They would probably fire more workers to stay in business or/and raise prices.
Hope this helps!
Answer:
B) $ 4.25
Explanation:
From the data provided in the question, we need to classify the items into manufacturing costs.
Salary of production supervisor $ 40,000
Indirect materials $ 8,000
Rent on factory equipment <u>$ 20,000</u>
Total manufacturing costs <u>$ 68,000</u>
Estimated Machine Hours 16,000
Manufacturing Overhead - $ 68,000/ 16,000 hours $ 4.25 per machine hours
The other items provided in the question, sales commission and advertising expenses are selling expenses and are not manufacturing costs.
Answer and Explanation:
The journal entries are shown below:
On July 1
Treasury stock Dr (670 shares × $9 per share) $6,030
To Cash $6,030
(Being the purchase of treasury stock is recorded)
For recording this we debited the treasury stock as it increased the treasury and credited the cash as it decreased the assets
On Sep 1
Cash Dr (420 shares × $14 per share) $5,880
To Treasury Stock (420 shares × $9 per share) $3,780
To Additional paid in capital - Treasury stock $2,100
(Being the resale of treasury stock is recorded)
For recording this we debited the cash as it increased the assets and credited the treasury stock and additional paid in capital as the sale is made
I took the business class last year but if I remember correctly Net profit is more important to consider because even if your net profit is 0, your company is still a success.
Answer:
First Expected Dividend will come in at the end of Year 3 or t=3 assuming current time is t=0.
D3 = $ 4.25, Growth Rate for year 4 and year 5 = 22.1 %
Therefore, D4 = D3 x 1.221 = 4.25 x 1.221 = $ 5.18925 and D5 = D4 x 1.221 = 5.18925 x 1.221 = $ 6.33607
Growth Rate post Year 5 = 4.08 %
D6 = D5 x 1.0408 = 6.33607 x 1.0408 = $ 6.59459
Required Return = 13.6 %
Therefore, Current Stock Price = Present Value of Expected Dividends = [6.59459 / (0.136-0.0408)] x [1/(1.136)^(5)] + 4.25 / (1.136)^(3) + 5.18925 / (1.136)^(4) + 6.33607 / (1.136)^(5) = $ 45.979 ~ $ 45.98
Price at the end of Year 2 = P2 = Present Value of Expected Dividends at the end of year 2 = [6.59459 / (0.136-0.0408)] x [1/(1.136)^(3)] + 4.25 / (1.136) + 5.18925 / (1.136)^(2) + 6.33607 / (1.136)^(3) = $ 59.3358 ~ $ 59.34
Dividend Yield at the end of year 3 = DY3 = D3 / P2 = 4.25 / 59.34 = 0.07612 or 7.612 %
Total Required Return = 14. 6 %
Therefore, Required Capital Gains Yield = 14.6 % - 7.612 % = 6.988 %
