To determine whether Batting should accept the one-time special order for 2,000 bats at $22 each, we need to compare the incremental revenue with the incremental costs.
Incremental Revenue:
Number of bats in the special order = 2,000
Price per bat = $22
Total incremental revenue = Number of bats × Price per bat = 2,000 × $22 = $44,000
Incremental Costs:
Since there are no variable selling costs for this special order, we only need to consider the incremental variable production costs and any incremental fixed costs. However, it is mentioned that at the production and sales level of 30,000 bats, the fixed costs remain the same. Therefore, the fixed costs will not change for this special order.
Incremental Variable Production Costs:
Variable production costs per bat = $16
Number of bats in the special order = 2,000
Total incremental variable production costs = Variable production costs per bat × Number of bats = $16 × 2,000 = $32,000
Operating Income Effect:
Operating Income = Total Revenue - Total Costs
Before accepting the special order:
Total Revenue = Price per bat × Number of bats
Total Costs = Fixed Costs + Variable Production Costs per bat × Number of bats
Total Revenue = $33 × 30,000 = $990,000
Total Costs = $16 × 30,000 = $480,000 (Fixed Costs are not included as they remain the same)
Operating Income = $990,000 - $480,000 = $510,000
After accepting the special order:
Total Revenue = $990,000 + $44,000 = $1,034,000
Total Costs = $480,000 + $32,000 = $512,000 (Fixed Costs are not included as they remain the same)
Operating Income = $1,034,000 - $512,000 = $522,000
If Batting accepts the one-time special order for 2,000 bats at $22 each, the effect on operating income would be an increase of $12,000 ($522,000 - $510,000). Therefore, Batting should accept this one-time special order.
To determine whether Batting should accept the one-time special order for 2,000 bats at $22 each, we need to compare the incremental revenue with the incremental costs.
Incremental Revenue:
Number of bats in the special order = 2,000
Price per bat = $22
Total incremental revenue = Number of bats × Price per bat = 2,000 × $22 = $44,000
Incremental Costs:
Since there are no variable selling costs for this special order, we only need to consider the incremental variable production costs and any incremental fixed costs. However, it is mentioned that at the production and sales level of 30,000 bats, the fixed costs remain the same. Therefore, the fixed costs will not change for this special order.
Incremental Variable Production Costs:
Variable production costs per bat = $16
Number of bats in the special order = 2,000
Total incremental variable production costs = Variable production costs per bat × Number of bats = $16 × 2,000 = $32,000
Operating Income Effect:
Operating Income = Total Revenue - Total Costs
Before accepting the special order:
Total Revenue = Price per bat × Number of bats
Total Costs = Fixed Costs + Variable Production Costs per bat × Number of bats
Total Revenue = $33 × 30,000 = $990,000
Total Costs = $16 × 30,000 = $480,000 (Fixed Costs are not included as they remain the same)
Operating Income = $990,000 - $480,000 = $510,000
After accepting the special order:
Total Revenue = $990,000 + $44,000 = $1,034,000
Total Costs = $480,000 + $32,000 = $512,000 (Fixed Costs are not included as they remain the same)
Operating Income = $1,034,000 - $512,000 = $522,000
If Batting accepts the one-time special order for 2,000 bats at $22 each, the effect on operating income would be an increase of $12,000 ($522,000 - $510,000). Therefore, Batting should accept this one-time special order.
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A company has 440,000 shares outstanding that sell for $92.00 per share. The company plans a 6-for-1 stock split. Assuming no market imperfections or tax effects, what will the stock price be after the split?
After the 6-for-1 stock split, the stock price will be $15.33 per share.
A 6-for-1 stock split means that each existing share will be divided into six new shares. In this case, since the company has 440,000 shares outstanding, after the split, the number of shares will increase to 440,000 x 6 = 2,640,000 shares.
To determine the stock price after the split, we divide the original price per share by the split ratio. In this case, the original stock price is $92.00, and the split ratio is 6-for-1.
So, the new stock price after the split will be $92.00 / 6 = $15.33 per share.
Therefore, after the 6-for-1 stock split, the stock price will be $15.33 per share.
It's important to note that stock splits do not change the overall value or market capitalization of a company. They simply increase the number of shares outstanding and decrease the price per share proportionally.
The purpose of a stock split is often to make the stock more affordable and increase liquidity, as well as to potentially attract more investors.
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The production department of Hareston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 1st Quarter 8,200 2nd Quarter 9,200 3rd Quarter 7,200 4th Quarter 6,200 Units to be produced In addition, the beginning raw materials inventory for the first quarter is budgeted to be 2,000 kilograms and the beginning accounts payable for the first quarter are budgeted to be $3,540. Each unit requires 3.2 kilograms of raw material that costs $2.60 per kilogram. Management desires to end each quarter with an inventory of raw materials equal to 10% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 2,400 kilograms. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.6 direct labour-hours, and direct labour-hour workers are paid $20.0 per hour.
The beginning raw materials inventory for Q1 is 2,000 kg, and beginning accounts payable is $3,540.
To calculate the detailed information for the production department of Hareston Company, we will need to determine the following:
Raw Material Requirements:
We'll start by calculating the raw material requirements for each quarter based on the forecasted production and desired ending inventory.
1st Quarter:
Raw materials needed = (8,200 units + 10% of 9,200 units) × 3.2 kg per unit
Raw materials needed = (8,200 + 920) × 3.2 kg = 27,040 kg
2nd Quarter:
Raw materials needed = (9,200 units + 10% of 7,200 units) × 3.2 kg per unit
Raw materials needed = (9,200 + 720) × 3.2 kg = 32,640 kg
3rd Quarter:
Raw materials needed = (7,200 units + 10% of 6,200 units) × 3.2 kg per unit
Raw materials needed = (7,200 + 620) × 3.2 kg = 26,880 kg
4th Quarter:
Raw materials needed = (6,200 units + 10% of 0 units) × 3.2 kg per unit
Raw materials needed = (6,200 + 0) × 3.2 kg = 19,840 kg
Raw Material Purchases:
Next, we'll calculate the raw material purchases by considering the payment terms and desired ending inventory.
