Western Electric has 33,500 shares of common stock outstanding at a price per share of $82 and a rate of return of 12.85 percent. The firm has 7,450 shares of 8.10 percent preferred stock outstanding at a price of $96.50 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $413,000 and currently sells for 112.5 percent of face. The yield to maturity on the debt is 8.17 percent. What is the firm's weighted average cost of capital if the tax rate is 39 percent
Answers
Answer:
11.05
Explanation:
WACC is the average cost of capital of the firm based on the weightage of the debt and weightage of the equity multiplied to their respective costs.
Formula for WACC
Weighted Average Cost of Capital = (Cost of Equity x Weightage of equity) + (Cost of preferred Stock x Weightage of preferred Stock ) + (Cost of Debt (1 -t) x Weightage of Debt)
Market Value
Equity = 33,500 x $82 = $2,747,000
Preferred Stock = 7,450 x $96.50 = $718,925
Debt = $413,000 x 112.5% = $464,625
Total Value = $2,747,000 + $718,925 + $464,625 = $3,930,550
Cost of Equity = 12.85%
Cost of Preferred stock = 8.1%
Cost of Debt = 8.17%
Placing values in the formula
Weighted Average Cost of Capital = (12.85% x $2,747,000 / $3,930,550) + (8.1% x $718,625 / $3,930,550 ) + (8.17% (1 - 0.39) x $464,625 / $3,930,550)
Weighted Average Cost of Capital = 8.98% + 1.48% + 0.59% = 11.05%
Related Questions
The previous statement for your credit card had a balance of $690. You make a payment of $260 but you make additional purchases of $170. The card carries an APR of 24%. What is the finance charge for this month
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Answer:
744 hope this helps
Explanation:
Potential employers might be interested in verifying your high school
O attendance
O friends
O grades
O teachers
Answers
True or False & Why? “Every time price goes up, demand goes up and every time price falls, demand falls too, and so on ad infinitum.”
Answers
Answer: ▶False◀
Explanation:▶ realistically when prices fall, demand goes up. This is because everyone would buy something that cost less, than something that is expensive. Now when prices go up, demand usually goes down. This is because the consumer wouldn't want to buy something from ( ex:) retailer 1, who's products are too expensive. Than retailer 2, who's prices are very reasonable. People wouldn't want to demand something that has a price going up and up.
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Gerald purchased a washing machine for $650 three months ago and is very unhappy with his purchase. Since then, he had to call for repair service twice. On each of these instances the repair company charged $50 for the service call just to go to his house. They also charged $20 an hour for labor. The first time they came they spent 2.5 hours, and the second time they came they spent 1.5 hours. Gerald wants to send a complaint letter to the manufacturer. He is seeking to return the defective machine and get a refund for his total expenses related to the washing machine. What amount should be put in his letter?
Answers
Answer:
Explanation:
Le montant total que Gerald a payé pour la machine à laver est de 650 $. Le coût total des services de réparation pour les deux instances est : 50 $ (frais d'appel de service) + 20 $/heure (frais de main-d'œuvre) × 2,5 heures = 100 $ (première fois) 50 $ (frais d'appel de service) + 20 $/heure (frais de main-d'œuvre) × 1,5 heure = 80 $ (deuxième fois) Ainsi, le coût total des services de réparation est de 100 $ + 80 $ = 180 $. Par conséquent, le montant total que Gerald devrait mettre dans sa lettre demandant un remboursement est de 650 $ + 180 $ = 830 $.
What is Transit media service?
Answers
Answer:
1.An aggregation of different kinds of media, including text, image, video, audio, and so forth Learn more in: Evolution of TD-SCDMA Networks2.A type of service which includes more than one type of information (text, audio, pictures, and video), transmitted through the same mechanism and allowing the user to interact or modify the information provided
What is one cost of avoiding insurance?
Answers
Answer: One of the costs of not having insurance is the cost of repairing. Another cost is paying insurance premiums. Losses caused by a lack of insurance are the price of not having insurance.
