Answer:
Administration Cost Allocated To Domestic is $197,183.
Administration Cost Allocated To International is $152,817.
Accounting Cost Allocated To Domestic is $29,400.
Accounting Cost Allocated To International is $117,600.
Explanation:
The Direct Method used for allocating Services Departments Cost to Operating Departments ignores the services used by service departments and allocate costs just to operating departments based on each department's consumption of allocation base. So, the costs of Administration and Accounting departments will be allocated to Domestic and International Departments.
Allocation of Administration Department Cost:
Domestic
Direct Cost of Administration * (No. of Employees in Domestic / Total No. of Employee in Operating Departments)
⇒ 350,000 * (40 / 71) = $197,183.
International
Administration Cost Allocated = 350,000 * (31 / 71) = $152,817.
Allocation of Accounting Department Cost:
Domestic
Direct Cost of Accounting * (No. of Transactions in Domestic / Total No. of Transactions in Operating Departments)
⇒ 147,000 * (19,000 / 95,000) = $29,400.
International
Accounting Cost Allocated = 147,000 * (76,000 / 95,000) = $117,600.
Answer:
20.19%
Explanation:
The computation is shown below:
As we know that
Future value = Present value × (1 + rate)^number of years
where,
Present value = $2,300
Future value = $4,800
Time period = 4 years
So, the interest rate is
$4,800 = $2,300 × (1 + rate)^4
2.086957 = (1 + rate)^4
So after solving this, the interest rate is 20.19%
b. Find the price and P/E ratio of the firm if the plowback ratio is reduced to 0.20.
Answer:
a. Earnings per share = $5
Expected dividend per share(D1) = 70% x $5 = $3.50
Current market price(Po) = D1/Ke - g
Current market price(Po) = $3.50/0.12-0.06
Po = $3.50/0.06
Po = $58.33
Growth rate(g) = b x r
= 0.3 x 0.2
= 0.06
Price-earnings(P/E) ratio = market price per share/Earnings per share
= 58.33/5
= 11.67
b. Earnings per share = $5
D1 = 80% x $5 = $4
Po = D1/Ke - g
Po = $4/0.12-0.04
Po = $50
g = b x r
g = 0.2 x 0.2
g = 0.04
P/E ratio = $50/$5
P/E ratio = 10
Explanation:
In this question, there is need to determine the growth rate, which is a function of return on investment and plowback ratio. Then, we will calculate the current market price as shown above. Finally, the current market price is divided by earnings per share in order to obtain the P/E ratio.
Answer:
The cash-basis net income and accrual-basis net income for the year is $19,500 and $22,800 respectively.
Explanation:
The computation is shown below:
1. Net income under cash basis:
= Received cash from customers - paid cash for salaries
= $43,000 - $23,500
= $19,500
2. Net income under accrual basis:
= Cash received - salary paid
where,
Cash received = Cash owed at the end of the year + cash received - cash owed at the beginning of the year
= $6,600 + $43,000 - $1,000
= $48,600
And, the salary paid = salary owed at the end of the year + salary paid - salary owed at the beginning of the year
= $5,600 + $23,500 - $3,300
= $25,800
Now put these values to the above formula
So, the value would equal to
= $48,600 - $25,800
= $22,800
1. Cash basis in as accounting method that recognizes revenues and expenses only when the cash is received or paid out.
Net income under cash basis = Received cash from customers - Cash paid for salaries
Net income under cash basis = $43,000 - $23,500
Net income under cash basis = $19,500
2. Accrual basis is as accounting method where accounting transactions are recorded for revenue when earned and expenses when incurred.
Net income under accrual basis = Cash received - Salary paid
Net income under accrual basis = (Cash owed at the end of the year + Cash received - Cash owed at the beginning of the year) - (Salary owed at the end of the year + Salary paid - Salary owed at the beginning of the year)
Net income under accrual basis = ($6,600 + $43,000 - $1,000) - ($5,600 + $23,500 - $3,300)
Net income under accrual basis = $48,600 - $25,80
Net income under accrual basis = $22,800
See similar question & solution here
The cost to produce today = 74000
At a discount of 12%, the future value of costs in 5 years = PV*(1+r)^n where PV = 74000, r= 12% = 0.12 and n = 5 years = 5
The value of costs in 5 years = 74000*(1+0.12)^5
The value of costs in 5 years = 74000*1.12^5
The value of costs in 5 years 130,413.28
Price in 5 years = 138,000
Profit = 138,000-130,413.28 = 7,586.72
The profit the firm will make on this asset (considering time value of money) = $7,586.72
"There are fewer close substitutes for the product your team supports" will improve your bargaining position with customers.
Option: B
Explanation:
Bargaining is the procedure which is preferred by citizens not only with street shops but it is famous internationally too, where defense, economic trade deal, etc are signed between two different nations to corporate and shake hand of unity. Bargaining is more effective when one allow seller to know that the party itself have more substitutes if the product is not provided by the seller in appropriate rate.
For an instance, if India need to buy some rolling defense helicopters for nation from Russia but prices are high and United States is providing same material with lower price or may be with better rewards on buying from them.
Answer:
The correct answer is b. after taxes minus preferred dividends.
Explanation:
Net profit:Add all the revenues of the firm and deduct all the expenses of the firm. If the amount come in positive, the firm earns profit else suffered loss.
In mathematically,
Net profit = Sales revenue - all expenses
The earning which is available to shareholders is net profit after paying preference dividend to preference shareholders.
As first we have to pay the dividend to preference shareholders then we distribute the income to equity shareholders.
In mathematically,
EBIT - taxes - Preferred dividend
Hence, the correct option is b. After taxes minus preferred dividends.