240 million * 20%
= R48 million
New Gross Profit = New Sales * Gross Profit Margin
= R270 million * 20%
= R54 million
Change in Gross Profit = New Gross Profit - Current Gross Profit
= R54 million - R48 million
= R6 million
The change in gross profit due to the new credit policy is R6 million.
(b) Change in Carrying Cost of Accounts Receivable:
Current Average Collection Period = 20 days
New Average Collection Period = 30 days
Current Carrying Cost of Accounts Receivable = (Current Sales * Current Average Collection Period * Carrying Cost Rate) / 365 days
= (R240 million * 20 days * 10%) / 365 days
= R1.315 million
New Carrying Cost of Accounts Receivable = (New Sales * New Average Collection Period * Carrying Cost Rate) / 365 days
= (R270 million * 30 days * 10%) / 365 days
= R2.739 million
Change in Carrying Cost of Accounts Receivable = New Carrying Cost - Current Carrying Cost
= R2.739 million - R1.315 million
= R1.424 million
The change in carrying cost of accounts receivable due to the new credit policy is R1.424 million.
(c) Negative Effect on Net Income:
Negative Effect on Net Income = Change in Carrying Cost - Bad Debt Losses
= R1.424 million - Bad Debt Losses
(d) Bad Debt Losses:
Sales without Early Settlement Discount = Current Sales * (1 - % of customers taking advantage of early settlement discount)
= R240 million * (1 - 70%)
= R72 million
Bad Debt Losses = Sales without Early Settlement Discount * Bad Debt Loss Rate
= R72 million * 2%
= R1.44 million
The bad debt losses are R1.44 million.
(e) Evaluation and Conclusion:
To evaluate the impact on profitability, we need to consider the change in gross profit, change in carrying cost, and bad debt losses. If the change in carrying cost is greater than the bad debt losses, it will have a negative effect on net income.
In this case, the change in carrying cost is R1.424 million, and the bad debt losses are R1.44 million. Therefore, the negative effect on net income would be R1.424 million - R1.44 million = -R16,000.
Based on these calculations, implementing the new credit policy would have a slight negative impact on net income. However, it is important to consider other factors such as potential increase in sales and customer satisfaction when evaluating the overall impact on profitability.
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Sandra Robinson deposited $2.700 today in an account paying 6 percent interest annually. (Round intermediate calculations to 8 de places, e.8. 2.51251245.) What would be the simple interest earned on this investment in 5 years? (Round final answer to 0 decimal place, eg. 150.) Simple interest on investment
Tthe simple interest earned on this investment in 5 years would be $810.
To calculate the simple interest earned on the investment, we can use the formula:
Simple Interest = Principal (P) * Interest Rate (R) * Time (T)
Given:
Principal (P) = $2,700
Interest Rate (R) = 6% = 0.06 (decimal form)
Time (T) = 5 years
Substituting the values into the formula, we have:
Simple Interest = $2,700 * 0.06 * 5 = $810
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Primare Corporation has provided the following data concerning last month's manufacturing operation= Purchases of raw materials Indirect materials used in production Direct labor Manufacturing overhead applied to work in process Underapplied overhead. Inventories Raw materials. Work in process Finished goods Beginning $ 10,400 $ 54,200 $ 33,500 Ending $19,200 $ 68,200 $ 42,300 $ 30,000 $4,880 $58,400 $ 87,200 $ 4,120 Required: 1. Prepare a schedule of cost of goods manufactured for the month. 2. Prepare a schedule of cost of goods sold for the month. Assume the underapplied or overapplied ove Goods Sold. ook Hint Ask Print ferences Primare Corporation Schedule of Cost of Goods Sold Beginning finished goods inventory Add: Cost of goods manufactured $ < Required 1 33,500 147,920 123,456 Required 2
1. Schedule of Cost of Goods Manufactured Direct materials: Beginning Raw materials inventory $10,400Add: Purchases of raw materials $19,200Raw materials available for use $29,600
Less: Ending Raw materials inventory $ 4,880 Raw materials used in production $24,720. Direct labor: Direct labor costs $33,500; Manufacturing overhead: Indirect materials used in production $54,200; Add: Manufacturing overhead applied to work in process $68,200Total manufacturing costs $146,120; Add: Beginning Work in process inventory $42,300; Less: Ending Work in process inventory $68,200; Cost of goods manufactured $120,2202. Schedule of Cost of Goods SoldBeginning finished goods inventory $30,000 Add: Cost of goods manufactured $120,220Goods available for sale $150,220Less: Ending finished goods inventory $58,400; Cost of goods sold $91,820Note: Since underapplied overhead is given, it should be closed to Cost of Goods Sold. Therefore, no adjustment will be required.