Answer:
falling into debt if faced with a serious problem
Explanation:
What happens when the price of a good increases
Answers
Answer:
the value of good increases (goes up)
Which set of documents do you need to correct a mistake on a filed tax return
Answers
Answer:
Form 1040x
Explanation:
Classic Limo, Inc., provides limousine service to Tri-Cities airport. The price of the service is fixed at a flat rate for each trip and most costs of the providing the service are stable for each trip. Marc Pence, the owner, budgets income by estimating two factors that fluctuate with the economy: the fuel cost associated with each trip and the number of customers who will take trips. Looking at next year, Marc develops the following estimates of contribution margin (price less variable cost of the trip, including fuel) and for the estimated number of customers. Although Marc understands that it is not strictly true, he assumes that the cost of fuel and the number of customers are independent. In addition to the costs of a ride, Marc estimates that other service costs are $50,000 plus $5 for each customer (ride) in excess of 6,000 rides. Annual administrative and marketing costs are estimated to be $25,000 plus 10 percent of the contribution margin.
Required:
Using the above information, construct an Excel spreadsheet to prepare an analysis of the possible operating income for Classic Limo, Inc., similar to that in Exhibit 13.15 on page 558 of the textbook. You must submit this part of the assignment as an Excel file and utilize formulas for all calculations. You will be graded on the answers provided, formulas/calculations, and presentation. If you would like feedback on this part of the assignment before submitting, please email your spreadsheet to me at least 48 hours prior to the due date.
Answers
Answer:
Poor $(14,250)
Fair $26,250
Excellent $87,000
Poor $6,000
Fair $60,000
Excellent $141,000
Poor $44,250
Fair $138,750
Excellent $280,500
Explanation:
Prepare of an analysis of the possible operating income for Classic Limo, Inc.,
Contribution MarginA Numbers of CustomersB Total Contribution MarginC=A*B Service costsD Marketing & AdminE=25,000+(C*10%) Operating Profit / (Loss)F=C-D-E
Poor $15* 4,500= $67,500- $50,000- $31,750 =$(14,250)
Fair $25 *4,500= $112,500 -$50,000 -$36,250 =$26,250
Excellent $40* 4,500=$180,000-$50,000-$43,000=$87,000
Poor $15*6,000=$90,000-$50,000-$34,000=$6,000
Fair $25*6,000=$150,000-$50,000-$40,000=$60,000
Excellent $40*6,000=$240,000-$50,000-$49,000=$141,000
Poor $15*10,500=$157,500-$72,500-$40,750=$44,250
Fair $25*10,500=$262,500-$72,500-$51,250=$138,750
Excellent $40*10,500=$420,000-$72,500-$67,000=$280,500
CALCULATION FOR SERVICE COST
Service costs=$50,000+($10,500-$6,000)*5
Service costs=$50,000+($4,500*5)
Service costs=$50,000+$22,500
Service costs=$72,500
CALCULATION FOR Marketing & AdminE=25,000+(C*10%)
$25,000+(Total Contribution margin *10%)
Poor $25,000+($67,500*10%)=$31,750
Fair $25,000+($112,500*10%)=$36,250
Excellent$25,000+($180,000*10%)=$43,000
Poor $25,000+($90,000*10%)=$34,000
Fair $25,000+($150,000*10%)=$40,000
Excellent $25,000+($240,000*10%)=$49,000
Poor $25,000+($157,500*10%)=$40,750
Fair $25,000+($262,500+10%)=$51,250
Excellent $25,000+($420,000*10%)=$67,000
Therefore the possible operating income for Classic Limo, Inc.,are
Poor $(14,250)
Fair $26,250
Excellent $87,000
Poor $6,000
Fair $60,000
Excellent $141,000
Poor $44,250
Fair $138,750
Excellent $280,500
(
Which of the following are characteristics of commercial paper?
a. Long term; government issued
O b. Medium term; mortgage backed
c. Short term; government issued
O d. Short term; unsecured
Answers
D.) Short Term; Unsecured
B.) Medium Term; Mortgage backed
Short-term; unsecured are the characteristics of commercial paper. The correct option is D. Commercial paper is a type of promissory note that is unsecured and pays a set interest rate.