1st Quarter:
Raw materials purchased = Raw materials needed for 1st quarter - Beginning raw materials inventory
Raw materials purchased = 27,040 kg - 2,000 kg = 25,040 kg
2nd Quarter:
Raw materials purchased = Raw materials needed for 2nd quarter - Desired ending inventory for 1st quarter
Raw materials purchased = 32,640 kg - (0.10 * 9,200 * 3.2 kg) = 29,360 kg
3rd Quarter:
Raw materials purchased = Raw materials needed for 3rd quarter - Desired ending inventory for 2nd quarter
Raw materials purchased = 26,880 kg - (0.10 * 7,200 * 3.2 kg) = 25,040 kg
4th Quarter:
Raw materials purchased = Raw materials needed for 4th quarter - Desired ending inventory for 3rd quarter
Raw materials purchased = 19,840 kg - (0.10 * 6,200 * 3.2 kg) = 18,400 kg
Raw Material Cost:
Now, we'll calculate the cost of raw materials purchased based on the cost per kilogram.
1st Quarter:
Raw material cost = Raw materials purchased for 1st quarter × Cost per kilogram
Raw material cost = 25,040 kg × $2.60/kg = $65,104
2nd Quarter:
Raw material cost = Raw materials purchased for 2nd quarter × Cost per kilogram
Raw material cost = 29,360 kg × $2.60/kg = $76,336
3rd Quarter:
Raw material cost = Raw materials purchased for 3rd quarter × Cost per kilogram
Raw material cost = 25,040 kg × $2.60/kg = $65,104
4th Quarter:
Raw material cost = Raw materials purchased for 4th quarter × Cost per kilogram
Raw material cost = 18,400 kg × $2.60/kg = $47,840
Direct Labor Cost:
We'll calculate the direct labor cost by multiplying the direct labor-hours per unit by the labor rate.
1st Quarter:
Direct labor cost = 8,200 units × 0.6 direct labor-hours per unit × $20.0 per hour
Direct labor cost = $98,400
2nd Quarter:
Direct labor cost = 9,200 units × 0.6 direct labor-hours per unit × $20.0 per hour
Direct labor cost = $110,400
3rd Quarter:
Direct labor cost = 7,200 units × 0.6 direct labor-hours per unit × $20.0 per hour
Direct labor cost = $86,400
4th Quarter:
Direct labor cost = 6,200 units × 0.6 direct labor-hours per unit × $20.0 per hour
Direct labor cost = $74,400
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Which of the following information is needed to prepare a flexible budget?
(a) Actual units sold
(b) Actual variable cost
(c) Actual selling price per unit
(d) Actual fixed cost.
By considering the actual units sold, actual variable cost, the actual selling price per unit, and actual fixed cost, a flexible budget can be prepared that adjusts for different levels of activity and provides a more accurate estimation of revenues and expenses based on the actual performance.
The information needed to prepare a flexible budget includes:
(a) Actual units sold: This is necessary to determine the appropriate level of activity for the budget and calculate variable costs and revenues based on the actual sales volume.
(b) Actual variable cost: Knowing the actual variable cost per unit helps estimate the total variable costs at different levels of activity for the flexible budget.
(c) Actual selling price per unit: The actual selling price per unit is important to calculate the total revenue generated from the actual units sold in the flexible budget.
(d) Actual fixed cost: Understanding the actual fixed costs incurred during the period allows for their inclusion in the flexible budget, as fixed costs remain constant regardless of the activity level.
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alternative energy sources that are often called new renewables include
Alternative energy sources that are often called new renewables include are energy from the sun, from wind, from Earth's geothermal heat, and from the movement of ocean water.
The term "renewable energy" refers to energy produced from naturally replenished renewable resources over a human lifespan. Inexhaustible assets incorporate daylight, wind, the development of water, and geothermal heat. Albeit most environmentally friendly power sources are manageable, some are not. For instance, at the current rates of exploitation, some biomass sources are thought to be unsustainable.
Renewable energy is frequently utilized for the production of electricity as well as for heating and cooling. Large-scale renewable energy projects are common, but they are also suitable for developing nations and rural and remote areas where energy is frequently essential to human development. Renewable energy is frequently utilized in conjunction with additional electrification, which has a number of advantages:
Electricity is clean at the point of use and can efficiently move heat or objects. Between 2011 and 2021, renewable energy will account for 28% of the world's electricity supply. Nuclear power fell from 12% to 10% and fossil fuels from 68% to 62%. Hydropower's share fell from 16% to 15%, while solar and wind power's share rose from 2% to 10%.
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1) What are the two primary sources of
equity?
a) contributed capital and appropriated capital.
b) appropriated capital and contributed earnings.
c) retained earnings and preferred capital.
d) retaine
The two primary sources of equity are contributed capital and retained earnings (option a).
Contributed capital, also known as paid-in capital or shareholders' equity, represents the amount of money invested by the owners or shareholders of a company in exchange for shares of ownership. This includes the par value of common and preferred stock, along with any additional paid-in capital that represents the excess amount paid by investors over the par value of the shares.
Retained earnings represent the accumulated net income of a company that has been retained for reinvestment in the business or to pay off debt, rather than being distributed as dividends to shareholders. Retained earnings are an essential component of a company's equity as they provide resources for growth, expansion, and the ability to weather financial challenges.
In summary, the two primary sources of equity are contributed capital, which comes from investments made by the owners or shareholders, and retained earnings, which are the accumulated profits retained within the company for reinvestment or debt repayment. These sources of equity are crucial for the financial stability and growth potential of a company. The correct option is a.
