BUSINESS COLLEGE

At Bargain Electronics, it costs $30 per unit ($16 variable and $14 fixed) to make an MP3 player at full capacity that normally sells for $51. A foreign wholesaler offers to buy 3,580 units at $28 each. Bargain Electronics will incur special shipping costs of $3 per unit. Assuming that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Should the order be accepted or rejected?

Answers

Answer 1
Answer:

Answer:

(17,900) net loss

Explanation:

51 - 16 = 35

Special order Contribution margin

28 sales price - 16 variable cost - 3 shipping cost = 9

Total contribution for the order

3,580 units x 9 CM= 32,220

3,580 x 14 fixed cost = (50,120)

(17,900) net loss

We should assume the fixed cost will increase because we are at full capacity.
Answer 2
Answer:

Final answer:

Bargain Electronics would realize a loss of $17,300 by accepting the special order.

Explanation:

To determine the net income (loss) from accepting the special order, we need to calculate the cost of producing the units, including both variable and fixed costs, and subtract it from the revenue generated from selling the units to the foreign wholesaler. The cost to produce each unit is $16 variable cost + $14 fixed cost + $3 shipping cost = $33. So, the total cost to produce 3,580 units is $33 × 3,580 = $117,540.

The revenue from selling the units to the wholesaler would be 3,580 × $28 = $100,240. The net income (loss) is calculated by subtracting the total cost from the revenue: $100,240 - $117,540 = ($17,300). Therefore, Bargain Electronics would realize a loss of $17,300 by accepting the special order.

The primary topic of this question is calculating net income (loss) for a business.

Learn more about Calculating net income (loss) for a business here:

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Hubbard Industries just paid a common dividend, D0, of $2.00. It expects to grow at a constant rate of 3% per year. If investors require a 8% return on equity, what is the current price of Hubbard's common stock

Answers

Answer:

The answer is $41.2

Explanation:

This will be solved by Dividend Discount Model which is one of the ways of valuing the price of shareholders' equity.

Here, the future value of dividend payment are discounted using the cost of equity.

Ke = D1/Po + g

Where Ke is the cost of equity

D1 is future dividend payment.

Po is the current share price or stock price

g is the growth rate.

To find the current price of stock price, we need to re write the equation;

Po = D1 ÷ (Ke - g)

D1 = Do x 1.03

= $2 x 1.03

=2.06

Ke = 8% or 0.08

g = 3% or 0.03

So we have;

2.06 ÷ (0.08 -0.03)

$2.06 ÷ 0.05

$41.2

Toshlin issues financial statements on June 30. If payroll was $30,000 through June 30th and wages were to be paid on July 5. What is the correct journal entry on June 30?Assume FIT = 15%, FICA = 8%, SUTA = 6%, FUTA = 1%,

Answers

Answer:

a. No entry is required.

b.   Payroll        Dr.      $30,000  

           Wages Payable                      Cr.   $30,000

c.     Payroll          Dr.           $30,000    

             Federal Income Tax              Cr.       $4,500    

             FICA Taxes Payable               Cr.      $2,400    

             Wages Payable                       Cr.      $23,100      

d.     Payroll                          Dr.      $30,000  

              Federal Income Tax                       Cr.         $4,500  

              FICA Taxes Payable                       Cr.        $2,400    

              SUTA                                               Cr.        $1,800    

              FUTA                                               Cr.        $300        

              Wages Payable                               Cr.        $21,000

Powers Company reported Net sales of $1,240,000 and average Accounts Receivable, net of $74,500. The accounts receivable turnover ratio is:

Answers

Answer:

Accounts receivable turn over is 16.64

Explanation:

To compute accounts receivable turn over ratio, we simply divide net credit sales over the average accounts receivable.

Accounts receivable turn over ratio = $1,240,000/$74,500

= 16.64

The higher the ratio, the better it is in the company. It simply means, the company exercises the effective way to collect its receivable from the customer.

*Net credit sales is derived by deducting sales returns and allowances from gross credit sales. If the problem is silent regarding cash sales, we will assume that the sales made by the period is all at credit.