What are the advantages and disadvantages of commercial paper?Commercial paper is a productive approach for businesses to obtain funding directly from investors. On the other hand, commercial paper is unsecured and entails more significant risk than other forms of debt. Commercial paper is another short-term financing option, although it lacks the solidity of longer-term financial instruments.
An unsecured, short-term debt product is commercial paper. Businesses frequently provide it to cover their wages, accounts payable, inventories, and other short-term liabilities. On commercial paper, maturities can be as short as one day and as long as 270 days, with a 30-day average.
Thus, the ideal solution is option D.
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Mcgahen Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,080 patient-visits and the actual level of activity was 990 patient-visits. The clinic's director budgets for variable overhead costs of $3.30 per patient-visit and fixed overhead costs of $10,600 per month. The actual variable overhead cost last month was $3,380 and the actual fixed overhead cost was $8,780. In the clinic's flexible budget performance report for last month, what would have been the variance for the total overhead cost?
Answers
Answer:
$1,707 Favorable
Explanation:
The variance will be the difference between the planned budget and the actual costs.
Variable costs are budgeted at $3.30 per customer visit, and fixed costs are $10,600 per month. There were 990 customer visits.
The variable cost budget will be
=$3.30 x 990
=$3,267
Fixed budget is $10,600
Total budget
= $10,600 + $3,267
=$13,867
the actual expenditure was
variable cost= $3,380
fixed costs=$8,780
total actual costs = $3,380 +$8,780
= $12,160
variance = $13,867 - $12,160
=$1,707
Based on the given information on Mcgahen medical clinic, the variance for the total overhead cost is -$1,707
How to calculate variance of the overhead costTo calculate the variance for the total overhead cost
First, get the flexible budget amount for variable overhead costs is:
Flexible budget amount for variable overhead costs = Budgeted variable overhead rate per patient-visit x Actual level of activity
= $3.30 x 990
= $3,267
The total flexible budget amount for overhead costs is:
Total flexible budget amount for overhead costs = Flexible budget amount for variable overhead costs + Fixed overhead costs
= $3,267 + $10,600
= $13,867
Now, calculate the variance for the total overhead cost:
Total overhead cost variance = Actual overhead costs - Total flexible budget amount for overhead costs
= ($3,380 + $8,780) - $13,867
= $12,160 - $13,867
= -$1,707
The negative value for the variance indicates that the actual overhead costs were lower than the expected flexible budget amount for overhead costs.
Specifically, the clinic spent $1,707 less on overhead costs than it had planned for based on its budgeted level of activity.
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The Federal reserve is raising interest rates in order to combat inflation. They have warned that this will increase unemployment.
Using the AD-AS model, explain why raising interest rates will help combat inflation. (5 points)
Using the AD-AS model, explain why the increased interest rates will cause an increase in unemployment. (5 points)
Answers
When the Federal Reserve raises interest rates, it makes borrowing more expensive. This reduces the amount of money flowing into the economy, which can decrease aggregate demand.
As borrowing becomes more expensive, firms and households will spend less, which will decrease aggregate demand.
What is AD-AS model?Generally, The AD-AS model is a framework for understanding how changes in aggregate demand (AD) and aggregate supply (AS) interact to determine output and prices in an economy.
Why raising interest rates will help combat inflation:
When the Federal Reserve raises interest rates, it makes borrowing more expensive. This reduces the amount of money flowing into the economy, which can decrease aggregate demand.As aggregate demand decreases, firms will produce less, which will decrease the overall price level. This decrease in prices is the definition of disinflation, and it can help combat inflation.Why the increased interest rates will cause an increase in unemployment:
As aggregate demand decreases, firms will produce less, which will lead to a decrease in employment.The decrease in employment is the result of the decrease in aggregate demand, which is caused by the increase in interest rates.Read more about AD-AS model
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Why is planning important for organizations like State Farm?
