Answer:
![\arge\boxed{\large\boxed{\$ 117,788}}](https://tex.z-dn.net/?f=%5Carge%5Cboxed%7B%5Clarge%5Cboxed%7B%5C%24%20117%2C788%7D%7D)
Explanation:
Assume the <em>cost</em> equation to be:
![Cost(x)=Fixed\text{ }costs+Variable\text{ }costs\\\\Cost(x)=A+Bx](https://tex.z-dn.net/?f=Cost%28x%29%3DFixed%5Ctext%7B%20%7Dcosts%2BVariable%5Ctext%7B%20%7Dcosts%5C%5C%5C%5CCost%28x%29%3DA%2BBx)
Where
is the number of units (wooden baseball bats) produced.
The <em>average cost per unit of production level</em> is the total cost divided by the number of units produced:
![Average\text{ }cost(x)=Cost(x)/x\\\\Average\text{ }cost(x)=(A+Bx)/x\\](https://tex.z-dn.net/?f=Average%5Ctext%7B%20%7Dcost%28x%29%3DCost%28x%29%2Fx%5C%5C%5C%5CAverage%5Ctext%7B%20%7Dcost%28x%29%3D%28A%2BBx%29%2Fx%5C%5C)
You are given that the <em>average cost per unit of a production level of 7,700 bats is $14</em>, then:
![14=(A+7,700B)/7,700](https://tex.z-dn.net/?f=14%3D%28A%2B7%2C700B%29%2F7%2C700)
You are also given that the <em>fixed costs</em> are <em>$22,500</em>, thus A = 22,500. Hence, you can substitute the value of A in the previous equation and find B:
![14=(22,500+7,700B)/7,700\\\\14\times 7,700=22,500+7,700B\\\\107,800-22,500=7,700B\\\\85,300/7,700=B\\\\B=11.08](https://tex.z-dn.net/?f=14%3D%2822%2C500%2B7%2C700B%29%2F7%2C700%5C%5C%5C%5C14%5Ctimes%207%2C700%3D22%2C500%2B7%2C700B%5C%5C%5C%5C107%2C800-22%2C500%3D7%2C700B%5C%5C%5C%5C85%2C300%2F7%2C700%3DB%5C%5C%5C%5CB%3D11.08)
Now you can complete the cost equation:
![Cost(x)=\$ 22,500+11.08x](https://tex.z-dn.net/?f=Cost%28x%29%3D%5C%24%2022%2C500%2B11.08x)
And to predict the total costs for 8,600 bats you must subsitute x with 8,600 in the previous equation:
![Cost(8,600)=\$ 22,500+11.08(8,600)=\$ 117,788](https://tex.z-dn.net/?f=Cost%288%2C600%29%3D%5C%24%2022%2C500%2B11.08%288%2C600%29%3D%5C%24%20117%2C788)
Answer:
A.
2015 37.7
2016 12.9
B. Yes
Explanation:
Computation of the times interest earned ratios for 2016 and 2015
First step is to find the EBIT
EBIT: 2016 $ 2015 $
Gross profit 44,500 58,400
Less Selling, General and Administrative expenses (36,900) (38,800)
EBIT 7,600 19,600
Second step is to compute the times interest earned ratios for 2016 and 2015 using this formula
Time interest earned = EBIT / Interest expense
Let plug in the formula
Time interest earned 2016 2015
EBIT $7,600 $19,600
÷Interest expense $590 $520
=Time interest earned 12.9 37.7
Therefore the Time interest earned will be :
2015 37.7
2016 12.9
2. Yes Computer Tycoon generate sufficient net income in both 2015 and 2016 before taxes and interest in order to cover the cost of debt financing.
Answer:
The journal entry is as follows:
On September 30,
Bonds payable A/c Dr. $1,000,000
Loss on bonds retirement A/c Dr. $20,000
To Discount on bond $10,000
To cash A/c $1,010,000
(To record the bonds payable and retirement)
Workings:
Loss on bonds retirement:
= (Cash + Discount on bonds) - Par value of callable bonds
= ($1,010,000 + $10,000) - $1,000,000
= $1,020,000 - $1,000,000
= $20,000