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3 years ago

Which of the following are advantages of short-term financing (as compared to long-term financing)?

Business

1 answer:

ollegr [7]3 years ago

5 0

Answer:

Answers a. and b. are both correct which shows the advantages of short-term financing (as compared to long-term financing).

Explanation:

The short term financing have includes less compliance, less interest rate, contain lesser amount, speedy transactions ,and lesser time period whereas the long term financing includes more compliance, large amounts, large time period.

Thus, a. and b. are both correct which shows the advantages of short-term financing (as compared to long-term financing)

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During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 48,000 mini refrigerators, of whi

Anvisha [2.4K]

Answer:

Part a.

Income statement based on the absorption costing concept.

Sales $8,800,000.00

Less Cost of Sales

Beginning Inventory $0

Add Manufacturing Cost $6,048,000.00

Less Ending Inventory ($504,000.00) ($5,544,000.00)

Gross Profit $3,256,000.00

Less Expenses :

Selling and administrative expenses:

Variable $528,000.00

Fixed $352,000.00 ($880,000.00)

Net Income/(loss) $2,376,000.00

Part b.

Income statement based on the variable costing concept.

Sales $8,800,000.00

Less Cost of Sales

Beginning Inventory $0

Add Manufacturing Cost $5,520,000.00

Less Ending Inventory ($460,000.00) ($5,060,000.00)

Contribution $3,740,000.00

Less Expenses :

Fixed manufacturing cost $528,000.00

Selling and administrative expenses:

Variable $528,000.00

Fixed $352,000.00 ($1,408,000.00)

Net Income/(loss) $2,332,000.00

Part c.

Reason : Fixed Costs deferred in Ending Inventory in Absorption Costing has resulted in a higher Income.

Explanation:

<u>Units in Ending Inventory Calculation :</u>

Production 48,000

Less Sales (44,000)

Ending Inventory 4,000

Absorption Costing Calcs

<u>Variable Manufacturing Costs</u>

Direct materials $3,360,000.00

Direct labor $1,344,000.00

Variable manufacturing cost $816,000.00

Fixed manufacturing cost $528,000.00

Total $6,048,000.00

Ending Inventory = $6,048,000.00 × 4,000 / 48,000

= $504,000

Variable Costing Calcs

<u>Variable Manufacturing Costs</u>

Direct materials $3,360,000.00

Direct labor $1,344,000.00

Variable manufacturing cost $816,000.00

Total $5,520,000.00

Ending Inventory = $5,520,000.00 × 4,000 / 48,000

= $460,000

4 0

3 years ago

The current price of a non-dividend-paying stock is $40. Over the next year it is expected to rise to $42 or fall to $37. An inv

jek_recluse [69]

Answer:

D. $0.93

Explanation:

Upmove (U) = High price/current price

= 42/40

= 1.05

Down move (D) = Low price/current price

= 37/40

= 0.925

Risk neutral probability for up move

q = (e^(risk free rate*time)-D)/(U-D)

= (e^(0.02*1)-0.925)/(1.05-0.925)

= 0.76161

Put option payoff at high price (payoff H)

= Max(Strike price-High price,0)

= Max(41-42,0)

= Max(-1,0)

= 0

Put option payoff at low price (Payoff L)

= Max(Strike price-low price,0)

= Max(41-37,0)

= Max(4,0)

= 4

Price of Put option = e^(-r*t)*(q*Payoff H+(1-q)*Payoff L)

= e^(-0.02*1)*(0.761611*0+(1-0.761611)*4)

= 0.93

Therefore, The value of each option using a one-period binomial model is 0.93

8 0

3 years ago

N april 1, santa fe, inc. paid griffith publishing company $1,548 for 36-month subscriptions to several different magazines. san

DerKrebs [107]

<span>Let us first find out how much of the prepaid subscriptions has been used up during the reporting year. $1548 is for 36 months. So the monthly rate of subscription charges will be 1548/36 = 43. During the reporting year, subscription charges are paid only for 9 months( from April to December) So the amount to be debited to subscription charges = 43 * 9 = 387. Subscription charges will be debited with $ 387 and prepaid subscriptions account will be credited with the same amount. The remaining amount, 1548-387=1161, will remain in prepaid subscriptions account as a debit balance.</span>

3 0

3 years ago

what situation is occurring if a 1 percent decrease in price results in more than a 1 percent increase in quantity demand?

Mekhanik [1.2K]

Demand is price elastic, is occurring if a 1 percent decrease in price results in more than a 1 percent increase in quantity demand.

<h3>What is price elastic?</h3>

Price elastic of demand means the measurement of the product's demand with respect to its price.

It is common that if the price of a product will increase, the demand will fall, but some products demand fall more than other products, which is measure by price elastic in demand.

Thus, the correct option is demand is price elastic.

Learn more about demand is price elastic.

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3 0

2 years ago

Allen Boating Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skil

jek_recluse [69]

Answer:

Direct material quantity (efficiency) variance= $60,500 unfavorable

Explanation:

Giving the following information:

Standards:

Direct materials: 1 pound per unit; $ 11 per pound

Allen produced 2,000 units during the quarter.

Direct material used= 7,500 pounds

To calculate the direct material efficiency variance, we need to use the following formula:

Direct material quantity (efficiency) variance= (standard quantity - actual quantity)*standard price

standard quantity= 2,000*1= 2,000 pounds

Direct material quantity (efficiency) variance= (2,000 - 7,500)*11

Direct material quantity (efficiency) variance= $60,500 unfavorable

It is unfavorable because the company used more materials that estimated to produce 2,000 units.

5 0

3 years ago