Answers
Answer:
helps them too set realistic goals and gives them a deadline with the aid of careful preparation.
A company had issued 10,000 bonds which had a par value of $50 and currently sold at $60. The company is expected to pay 10% interest for the next 5 years. In addition to this the preferred stock of the company is issued at $150 which a promised dividend of 8 per share. The common stock holders will receive $2 per share and this will grow T 8% for the first 3 years, 6% for the other 3 years and it will grow at 5% for indefinite period. Assume the tax rate is 35%. The capital structure of the company is composed of 600,000 common stock, 200,000 preferred stock and 100,000 is debt.
A) Find the cost of capital for each sources A) Find the weighted average cost of capital
Answers
To calculate the cost of capital for each source, we'll consider the cost of debt, cost of preferred stock, and cost of common stock.
1. Cost of Debt:
The cost of debt is the interest rate the company pays on its debt. In this case, the company has issued bonds with a par value of $50, currently selling at $60, and a coupon rate of 10% for 5 years.
Cost of Debt = (Interest Expense / (Bonds Market Value - Bond Discount)) * (1 - Tax Rate)
Interest Expense = Bonds Market Value * Coupon Rate
Bonds Market Value = Number of Bonds * Bond Selling Price
Number of Bonds = 10,000
Bond Selling Price = $60
Coupon Rate = 10%
Tax Rate = 35%
Interest Expense = $60 * 10,000 * 10% = $60,000
Bonds Market Value = 10,000 * $60 = $600,000
Bond Discount = Par Value - Bond Selling Price = $50 - $60 = -$10 (Negative value because the bond is selling at a premium)
Cost of Debt = ($60,000 / ($600,000 - (-$10))) * (1 - 0.35) = $6,000 / $600,010 * 0.65 = 0.064997 (approximately 6.50%)
2. Cost of Preferred Stock:
The cost of preferred stock is the dividend rate the company pays on its preferred stock. In this case, the preferred stock is issued at $150 with a promised dividend of $8 per share.
Cost of Preferred Stock = Dividend / Preferred Stock Price
Dividend = $8
Preferred Stock Price = $150
Cost of Preferred Stock = $8 / $150 = 0.053333 (approximately 5.33%)
3. Cost of Common Stock:
The cost of common stock is calculated using the dividend growth model. The dividend is expected to grow at different rates for different periods.
First 3 years: Dividend Growth Rate = 8%
Next 3 years: Dividend Growth Rate = 6%
Indefinite period: Dividend Growth Rate = 5%
Cost of Common Stock = Dividend / Current Stock Price + Growth Rate
Dividend = $2
Current Stock Price = Market Price
Growth Rate = Dividend Growth Rate
Cost of Common Stock = $2 / Market Price + Growth Rate
Weighted Average Cost of Capital (WACC):
The weighted average cost of capital is the weighted average of the costs of each source of capital, considering their respective proportions in the capital structure.
WACC = (Weight of Debt * Cost of Debt) + (Weight of Preferred Stock * Cost of Preferred Stock) + (Weight of Common Stock * Cost of Common Stock)
Weight of Debt = Debt / Total Capital
Weight of Preferred Stock = Preferred Stock / Total Capital
Weight of Common Stock = Common Stock / Total Capital
Debt = $100,000
Preferred Stock = $200,000
Common Stock = $600,000
Total Capital = Debt + Preferred Stock + Common Stock = $100,000 + $200,000 + $600,000 = $900,000
Weight of Debt = $100,000 / $900,000 = 0.111111 (approximately 11.11%)
Weight of Preferred Stock = $200,000 / $900,000 = 0.222222 (approximately 22.22%)
Weight of Common Stock = $600,000 / $900,000 = 0.666667 (approximately 66.67%)
WACC = (0.111111 * 6.50%) + (0.222222 * 5.