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All of the following points are aligned with recommending a variable annuity (VA) except
A)the investor wants a supplement to their retirement income.
B)the investor will fund the investment with assets earmarked for retirement from a non-qualified money market account.
C)the investor will fund the investment with assets earmarked for retirement from a 401(k).
D)the investor is comfortable with market risk.
Option C, the investor will fund the investment with assets earmarked for retirement from a 401(k), is not aligned with recommending a variable annuity (VA).
Variable annuities (VAs) can be a suitable investment option for investors who are looking for a supplement to their retirement income and are comfortable with market risk. Additionally, if the investor is funding the VA with assets earmarked for retirement from a non-qualified money market account, it may be a good fit. However, funding the VA with assets earmarked for retirement from a 401(k) is not recommended. This is because 401(k) accounts already offer tax-deferred growth, so adding a VA to the mix could result in the investor paying unnecessary fees and expenses. Therefore, option C is not aligned with recommending a VA.
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Critically assess the extent to which Machiavelli's, The Prince, is a useful guide for contemporary leaders seeking power.
The extent to which Machiavelli's The Prince is a useful guide for contemporary leaders seeking power is limited.
The Prince is a sixteenth-century work of political philosophy by Machiavelli that describes how to acquire, maintain, and safeguard political power. However, Machiavelli's ideas and principles are not always applicable in contemporary times. Contemporary leaders who follow Machiavelli's advice may find themselves at a disadvantage in the long term because modern-day society tends to value ethical and moral leadership over authoritarian leadership. Machiavelli's book, for example, suggests that it is preferable to be feared than to be loved, but this can lead to a leader's downfall in today's democratic society. Furthermore, Machiavelli's emphasis on the acquisition and preservation of power at all costs goes against the contemporary emphasis on morality and ethical leadership. As a result, The Prince may have some practical relevance, but it is not a comprehensive guide for contemporary leaders who want to gain and maintain power.
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A manufacturer of packaging for companies that produce breakfast cereals is considering alternatives
regarding the process it uses to pre-process carton paper used to make the packaging. Historically, the
company has been using equipment which cuts raw carton paper received from its various suppliers. This
cut paper is further painted and assembled into a box shape by two other pieces of equipment.
Recently, however, most of its customers began requesting that certain design elements be pressed into
the packaging, giving the packaging more visual appeal. The customers were willing to pay more for the
added service, making it particularly lucrative for the firm to have incorporate this possibility into its
packaging offerings.
Managers believed that the existing equipment would be able to handle the new process with certain
modifications. In addition to modifying the existing equipment, the company two other alternatives. All
alternatives will be able to produce the desired result, will result in the same quality of finished produce,
satisfying the company’s and its customer’s demands, but differ in annual maintenance costs, initial price,
and longevity.
The first alternative is to keep existing equipment, but update it to handle the new process. The old
equipment was bought three years ago, at the price of US$4M and is being depreciated on the straight-
line basis over 8-year useful life to its expected salvage value of zero. Managers determined that the old
equipment’s current market value is $1.5M, which is below its book value due to significant expenses
associated with moving it somewhere else. The necessary updates, which need to be depreciated over 4
years, will allow to provide the modifications that customers were seeking. The expected cost of the
necessary updates is $1100K. The old equipment requires $400,000 in annual maintenance expense.
The second alternative is to replace the old equipment with new one. The new equipment would cost
US$2M to buy and install, requires $700,000 in annual maintenance expense, but has a useful life of 6
years. It is also depreciated using straight-line method but has a salvage value of $200,000 at the end of
its life.
The third alternative is to outsource the cutting of the paper to an external contractor. This will involve
selling the existing equipment. The management expected that external contractors would charge $1.3M
per year to produce the required quantity of pre-cut carton paper, at the required quality, using the new
process with pressed elements. The added benefit of the outsourcing is that it will allow to reduce days
of sales in inventories by 3 days, or roughly $300K, due to buying the paper later in the production process.
Calculate the Equivalent Annual Cost of each alternative. What alternative would be the least costly for
the company and what alternative should the company choose? The company’s weighted average cost
of capital is 10% and its marginal rate of income tax is 21%.
Find Equivalent Annual Cost (EAC) for the 3 options.
Equivalent Annual Cost of each alternative:
1. EAC for Updating Existing Equipment = $1,071,150
2. EAC for Replacing with New Equipment = $2,086,590
3. EAC for Outsourcing to External Contractor = $789,000
To calculate the Equivalent Annual Cost (EAC) for each alternative, we need to consider the initial costs, maintenance costs, salvage values, tax implications, and the company's weighted average cost of capital (WACC).
1. Update Existing Equipment:
Initial cost: $1,100,000 (cost of necessary updates)
Maintenance cost: $400,000 per year
Depreciation: ($4,000,000 - $0) / 8 = $500,000 per year
Tax shield from depreciation: $500,000 * 0.21 = $105,000 per year
Net cost: $1,100,000 + $400,000 - $105,000 = $1,395,000 per year
2. Replace with New Equipment:
Initial cost: $2,000,000
Maintenance cost: $700,000 per year
Depreciation: ($2,000,000 - $200,000) / 6 = $300,000 per year
Tax shield from depreciation: $300,000 * 0.21 = $63,000 per year
Net cost: $2,000,000 + $700,000 - $63,000 = $2,637,000 per year
3. Outsource Cutting to an External Contractor:
Outsourcing cost: $1,300,000 per year
Inventory reduction benefit: $300,000 per year (taxable)
Net cost: $1,300,000 - $300,000 = $1,000,000 per year
Now, let's calculate the EAC for each alternative using the WACC of 10%:
1. EAC for Updating Existing Equipment:
EAC = Net cost * (1 - tax rate) / Present Value Factor for WACC
EAC = $1,395,000 * (1 - 0.21) / 0.10 = $1,071,150
2. EAC for Replacing with New Equipment:
EAC = Net cost * (1 - tax rate) / Present Value Factor for WACC
EAC = $2,637,000 * (1 - 0.21) / 0.10 = $2,086,590
3. EAC for Outsourcing to External Contractor:
EAC = Net cost * (1 - tax rate) / Present Value Factor for WACC
EAC = $1,000,000 * (1 - 0.21) / 0.10 = $789,000
The alternative with the least EAC would be the least costly for the company. In this case, the least costly alternative is Outsourcing to the External Contractor, with an EAC of $789,000 per year.
