BUSINESS COLLEGE

Head-First Company had planned to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $100,500. The degree of operating leverage is 1.5. Now Head-First expects to increase sales by 10% next year.Required:


1. Calculate the percent change in operating income expected.___ %


2. Calculate the operating income expected next year using the percent change in operating income calculated in Requirement 1. $___

Answers

Answer 1
Answer:

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Sales= 5,000 units

Selling price= $75

The unit variable cost= $45

Total fixed cost equals= $49,500

Operating income at 5,000 units sold is $100,500.

Degree of operating leverage= 1.5

Now Head-First expects to increase sales by 10% next year.

1) % Change on income= ?

We know that the degree of operating leverage is calculated by the following formula:

degree of operating leverage= %change in income/ %change in sales

1.5= %change in income/0.10

0.15= %change in income

15%= %change in income

2) Net operating income

Sales= 5,500*75= 412,500

Total variable cost= 5,500*45= (247,500)

Contribution margin= 165,000

Fixed costs= (49,500)

Net operating income= 115,500

Change in income= (115,500 - 100,500)/100,500= 0.1493= 14.93%

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The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below:Sales $939,000Variable expenses $413,500Fixed manufacturing expenses $525,500Fixed selling and administrative expenses $353,000All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $215,500 of the fixed manufacturing expenses and $126,500 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued.What would be the effect on the company's overall net operating income if product V41B were dropped?
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The Card Shoppe needs to maintain 18 percent of its sales in net working capital. Currently, the store is considering a four-year project that will increase sales from its current level of $279,000 to $308,000 the first year and to $314,000 a year for the following three years of the project. What amount should be included in the project analysis for net working capital in Year 4 of the project?

Answers

Answer:

$56,520

Explanation:

As per given data

Year     Sales          Working Capital 18%

   0      $279,000   ($50,220)

   1       $308,000   ($5,220)

   2      $314,000    ($1,080)

   3      $314,000    $0

   4      $314,000   $56,520

As the sales value of year 2, 3 and 4 are same, as capital is adjusted in year 2 and company has equal working capital required in year 3, years 4 is the last year of the project so, working capital will be recovered from the project

Net Working capital will be reimbursed at the end of the project. The accumulated value of investment in working capital will be recorded as cash inflow in the analysis.

Boilermaker House Painting Company1. Sep 3 Paint houses in the current month for $20,000 on account.

2. Sep 8 Purchase painting equipment for $21,000 cash.

3. Sep 12 Purchase office supplies on account for $3,500.

4. Sep 15 Pay employee salaries of $4,200 for the current month.

5. Sept 19 Purchase advertising to appear in the current month for $1,000 cash.

6. Sep 22 Pay office rent of $5,400 for the current month.

7. Sep 26 Receive $15,000 from customers in (1) above.

8. Sep 30 Receive cash of $6,000 in advance from a customer who plans to have his house painted in the following month.

a) Record each transaction. The company uses the following accounts: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Deferred Revenue, Common Stock, Retained Earnings, Service Revenue, Salaries Expense, Advertising Expense, Rent Expense.

Answers

Answer:

Explanation:

The journal entries are shown below:

1. Account receivable A/c Dr $20,000

          To Deferred revenue A/c $20,000

(Being the paint house on account is recorded)      

2. Equipment A/c Dr $21,000

         To Cash A/c $21,000

(Being the equipment is purchased for cash)

3. Supplies A/c Dr $3,500

            To Accounts Payable A/c $3,500

(Being the office supplies are purchased on credit basis)

4. Salaries expense A/c Dr $4,200

        To Cash A/c $4,200

(Being the employees salaries are paid for cash)

5. Advertising expense A/c Dr $1,000

        To Cash A/c $1,000

(Being the advertising are purchase for cash)

6.  Rent expense A/c $5,400

                To Cash A/c $5,400

(Being the rent is paid for cash)

7. Cash A/c Dr $15,000

      To Account receivable A/c $15,000

(Being the cash is received)

8. Cash A/c Dr $6,0000

      To Deferred revenue $6,000

(Being the cash is received)

Final answer:

The transactions of the Boilermaker House Painting Company are recorded considering the cash flow, accounts receivable, and deferred revenues with specific monetary changes respective of each transaction.

Explanation:

The transactions for Boilermaker House Painting Company can be recorded as follows:

  1. Accounts Receivable $20,000 | Service Revenue $20,000 - the company painted houses on credit.
  2. Equipment $21,000 | Cash $21,000 - the company purchased equipment for cash.
  3. Supplies $3,500 | Accounts Payable $3,500 - the company purchased office supplies on credit.
  4. Salaries Expense $4,200 | Cash $4,200 - the company paid employee salaries.
  5. Advertising Expense $1,000 | Cash $1,000 - the company purchased advertising for cash.
  6. Rent Expense $5,400 | Cash $5,400 - the company paid office rent.
  7. Cash $15,000 | Accounts Receivable $15,000 - the company received cash from customers.
  8. Deferred Revenue $6,000 | Cash $6,000 - the company received cash in advance from a customer.

Learn more about Accounting Transactions here:

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Define and explain SMART?

Answers

Being smart is something that's grown and cultivated, often by being curious enough to seek out new information and by recognising what you don't already know. Being smart is the ability to put ideas together, and create solutions to problems. Being smart is the ability to focus, concentrate, and communicate.

Consider the pooling strategy Fg, Fb, where both types have fun. 1) If anticipating this strategy, what are the employer’s beliefs after the signal of F? That is, what is p(g|F)—you do not need to worry about their beliefs following education, since it is off-path. 2) What strategy should the employer choose in response to F? 3) Is Fg, Fb a best reply for both worker types if the employer plays this optimal strategy in response to F, and also hires following education (hE)? 4) What if the employer does not hire after education (∼hE)?

Answers

Answer:

If I am a employer of fb,my strategy will be that I will hire machine learning engineer to solve automation problem,I will give them skills if employer don't hire after education.  

Tri Fecta, a partnership, had revenues of $378,000 in its first year of operations. The partnership has not collected on $47,000 of its sales and still owes $38,700 on $235,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $28,100 in salaries. The partners invested $47,000 in the business and $26,000 was borrowed on a five-year note. The partnership paid $2,600 in interest that was the amount owed for the year and paid $8,900 for a two-year insurance policy on the first day of business. Ignore income taxes. Compute the cash balance at the end of the first year for Tri Fecta.a) $332,110.b) $161,640.c) $166,290.d) $155,440.

Answers

Answer: $168,000

Explanation:

Cash balance at the end of the year = Cash Inflows - Cash outflows

Cash Outflows

= (Merchandise purchased  - Account payables) + Salaries + Interest + Insurance

= (235,000 - 38,700) + 28,100 + 2,600 + 8,900

= $235,900

Cash Inflows

= (Sales - Accounts receivables) + Investment by partners + Amount borrowed

= (378,000 - 47,000) + 47,000 + 26,000

= $404,000

Cash Balance = $168,000

Note: The options are most probably for a similar question.

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Answers

Answer: It drives down prices and increases the economic welfare of consumers.

Explanation:

Greenfield investment is a form of Foreign Direct Investment where the investors build a facility/ies in the host nation from scratch as opposed to buying or leasing one.

With increased competition from greenfield investments, consumers would be better off because there will be more quantity of the relevant good available in the market. This will lead to the prices falling and consumers being able to afford more of the good at higher qualities.

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