BUSINESS COLLEGE

Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company’s planning budget for May appears below: Puget Sound Divers Planning Budget For the Month Ended May 31
Budgeted diving-hours (q) 350
Revenue ($420.00q) $ 147,000
Expenses:
Wages and salaries ($11,500 $130.00q) 57,000
Supplies ($4.00q) 1,400
Equipment rental ($2,200 $25.00q) 10,950
Insurance ($3,900) 3,900
Miscellaneous ($510 $1.44q) 1,014
Total expense 74,264
Net operating income $ 72,736
Required:
During May, the company’s actual activity was 340 diving-hours. Compute the flexible budget of activity.

Answers

Answer 1

Answer:

Answer:

operating income 84740.4

Explanation:

The flexible budget will work out the numbers for a level of activity of 340 units

Revenue $420 x 340 = 142,800

Wages and salaries $11,500 fixed component + $130 x 340 = 55,700

Supplies $4.00 x 340 = 1,360

Insurnace (fixed) $3,900

Miscellaneous $510 fixed component + $1.44 x 340 = 999,6

Operating Income:

Revenues 142,800

total expenses (58,059.6)

operating income 84740.4

Related Questions

Vilas Company is considering a capital investment of $183,600 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $10,557 and $51,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment.Required:a. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)b. Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 10.52%)c. Using the discounted cash flow technique, compute the net present value.
Each of the following quality control policies and procedures is typical of ones that can be found in public accounting firms’ systems of quality control. Identify each of them with one of the six elements of quality control identified by SQCS 8. Assign management responsibilities in such a manner that commercial considerations do not override the quality of work performed. Establish policies and procedures for resolving differences of opinion among firm personnel that arise during professional engagements. Develop policies and procedures to ensure that professionals are provided appropriate professional development opportunities. Review engagement documentation, reports, and the client’s financial statements. Develop effective performance evaluation, compensation, and advancement procedures. Identify circumstances and relationships that create threats to independence and take appropriate action to eliminate those threats or reduce them to an acceptable level. Identify whether the firm possesses the competency, capability, and resources to appropriately serve a specific client. Devote sufficient resources to develop, communicate, and support the firm’s quality control procedures. Retain engagement documentation for a sufficient period of time to satisfy the needs of the firm, professional standards, laws, and regulations.
What is the present value of a $500 payment received at the end of each of the next five years, worth to you today at the appropriate discount rate of 6 percent? $1,105 $1,850 $2,106 $2,778
A number of activities that are a part of a company's quality control system are listed below: a. Product testing.b. Product recalls. c. Rework labor and overhead. d. Quality circles. e. Downtime caused by defects. f. Cost of field servicing. g. Inspection of goods. h. Quality engineering. i. Warranty repairs. j. Statistical process control. k. Net cost of scrap. I. Depreciation of test equipment. m. Returns and allowances arising from poor quality. n. Disposal of defective products. o. Technical support to suppliers. p. Systems development. q. Warranty replacements. r. Field testing at customer site. s. Product design. Required: 1. Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. 2. Which of the four types of costs in (1) above are incurred in an effort to keep poor quality of conformance from occurring? Which of the four types or costs in (1) above are incurred because poor quality of conformance has occurred?
Refer to exhibit 5-5. If the airline charges a price that is between P1 and P2 for both aisle seats and middle seats, the result will beA. a surplus of middle seats and a shortage of aisle seatsB. a surplus of aisle seats and a shortage of middle seatsC. a shortage of middle seats and the equilibrium quantity of aisle seatsD. a shortage of aisle seats and the equilibrium quantity of middle seats

Demonstrate your knowledge of a depreciation adjusting entry by completing the following sentence. A depreciation adjustment would include a debit to _________(depreciation expense/accumulated depreciation/building) and _________(debit/credit) to ____________(depreciation expense/accumulated depreciation/building).

Answers

Answer:

1. Depreciation Expense 2.Credit 3. Accumulated Depreciation

Explanation:

Depreciation is an expense. An increase in expense is always recorded as Debit.

Accumulated Depreciation is an allowance or reserve account which is credited till the time asset is in use.

Trade Mart has recently had lackluster sales. The rate of inventory turnover has? dropped, and the merchandise is gathering dust. At the same time, competition has forced AquariumAquarium's suppliers to lower the prices that Aquarium will pay when it replaces its inventory. It is now December 31, 2016, and the current replacement cost Aquarium's ending inventory is $75,000 below what Aquarium actually paid for the goods, which was $200,000.Before any adjustments at the end of the? period, the Cost of Goods Sold account has a balance of $$820,000.
Requirements:
a. What accounting action should Aquarium take in this situation?
b. Give any journal entry required.
c. At what amount should Aquarium report Inventory on the balance? sheet?
d. At what amount should the company report Cost of Goods Sold on the income? statement?
e. Discuss the accounting principle or concept that is most relevant to this situation.