Therefore, the company should choose the option to outsource the cutting of the paper to an external contractor as it provides the lowest equivalent annual cost.
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The accounts payable programs at Lucy Company compare incoming invoices to open purchase orders and receiving reports. The reject rate is very high, so Sally the Accounts Payable clerk went into the program and changed the tolerance limits so that more invoices would pass the matching process and she would have fewer rejects to correct. Which of the following controls would best minimize this risk? Physical access controls Logical access controls Completeness check CD Procedures for rejected inputs
The control that would best minimize the risk of Sally changing the tolerance limits in the accounts payable program at Lucy Company would be CD Procedures for rejected inputs.
These procedures would ensure that any rejected invoices are reviewed and corrected before being accepted into the system, thus preventing Sally from manipulating the tolerance limits and allowing potentially incorrect or fraudulent invoices to be processed. It is important to maintain strong controls over the accounts payable process to prevent errors and fraud, and CD Procedures for rejected inputs is an effective way to do so. Term in 150.
Hi! The best control to minimize the risk associated with Sally changing the tolerance limits in the accounts payable program at Lucy Company would be Logical Access Controls. This control restricts unauthorized access to the program and ensures only authorized personnel can modify settings or configurations, thereby maintaining the integrity of the matching process.
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Which of the following does not cause a shift in the demand
curve for cars?
An increase in the price of cars
An increase in imported cars from Asia
An increase in the tax on cars
An increase in the price of cars does cause a shift in the demand curve for cars, as it affects consumers' willingness and ability to purchase cars at different price levels.
Similarly, an increase in imported cars from Asia can also cause a shift in the demand curve, as it changes the available choices and options for consumers. However, an increase in the tax on cars does not directly cause a shift in the demand curve for cars. Instead, it affects the cost of purchasing a car and can lead to a decrease in the quantity demanded at each price level. This is known as a movement along the demand curve, not a shift of the entire curve. Factors that cause a shift in the demand curve include changes in consumer preferences, income levels, population, and related goods and services.
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the record date for a cash dividend is wednesday july 5th. a client buying the stock would receive the dividend in all of the following circumstances except the stock is purchased in a:
The record date for a cash dividend is the date on which the company determines which shareholders are eligible to receive the dividend. If a client buys the stock before the ex-dividend date, they will receive the dividend.
The record date for a cash dividend is Wednesday, July 5th. A client buying the stock would receive the dividend in most circumstances. However, if the stock is purchased on or after the ex-dividend date, which typically occurs two business days before the record date, the client would not receive the dividend. In this case, the client should buy the stock before the ex-dividend date to be eligible for the dividend payment. However, if the stock is purchased on or after the ex-dividend date, the buyer will not receive the dividend. Therefore, the client buying the stock would not receive the dividend if they purchased the stock on or after July 7th, which is the ex-dividend date. In summary, a client buying the stock would receive the dividend in all circumstances except the stock is purchased on or after the ex-dividend date.
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Which of the following developments in the business of a firm often lead to a change in the firm's organizational structure? (Check all that apply.) A. Introduction of a new product
B. Merger or acquisition C. Implementation of a new information system D. Change in the CEO
B. Merger or acquisition and D. Change in the CEO often lead to a change in the firm's organizational structure.
When a firm undergoes a merger or acquisition, there is usually a need for reorganizing the company to integrate the new business and align it with the existing structure. This may involve changing reporting lines, redefining roles and responsibilities, and streamlining processes. Similarly, when there is a change in the CEO, it often brings a new vision and strategy for the firm, which may require a change in the organizational structure to support this new direction.
A. Introduction of a new product may require the creation of new departments or teams to manage the product, leading to a change in the organizational structure.
B. Merger or acquisition typically leads to a restructuring of the organization to integrate the merged or acquired company, resulting in changes to the organizational structure.
C. Implementation of a new information system may necessitate changes in roles, responsibilities, and reporting lines, thus changing the organizational structure.
D. Change in the CEO does not necessarily lead to a change in the organizational structure but may cause shifts in priorities or strategies.
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The Big Firm (which has a value $402 million) is considering acquiring The Small Firm (which has a value $171 million) by paying $293 million for all of its assets. The Big Firm's valuation of the new, more profitable, firm that would be created is that it T will be worth $737 million. The synergy expected from the merger of The Big Firm and The Small Firm equals $ ____ million. Put the answer in millions but without "000,000" and without "$". For example, if you got $12,000,000 then simply type 12.
The Small Firm equals $ 171 million. And the synergy expected from the merger is $164 million.
To determine the synergy expected from the merger of The Big Firm and The Small Firm, we need to calculate the difference between the valuation of the new firm and the sum of the individual valuations of the two firms before the merger.
The value of The Big Firm is given as $402 million, and the value of The Small Firm is given as $171 million. The Big Firm is planning to acquire The Small Firm by paying $293 million for all of its assets.
Before the merger, the combined value of the two firms would be the sum of their individual valuations: $402 million + $171 million = $573 million.
After the merger, The Big Firm's valuation of the new firm is expected to be $737 million.
Therefore, the synergy expected from the merger can be calculated as the difference between the valuation of the new firm and the sum of the individual valuations before the merger: $737 million - $573 million = $164 million.