The transactions of Spade Company appear below. (a) Kacy Spade, owner, invested $100,750 cash in the company in exchange for common stock.(b) The company purchased office supplies for $1,250 cash.(c) The company purchased $10,050 of office equipment on credit.(d) The company received $15,500 cash as fees for services provided to a customer.(e) The company paid $10,050 cash to settle the payable for the office equipment purchased in transaction (f) The company billed a customer $2,700 as fees for services provided.(g) The company paid $1,225 cash for the monthly rent.(h) The company collected $1,125 cash as partial payment for the account receivable created in transaction (i) The company paid $10,000 cash in dividends to the owner (sole shareholder). Check Cash ending balance, $94,850 Prepare the Trial Balance

Answers

Answer:

Explanation:

Journal entry

a. Dr Cash 100750

               Cr Capital- Kacy spade 100750

(Investment in company)

b. Dr Office supplies 1250

                          Cr Cash     1250

(to purchase office supplies on cash)

c. Dr Office equipment 10050

                   Cr Accounts payable  10050

( To record purchase of office equipment)

d. Dr Cash  15500

                       Cr Service fee income   15500

     ( To record service provided to customer)

e. Dr Accounts payable  10050

                   Cr Cash                   10050

( To record payment of office equipment purchase)

f. Dr  Account receivable  2700

                           Cr Service revenue    2700

(To record service revenue)

g. Dr Rent expense 1225

                 Cr Cash           1225

( To record rent expense on cash)

h. Dr Cash 1125

              Dr Account receivable 1125

         ( To record  partial collection of receivable )

i. 1) Dr Retained earning  10000

                             Cr Dividend payable   10000

( To record dividend yet to be to shareholder )

 2.) Dr Dividend payable   10000

              Cr    cash                       10000      

 ( To record  Payment of cash dividend)

  Cash                                                                     capital-kacy spade

Dr____________Cr___                                     ___ DR ___________Cr

100750  ---  1250                                                                    --100750

15500 ---10050

           ---1225

1125-- 10000

Office supplies                                                             Office equipment

Dr ____________Cr__                                           __ Dr _____________Cr

1250--                                                                       10050---

Accounts payable                                                       Service fee income

Dr_____________Cr_                                               __ Dr ___________Cr_

   10050       ---- 10050                                                                   ---- 10050

                                                                                                    ---2700

Service revenue                                                            Account receivable

Dr_____________Cr__                                          _ Dr ______________Cr

                --                                                                    2700----1125

rent expense                                                             retained earning

Dr____________Cr__                                              _ Dr __________Cr__  

1225--                                                                        10000 ---- 10000

Dividend payable

Dr_______________Cr  

10000 --- 10000

Trial Balance

Cash       94850                                      100750     Capital-Kacy spade

Salary expense                                                

Rent expense  1225                                                  Account payable

Office Equipment  10050                                    Retained earning

Prepaid insurance                                          12750  Service revenue

office supplies  1250                                                   Dividend payable

Account receivable  1575

total 108950 =  108950

Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $120,000 or $300,000 with equal probabilities of 0.5. The alternative risk-free investment in T-bills pays 5% per year. Required:
a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio?
b. Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of return on the portfolio be?
c. Now suppose you require a risk premium of 15%. What is the price you will be willing to pay now?
d. Comparing your answers to (a) and (c), what do you conclude about the relationship between the required risk premium on a portfolio and the price at which the portfolio will sell?

Answers

Answer:

a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio?

the expected value of our portfolio = ($120,000 x 50%) + ($300,000 x 50%) = $210,000

the current market price of the investment = $210,000 / 1.13 = $185,840.71

discount rate = 5% + 8% = 13%

b. Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of return on the portfolio be?

13%, it should be equal to the discount rate

c. Now suppose you require a risk premium of 15%. What is the price you will be willing to pay now?

the current market price of the investment = $210,000 / 1.21 = $175,000

discount rate = 5% + 15% = 20%

d. Comparing your answers to (a) and (c), what do you conclude about the relationship between the required risk premium on a portfolio and the price at which the portfolio will sell?

the higher the risk premium, the lower the market price of the portfolio

Poland's Paints allocates overhead based on machine hours. Selected data for the most recent year follow. Estimated manufacturing overhead cost $238,900 Actual manufacturing overhead cost $244,100 Estimated machine hours 20,000 Actual machine hours 23,000 The estimates were made as of the beginning of the​ year, while the actual results were for the entire year. The amount of manufacturing overhead allocated for the year based on machine hours would have been​ _____ .​ (Round intermediary calculations to the nearest cent and final answer to the nearest​ dollar.) A. $274,850. B. $238,900. C. $244,100. D. $212,261.

Answers

Answer:

Allocated MOH= $274,850

Explanation:

Giving the following information:

Estimated manufacturing overhead cost $238,900

Estimated machine hours 20,000

Actual machine hours 23,000

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 238,900/20,000

Predetermined manufacturing overhead rate= $11.945 per machine-hour

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 11.95*23,000

Allocated MOH= $274,850
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