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3 years ago

An increase in a levered firm’s tax rate will:

Business

1 answer:

svet-max [94.6K]3 years ago

4 0

Answer:

B, decrease the firm's cost of capital

Explanation:

When the tax rate of a levered firm is increased, there is a decrease in the firm's cost of capital because the value of a levered firm is the sum of the market value of the firm's debt and its equity.

An increased tax rate means it has a greater debt and as such the firm's capital after settling tax debt is very reduced.

I hope this helps. Cheers.

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A large bakery buys flour in 25-pound bags. The bakery uses an average of 1,215 bags a year. Preparing an order and receiving a

Nostrana [21]

Answer and Explanation:

The computation is shown below

a. The economic order quantity is

= sqrt ((2 × annual demand × ordering cost) ÷ carrying cost)

= sqrt ((2 × 1,215 × $10) ÷ $75)

= 18 units

b) Average number of bags on hand is

= EOQ ÷ 2

= 18 ÷ 2

= 9

c) Orders per year is

= D ÷ EOQ

= 1215 ÷ 18

= 67.5

= 68

d) Total cost = Total carrying cost+ Total ordering cost

= (Q ÷ 2)H +(D ÷ Q)S

= (18 ÷ 2)75 + (1215 ÷ 18) × 10

= 675 + 675

= $1350

3 0

2 years ago

Whispering Winds Corp. has the following transactions during August of the current year. Aug. 1 Issues shares of common stock to

k0ka [10]

Answer:

Aug. 1 Issues shares of common stock to investors in exchange for $10,800.

Accounting equation:

Asset + 10,800

Equity +10,800

Journal entry:

cash 18,000 debit

common stock 18,000 credit

Aug. 4 Pays insurance in advance for 3 months, $1,200.

Accounting equation:

Asset + 1,200

Assets - 1,200

Net 0

Journal entry:

prepaid rent 1,200 debit

cash 1,200 credit

Aug. 16 Receives $730 from clients for services rendered.

Accounting equation:

Asset + 730

Equity +730

Journal entry:

cash 730 debit

revenues 730 credit

Aug. 27 Pays the secretary $580 salary

Accounting equation:

Asset - 580

Equity - 580

Journal entry:

salaries expense 580 debit

cash 580 credit

Explanation:

We need to disclose how the impact in the accounting equation and the journal entry should be done:

Aug 1st the common stock is an equity account that is increasing

we receive cash that is an asset

August 4th we are using our cash to pay in advance the rent.

this gives a right to use the rental space for 3-months thus, it is not an expense is a new asset. There is no change in the accounting equation only the composition of assets changed.

August 16th we recognize earnings through revenues account this increases the equity of the company as well as assets.

August 27th in this case we pay the salaries which are an incurred cost, therefore, expense. This decreases equity.

We also use cash making assets to decrease as well.

6 0

3 years ago

A.C. Tech Manufacturing Appliances manufactures three sizes of kitchen appliances: small, medium, and large. Product information

Colt1911 [192]

Answer:

A.C. Tech Manufacturing Appliances

Product Models to produce first, if management incorporates a short-run profit-maximizing strategy:

Small Medium Large

Selling price $430 $610 $1,210

Variable cost $270 $280 $530

Contribution $160 $330 $680

Fixed Costs:

Fixed manufacturing $40 $170 $270

Fixed selling & admin $70 $75 $140

Unit Profit $50 $85 $270

Demand in units 150 170 150

Total profit $7,500 $14,450 $40,500

Machine hours/unit 60 60 150

Total machine hours required 9,000 10,200 22,500

Unit profit per machine hour $0.83 $1.42 $1.80

If management incorporates a short-run profit maximizing strategy, given maximum machine hours available, it should first produce the large model.

Explanation:

The large model offers better contribution per unit, better profit per unit and in total, and most importantly better profit per unit of hour (major constraint).

In making a limiting factor decision, the choice goes to the product model that produces more profit under the limiting constraint.

5 0

3 years ago

__________ is the management function that involves determining whether an organization is progressing toward its goals, rewardi

IRISSAK [1]

Answer:

Controlling

Explanation:

One of the various responsibilities of a manager (management function) is controlling.

In the controlling function, which is usually preceded by other functions such as planning, staffing and leading, it is very important for a manager to control the activities of the subordinates to ensure that they are working towards organization goals, as well as rewarding employees for their good works and also putting them in check when they do not do a good job.

Cheers.

5 0

3 years ago

Restaurant A uses 60 bags of tomatoes each month. The tomatoes are purchased from a supplier for a price of $80 per bag and an o

ch4aika [34]

Answer:

Explanation:

D = 60 bags

cost = 80 / bag

s = 20 / order

h = 40% of cost

0.4 * 80 / 100

h= 32 unit/year

D = d * 12 months

D = 60 * 12

D = 720 bags / year

EOQ = $\sqrt{2DS/H}$

EOQ = $\sqrt{2 *720*20/32}$

EOQ = 30 bags

Total cost = Total holding cost + total ordering cost

Total holding cost = (Q/2 * H) = (30/2 * 32) = 480

Total ordering cost = (D/Q * 20) = (720/30 *20) = 480

Total cost = 480 + 480 = 960

Total purchasing cost = cost * D = 80 * 720 = 57.600

Percentage= total cost / total purchasing cost * 100

960 / 57.600 * 100

1.67 %

6 0

3 years ago