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AveGali [126]
3 years ago
13

Tara Company owns 30% of Hawkins, Inc. and applies the equity method. During the current year, Hawkins buys inventory costing $4

00,000 and sells it to Tara for $500,000. At the end of the year, only 25% of this merchandise is still being held by Tara. What amount of unrealized gain must be deferred by Hawkins in reporting on the equity method?$937.50$30,000.00$25,000.00$7,500.00$100,000.00
Business
1 answer:
Step2247 [10]3 years ago
3 0

Answer:

The correct option is d. $7,500

Explanation:

For computing the unrealized gain, first we have to compute the gross profit ratio which is shown below:

Since gross profit is not given in the question, so, first we have to find it.

The gross profit formula is shown below:

= Sales revenue - cost of goods sold

= $500,000 - $400,000

= $100,000

Now, gross profit ratio equals to

= (Gross profit ÷ sales revenue) × 100

= ($100,000 ÷ $500,000) × 100

= 20%

In the question, the 25% of merchandise is still held by Tara.

Since merchandise inventory is not given

So, we multiply the gross profit by 25% and 30%

In mathematically,

= Gross profit × 25% × 30%

= $100,000 × 25% × 30%

= $7,500

Hence, the $7,500 amount of unrealized gain must be deferred by Hawkins in reporting on the equity method

Therefore, the correct option is d. $7,500

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Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor
WARRIOR [948]

Answer:

$93,750

Explanation:

Required: "<em>Calculate the overhead assigned to the fabric case using the traditional costing system based on direct labor hours."</em>

<em />

Total estimated overhead costs (A) = 150,000

Total labor hours (B) = 15,000 + 9,000 = 24,000

Overhead allocation rate (C) = A/B = 150,000/24,000

Overhead allocation rate (C) = $6.25 Per labor hour

Total labor hours used by Fabric case (D) = 15,000 Hours

Overhead assigned to the fabric case (C*D) = $6.25 Per labor hour * 15,000 Hours = $93,750

5 0
3 years ago
Free cash flow describes the net cash provided by operating activities after adjusting for A : current liabilities. B : both cap
Nikolay [14]

Answer:

The answer is B, both capital expenditure and dividends paid.

Explanation:

In the Statement os Cash Flow, cash provided by operating activities fails to take into account that a company must invest in a new property, plant, and equipment and must maintain dividends at current levels to satisfy investors.

Free cash flow describer the net cash provided by operating activities after adjusting for capital expenditures and dividens paid.

7 0
2 years ago
Emily's trust fund has a value of 100,000 on January 1, 1997. On April 1, 1997, 10,000 is withdrawn from the fund, and immediate
mafiozo [28]

Answer:

(a) Dollar Weighted Rate of return = 0.27

(b) Simple interest-based rate of return = (115000- 100000)/ 100000 = 0.15

(c) Since, the data or investment portfolio of Emily is of one year, we can calculate the money weighted rate of return but time weighted rate of return couldn’t be calculated.

Explanation:

For (a) Dollar Weighted Rate of return = 0.27

<em>Calculations:</em> 115000 = ((-10000) *(1 + r) ^ ((365-90)/365)) + 100000*(1+r)

So, using calculator we found r= 0.27  

Here we’ve equated the value of portfolio at Jan 1, 1998 with Value of portfolio on Jan 1, 1997 and using the formula for money weighted average rate of return we’ve found the rate of return. Since, we are taking annual money weighted average rate of return, so we don’t include the value of July cash flow, i.e. $5000.

For (b) Simple interest-based rate of return = (115000- 100000)/ 100000 = 0.15  

Since, the distribution of deposits and withdrawals is uniform, so it is simply the newer value minus original value divided by the original value and is most likely to percentage calculation.

(c) Since, the data or investment portfolio of Emily is of one year, we can calculate the money weighted rate of return but time weighted rate of return couldn’t be calculated.

4 0
3 years ago
You have been appointed head of marketing for Barry's Younique Yachts. Barry, the CEO, is interested in determining whether offe
Zielflug [23.3K]

Answer:

that he should reduce his prices. Yachts are luxury goods and therefore exhibit a high price elasticity of demand. Thus, reducing prices would increase revenue.

Explanation:

Luxury goods usually have a high elasticity of demand when compared with necessity goods which are highly inelastic.

An elastic demand means that a change in price would have a considerable impact on quantity demanded.

Therefore, if the price of the yachts which is a luxury good with high elasticity is reduced, demand for yachts would increase and revenue would increase.

7 0
2 years ago
Choose the method of pay that would result in the most earnings for one month on sales of $40,000. A. Straight commission of 7.
sleet_krkn [62]

The method of pay that would result in the most earnings is method 1.

<h3>What method of pay would result in the most earnings?</h3>

In order to determine which method of pay would yield the highest earnings, the total amount that would be earned using each method of pay has to be determined.

Method A = 7.5% x $40,000 = $3000

Method B = $1600 + (2.5% x $40,000) = $2,600

Method C = (5% x $30,000) + (6% x 10,000) = $2,100

Method D = (4% x $25,000) + (8% x $15,000) = $2,200

To learn more about pay, please check: brainly.com/question/11946555

8 0
2 years ago
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