Which of the following is not a concern in using ratio analysis?a. We don't know an 'optimal' value for ratios..b. We cannot find adequate industry averages.c. There may be accounting differences.d. Ratios do not give us answers to how to 'fix' an organization.e. All of the above are concerns.
Answers
Answer:
b. We cannot find adequate industry averages
Explanation:
- Ratio analysis is a process for determining also to interpret the relationship between the items of financial statements. It aims to provide a meaningful understanding of the position of the organization.
- There are five basic types of ratios as the profitability, the liquidity, the activity, debt, and market thus its use for an intra and inter-firm comparison, useful in locating weaker areas, helpful in addressing the operating efficiency and simplifies accounting data.
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In evaluating different market segments, the firm must look at two factors: the segment's overall attractiveness and the ________.
4. Problems and Applications Q4 Identify which of the arguments for restricting trade that each of the following rebuttals directs against. Rebuttals The Jobs Argument The National-Security Argument The Infant-Industry Argument The Unfair-Competition Argument The Protection-as-a-Bargaining-Chip Argument (A) The gains of the consumers from buying imports at the low price subsidized by foreign governments would exceed the losses of domestic producers. (B) Companies may exaggerate the degree to which their products are essential to national defense in order to obtain protection from foreign competition at the expense of consumers. (C) The country may be forced into deciding between implementing trade restrictions as threatened, which would make the society as a whole worse off, or backing down on its own threat, which would cause it to lose credibility in foreign affairs. (D) Opening up to free trade may impose hardship on some workers in the short run, but it also creates jobs in industries in which the country has a comparative advantage and enables the country as a whole to enjoy a higher standard of living.
McCoy Brothers manufactures and sells two products, A and Z in the ratio of 5:2. Product A sells for $75; Z sells for $95. Variable costs for product A are $35; for Z $40. Fixed costs are $418,500. Compute the contribution margin per composite unit
Answers
Answer:
Option B) 3 or 4; 2 or fewer
Explanation:
A high quality factor will not meet 3 or 4 and low quality factor will not meet 1 or 0 so option A, C and D are incorrect.
The correct option is B. 3 or 4; 2 or fewer as a high quality factor will meet three or four of the AQCD criteria; a low quality factor will meet two or fewer of the AQCD critieria.
Accounts receivable $3,360 Accrued liabilities 5,040
Inventories 6,720
Current assets 11,760 Current liabilities 8,400
Long-tem liabilities 6,720
PPE, net 16,800 Stockholders' equity 13,440
Total liabilities & equity $28,560 Total assets $28,560
Parts A and B are independent of each other.
A. Provide the journal entry if the investor pays cash and purchases the assets and assumes the liabilities of the investee company.
B. Provide the journal entry if the investor pays cash and purchases all of the stock of the investee's shareholders.
Answers
Answer and Explanation:
The Journal entries are shown below:-
A. Cash Dr, $1,680
Accounts receivable Dr, $3,360
Inventories Dr, $6,720
PPE, net Dr, $16,800
To Accounts payable $3,360
To Accrued liabilities $5,040
To Long-term liabilities $6,720
To Cash $13,440
(Being purchase of the assets and assumption of the liabilities is recorded)
B. Equity investment Dr, $13,440
To Cash $13,440
(Being purchase of the assets and assumption of the liabilities is recorded)
Cost of Direct Labor wages: $37,500
Variable Manufacturing Overhead: $25,000
Fixed Manufacturing Overhead: $125,000
Total units produced: 10,000
Under absorption costing what was the per-unit cost of the units produced?
a. None of the above
b. $23.75
c. $12.50
d. $11.25
e. $8.75
Answers
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Cost of Direct Materials used in production: $50,000
Cost of Direct Labor wages: $37,500
Variable Manufacturing Overhead: $25,000
Fixed Manufacturing Overhead: $125,000
Total units produced: 10,000
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
First, we need to calculate the total cost:
Total cost= 50,000 + 37,500 + 25,000 + 125,000
Total cost= $237,500
Now, the unitary cost:
Unitary cost= 237,500/10,000= $23.75
Answers
Answer:
The amount that could be justified now for the purchase of this piece of equipment is $73,747.41.
