Evaluating the possible positive and negative outcomes of different

An investment offers $5,900 per year for 15 years, with the first payment occurring one year from now. If the required return is

drek231 [11]

Answer:

Today, the investment is worth $31,997.29

Explanation:

Giving the following information:

An investment offers $5,900 per year for 15 years, with the first payment occurring one year from now. The required return is 6 percent

First, we need to calculate the final value, using the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual pay= 5,900

n= 15

i= 0.06

FV= {5,900*[(1.06^15)-1]} / 0.06= $137,328.22

Now, we can determine the present value:

PV= FV/ (1+i)^n

PV= 137,328.22/ 1.06^25= $31,997.29

4 0

3 years ago

Prepare income statements based on variable costing for each of the 2 years. 2.Prepare income statements based on absorption cos

enot [183]

Answer:

The question is incomplete, it is missing the accounts and numbers, so I looked for a similar question:

The Rehe Comany sells its razors at $3 per unit. The company uses a first-in, first-out actual costing system. A fixed manufacturing cost rate is computed at the end of each year by dividing the actual fixed manufacturing costs by the actual production units. The following data are related to its first two years of operation:

2011 2012

Sales 1000 units 1200 units

Costs:

Variable manufacturing 700 500

Fixed manufacturing 700 700

Variable operating (marketing) 1000 1200

Fixed operating (marketing) 400 400

2011 2012

Sales 1000 units 1200 units

Production 1400 1000

Costs:

Variable manufacturing $700 $500

per unit $0.50

Fixed manufacturing $700 $700

Variable operating (marketing) $1000 $1200

Fixed operating (marketing) $400 $400

cogs under absorption costing 2011 = ($1,400 / 1,400) x 1,000 = $1,000

cogs under absorption costing 2012 = $400 + ($1,200 / 1,000) x 800 = $1,360

1. INCOME STATEMENTS

VARIABLE COSTING

2011 2012

Total sales revenue: $3,000 $3,600

Opening inventory: ($0) ($200)

Variable manufacturing: ($700) ($500)

Ending inventory: $200 $100

Gross contribution margin: $2,500 $3,000

Variable operating: ($1,000) ($1,200)

Contribution margin: $1,500 $1,800

Fixed manufacturing: ($700) ($700)

Fixed operating: ($400) ($400)

Net operating income: $400 $700

2. INCOME STATEMENTS

ABSORPTION COSTING

2011 2012

Total sales revenue: $3,000 $3,600

COGS: ($1,000) ($1,360)

Gross margin: $2,000 $2,240

Operating costs: ($1,400) ($1,600)

Net operating income: $600 $640

3. Under variable costing, closing inventory = 400 units x $0.50 (variable production costs per unit) = $200.

Under absorption costing, closing inventory = 400 units x $1 (production cost per unit) = $400

Since closing inventory is $200 higher under absorption costing, then net operating income during 2011 increases by $200.

4. a) Variable costing is more likely to result in inventory buildups. Since variable costing determines the value of closing inventory only using variable manufacturing costs, their value is much lower. E.g. in this case the value of closing inventory 2011 under variable costing is $200, while under absorption costing it is $400. This means that less costs are transferred from one year to another.

b) Cost of goods sold must include all production costs (both variable and fixed). This way COGS costs cannot be over estimated during one year and under estimated the next.

3 0

3 years ago

The goal of an mnc is to maximize the ________.

SashulF [63]

Answer: Option C

Explanation: In simple words, the goal of an MNC is to maximize the wealth of its shareholders which can be achieved only when the value of that company increases overall.

The increase in value of a subsidiary will only increase the benefit of the stakeholders of that subsidiary while earnings is considered as a temporary benefit in corporate world.

Hence from the above we can conclude that the correct option is C.

3 0

2 years ago

ncome Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engine

Mnenie [13.5K]

Answer:

Income statement according to the absorption costing

Sales 2,600,000

Less Cost of Goods Sold

Opening Stock 0

Add Cost of Goods Manufactured

Direct materials 1,218,000

Direct labor 522,000

Variable factory overhead 87,000

Fixed factory overhead 130,500

Less Closing Stock (1,957,500/4,350)×350 (157,500) 1,800,000

Gross Profit 800,000

Less Period Costs :

Selling and administrative expenses:

Variable selling and administrative expenses (60,000)

Fixed selling and administrative expenses (25,000)

Net Income 715,000

Explanation:

Product/Manufacturing Cost - Absorption Costing = Direct Materials + Direct Labor + Variable Overheads + Fixed Overheads

Period Cost - Absorption Costing = All Non - Manufacturing Costs

7 0

3 years ago

A project professional has just been assigned manager of a project to develop a new advertising campaign for an established prod

german

Answer:

Establish project priorities

Explanation:

Remember, we are told the project professional has been assigned to manage a project, therefore going by the guiding steps when defining a project, the next and second step he should take is to establish project priorities.

In other words, he should draft out what tasks should be done first, those for later, and so forth in other to successfully achieve/finish the project's objective.

4 0

3 years ago