Garfield Industries is expanding its operations throughout the Southeast United States. Garfield anticipates that the expansion will increase sales by $1,000,000, and increase the costs of goods sold by $700,000. Depreciation expenses will rise by $50,000 and interest expense will increase by $150,000. The company’s tax rate will remain at 40 percent. If the company’s forecast is correct, how much will net income increase or decrease, as a result of the expansion?
Answers
Answer:
$60,000 increase
Explanation:
The company's additional earnings before interest and taxes (EBIT) are subjected to a 40% tax rate. The company's EBIT is:
The change in income is determined as the EBIT minus taxes and interest expense:
Therefore, Garfield Industries experienced a $60,000 increase in its income as a result of the expansion.
Final answer:
The net income will increase by $100,000 as a result of the expansion.
Explanation:
To calculate the net income increase or decrease, you need to subtract the increased costs of goods sold, depreciation expenses, and interest expense from the increased sales. The tax rate of 40 percent should be applied to the resulting amount to calculate the net income. So, the net income increase or decrease can be calculated as follows:
- Increased sales: $1,000,000
- Increased costs of goods sold: $700,000
- Depreciation expenses increase: $50,000
- Interest expense increase: $150,000
Net income increase or decrease = (Increased sales - Increased costs of goods sold - Depreciation expenses increase - Interest expense increase) * Tax rate
= ($1,000,000 - $700,000 - $50,000 - $150,000) * 0.40
= $100,000
Therefore, the net income will increase by $100,000 as a result of the expansion.
Related Questions
Job 607 was recently completed. The following data have been recorded on its job cost sheet:Direct Materials $3,405 Direct Labor Hours 50 labor hoursDirect Labor wage rate $13 per labor hourMachine Hours 158 machine hoursThe company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $14 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 607 would be:
A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $348,400 and direct labor hours would be 47,000. Actual manufacturing overhead costs incurred were $304,000, and actual direct labor hours were 52,400. The journal entry to apply the factory overhead costs for the year would include a
Geographically dispersed work groups no longer pose additional communication challenges given todays technology.a) trueb) false
Faeber Textile Company frequently factors its accounts receivable. During 2019, Faeber made credit sales of $100,000 to customers, under terms of 2/10, n/30. Faeber records its credit sales using gross price. In 2019, Faeber sold $70,000 of these receivables to a factor. The factor remitted 90% of the accounts receivable factored and charged a 12% commission on the gross amount of the factored receivables. The factoring agreement also requires Faeber to be responsible for any cash discounts taken by customers upon payment of the factored receivables. Faeber is charged for these cash discounts upon reimbursement by the factor. During 2019, the factor collected the remaining amount of the factored receivables, minus the 2% discount on 94% of the collected receivables, and returned the balance owed to Faeber. Faeber collected the remaining amount of the unfactored accounts receivable, minus the 2% discount on 96% of the collected receivables. Required: Prepare all the journal entries necessary for Faeber to record the preceding information.
b. $4,866.67
c. $1,958.33
d. $2,433.33
e. $2,700.00
Answers
Answer:
$2,316.67
Explanation:
From the question we know that the asset is depreciated in 3 years
The monthly depreciation expenses before re-determine savage value
= ($64,800-$11,400)/36 = $1,483.33
Because management determine to reduce $5,000 in salvage value (=$11,400-$6,400) just before 6 months ending depreciation period, then we have to allocate $5,000 in next 6 months.
The depreciation expense during the last six months of Year 3 would be:
= current depreciation expense $1,483.33 + $5,000/6
= $2,316.67
Answers
Answer:
Check the explanation
Explanation:
Government needs to fill gap of $64 billions
for economist A
Tax multiplier is 2 so in order to fill a output gap of 64 billions, cut taxes by 64/ 2 = 32 billion
tax have to cut by $32 billions
govt spending multiplier is 8, so spendinh has to increase by 64/8=$8 billions.
for economist B
Tax multipler is 8 so to fill a output gap of 64 billions, cut taxes by 64/ 8= 8 billion
tax have to cut by $8 billions
govt spending multiplier is 4, so spending has to increase by 64/4=$16 billions.
⇒This means that Economist C likely believes that:
- Tax cuts induce investment spending and improve workers incentives.This is because cutting the taxes gives an incentive to the workers to work more.
⇒ A rise in government spending completely crowds out private sector spending, because increased govt spending increases the interest rate, hence private spending is crowded out.