Answers

Answer:

a. What accounting action should Aquarium take in this situation?

the balance of inventory account should decrease to match the replacement cost.

b. Give any journal entry required.

Dr Cost of goods sold 75,000

Cr Inventory 75,000

c. At what amount should Aquarium report Inventory on the balance? sheet?

Inventory = $200,000 - $75,000 = $125,000

d. At what amount should the company report Cost of Goods Sold on the income statement?

Cost of goods sold = $820,000 + $75,000 = $895,000

e. Discuss the accounting principle or concept that is most relevant to this situation.

US GAAP states that companies must use the lower of cost or market rule, which means that inventory must be recognized at the lowest cost either original purchase cost or market value.

A bond was issued three years ago at a price of $1,050 with a maturity of six years, a yield-to-maturity (YTM) of 6.50% compounded semi-annually, and a face value of $1,000 with semi-annualy coupons. What is the price of this bond today immediately after the receipt of today's coupon if the YTM has risen to 7.75% compounded semi-annually

Answers

Answer:

$967.20

Explanation:

the YTM formula = {coupon + [(face value - present value)/time]} / [(face value + present value)/2]

to determine the coupon rate we fill the equation with the known factors:

0.065 = {coupon + [(1,000 - 1,050)/12]} / [(1,000 + 1,050)/2]

0.065 = (coupon - 41.67) / 1,025

66.625 = coupon - 4.167

coupon = 66.625 + 4.167 = $70.792

three years later, the YTM = 7.5%, what is the PV? Again we use the YTM formula:

0.0775 = {70.792 + [(1,000 - x)/6]} / [(1,000 + x)/2]

0.0775(500 + 0.5x) = 70.792 + 166.67 - 0.1667x

38.75 + 0.03875x = 237.462 - 0.1667x

0.20545x = 198.712

x = 198.712 / .20545

x = $967.20

A company is considering the purchase of new equipment for $69,000. The projected annual net cash flows are $27,800. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 9% return on investment. The present value of an annuity of $1 for various periods follows: Period Present value of an annuity of $1 at 9% 1 0.9174 2 1.7591 3 2.5313 What is the net present value of this machine assuming all cash flows occur at year-end?

Answers

Answer:

The correct answer is $1,370

Explanation:

The computation of net present value is shown below:-

For computing the net present value first we need to find out the present value of inflow

Present Value of Inflow of 3 Years at 9% = Net cash flow × Number of years

= $27,800 × 2.5313

= $70,370

Net Present Value = Present value of inflow - Initial Outflow

= $70,370 - $69,000

= $1,370

Therefore for computing the net present value we simply deduct the initial outflow from present value of inflow.

CoffeeStop primarily sells coffee. It recently introduced a premium coffee-flavored liquor (BF Liquors). Suppose the firm faces a tax rate of 40 % and collects the following information. If it plans to finance 12 % of the new liquor-focused division with debt and the rest with equity, what WACC should it use for its liquor division? Assume a cost of debt of 5.4 %, a risk-free rate of 3.5 %, and a market risk premium of 6.9 %.

Answers

Answer:

Risk-free rate = 3.5%

Market risk-premium = 6.9%

Cost of equity (Ke) = ?

Ke = Rf +β(Rm - Rf)

Ke = Rf + Market risk premium

Ke = 3.5 + 6.9

Ke = 10.4%

Cost of debt (Kd) = 5.4%

Market value of debt (D) = 12

Market value of equity (E) = 88

Market value of the company (V) = 100

WACC = Ke(E/) + Kd(D/V)(1-T)

WACC = 10.4(88/100) + 5.4(12/100)(1-0.40)

WACC = 9.152 + 0.3888

WACC = 9.54%

Explanation:

In this case, there is need to calculate cost of equity according to capital asset pricing model, which is risk-free rate plus market risk-premium.

Then, we will calculate the weighted average cost of capital, which equals cost of equity multiplied by the proportion of equity in the capital structure plus after-tax cost of debt multiplied by the proportion of debt in the capital structure. Since the proportion of debt in the capital structure is 12%(12/100), the proportion of equity will be 88%(88/100).

At the beginning of the year, a firm has current assets of $328 and current liabilities of $232. At the end of the year, the current assets are $493 and the current liabilities are $272. What is the change in net working capital?