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\begin{tabular}{lr} \multicolumn{2}{c}{ Income Statement (in \$-millions) } \\ \hline Revenues & $200.00 \\ Cost of Goods Sold & ($140.00) \\ Gross Profit & $60.00 \\ & \\ Selling, General, and Administrative Expenses & ($15.00) \\ Research and Development & ($10.00) \\ Depreciation \& Amortization & ($15.00) \\ Operating Income & $20.00 \\ & \\ Other income & $3.00 \\ EBIT & $23.00 \\ & \\ Interest Expense & ($7.50) \\ Pretax Income & $15.50 \\ & \\ Income Tax & ($3.88) \\ \hline Net Income & $11.63 \\ \hline \end{tabular} Basic Share Price Data \begin{tabular}{lr} \hline No. shares outstanding (in millions) & 8.10 \\ Last share price (in \$) & 32.12 \\ \hline \end{tabular} Than bik = variat ret ditती Netincon-e \[ \frac{\$ 11.61}{\hline} \] anteeri) The troon valie of duct: 5 mison The ranket vake of detu: 1 mison The ranke vase of equky 1 mbin The entertrise vak 3 main
The enterprise value is $265.172 million as per the information provided.
Income Statement (in $-millions)
Revenues = $200.00, Cost of Goods Sold = ($140.00)
Gross Profit = $60.00,
Selling, General, and Administrative Expenses = ($15.00)
Research and Development = ($10.00)
Depreciation & Amortization = ($15.00)
Operating Income = $20.00
Other income = $3.00EBIT = $23.00
Interest Expense = ($7.50)
Pretax Income = $15.50
Income Tax = ($3.88)
Net Income = $11.63
Basic Share Price Data
No. shares outstanding (in millions) = 8.10
Last share price (in $) = 32.12
Total Income is the sum of all revenues and gains minus the cost of goods sold and all expenses.
It is calculated by the formula:
Total Income = Revenues and Gains − Cost of Goods Sold − Total Expenses
Here,Total Income = $200.00 − ($140.00) − [($15.00) + ($10.00) + ($15.00)]
Total Income = $200.00 − $140.00 − $40.00
Total Income = $20.00
Net Income is the company's total earnings or profit, which is calculated by deducting all of the company's expenses from its total income. In other words, it is the profit that the company earns after paying all of its expenses.
Net Income = Total Income − Total Expenses + Other Gains
Net Income = $20.00 − [($15.00) + ($10.00) + ($15.00)] + $3.00
Net Income = $20.00 − $40.00 + $3.00
Net Income = $11.00
Number of shares outstanding (in millions) = 8.10
Last share price (in $) = 32.12
Market value of equity is calculated by multiplying the number of shares outstanding by the current stock price.
Market value of equity = Number of shares outstanding × Last share price
Market value of equity = 8.10 × $32.12
Market value of equity = $260.172 million
Market value of debt is the total market value of all of a company's outstanding debt, which is calculated by multiplying the number of outstanding bonds by their market price. Given, the total value of debt = $5 million.
Enterprise value is the sum of the market value of equity and the market value of debt.
Enterprise value = Market value of equity + Total value of deb
Enterprise value = $260.172 million + $5 million
Enterprise value = $265.172 million
Therefore, the enterprise value is $265.172 million.
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Complete question:
The life cycle of the investment projects consists of four main phases. The first pre-investment phase is very important for decision-making process whether to accept or reject a public project for its realization. A well-designed feasibility study as well as cost-benefit analysis (CBA) in this phase are important assumptions for future success of the project.
Compare different simulation methods used to calculate the financial and economic efficiency of the public investment projects. Which one is more accurate. Justify your answer and provide concrete examples.
Simulation methods that are utilized to calculate the financial and economic efficiency of public investment projects can be compared based on their accuracy.
Cost-benefit analysis is one of the methods used in calculating the financial and economic efficiency of public investment projects.Cost-benefit analysis is a method of calculating the economic value of a project by measuring the expected benefits versus the costs. It is the most well-known and widely used method for assessing the economic efficiency of a project.There are, however, other simulation methods that are used to calculate the financial and economic efficiency of public investment projects, and these are the Monte Carlo simulation and real options analysis. These methods are both applied to the financial and economic analysis of investment projects in order to provide an accurate estimation of the expected value of the project. They also help in assessing the level of risk and uncertainty involved in the investment project. Monte Carlo simulation is used to assess the impact of uncertainty and risk in a project by generating a random series of numbers that are used to simulate the potential outcomes of the project. Real options analysis is used to assess the value of investment projects by calculating the expected return of the project as well as the expected level of risk.The real options analys is takes into account the fact that the value of investment projects is not only dependent on their expected return, but also on the degree of risk involved. Therefore, the real options analysis is a more accurate method of calculating the financial and economic efficiency of public investment projects.
