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Romashka [77]
3 years ago
9

Stanton Inc. is considering the purchase of a new machine that will reduce manufacturing costs by $5,000 annually and increase e

arnings before depreciation and taxes by $6,000 annually. Stanton will use the Modified Accelerated Cost Recovery System (MACRS) method to depreciate the machine, and it has estimated the depreciation expense for the first year as $8,000. Which of the following is the supplemental operating cash flow for the first year if Stanton's marginal tax rate is 40 percent?
Business
1 answer:
Greeley [361]3 years ago
7 0

Answer:

$9,800

Explanation:

supplemental cash flow for year 1 = [(decrease in costs + increase in earnings - depreciation) x (1 - tax rate)] + depreciation expense = [($5,000 + $6,000 - $8,000) x (1 - 40%)] + $8,000 = ($3,000 x 0.6) + $8,000 = $1,800 + $8,000 = $9,800

Since depreciation expense does not generate a cash outflow it must be included when you calculate taxes, but then you must add it later.

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A company's normal operating activity is to produce 500 units per month. During its first two months of operaetion, it produced
Bingel [31]

Answer:

a. 450-510

Explanation:

4 0
3 years ago
A company will buy 1000 units of a certain commodity in one year. It decides to hedge 80% of its exposure using futures contract
Nataliya [291]

Answer:

$96 per unit

Explanation:

The computation of the average price paid for the commodity is shown below:

Average price = Total cost ÷ Total number of units

where,

Total cost = Total number of units buyed × spot rate - hedge fund

where,

Hedge fund is

= 1,000 × 80% × ($110 - $90)

= $16,000

So, the total cost is

= 1,000 units × $112 - $16,000

= $96,000

Now the average price is

= $96,000 ÷ 1,000 units

= $96 per unit

6 0
3 years ago
Piper Technology's fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are $130. What is the
sweet-ann [11.9K]

Answer:

141,667 units

Explanation:

The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.

As such, the net operating income/loss is the difference between the sales and the total costs .

Let the amount of sales in units be y then,

250y - 130y - 1,500,000 = 200,000

120y = 1,700,000

y = 1700000/12

= 141,667 units

4 0
3 years ago
On March 13, a company writes off a customer's account of $3,500. On June 3, the customer unexpectedly pays the $3,500 balance.
Yuri [45]

Answer and Explanation:

The journal entries are shown below:

1. Allowance for doubtful Accounts Dr      $3,500

            To Accounts receivable         $3,500

(Being the allowance for doubtful account is recorded)

2. Accounts receivable Dr $3,500

           To Allowance for doubtful Accounts $3,500

(Being the written off amount is recorded)

3. Cash Dr $3,500

        To Account receivable $3,500

(Being the cash collection is recorded)

Only these 3 entries are required

5 0
3 years ago
Economists argue that the pace of economic growth: Determines the size of the population of a nation over the long term. Determi
hammer [34]

Answer: Determines the standard of life of a nation over the long term.

Explanation:

Economists believe that the economic growth of a country determines the standard of living of its people over the long term which is why measures such as GDP per capita exist.

They argue that if the economy is growing, more wealth will be created for citizens to access and the higher production of goods and services will give citizens more choice on what to buy to be able to improve their standard of living.

5 0
3 years ago
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