The cost of capital for each source can be calculated by determining the cost of debt, cost of preferred stock, and cost of common equity. The cost of debt is 8.33%, the cost of preferred stock is 5.33%, and the cost of common equity is 14.77%.
To find the cost of capital for each source, we will calculate the cost of debt, cost of preferred stock, and cost of common equity.
The cost of debt can be calculated using the formula: Cost of Debt = (Annual Interest Payment / Bond Price) x 100%. In this case, the bond price is $60 and the annual interest payment is 10% of the bond's par value of $50, so the cost of debt is (0.10 * $50 / $60) x 100% = 8.33%.
The cost of preferred stock can be calculated using the formula: Cost of Preferred Stock = Dividend / Stock Price. In this case, the dividend is $8 per share and the stock price is $150, so the cost of preferred stock is $8 / $150 = 5.33%.
The cost of common equity can be calculated using the Dividend Discount Model (DDM) formula: Cost of Common Equity = Dividend / Current Stock Price + Growth Rate. The growth rate for the first 3 years is 8%, for the following 3 years is 6%, and for an indefinite period is 5%. The dividend for common stock is $2 per share. The current stock price can be calculated using the market value of the common stock ($2 * 600,000 = $1,200,000) divided by the number of shares (600,000), which equals $2 per share. The cost of common equity is $2 / $2 + 0.08 + 0.06 + 0.05 = 14.77%.
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What expectation for ethical behavior and procedures that should be followed?
Answers
Ethical behavior and procedures are essential in maintaining integrity and trust in any organization. The expectations for ethical behavior and procedures may vary depending on the specific industry, organization, and jurisdiction.
However, there are some common principles and guidelines that can be followed. Here are a few key expectations:
Compliance with Laws and Regulations: Employees and stakeholders should comply with all applicable laws, regulations, and industry standards. This includes legal and regulatory requirements related to financial reporting, taxation, data protection, workplace safety, and environmental protection.
Honesty and Integrity: Individuals should act with honesty, integrity, and transparency in all their professional interactions. This involves avoiding conflicts of interest, providing accurate and truthful information, and not engaging in fraudulent or deceptive practices.
Confidentiality and Data Protection: Employees should respect the confidentiality of sensitive information, including customer data, trade secrets, and proprietary information. They should follow appropriate procedures to protect data privacy and ensure compliance with data protection laws.
Fair Treatment and Respect: All individuals should be treated fairly and with respect, regardless of their background, race, gender, religion, or other characteristics. Discrimination, harassment, or any form of unfair treatment should not be tolerated.
Ethical Decision-Making: Individuals should make decisions based on ethical considerations, considering the impact on stakeholders and society as a whole. This involves avoiding conflicts of interest, exercising professional judgment, and seeking guidance when faced with ethical dilemmas.
Accountability and Responsibility: Employees should take responsibility for their actions, acknowledge mistakes, and be accountable for the consequences of their decisions. This includes reporting unethical behavior, complying with internal control procedures, and cooperating with internal and external audits.
Social and Environmental Responsibility: Organizations and individuals should consider the broader impact of their actions on society and the environment. This may involve promoting sustainability, minimizing waste and pollution, and supporting social initiatives.
These expectations for ethical behavior and procedures should be communicated clearly to all employees through codes of conduct, ethics training programs, and regular communication from management. It is important to foster a culture of ethics and integrity, where individuals are empowered to raise concerns, report violations, and seek guidance without fear of retaliation.