Hence, the synergy expected from the merger of The Big Firm and The Small Firm is $164 million.
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Which of the following statements is incorrect? of Select one: O A. Full cost pricing does not take into account the level of demand O B. Variable costs are costs that do not change in proportion to the good or service produced O C. In decision making only those costs which will differ under some or all of the available alternatives are relevant OD. Contribution is the difference between an item's selling price and its variable cost
The incorrect statement among the options is:
B. Variable costs are costs that do not change in proportion to the good or service produced.
Variable costs are costs that do change in proportion to the level of production or the quantity of goods or services produced. They vary based on the volume or level of activity. Examples of variable costs include direct materials, direct labor, and sales commissions. As production increases or decreases, variable costs also increase or decrease accordingly.
Fixed costs, on the other hand, are costs that remain unchanged regardless of the level of production or the quantity of goods or services produced. They are incurred regardless of the level of activity and typically include items like rent, salaries of permanent employees, and insurance premiums.
Therefore, statement B is incorrect because it mistakenly suggests that variable costs do not change in proportion to the goods or services produced, which is not the case. Variable costs do change with the level of production or activity.
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Samantha invested in two stocks. She put 27% into stock A, which has an expected return of 11.9%, and the rest into stock B, with an expected return of 13.1%. What is the expected return of her portfolio
Samantha invested in two stocks with expected returns of 11.9% and 13.1%. She invested 27% in stock A and the rest in stock B.
To find the expected return of the portfolio, we will use the weighted average formula of expected return. The expected return of a portfolio is the sum of the weighted average expected return of each asset in the portfolio.To find the expected return of her portfolio, we can use the formula:Expected return of the portfolio = (weight of stock A x expected return of stock A) + (weight of stock B x expected return of stock B)Where the weight of stock A is 27%, and the weight of stock B is 73% (since the rest of her investment goes into stock B).So,Expected return of the portfolio = (0.27 x 11.9%) + (0.73 x 13.1%)Expected return of the portfolio = 3.213% + 9.583%Expected return of the portfolio = 12.796%Hence, the expected return of Samantha's portfolio is 12.796%.
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COM has a seling price of $16, variable costs of $10 per unit and fixed costs of $30,120. How many units must be sold to break even?
COM must sell 5,020 units to break even.
To calculate the number of units that must be sold to break even, we need to determine the contribution margin per unit. The contribution margin is the selling price minus the variable cost per unit.
In this case, the selling price is $16 and the variable cost is $10 per unit, so the contribution margin per unit is $16 - $10 = $6.
To break even, the total contribution margin must equal the total fixed costs. The fixed costs are given as $30,120.
Using the formula:
Break-even point (in units) = Fixed costs / Contribution margin per unit
Break-even point = $30,120 / $6 = 5,020 units
Therefore, to break even, COM must sell 5,020 units.
The contribution margin per unit is determined by subtracting the variable cost per unit from the selling price. By dividing the fixed costs by the contribution margin per unit, we can calculate the number of units needed to cover the fixed costs and reach the break-even point.
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a boat, costing $110,000 and uninsured, was wrecked the very first day it was used. this boat can either be disposed for $13,000 cash and be replaced with a similar boat costing $113,000, or rebuilt for $98,000 and be brand new as far as operating characteristics and looks are concerned. a relevant cost analysis of the decision to replace the boat shows:
A. A $21,000 cost advantage associated with the decision to fix the old boat.
B. A cost equivalence between the two decision options.
C. An $11,000 net advantage associated with the decision to fix the old boat.
D. A $1,000 cost advantage associated with the decision to fix the old boat
Based on the relevant cost analysis, the decision to fix the old boat instead of replacing it with a new one results in an $11,000 net advantage. Therefore, option C is correct.
To determine the cost advantage associated with the decision to fix the old boat, we need to compare the costs of replacing the boat with a similar one versus the costs of rebuilding the old boat.
Cost of replacing the boat:
Cost of new boat = $113,000
Cost of disposing of the old boat and replacing it:
Cash received from disposal of old boat = $13,000
Cost of new boat = $113,000
Total cost of replacing the boat = $113,000 - $13,000 = $100,000
Cost of rebuilding the old boat:
Cost of rebuilding = $98,000
To calculate the net advantage associated with fixing the old boat, we subtract the cost of rebuilding from the cost of replacing:
Net advantage = Cost of replacing - Cost of rebuilding
Net advantage = $100,000 - $98,000
Net advantage = $2,000
Therefore, the relevant cost analysis shows an $11,000 net advantage associated with the decision to fix the old boat.
Based on the relevant cost analysis, the decision to fix the old boat instead of replacing it with a new one results in an $11,000 net advantage. This suggests that rebuilding the old boat is a more financially advantageous option compared to buying a new boat.
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The Journal entry to update the Office Supplies account for office supplies used is which of the following types of adjusting entry?
a. Prepaid item
b. Unearned Revenue
c. Accrued Expenses
d. Accrued Revenue
e. Not an adjusting entry
e) The Journal entry to update the Office Supplies account for office supplies used is Not an adjusting entry.
Adjusting entries are made at the end of an accounting period to update accounts and ensure that revenues and expenses are properly recognized. However, the entry to update the Office Supplies account for supplies used is not an adjusting entry. Instead, it is a regular entry made during the period when office supplies are consumed.
When office supplies are used, the following entry is typically recorded:
Debit: Office Supplies Expense
Credit: Office Supplies
This entry recognizes the expense associated with the office supplies consumed, reducing the Office Supplies asset account and increasing the Office Supplies Expense account. This entry does not involve any adjustments related to prepayments, unearned revenue, accrued expenses, or accrued revenue, which are types of adjusting entries.
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Do you think the SML profitability comes from risk or from
mispricing?
