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3 years ago

Last years ending inventory was overstated. This error would cause...

Business

1 answer:

Vsevolod [243]3 years ago

7 0

Answer:

This periods end assets to be overstated

Explanation:

As inventory is summarized in the assets if the final inventory is overstated it will generate an overstate in the following years.

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matthew's fish fry has a monthly target operating income of $7,200. variable expenses are 60% of sales and monthly fixed expe

slamgirl [31]

Given, Operating income = 7,200

Fixed expenses = 1800

Let the target sales be assumed to be X

Sales = 7200 + 1800 + 0.6*Sales

X = 7200 +1800 +0.6X

X-0.6X = 9000

0.4X =9000

X = 22,500

Target Sales = 22,500

Break even point = Fixed Costs/(Price -Variable cost)

Break even point = 1,800/(1-0.6) = 1,800/0.4 = 4,500

Break even point =4,500

Margin of Safety = (Target sales - break even point)/ Target Sales

Margin of Safety = (22,500-4,500)/22,500 = 18,000/22,500 = 0.8 = 80%

Margin of Safety =80%

7 0

3 years ago

Read 2 more answers

Calculating the Cost of Equity. Suppose stock in Lululemon Corporation has a beta of 0.80. The market risk premium is 10 percent

Elan Coil [88]

Answer:

Cost of equity capital can be found by the Capital asset pricing model:

Cost of capital

= Risk free rate + beta * market premium

= 2% + 0.8 * 10%

= 10%

Weighted Average Cost of Capital:

= (weight of debt * after tax cost of debt) + (weight of stock * cost of stock)

= (50% * 8% * ( 1 - 34%)) + (50% * 10%)

= 10.28%

5 0

2 years ago

Presented below is information related to Wildhorse Department Stores, Inc. pension plan for 2021. Accumulated benefit obligatio

Mashcka [7]

Answer:

1. Service cost $650,000

Interest on projected benefit $52,200

obligation (580,000)*9%

Expected return on plan -$37,600

assets ($470,000*8%)

Amortization of PSC $111,000

Amortization of Net gains $59,000

Pension Expenses - 2021 $716,000

General Journal Debit Credit

Pension Expenses $716,000

Other Comprehensive Income (G/L) $59,000

Cash $590,000

Other Comprehensive Income (PSC) $111,000

Pension Asset/Liability $74,600

(To record pension expense and the employer's contribution for 2021)

4 0

2 years ago

The direct labor rate for Brent Corporation is $9.00 per hour, and manufacturing overhead is applied to products using a predete

Paladinen [302]

Answer:

1.- first question D. Beginning WIP: $8,500

2.- second question A raw materials used. $63,000

3.- third quesion B. $21,700 actual overhead

Explanation:

Balance in May 1st

4,000 direct materials

300 hours x $9 labor rate = 2,700

300 hours x $6 overhead rate = 1,800

Total 8,500

We have to calculate the total cost for materials added for the month

beginning + purchase - used into production = ending

We are given the fact that balance decrease by 3,000 so

ending - beginning = -3,000

we post that into the formula:

purchase - used into production = ending - beginning

60,000 - production = -3,000

production = 63,000

applied overhead:

3,200 hours x 6 = 19,200

If underapplied by 2,500 then:

applied - actual = -2,500

19,200 - actual = -2,500

19,200 + 2500 = actual

actual overhead = 21,700

7 0

3 years ago

You are considering two independent projects. Project A has an initial cost of $125,000 and cash inflows of $46,000, $79,000, an

Tamiku [17]

Answer:

B) Accept Project A and reject Project B.

Explanation:

We use excel or a spreadsheet to calculate this ratio.

See document attached.

Cash flow will solve this problem.

At moment 0 we have the investment cost or initial cost, in this case $125,000 or $135,000. From period 1 to period 3, we have different incomes. Then, we calculate the Net cash flow that is the difference between benefits and cost.

We use all the result (positive and negative) in Net cash flow to get the IRR.

Project A

Internal Rate of Return (IRR) 18,86%

Project B

Internal Rate of Return (IRR) 13,78%

So we should accept Project A and reject Project B, because in project A the IRR is bigger of required return ( 16%), we reject project B because the IRR is smaller.

7 0

3 years ago