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5. Which of the following describes a business want?
a higher ROMI
increased profits
a new advertising campaign
decreased expenses
Answers
Answer:
so its increased profits
the following balance where extracted from the book of Alfsal, a sole trader as at 31/12/2014 capital 198000 ,drawing 10700, building 300000, office equipment (cost le 22000) 15000, patent 24000, delivery van at cost63000, Accumulated depreciation delivery vans 14000, stock 01/01/2014 29000, sale485,000, purchase 196000, return outward 5300, return inward 17000, creditor 21900, debtor 34800, discount received 1400, wages and salaries 105,000, general expenses 13000,stationary 4800, tem loan(received on 01/04/2014) 50,000. vat 17300. provision for bad debts 2500. Advertising 5700. insurance 9,000. loan interest paid 1,000. bank42,600. PRSI/USU 10,200. profit and loss balance 01/01/2014 65,000. you are given the following aditional information: stock for resale at 31/12/2014 was le 19,000. stationary paid in advance was le 1,200. provision should be made for interest due on loan. the rate of interest is 6%per annum. wages and salaries are to be divided 75%for employees and drawings. building 10% of cost. delivery van 10% of net book value. office equipment 20% of cost. provision for bad debts is to be adjusted to 10% of debtors . you are required to prepare a trading and profit and loss account for the year ended 31/ 12/2014. balance sheet as at 31/12/2014.
Answers
Here is the trading and profit and loss account for the year ended 31/12/2014:
The Trading and Profit and Loss AccountFor the year ended 31/12/2014
Particulars Amount
Sales €485,000
Less: Cost of Goods Sold €196,000
Gross Profit €289,000
Less: Expenses
- Wages and Salaries (75%) €78,750
- General Expenses €13,000
- Stationary €4,800
- VAT €17,300
- Provision for Bad Debts €3,480
- Advertising €5,700
- Insurance €9,000
- Loan Interest €600
- PRSI/USU €10,200
Net Profit €157,370
Here is the balance sheet as at 31/12/2014:
Balance Sheet
As at 31/12/2014
Assets Liabilities
Cash €42,600
Bank €1,200
Debtors €34,800
Stock €19,000
Capital €213,570
Drawings €10,700
Building €300,000
Office Equipment €15,000
Patent €24,000
Delivery Vans €49,000
Accumulated Depreciation €28,000
Provision for Bad Debts €3,730
Loan €50,000
Profit and Loss €157,370
Total €618,570
Total €618,570
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They went for a bicycle ride (affirmative)
Answers
Answer:
???
Explanation:
I couldn't give you an answer. you didn't ask an actual question
there are two packs of cards each containing 52 cards. one card is drawn from each pack. find the probability that at least one of them will be the ace of hears.
Answers
Answer:
Probability drawing at least one ace of hearts is 3.8 %
Explanation:
Probability of drawing at least one ace of hearts = 1 - probability of no aces of hearts being drawn.
Probability of drawing no aces of hearts
\((\frac{51}{52})^2\) \(= 0.9619\)
Probability drawing at least one ace of hearts
\(= 1- 0.9619\\\\= 0.03809\\= 3.8\)%
Items owned that could be sold for cash
Answers
Help Me! I cant do this question and I am so confused!
Answers
Answer:
3,000
Explanation:
Divide 24,000 by 8
Answer:
It is B
Explanation:
3,000
Freehold Foods, an Ontario organization, will be terminating the employment of Annette Rose on January 30, 2015, the last day of the pay period. Annette started with Freehold Foods on March 15, 2007. Complete the paper Record of Employment for Annette based on the information provided in the following chart. The company is not providing the equivalent of 53 weeks of pay information as part of the Variable Best Weeks initiative. Hours worked per pay = 80 Annual salary = $54,975.00 Assume a bi-weekly pay period Assume Annette works 80 hours per pay period from Monday to Friday Complete the ROE for Annette using the form below
Answers
The insurable earnings for Annette Rose equals $41,347.82.
What is an insurable earnings?This refers to the portion of employee's income that is used to calculate their contributions and for employment insurance premiums.
In order to complete Block 15B form:
Bi-weekly pay period frequency, 14.
number of consecutive pay periods = $2,105.77
Insurable earnings = $2,105.77 * 14
Insurable earnings = $29,480.78.
Now, we will add vacation pay of $3,444.00 and the pay in lieu of notice of $8,423.04.
Total insurable earnings = $29,480.78 + $3,444.00 + $8,423.04
Total insurable earnings = $41,347.82.