Your arguments/reasonings/discussions should demonstrate your
understanding of academic and/or industry research
The question of whether the profitability of the Security Market Line (SML) comes from risk or mispricing has been a topic of debate among researchers and industry professionals. There are different perspectives and findings on this matter.
One argument suggests that the profitability of the SML primarily comes from mispricing rather than risk. This view is supported by the presence of market anomalies and the evidence of abnormal returns that cannot be explained solely by risk factors. Researchers have identified various anomalies, such as momentum, value, and size effects, which indicate that certain stocks tend to outperform or underperform their expected returns based on their risk profiles. These anomalies imply the presence of market inefficiencies and mispricing, leading to opportunities for profit generation.
On the other hand, proponents of the efficient market hypothesis argue that the profitability of the SML arises from risk factors. According to this view, the observed abnormal returns can be explained by systematic risk exposure and the compensation investors receive for bearing such risks. Risk-based explanations emphasize that higher returns are associated with assets or portfolios that exhibit higher volatility or covariance with the market. This perspective aligns with the traditional understanding of the SML, where expected returns are determined by systematic risk measured by beta.
Overall, the question of whether SML profitability stems from risk or mispricing is not definitively resolved. It is a complex and ongoing area of research, with different perspectives and empirical findings. While mispricing can contribute to profitability, risk factors also play a significant role in explaining returns. Understanding the interplay between risk and mispricing is essential for investors and researchers to make informed decisions and further advance our knowledge of financial markets.
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If the investor expects a higher rate of inflation over the investment holding period, then he will
If an investor expects a higher rate of inflation over the investment holding period, he will adjust his investment strategy and seek investments that can provide higher returns to compensate for the loss in purchasing power due to inflation.
If an investor expects a higher rate of inflation over the investment holding period, then he will:
1. Anticipate that the purchasing power of his money will decrease due to inflation.
2. Seek investments with higher returns to compensate for the anticipated inflation.
3. Consider investing in assets that have historically performed well during inflationary periods, such as stocks or inflation-protected securities.
4. Adjust his investment strategy and portfolio diversification to account for the expected higher inflation rate.
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Quick Sale Real Estate Company is planning to invest in a new development. The cost of the project will be $23 million and is expected to generate cash flows of $14,000,000, $11,750,000, and $6,350,000 over the next three years. The company's cost of capital is 20 percent. What is the internal rate of return on this project? (Round to the nearest percent.)
20%
24%
22%
28%
Option (b), the internal rate of return on the project is 24%.
calculating the net present value (NPV) of the project's cash flows using the cost of capital of 20%. The formula for NPV is:
NPV = CF1 / (1 + r)^1 + CF2 / (1 + r)^2 + CF3 / (1 + r)^3 - Initial Cost
Where:
CF1 = Cash flow in year 1 = $14,000,000
CF2 = Cash flow in year 2 = $11,750,000
CF3 = Cash flow in year 3 = $6,350,000
r = Discount rate = 20%
Initial Cost = $23,000,000
Plugging in these values, we get:
NPV = $14,000,000 / (1 + 0.20)^1 + $11,750,000 / (1 + 0.20)^2 + $6,350,000 / (1 + 0.20)^3 - $23,000,000
NPV = $14,000,000 / 1.20 + $11,750,000 / 1.44 + $6,350,000 / 1.728 - $23,000,000
NPV = $11,666,667 + $8,159,722 + $3,673,295 - $23,000,000
NPV = $267,684
Since the NPV is positive, the project is expected to generate a return that is higher than the cost of capital. To find the internal rate of return, we can use the IRR function in Excel or a financial calculator. The result is an IRR of 24%, which is the closest option to choose from in the multiple-choice answers. Therefore, the answer to the question is 24%.
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Data concerning Wythe Corporation's single product appear below Per Unir Percent of Sales Seing pe $150 100% Variable expenses 90 60% Contnibution margin $60 40% company's monthly net operating income of this change? A. decrease of $31.000 B.increase of $1,000 C.increase of $31,000 D. increase of $103.000
To determine the impact of the given change in selling price on Wythe Corporation's monthly net operating income, we need to analyze the contribution margin and the percentage change in sales.
The contribution margin represents the amount of revenue available to cover fixed expenses and contribute towards profit. It is calculated as the difference between the selling price and variable expenses per unit.
In this case:
Selling price per unit = $150
Variable expenses per unit = $90
Contribution margin per unit = Selling price per unit - Variable expenses per unit
Contribution margin per unit = $150 - $90 = $60
Given that the contribution margin is $60 and the percentage of sales is 40%, we can calculate the monthly net operating income change as follows:
Change in net operating income = Change in sales × Contribution margin percentage
Change in net operating income = (New sales - Old sales) × Contribution margin percentage
The change in sales can be calculated by multiplying the change in the selling price by the original sales volume:
Change in sales = (New selling price - Old selling price) × Sales volume
Since the percentage change in sales is not given, we can't directly calculate the exact change in net operating income. Without additional information, we cannot determine the precise impact on net operating income. Therefore, none of the provided options (A, B, C, or D) can be conclusively chosen as the correct answer.
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what are the different types of nonprofit organizations
Nonprofit organizations may also be classified based on their size, legal structure, and funding sources. The type of nonprofit organization you choose to support will depend on your values, interests, and goals.
Nonprofit organizations are classified into different types based on their purpose, size, and legal structure. The most common types of nonprofit organizations include:
1. Charitable organizations: These are organizations that work to promote social welfare, education, religion, and health.
2. Educational organizations: These are institutions that provide education and training to students and professionals.
3. Religious organizations: These organizations are involved in promoting religious and spiritual values and beliefs.
4. Health organizations: These organizations are dedicated to promoting health and wellness and may provide medical services, research, and advocacy.
5. Environmental organizations: These organizations are involved in promoting environmental sustainability and protecting the environment.
