Answer:
d. $72.41 per setup
Explanation:
The computation of the activity rate for the machine setup activity pool is as follows;
The Activity rate for the Machine setups activity cost pool is
= Estimated overhead cost ÷ Total machine setup
= $50,687 ÷ 700
= $72.41 per setups
Hence, the activity rate for the machine setup activity pool is $72.41 per setup
Therefore the option d is correct
Answer:
WACC for A: 9.05%
WACC for B: 9.50%
WACC for C: 12.20%
WACC for D: 12.65%
Explanation:
WACC for a division will be equal: Percentage of Debt in capital employed by the Division x Cost of Debt + Percentage of Equity in capital employed by the Division x Cost of equity = 50% x 6% + 50% x ( Risk free rate + Beta of each Division x Risk premium) = 3% + 50% x ( 4% + beta of each Division x Risk premium)
Risk premium for the 4 Divisions is equal to (Cost of equity for the whole firm - Risk free rate) / beta = 9%
Thus WACC for a division will be equal: 3% + 50% x ( 4% + beta of each Division x 9%).
Substitute beta of each Division from A to D provided in the question, we have: WACC for A: 9.05%; WACC for B: 9.5%; WACC for C: 12.2%; WACC for D: 12.65%.
Answer:
$7.88 million
Explanation:
Net Income = (EBITDA- Interest - Dep)*(1-tax)
Net income = 9.7
Earnings before interest, taxes, depreciation and amortization; EBITDA = 29.60
Interest = 6.8
tax = 35% or 0.35
9.7 = (29.60 - 6.8 - Dep)(1-0.35)
9.7 = (22.8 - Dep)*0.65
Divide both sides by 0.65
9.7/0.65 = 22.8- dep
14.9231 = 22.8 -dep
Dep = 22.8 - 14.9231
Dep = 7.8769
Therefore, depreciation and amortization expense is $7.88 million
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