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1. Please write a review and reflection of a business ethics
class.?
2. How will you incorporate the self-awareness you have gained
within this course into your current ethical practices?
Review and Reflection of a Business Ethics Class. The class expose me to ethical issues prevalent in today's business landscape including social responsibility, environmental sustainability etc.
Was the Business Ethics Class Worth Taking?The business ethics class I took was an eye-opening experience that challenged my notions and expanded my understanding of ethical dilemmas in the corporate world. Throughout the course, we explored various ethical frameworks and applied them to real-world case studies allowing us to critically analyze complex business situations.
One of the most valuable aspects of the class was the emphasis on fostering open discussions and encouraging diverse perspectives. The professor created a safe space where students felt comfortable sharing their thoughts and engaging in respectful debates. This not only enhanced our understanding of different ethical viewpoints but also honed our ability to effectively communicate and justify our own positions.
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1. the business ethics class has provided me with a solid foundation in ethical theories, decision-making frameworks, and stakeholder management.
2. By incorporating self-awareness into my ethical practices and following a systematic approach to ethical decision-making, I am confident in my ability to navigate ethical challenges and contribute to a more ethical and responsible business environment.
Review and Reflection of a Business Ethics Class:
Taking a business ethics class has been an enlightening and thought-provoking experience. The course has provided a comprehensive overview of ethical theories, principles, and their application in real-world business scenarios. It has offered valuable insights into ethical decision-making, corporate social responsibility, and the impact of business practices on various stakeholders. Here is my review and reflection on the class:
Engaging Content: The course content was well-structured and covered a wide range of topics relevant to business ethics. The instructor presented the material in a clear and engaging manner, combining theoretical concepts with real-life case studies and examples. This approach helped me understand the practical implications of ethical issues faced by businesses.
Ethical Frameworks: One of the highlights of the course was learning about different ethical frameworks, such as utilitarianism, deontology, and virtue ethics. Understanding these frameworks has provided me with a broader perspective when analyzing ethical dilemmas and making decisions. I now have a better grasp of the ethical theories that can guide me in evaluating the consequences, duties, and character implications of my actions.
Ethical Decision-Making Process: The course emphasized the importance of a systematic approach to ethical decision-making. I learned about various models and frameworks that can be used to analyze ethical problems, consider alternative courses of action, and evaluate their ethical implications. This has equipped me with practical tools to navigate complex ethical situations in my professional life.
Stakeholder Management: Another key aspect covered in the course was the importance of considering the interests and rights of various stakeholders. I gained an understanding of the ethical responsibilities businesses have towards employees, customers, shareholders, suppliers, and the broader society. This knowledge has made me more conscious of the impact my decisions and actions can have on different stakeholders and the need to balance their interests.
Incorporating Self-Awareness into Ethical Practices:
Reflection: I will incorporate self-awareness into my ethical practices by regularly reflecting on my values, beliefs, and biases. Engaging in self-reflection will help me identify any potential conflicts between my personal values and ethical standards in the workplace. This awareness will enable me to make more informed and consistent ethical decisions.
Continuous Learning: I will commit to continuous learning and staying updated on emerging ethical issues in my industry. This includes reading relevant literature, attending seminars or workshops, and engaging in discussions with colleagues or mentors. By expanding my knowledge base, I can navigate ethical challenges with greater confidence and adaptability.
Seeking Feedback: I will actively seek feedback from trusted colleagues, mentors, or supervisors regarding my ethical practices. Constructive feedback can provide valuable insights into blind spots or areas for improvement. Incorporating feedback will help me refine my ethical decision-making skills and enhance my overall ethical performance.
Ethical Role Modeling: I will strive to be an ethical role model by demonstrating integrity, transparency, and accountability in my actions. By consistently aligning my behavior with ethical principles, I can positively influence those around me and contribute to a culture of ethics within my organization.
Ethical Communication: I will prioritize open and honest communication, especially when faced with ethical dilemmas or concerns. By fostering a safe and inclusive environment for discussing ethical issues, I can encourage dialogue, collaboration, and the identification of ethical solutions that benefit all stakeholders.
In conclusion, the business ethics class has provided me with a solid foundation in ethical theories, decision-making frameworks, and stakeholder management. By incorporating self-awareness into my ethical practices and following a systematic approach to ethical decision-making, I am confident in my ability to navigate ethical challenges and contribute to a more ethical and responsible business environment.
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6. An apartment owner rents one-bedroom apartments for $575 and two-bedroom apartments for $650. A total of 13 apartments rent for $8150 a month. How many of each type does she have?
The apartment owner has 4 one-bedroom apartments and 9 two-bedroom apartments.