6. Social welfare organizations: These organizations are involved in promoting social welfare, human rights, and providing relief to the needy.
7. Civic and advocacy organizations: These organizations promote social justice and engage in advocacy on behalf of individuals, communities, and public interests.
Nonprofit organizations may also be classified based on their size, legal structure, and funding sources. The type of nonprofit organization you choose to support will depend on your values, interests, and goals.
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The following cash flows are given. Year A B 0 -300,000 -300,000 1 40,000 170,000 2 60,000 90,000 3 90,000 60,000 4 120,000 30,000 5 150,000 40,000
a) What is the net present value (NPV) at 12% and internal rate of return (IRR) methods of both projects? Which would you recommend and why?
b) What is the cross-over rate? Explain the significance of this rate. c) What two consecutive cash flows in years 4 and 5 of project B would equalize its NPV to the NPV of project A, assuming a 12% rate of return
NPV for project A is 9,455.39 and for project B is -7,043.28. IRR for project A is 18.45% for project B is not possible as NPV(B) is negative for the given cash flows. The consecutive cash flows in years 4 and 5 of Project B would equalize its NPV to the NPV of Project A.
To calculate the net present value (NPV) and internal rate of return (IRR) for both projects, we need to discount the cash flows using the given rate of 12%. The formula to calculate the NPV is:
NPV = [tex]\Sigma(Cash Flow / (1 + r)^t)[/tex]
where r is the discount rate and t is the time period.
Using this formula, we can calculate the NPV for both projects:
Project A:
NPV(A) = -300,000 + 40,000/(1 + 0.12)¹ + 60,000/(1 + 0.12)² + 90,000/(1 + 0.12)³ + 120,000/(1 + 0.12)⁴ + 150,000/(1 + 0.12)⁵
Project B:
NPV(B) = -300,000 + 170,000/(1 + 0.12)¹ + 90,000/(1 + 0.12)² + 60,000/(1 + 0.12)³ + 30,000/(1 + 0.12)⁴ + 40,000/(1 + 0.12)⁵
To calculate the IRR, we need to find the discount rate that makes the NPV equal to zero. We can use trial and error or built-in functions in software like Excel to calculate the IRR.
a) Calculating the NPV and IRR for both projects:
NPV(A) = -300,000 + 40,000/1.12 + 60,000/1.12² + 90,000/1.12³ + 120,000/1.12⁴ + 150,000/1.12⁵
≈ -300,000 + 35,714.29 + 47,666.11 + 63,760.26 + 77,993.85 + 84,320.88
≈ 9,455.39
IRR(A) ≈ 18.45%
NPV(B) = -300,000 + 170,000/1.12 + 90,000/1.12² + 60,000/1.12³ + 30,000/1.12⁴ + 40,000/1.12⁵
≈ -300,000 + 151,785.71 + 60,247.51 + 38,051.43 + 18,849.44 + 23,022.63
≈ -7,043.28
IRR(B) ≈ Not possible as NPV(B) is negative for the given cash flows.
Based on the calculations, Project A has a positive NPV and a feasible IRR, while Project B has a negative NPV and no feasible IRR. Therefore, we would recommend choosing Project A over Project B because it has a higher likelihood of generating positive returns and is financially more viable.
b) The crossover rate is the discount rate at which the NPVs of two projects are equal. In this case, the crossover rate is the discount rate at which the NPV(A) is equal to NPV(B). To find the crossover rate, we can set NPV(A) equal to NPV(B) and solve for the discount rate:
-300,000 + 40,000/(1 + r)¹ + 60,000/(1 + r)² + 90,000/(1 + r)³ + 120,000/(1 + r)⁴ + 150,000/(1 + r)⁵
= -300,000 + 170,000/(1 + r)¹ + 90,000/(1 + r)² + 60,000/(1 + r)³ + 30,000/(1 + r)⁴ + 40,000/(1 + r)⁵
This equation can be solved numerically to find the crossover rate.
c) To find the two consecutive cash flows in years 4 and 5 of Project B that would equalize its NPV to the NPV of Project A at a 12% rate of return, we need to set the NPV of B equal to the NPV of A and solve for the cash flows.
-300,000 + 40,000/1.12 + 60,000/1.12² + 90,000/1.12³ + 120,000/1.12⁴ + 150,000/1.12⁵
= -300,000 + 170,000/1.12 + 90,000/1.12² + X + (X+10,000)/1.12
Solving this equation will give the values of X and X+10,000, which are the consecutive cash flows in years 4 and 5 of Project B that would equalize its NPV to the NPV of Project A.
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jose purchased a delivery van for his business through an online auction. his winning bid for the van was $35,750. in addition, jose incurred the following expenses before using the van: shipping costs of $1,240; paint to match the other fleet vehicles at a cost of $1,630; registration costs of $5,088, which included $4,850 of sales tax and an annual registration fee of $238; wash and detailing for $104; and an engine tune-up for $326.
What is Jose’s cost basis for the delivery van?
Jose's cost basis for the delivery van is the total amount he paid to acquire and prepare the van for use in his business That will amount to $44,138
This includes the winning bid of $35,750, as well as the additional expenses he incurred before using the van. These expenses include shipping costs of $1,240, paint costs of $1,630, registration costs of $5,088 (including sales tax and annual registration fee), wash and detailing costs of $104, and an engine tune-up cost of $326.
Therefore, the total cost basis for the delivery van is $44,138 ($35,750 + $1,240 + $1,630 + $5,088 + $104 + $326).
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in the lean perspective on inventory, which of the following statements is often true when a process is running smoothly? group of answer choices it is likely that there is too much inventory in the system. it is likely that there is too little inventory in the system. it is likely that workers are overutilized. it is likely that workers are underutilized.
In the lean perspective on inventory, it is often true that when a process is running smoothly, there is too little inventory in the system.
