Managerial accounting information is generally prepared for

At any given volume, average fixed costs must equal average variable costs<br><br> True or false?

Elanso [62]

False. Average fixed costs are totally different from average variable costs. They can only be equal if by chance the fixed costs are equal to variable costs for a specific level of production

3 0

3 years ago

The Corner Bakery has a bond issue outstanding that matures in 7 years. The bonds pay interest semi-annually. Currently, the bon

MaRussiya [10]

Answer:

Ans. The after tax cost of this bond is 2.09%

Explanation:

Hi, first we need to establish the cash flow of the bond, so we can find the after tax cost of the bond. After we find the after tax cash flow of the bond, we must use the IRR function of MS Excel to find the semi-annual cost of this debt, but, all after tax debts should be presented in annual basis. Let me walk you through the process. First, let me show you how it should look.

Face Value 100

price 101,4

years 7 years

Coupon 9%

Coupon 4,5% semi-annually

tax 30%

Per Cash Flow After Tax

0 101,4 101,4

1 -4,5 -3,15

2 -4,5 -3,15

3 -4,5 -3,15

4 -4,5 -3,15

5 -4,5 -3,15

6 -4,5 -3,15

7 -4,5 -3,15

8 -4,5 -3,15

9 -4,5 -3,15

10 -4,5 -3,15

11 -4,5 -3,15

12 -4,5 -3,15

13 -4,5 -3,15

14 -104,5 -73,15

Cost of Debt 1,04% semi-annually

Cost of Debt 2,09% annually

Ok, now, as you can see, there are 14 periods, that is because the coupon is paid semi-annually, the way to find the cash flow (I mean, the bond´s coupon) is:

$Coupon (semi-annual)=(Face Value)x\frac{0.09}{2} =4.5$

At the end (period 14), we need to add the face value and the coupon, that is $100+$4.5=$104.5

Now, to find the value of the third column (after-tax cost), we do the following.

$After-tax-Cost=Couponx(1-taxes)=4.5(1-0.3)=3.15\\$

Now, consider this, you are receiving 101.4 for every 100 of debt, that means that you are receiving more money than the emission value, and paying interests over 100 instead of 101.4, that is why we have to use the IRR excel function to find out the semi-annual cost of debt. That is, 1.04%.

Now, to make this an effective annual rate, we calculate it like this.

$EffectiveAnnualRate=(1+semi-annual Rate)^{\frac{1}{2} } -1=(1+0.0104)^{\frac{1}{2} } -1=0.0209$

Finally, the after-tax cost of this debt is = 2.09%

Best of luck.

6 0

3 years ago

Partnership XYZ distributed a piece of land in a nonliquidating distribution to Bob, a 50% partner, during the current taxable y

andrezito [222]

Answer:

a. Partnership XYZ's recognized gain (loss)

recognized gain = fair market value - basis = $180,000 - $50,000 = $130,000

b. Bob's taxable gain (income)

Bob's taxable income = $130,000 x 50% = $65,000

c. Bob's basis in the property

Bob's new basis = $180,00 x 50% = $90,000

d. Bob's basis in the partnership

Bob's basis in the partnership = $40,000 + $65,000 = $105,000

4 0

3 years ago

A phone company offers two monthly charge plans. In Plan A, there is no monthly fee, but the customer pays cents per minute of u

Andreas93 [3]

Answer:

For more than 180 minutes of phone use.

Explanation:

Let m represent number of minutes of phone use in a month.

We have been given that in Plan A, there is no monthly fee, but the customer pays $0.06 per minute of use.

The cost of using m minutes in plan A would be $0.06m$ .

We are also told that in Plan B, the customer pays a monthly fee of $4.80 and then an additional $0.03 per minute of use.

The cost of using m minutes in plan B would be $0.03m+4.80$ .

To find the amounts of monthly phone when Plan A will cost more than Plan B, we will set cost of plane A greater than cost of plan B as:

$0.06m>0.03m+4.80$

Let us solve for m.

$0.06m-0.03m>0.03m-0.03m+4.80$

$0.03m>4.80$

$\frac{0.03m}{0.03}>\frac{4.80}{0.03}$

$m>180$

Therefore, Plan A will cost more than Plan B for more than 180 minutes of phone use.

4 0

3 years ago

How will the general ledger accounts in the trial balance most likely differ if the company were a retail store rather than a wh

ExtremeBDS [4]

How will the general ledger accounts in the trial balance most likely differ if the company were a retail store rather than a wholesale company?

A general ledger account is used to record transactions that a company has. A trial balance has all of the general ledger accounts listed shows all of the debits and credits that a company has faced. A retail store will have smaller product transactions over a wholesale store due to the wholesale store selling in bulk. There will likely be more credits and debits for a retail store whereas a wholesale store may have more debits as they are less likely to have returns.

How will they differ for a hospital or a government unit?

A hospital or government unit will have vastly different general ledger reports due to the type of agency they are. These transactions will deal more with insurance or big dollar companies rather than individuals on a smaller scale. A trial balance is not a financial statement but it used to show balances that an organization has.

7 0

3 years ago