Explanation:
Note: This question is not complete as all the data in it are omitted. A complete question is therefore provided before answering the question as follows:
It is estimated that a certain piece of equipment can save $22,000 per year in labor and materials cost. The equipment has an expected life of five years and no market value. If the company must earn a 15% annual return on such investments, how much could be justified now for the purchase of this piece of equipment?
The explanation to the answer is now given as follows:
To calculate this, the formula for calculating the present value of an ordinary annuity is used as follows:
PV = P * [{1 - [1 / (1 + r)]^n} / r] …………………………………. (1)
Where;
PV = Present value of the amount to justify the equipment purchase = ?
P = yearly savings in labor and materials costs = $22,000
r = annual return rate = 15% = 0.15
n = Equipment has an expected life = 5
Substitute the values into equation (1) to have:
PV = $22,000 * [{1 - [1 / (1 + 0.15)]^5} / 0.15]
PV = $22,000 * [{1 - [1 / 1.15]^5} / 0.15]
PV = $22,000 * [{1 - 0.869565217391304^5} / 0.15]
PV = $22,000 * [{1 - 0.497176735298289} / 0.15]
PV = $22,000 * [0.502823264701711 / 0.15]
PV = $22,000 * 3.35215509801141
PV = $73,747.41
Therefore, the amount that could be justified now for the purchase of this piece of equipment is $73,747.41.
Final answer:
The question asks about the amount a company can justify spending on equipment, based on expected savings and a required rate of return. This requires understanding the concept of Present Value in financial calculations, using the formula PV = CF / (1 + r.
Explanation:
The problem is related to the concept of Present Value in finance. Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return. In this scenario, the stream of cash flows is the annual savings in labor and materials costs due to the equipment. The return rate is the annual return the company requires on such investments.
To calculate the present value, use the formula:
PV = CF / (1 + r
Where:
PV is the Present Value
CF is the annual savings (Cash flow)
r is the annual return rate
n is the expected life of the equipment.
Plug in the given values into this formula to get the amount the company could justify for the purchase of this equipment. Do remember, the rate (r) is expressed in decimal, so if the annual return is say, 5%, use 0.05 in the formula.
Learn more about present value here:
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Answers
Answer:
Variable per hour is $7
total variable costs for 700 hours=$4900
Fixed costs is $600
Explanation:
Under the high-low method,variable cost formula is as stated below
variable cost=highest maintenance cost-lowest maintenance/machine hours at highest maintenance cost-machine hours at the lowest maintenance cost
highest maintenance cost is $5500
lowest maintenance is $2700
machine hours at highest maintenance cost is 700 hours
machine hours at lowest maintenance cost is 300 hours
variable cost=($5500-$2700)/(700-300)
variable cost=$7
Fixed cost=total cost-total variable cost
total variable cost for 700 hours =$7*700=$4,900
Fixed cost=$5,500-$4900
fixed cost=$600
b. Ms. Eaton comes up with a new plan to cut fixed costs to $210,000. However, more labor will now be required, which will increase variable costs per unit to $40. The sales price will remain at $68. What is the new break-even point?
c. . Under the new plan, what is likely to happen to profitability at very high volume levels (compared to the old plan)?
a. Profitability will be less
b. Profitability will be more
Answers
Answer:
a. $584,800
b. $510,000
c. Profitability will be more
Explanation:
a.
Contribution Margin = Selling price - variable cost = $68 - $37 = $31
The break-even point is the level of sales at which the business incur no profit no loss.Fixed and variable costs are covered at this level of sales. Use following formula of break-even to calculate the fixed cost.
Break-even point = Fixed cost / Contribution margin ratio
Break-even point = $266,600 / ($31 / $68) = $584,800
b.
Contribution Margin = Selling price - variable cost = $68 - $40 = $28
Break-even point = Fixed cost / Contribution margin ratio
Break-even point = $210,000 / ($28 / $68) = $510,000
c.
As the break-even point is decreases it means the cost of associated with the product is decreased because the selling price remains constant. Although there is an increase in the variable cost but reduction in fixed cost has more effect than increase in variable cost.