Answers
Final answer:
The question discusses inventory management at Jill's Job Shop. For Tegdiws, a reorder level is calculated based on the annual demand, lead time, and the fact that orders are placed as soon as this level is reached. Widgets are ordered every four weeks, so the ordering quantity is determined considering the holding cost and safety stock.
Explanation:
The question revolves around the concept of inventory management at Jill's Job Shop. Given the figures, we're looking at two factors here- reorder level for Tegdiws and fixed interval time for ordering Widgets. The primary consideration is to minimize holding costs while ensuring enough quantity is available to meet demand throughout the year.
For Tegdiws, the reorder level must be calculated to ensure that when the remaining quantity reaches this level, a new order is placed. This level is typically the amount necessary to meet demand during the lead time. Given an annual demand of 11,000 units, a lead time of 4 weeks, and a 52-week year, the reorder level for Tegdiws would be around 846 units.
On the other hand, Widgets are ordered every four weeks, so the quantity of each order should be calculated to meet the four-week demand while considering the holding cost and safety stock. With an Annual demand of 8,000 units and a 52-week year, the quantity for each order of Widgets would be approximately 615 units.
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Answer:
EOQ = √ 2DCo/H
D = Annual demand
Co = Ordering cost per order
H = Holding cost per item per annum
TEGDIWS
D = 11,000 units
C0 = $110
H = 10% x $15 = $1.5
EOQ = √2 x 11,000 x $110
$1.5
EOQ = 1,270 units
WIDGET
D = 8,000 units
Co = $10
H = 20% x $8 = $1.6
EOQ =√ 2 x 8,000 x $10
$1.6
EOQ = 316 units
Explanation:
EOQ is equal to the square root of 2 multiplied by annual demand and ordering cost divided by holding cost.
Answers
Answer:
Establish metric-based performance measures.
Explanation:
In the given scenario the line managers are not taking corporate objectives into consideration in their decision making.
As a upper-level manager can resolve this by introducing metric based performance measures that will show clearly productivity of the line managers.
The Key Performance Indicators should be tailored to the organisation's objectives.
The line managers that are not performing well according to the KPIs will need to align and perform better in the specific areas.
This is an effective way of disseminating the corporate objectives in the organisation.
Final answer:
To effectively disseminate corporate objectives throughout an organization, holding supervisory manager meetings, establishing metric-based performance measures, and evaluating and increasing manager salaries and benefits can be effective methods.
Explanation:
In order to correct the issue of corporate objectives not being effectively disseminated throughout an organization, the best method to try would be to hold a series of supervisory manager meetings. This would create a direct channel for upper management to communicate these objectives to line managers. It also gives room for discussion, understanding, and eventual implementation of the objectives in their decision-making process. Establishing metric-based performance measures could also be useful in this context as it would provide a defined and quantifiable way to bring about desired behaviors in line-level managers by linking their performance indicators directly to corporate objectives. Evaluating and increasing manager salaries and benefits will also incentivize them to work in accordance with the corporate objectives.
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Answers
Answer:
2.64%
Explanation:
A = P(1 + r)^n
A = $12,000
P = $10,000
n = 7 years
12,000 = 10,000(1 + r)^7
(1 + r)^7 = 12,000/10,000 = 1.2
(1 + r)^7 = 1.2
1 + r = (1.2)^1/7
I + r = 1.0264
r = 1.0264 - 1 = 0.0264
r = 0.0264 × 100 = 2.64%
A)
7.55%
B)
9.17%
C)
9.00%
D)
8.00%
Answers
Answer:
WACC = 7.55 %
so correct option is A) 7.55%
Explanation:
given data
company raised = $100,000,000
sale of bonds = $50,000,000
current yield = 8%
sale of common stock = $25,000,000
cost equal = 9%
sale of preferred stock =$25,000,000
cost equal = 10%
tax rate = 30%
to find out
WACC
solution
we get here WACC that is express as
WACC = ( Weight of debt × After tax cost of debt) + (Weight of equity × Cost of equity) + (Weight of preferred stock × cost of preferred stock) ..................1
and cost of debt after tax will be
cost of debt after tax = 8% of ( 1 - 30%)
cost of debt after tax = 5.6%
and Weight of debt = = 0.50
and Weight of equity = = 0.25
and Weight of preferred stock = = 0.25
so WACC = ( 0.50 × 0.056 ) + ( 0.25 × 0.09 ) + ( 0.25 × 0.10 )
WACC = 0.0755
WACC = 7.55 %
so correct option is A) 7.55%