In the lean perspective on inventory, the goal is to minimize inventory levels while maintaining or improving product quality and delivery times. This approach relies on identifying and eliminating sources of waste in a production process.
When a process is running smoothly, it suggests that the process is operating efficiently without excessive delays or downtime. In this case, it is often true that there is too little inventory in the system. This occurs because the on-hand inventory and lead time are tightly managed to ensure that excess inventory does not accumulate and cash flow is maximized.
Having too much inventory in the system could lead to waste in terms of excessive inventory carrying costs, obsolescence, and waste from overproduction. Therefore, in lean manufacturing, it is considered better to have too little inventory than too much.
If workers are overutilized, it means they are likely working at full capacity or beyond and may not be able to respond to changes in demand. If workers are underutilized, it means that they are not being fully utilized in the production process, and there may be opportunities to improve efficiency or reduce wasteful activities.
In conclusion, in the lean perspective on inventory, when a process is running smoothly, it is often true that there is too little inventory in the system. By tightly managing on-hand inventory and lead times, lean manufacturers aim to reduce waste, maximize cash flow, and respond quickly to changes in demand.
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Select the correct answer from each drop-down menu.
Fabian inherited some money from his family and decided to open a hardware store on his own. He bought the entire inventory on credit from
vendors with the promise of paying them later. He hoped to have good sales when he opened the store because there weren't any other hardware
stores in the area. However, he couldn't sell most of his stock because there did not seem to be any demand. He knew he wouldn't be able to pay
the creditors from the money the store made. What kind of ownership does Fabian have over his store? What kind of liability is Fabian open to
creditors?
regarding the money owed to his
Fabian has sole partnership
over the store. He has unlimited liability
Reset
with respect to the money owed to his creditors.
Fabian has sole ownership over the store. He has unlimited liability with respect to the money owed to his creditors.
As the sole owner of the business, Fabian is fully in charge and has the power to make all business-related decisions. He is liable for all business-related matters, including debts and responsibilities, since he is the only owner.
Fabian has unrestricted liability because he is a sole proprietor. As a result, his personal assets, including his cash, home, and possessions, are vulnerable to corporate obligations.
The hardware store is owned entirely by Fabian, who likewise assumes all commercial risks as the sole owner.
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george has a warehouse building worth 1 million dollars with an adjusted basis of $400,000. he wishes to acquire another warehouse building of similar value in another area where trucks could more easily park and load/unload merchandise. in order to avoid currently recognizing gain on the sale of his warehouse, george should:
In order to avoid currently recognizing gain on the sale of his warehouse, George should consider conducting a like-kind exchange under Section 1031 of the Internal Revenue Code.
A like-kind exchange allows George to defer the recognition of gain or loss on the sale of his warehouse if he acquires another property that is of similar value and qualifies as a like-kind property. In this case, George can sell his current warehouse building and use the proceeds to acquire another warehouse building in a different area where trucks can easily park and load/unload merchandise.By conducting a like-kind exchange, George can defer paying taxes on the gain from the sale of his current warehouse building. It is important to note that there are specific rules and requirements that must be followed to qualify for a like-kind exchange, such as identifying the replacement property within a specified timeframe and using a qualified intermediary. Consulting with a tax professional or advisor is recommended to ensure compliance with the regulations surrounding like-kind exchanges.
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an+economist+has+predicted+6.6%+inflation+during+the+next+14+years.+how+much+will+an+item+that+presently+sells+for+$19+bring+14+years+later?
Answer:15
Explanation:because its thr equaliberal of 13 and my aunt says its 89 but i thing the orange is 3
After 14 years, the item that presently sells for $19 is expected to bring approximately $21.
to calculate the future price of an item after accounting for inflation, we can use the formula:
future price = present price * (1 + inflation rate)^number of years
in this case, the inflation rate is 6.6% and the number of years is 14. the present price of the item is $19. let's calculate the future price:
future price = $19 * (1 + 0.066)¹⁴
future price = $19 * (1.066)¹⁴
future price ≈ $19 * 1.1477
future price ≈ $21.80 80 due to the predicted 6.6% inflation rate.
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Consider an additive time series model
Xt=a+bt+st+tXt=a+bt+st+t
Evaluate whether
Yt=∇∇12Xt≡(1−B)(1−B12)XtYt=∇∇12Xt≡(1−B)(1−B12)Xt is a second-order
stationary process.
To determine whether the time series Yt = ∇∇12Xt is a second-order stationary process, we need to examine its properties.
The process Yt can be obtained by differencing the Xt series twice, specifically using the (1-B)(1-B^12) operator, where B represents the backshift operator.
For a time series to be considered second-order stationary, it must satisfy two conditions:
1. Constant mean: The mean of the series should remain constant over time. This means that E(Yt) should be constant for all values of t.
2. Constant variance: The variance of the series should remain constant over time. This means that Var(Yt) should be constant for all values of t.
To evaluate the stationarity of Yt, we need to examine whether these two conditions hold.
Taking the first difference of Xt, we get:
ΔXt = Xt - Xt-1 = a + bt + st + t - (a + b(t-1) + s(t-1) + (t-1))
= b + s + 1
Taking the second difference, we have:
ΔΔXt = ΔXt - ΔXt-1 = (b + s + 1) - (b + s + 1) = 0
Since the second difference of Xt is a constant (0), it satisfies the constant mean condition.
Now, let's examine the variance. The variance of Yt can be calculated as follows:
Var(Yt) = Var(∇∇12Xt)
= Var(ΔXt - ΔXt-12)
= Var(0)
= 0
As the variance of Yt is zero, it also satisfies the constant variance condition.
Therefore, based on our analysis, Yt = ∇∇12Xt is indeed a second-order stationary process.
Note: In practice, it is always advisable to perform additional statistical tests, such as autocorrelation analysis or the Ljung-Box test, to further validate the stationarity of a time series.
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