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sleet_krkn [62]
3 years ago
9

The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for t

he shop are $30,000 a year. Depreciation on the repair tools will be $10,000. Prepare an income statement for the shop based on these estimates. The tax rate is 35%. Calculate operating cash flow for the year by using all three methods: (a) Dollars in minus dollars out; (b) Adjusted accounting profits; and (c) Add back depreciation tax shield. Operating Cash Flovw Method a. Dollars in minus dollars out b. Adjusted accounting profits c. Add back depreciation tax shield
Should all the above approaches result in the same value for cash flow.

a. Yes
b. No
Business
1 answer:
elena55 [62]3 years ago
4 0

Answer and Explanation:

Revenue                              $160,000

Rental Costs                      $30,000

Variable Costs                      $50,000

Depreciation                      $10,000

Profit before tax              $70,000

Tax(35%)                              $24,500

Net Income                      $45,500

Operating cash flow

a) Dollars in minus dollars out

Revenue ? rental costs ? variable costs ? taxes = $160000 -$30000-$50000-$24,500 = $55,500

b) Adjusted accounting profits

Operating cash flow = Net income + depreciation = $45,500 + $10,000 = $55,500

c) Add back depreciation tax shield

Operating cash flow = [(Revenue ? rental costs ? variable costs) × (1 ? 0.35)] + (depreciation × 0.35)]

= ($160,000-$30000-$50,000)*0.65 + $10,000*0.35 = $55,500

Yes, the above approaches result in the same value for cash flow

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nata0808 [166]

Answer:

He would save money over time.

Explanation:

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3 years ago
Simpleton, Inc. budgeted a material cost of $10 per lb. They ended up purchasing 2,300 lbs at $16 per lb. and using 1,800 lbs fo
Vesna [10]

Answer:

Direct material price variance= $13,800 unfavorable

Explanation:

Giving the following information:

Simpleton, Inc. budgeted a material cost of $10 per lb.

Actual:

2,300 lbs at $16 per lb.

<u>To calculate the direct material price variance, we need to use the following formula:</u>

<u></u>

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (10 - 16)*2,300

Direct material price variance= $13,800 unfavorable

4 0
3 years ago
On January​ 1, 2017,​ Sophie's Sunlounge owned 4 tanning beds valued at​ $20,000. During​ 2017, Sophie's bought 3 new beds at a
Natali5045456 [20]

Answer:

Net Investment = 4,000

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Gross Investment = 10,000

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Net Investment = Gross Investment - Depreciation

Net Investment = 10,000 - 6,000

Net Investment = 4,000

NOTE: Gross investment for 2017 will be the 3 new beds that Sophie bought during 2017 at a total cost of 10,000. To calculate Net investment we should calculate depreciation first by deducting book value from market value.

4 0
3 years ago
Why is it necessary to define policy elements?Discuss the terms confidentiality, integrity, and availability as they relate to i
aleksklad [387]

Explanation:

First, it is important to know the definition of policy and its relevance to society and organizations.

Politics is the science of organization, direction and administration, linked to government, the state and public administration, with the aim of guiding the administration and promoting the public good. Therefore in every act of managing, whether in the fields of public or private administration, there will be policies for the direction of society and business.

Public policies are composed of 4 main elements: government involvement, perception of a problem, definition of an objective and definition of an action process.

Because of its relevance to social welfare, policy must be protected in different ways, so it is right to relate policy design to the three pillars of information security, confidentiality, integrity and availability.

Confidentiality refers to actions to ensure that data are protected, with a hierarchy of access to information only by authorized, is what happens in policy, the set of guidelines should be protected and only the high hierarchy can change it if necessary.

Integrity corresponds to preserving the reliability, accuracy and consistency of information, in politics we can relate how the protection of information change by unauthorized persons and the design of policies that integrate and benefit the whole society.

Availability corresponds to the access of information by individuals, in politics can be related to the access that every citizen should have of the set of policies to guide their actions and protect society from possible conflicts.

8 0
3 years ago
Eyan is giving a seminar on environmental conservation efforts in a local factory. Which qualities is Eyan using when writing an
alexgriva [62]

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7 0
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