Missing Information "Item Information Pay period type bi-weekly, Social Insurance Number 158159138, First day worked September 30, 2007, Last day for which paid February 13, 2015, Final pay period ending date February 13, 2015, Hours worked per pay 80.00, Pay period earnings 2,105.77, Vacation pay rate 6%, Vacationable earnings 57,400.00, Pay in lieu of notice weeks 8 weeks, Severance weeks 10 weeks"
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PLEASE HELP ME QUICK!
Which of these is not an example of a trade restriction?
a. paying a subsidy to domestic farmers
b. charging a tariff on imports
c. taking land to build an airport
d. limiting the import of certain goods
Answers
Answer:
c. taking land to build an airport.
Explanation:
While the other options (a, b, and d) are examples of trade restrictions, the act of taking land to build an airport is not directly related to trade restrictions. It is more related to the acquisition of land for public infrastructure development, which may involve eminent domain or other legal processes.
Precision Systems manufactures CD burners and currently sells 18,500 units annually to producers of laptop computers. Jay Wilson, president of the company, anticipates a 15 percent increase in the cost per unit of direct labor on January 1 of next year. He expects all other costs and expenses to remain unchanged. Wilson has asked you to assist him in developing the information he needs to formulate a reasonable product strategy for next year.
You are satisfied that volume is the primary factor affecting costs and expenses and have separated the semivariable costs into their fixed and variable segments. Beginning and ending inventories remain at a level of 1,000 units. Current plant capacity is 20,000 units. The following are the current-year data assembled for your analysis.
Sales price per unit $100
Variable costs per unit:
Direct materials $10
Direct labor $20
Manufacturing overhead and selling and administrative expenses 30 60
Contribution margin per unit (40%) $40
Fixed costs $390,000
Required:
a. What increase in the selling price is necessary to cover the 15 percent increase in direct labor cost and still maintain the current contribution margin ratio of 40 percent?
b. How many units must be sold to maintain the current operating income of $350,000 if the sales price remains at $100 and the 15 percent wage increase goes into effect?
c. Wilson believes that an additional $700,000 of machinery (to be depreciated at 20 percent annually) will increase present capacity (20,000 units) by 25 percent. If all units produced can be sold at the present price of $100 per unit and the wage increase goes into effect, how would the estimated operating income before capacity is increased compare with the estimated operating income after capacity is increased? Prepare schedules of estimated operating income at full capacity before and after the expansion.
Answers
a. An increase of $20 per unit is necessary to cover the 15 percent increase in direct labor cost and maintain the desired contribution margin ratio.
b.The fixed costs and desired operating income remain the same, so the contribution margin per unit of $40 is used. The required sales volume is 18,500 units.
c. The estimated operating income after capacity expansion can be determined by increasing the production and sales volume by 25 percent, i.e., 23,125 units
a. To maintain the current contribution margin ratio of 40 percent, the selling price per unit needs to be increased by 20 percent [(15 percent wage increase) / (current contribution margin ratio)].
Therefore, an increase of $20 per unit is necessary to cover the 15 percent increase in direct labor cost and maintain the desired contribution margin ratio.
b. To maintain the current operating income of $350,000, the number of units that must be sold can be calculated using the contribution margin ratio.
The fixed costs and desired operating income remain the same, so the contribution margin per unit of $40 is used. The formula for calculating the required sales volume is:
(Number of units) = (Fixed costs + Desired operating income) / Contribution margin per unit
Plugging in the values, we have:
(Number of units) = ($390,000 + $350,000) / $40 = 18,500 units
c. Before the capacity expansion, the estimated operating income can be calculated using the current production and sales volume of 18,500 units.
The estimated operating income after capacity expansion can be determined by increasing the production and sales volume by 25 percent, i.e., 23,125 units.
The schedules of estimated operating income at full capacity before and after the expansion can be prepared by multiplying the respective sales volumes with the contribution margin per unit and subtracting the fixed costs and the wage increase.
