Helping my 4th grader with semantic map

A company is asking you to evaluate whether to start a specialty tile manufacturing unit. The initial cost of setting up the man

Vesna [10]

Answer:

Initial cost of setting up the manufacturing infrastructure = $2,000,000

Variable manufacturing cost per tile = $4

Selling price(revenue) per tile sold = $8

Company can earn contribution of = Selling price (revenue) per tile sold - Variable manufacturing cost per tile = $8 - $4 = $4 per tile sold

Break Even point (in units) = Fixed cost / Contribution per unit of tile = $2000000/$4 = 500,000 tiles

a. The company must sell 500,000 tiles in the first six months in order to break even

b. The company should not invest in this venture as it would not even be able to cover the total cost of investment. Reason is the break-even number of tiles to be sold is more than the forecasted sales units by 100,000 (500,000 - 400,000)

Also, company would incur a loss the first six months:

= Number of tiles*Revenue per tile - Fixed Cost - Number of tiles * Variable cost per tile

= 400000*$8 - $2000000 - 400000*$4

= $3200000 - $2000000 - $1600000

= ($400,000) loss.

6 0

2 years ago

Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $39.1 million ca

valina [46]

Answer:

1. Dr Cash $39.1 million

Cr Notes Payable $39.1 million

Dr Notes Receivable $39.1 million

Cr Cash $39.1 million

2. Dr Interest Expense $879,750

Cr Interest Payable $879,750

Dr Interest Receivable $879,750

Cr Interest Revenue $879,750

3. Journal entry for Precision Castparts

Dr Notes payable $39.1 million

Dr Interest expense $2,639,250

Dr Interest payable $879,750

Cr Cash $42,619,000

Journal entry for Midwest Bank

Dr Cash $42,619,000

Cr Notes receivable $39.1 million

Cr Interest receivable $879,750

Cr Interest revenue $2,639,250

Explanation:

1. Preparation of the journal entry to Record the necessary entry for the scenarios given .

Dr Cash $39.1 million

Cr Notes Payable $39.1 million

Dr Notes Receivable $39.1 million

Cr Cash $39.1 million

2. Preparation of the journal entry to Record the adjustments on December 31, 2018.

Dr Interest Expense $879,750

Cr Interest Payable $879,750

(39.1 million*9%*3/12)

Dr Interest Receivable $879,750

Cr Interest Revenue $879,750

(39.1 million*9%*3/12)

3. Preparation of the journal entry on September 30, 2016, to record payment of the notes payable at maturity

Journal entry for Precision Castparts

Dr Notes payable $39.1 million

Dr Interest expense $2,639,250

($39.1 million*9%*9/12)

Dr Interest payable $879,750

(39.1 million*9%*3/12)

Cr Cash $42,619,000

($39.1 million+$2,639,250+$879,750)

Journal entry for Midwest Bank

Dr Cash $42,619,000

($39.1 million+$2,639,250+$879,750)

Cr Notes receivable $39.1 million

Cr Interest receivable $879,750

(39.1 million*9%*3/12)

Cr Interest revenue $2,639,250

($39.1 million*9%*9/12)

4 0

2 years ago

Croft Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its cost of equity is 16 percen

Bezzdna [24]

Answer:

13.02%

Explanation:

Debt = 30% and Common stock = 70%

Cost of equity is 16% and debt is 8%

Tax is 24%

WACC = Cost of equity*Weight of equity + After tax cost of debt*Weight of debt

WACC = (0.16*0.70) + (0.08*(1-0.24)*0.30)

WACC = 0.112 + 0.01824

WACC = 0.13024

WACC = 13.02%

So, the the company's WACC is 13.02%

5 0

2 years ago

Chisholm Associates uses the indirect method to prepare the operating activities section of the statement of cash flows. The fol

Kobotan [32]

Answer:

$58100

Explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.

The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.

An increase in an asset other than cash is an outflow of cash while an increase in liabilities is an inflow of cash. A decrease in an asset other than cash is an inflow of cash while an decrease in liabilities is an outflow of cash.

Change in

Accounts receivable = $ 42,550 - $ 32,100=

= $10450 (Asset)

Prepaid insurance = 3,550 - 6,700

= -$3150 (Asset)

Accounts payable = 28,350 - 26,100

= $2250 (liability)

Unearned revenue = 6,350 - 8,500

= -$2150 (liability)

The net cash flows from operating activities

= $65,500 - $10450 + $3150 - $2250 + $2150

= $58100

7 0

3 years ago

What is the economic process of withdrawing investments from low profit sectors and investing in new activities?

frozen [14]

Answer:

Creative destruction.

Explanation:

In 1942, the term creative destruction was first to be used by the notable Austrian economist known as Schumpeter Joseph.

Creative destruction is the economic process of withdrawing investments from low profit sectors and investing in new activities.

This ultimately implies that, creative destruction is a concerted effort towards the deliberate destruction or dismantling of long standing products, processes, practices, procedures or services in order to give room for innovative ideas and an improved technique for the production (manufacturing) of goods and services. Thus, the old technology or methods of production are dismantled so as to pave way for new technologies, procedures, goods and services.

8 0

2 years ago