Answer:D beacuse we had a bigger population and more income
Answer:
Actual overhead= $37,000
Explanation:
Giving the following information:
Boston Company manufactures pipes and applies manufacturing overhead costs to production using a budgeted predetermined overhead rate of $18 per direct labor-hour.
Allocated overhead= $18*3600= $64,800
Actual overhead:
Indirect labor $9,000
Plant facility rent $20,000
Depreciation on plant machinery $8,000
Total= $37,000
Cost of equity capital is closest to: 16 percent
Solution:
WACC is covered on page 120 Corporate Finance, under Capital Structure.
Using the standard equation for WACC = %wt Equity x cost of equity (re) + %wt Debt x cost of debt (rd).
Since there is a 20% tax rate for the firm, the cost of borrowing is reduced by that amount. So the cost of debt is 4%, not 5%.
Plug the formula: 10% = 50% x re + 50% x 4%
The formula ( i.e. 0.1+(0.1-0.05)(1)(1-0.2)) in CFAI reading is questionable.
The calculation is 0.1+(0.1-0.05*(1-0.2))*(1)=16%