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Hughes Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 12 percent and the company just paid a $2.35 dividend, what is the current share price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Answers
Answer: $53.94
Explanation:
Current share price is the present value of the dividends for the next 3 years and the terminal value in year 3.
Terminal value = D₄ / ( required return - growth rate)
= (2.35 * 1.22³ * 1.05) / (12 % - 5%)
= $64
D₁ = 2.35 * 1.22 = $2.867
D₂ = 2.867 * 1.22 = $3.49774
D₃ = 3.49774 * 1.22 = $4.2672428
Share price = (2.867 / (1 + 12%)) + (3.49774 / 1.12²) + (4.2672428 / 1.12³) + (64/1.12³)
= $53.94
what is the function of product and service management
Answers
Review the following statements regarding a petty cash fund used in a business. Select the one that is correct.
Multiple choice question.
Only the petty cashier is responsible for paying cash from the fund.
The cashier of a fund will write checks for small payments like postage, supplies and deliveries.
Reason: The cashier will use the petty cash fund instead of writing checks for small payments.
A check written against the fund is cashed when the fund is replenished.
Reason: The company cashier gives the petty cashier a check for the total of all receipts paid out of the fund. This restores the fund to its original amount.
Answers
A check written against the fund is cashed when the fund is replenished is correct regarding a petty cash fund used in a business.
How should business be defined?A company or entrepreneurial entity that engages in business, industrial, or professional activity is referred to as a business. Both for-profit and nonprofit organizations can operate as businesses. Limited liability firms, corporations, partnerships, and sole proprietorships are all examples of different business structures.
What is the function of the company?A business's function is to create and offer products and services in order to meet consumer demand. Corporate social responsibility (CSR) is "a company approach that entails participation in projects that help a society," according to Business News Daily.
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fittings for GH$1,000. The useful life of the trademark is estimated to be 100 years. (1 point) ABC Ltd commenced business on 1 September, 2011. He keeps accounts to 31 December each year. The basis period for ABC Ltd for 2013 year of assessment is.. A. GH$4,500 B. GHC6,000 C. GHÇ3,000 )D. GHC3,500 E. 1/9/12 - 31/8/13 F. 1/1/13 - 31/12/13 G. 1/7/12 - 30/6/13 H. 1/6/12 - 31/5/13
Answers
The basis period for ABC Ltd, which commenced business on September 1, 2011, but keeps accounts to December 31 of each year, for the year 2013 year of assessment is F. 1/1/13 - 31/12/13.
What is the basis period?The basis period is the financial year for which a business is assessed for tax.
The basis period of a business follows the normal accounting period of the entity instead of the fiscal year of the taxation authority or the government.
For a business that commenced in 2011, but keeps accounts to December 31, the basis period for the later years agree with the accounting period ending on December 31.
Thus, we can conclude that the correct basis period is Option F.
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Windsor, started the year with $51600 in its Common Stock account and a credit balance in Retained Earnings of $37800. During the year, the company earned net income of \$41300 and declared and paid $17200 of dividends. In addition, the company sold additional common stock amounting to \$24100 . As a result, the amount of its retained earnings at the end of the year would be
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Answer:
what grade is this?
Explanation:
np idea
dpe
Suppose you are a human resource professional at a company setting up work
teams for production and sales. Explain at least four legal requirements which need
to be embedded in your pay structure to support this new work arrangement.
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If I were a human resource professional at a company setting up work teams for production and sales, the four legal requirements that need to be embedded in my pay structure to support this new work arrangement are:
The nation's minimum yearly salary.State minimum wage is paid.Minimal wage for the employees.A flat wage for the position.What will the legal requirements be about?A group incentive plan is a form of compensation that bases pay on the collective performance of a team and emphasizes cost-cutting, productivity growth, and achieving organizational objectives.
I supposedly work in human resources for a company that organizes work teams for sales and production and I would suggest the below point to encourage this new work arrangement:
Teams that are unable to function independently are provided group incentive plans. They are only able to function in teams, and the job itself necessitates it.Learn more about human resource professional from
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