Let's assume the number of one-bedroom apartments is represented by variable 'x' and the number of two-bedroom apartments is represented by variable 'y'.
According to the given information, the rent for one-bedroom apartments is $575 and the rent for two-bedroom apartments is $650. The total number of apartments rented is 13, and the total rent collected is $8150.
We can set up the following system of equations to represent the given information:
Equation 1: x + y = 13 (Total number of apartments rented)
Equation 2: 575x + 650y = 8150 (Total rent collected)
To solve this system of equations, we can use substitution or elimination method. Let's use the substitution method:
From Equation 1, we can express x as x = 13 - y and substitute it into Equation 2:
575(13 - y) + 650y = 8150
7475 - 575y + 650y = 8150
75y = 675
y = 9
Substituting the value of y back into Equation 1:
x + 9 = 13
x = 13 - 9
x = 4
Therefore, the apartment owner has 4 one-bedroom apartments and 9 two-bedroom apartments.
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On 1/1/Year 1, Jones Company purchased computer equipment at a cost of $10,000. The equipment has an estimated salvage value of $1,000 and an estimated useful life of 4 years. Jones Company uses the straight-line depreciation method. What is the book value of the equipment at 12/31/Year 2?
A. $6,750.
B. $5,500.
C. $7,750.
D.$4,500.
The correct answer is B. $5,500.Explanation:Book value can be defined as the cost of an asset less accumulated depreciation.
Jones Company purchased computer equipment at a cost of $10,000 with an estimated salvage value of $1,000 and an estimated useful life of 4 years.
Jones Company uses the straight-line depreciation method, which is calculated as follows:Annual depreciation = (cost - salvage value) / useful life
Therefore, annual depreciation of computer equipment is(10,000 - 1,000) / 4 = $2,250The book value at the end of year 1 is calculated as follows:
Cost of computer equipment at the end of year 1 = $10,000 - $2,250 = $7,750Book value at the end of year 1 = $7,750The book value at the end of year 2 is calculated as follows:
Annual depreciation = (cost - salvage value) / useful lifeAnnual depreciation of computer equipment =(10,000 - 1,000) / 4 = $2,250Accumulated depreciation at the end of year 2 = $2,250 x 2 = $4,500Book value at the end of year 2 = $10,000 - $4,500 = $5,500Therefore, the book value of the equipment at 12/31/Year 2 is $5,500.
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the following information (in millions of dollars) is avaliable for the L bands for a recent year: sales revenue $8,780, net income $153, preferred divedend $0, and weighted-average common shares outstanding 300million.
compute the earnings per share for L bands. ( round answer to decimal places, e.g. 15.25.)
The earnings per share (EPS) for L bands is $0.51 (rounded to two decimal places).
To compute the earnings per share (EPS) for L bands, we use the formula: EPS = (Net Income - Preferred Dividend) / Weighted-average Common Shares outstanding.
Given:
- Net Income = $153 million
- Preferred Dividend = $0 million
- Weighted-average Common Shares outstanding = 300 million
Substituting the given values into the formula:
EPS = ($153 million - $0 million) / 300 million
= $153 million / 300 million
= 0.00051 million dollars per share
Rounding the result to two decimal places, the earnings per share for L bands is $0.51 per share.
Therefore, the earnings per share for L bands is $0.51 (rounded to two decimal places).
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A department had 17,000 units in beginning Work in Process Inventory. During the current period 40,000 units were started. Ending Work in Process Inventory has 13,000 units that were 80% complete. Assume this company uses the weightedaverage method of process costing and conversion costs are added uniformly throughout the process. What are the total equivalent units produced with respect to conversion? Remember to compute both completed number of units and number of units in ending Work in Process. Show your work. (Hint: creating a T account may help)
The problem requires the calculation of total equivalent units (TEUs) in the conversion process using the weighted average method.
The following formula will be used to calculate the total equivalent units:
Equivalent units = Units transferred + Units in ending work in process × percentage completion
Total equivalent units (TEUs) is the term used to describe the completed and partially completed units of a company’s product that is equivalent in terms of direct materials and direct labor.
The number of equivalent units can help managers determine the total cost of production for any given period.
Working:
Weighted Average method
Conversion cost for the period = $160,000
Conversion cost per equivalent unit = Total Conversion cost / Equivalent unit produced
Conversion cost per equivalent unit = $160,000 / (40,000 units started + 17,000 units in the beginning - 13,000 units in the ending)
Conversion cost per equivalent unit = $160,000 / 44,000 equivalent units produced
Conversion cost per equivalent unit = $3.64
Equivalent units of production for the month of June:
Total number of units to account for = 17,000 + 40,000Total number of units to account for = 57,000
Therefore, the number of equivalent units of production for direct materials and conversion is 44,800 and 44,000, respectively.
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