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3 years ago

A firm’s liquidity level decreases when:_______.

Business

1 answer:

katovenus [111]3 years ago

5 0

Answer:

b) inventory is sold on credit.

Explanation:

Liquidity is defined as the a business to use its current assets to settle it's current liabilities.

This is calculated by using the working capital ratio.

Working capital ratio = Current assets ÷ Current liabilities.

Cash and inventory contribute to a business' liquidity.

When inventory is sold on credit, it does not result in immediate increase in cash as payment is in the future. So there is a reduction in the current asset of the company.

A reduction in the numerator of the working capital ratio results in lower value of the ratio (lower liquidity)

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Hilton Company manufactures two products: Product A100 and Product X500. The company currently uses a plantwide overhead rate ba

Serggg [28]

Answer:

Results are below.

Explanation:

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 765,000 / (7,000 + 6,200)

Predetermined manufacturing overhead rate= $57.95 per direct labor hour

Now, we can allocate overhead to each product:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Product Y:

Allocated MOH= 57.95*7,000= $405,650

Product Z:

Allocated MOH= 57.95*6,200= $359,390

Finally, the allocation rates based on ABC:

Machining= 231,000 /11,000= $21 per machine hour

Machine setups= 180,000/300= $600 per setup

Production design= 94,000 / 2= $47,000 per product

7 0

3 years ago

Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2

Vikki [24]

Answer:

a. The predetermined overhead rate for 2017,

=Total Manufacturing overhead costs / direct labor Costs

= $840,000/100,000= $ 1.2 / direct labor or 120% of direct labor cost.

b. Raw materials Inventory $ 90,000 Dr.

Accounts Payable $ 90,000 Cr.

To record the purchase of raw materials on account

Direct Labor $ 70,000 Dr.

Wages Payable $ 54,000 Cr

Payroll Taxes $ 16,000 Cr

To record factory labor costs incurred.

Indirect materials $ 17,000 Dr

Indirect labor $ 20,000 Dr

Depreciation expense $ 12,000 Dr

Other manufacturing costs $ 16,000 Dr

Manufacturing Overhead Control Account $ 65,000 Cr.

To record Manufacturing Overheads incurred.

c. Work In Process $ 189,000 Dr

Job 50 Raw materials $ 10,000 Cr

Job 51 Raw materials $ 39,000 Cr

Job 52 Raw materials $ 30,000 Cr

Job 50Direct Labor $ 5000 Cr

Job 51 Direct Labor $ 25000 Cr

Job 52 Direct Labor $ 20,000 Cr

Job 50 Manufacturing Overhead ( 1.2 * 5000) $ 6000Cr

Job 51 Manufacturing Overhead ( 1.2 * 25000) $ 30,000Cr

Job 52 Manufacturing Overhead ( 1.2 * 20,000) $ 24,000Cr

To record the materials, direct labor and manufacturing costs to Job 50,51 and 52. It can be summarized as follows

Work In Process $ 189,000 Dr

Raw materials $ 79,000 Cr

Direct Labor $ 50000 Cr

Manufacturing Overhead ( 1.2 * 50000) $ 60000Cr

6 0

3 years ago

The three major types of firms in the united states are called

Nina [5.8K]

The three major types are;
1. Partnerships
2. Corporations
3. Sole proprietorship

5 0

3 years ago

As part of its risk management strategy, Copper Monkey Mining sells futures contracts to hedge changes in fair value of its inve

tankabanditka [31]

Answer:

In the March 31 statement of financial position, the company should record the futures contracts as a loss and liability of $100,000

Explanation:

GAAP specifies that all derivatives instrument and hedging activities recorded in the balance sheet are assets and liabilities and measured at fair value.

At the starting of the futures contracts, the fair value is $0 since the prices of the future contract was entered at that date.

Given that 200 futures contracts was sold at the commodity exchange foo $$0.83/lb and each contract was for 25,000 lb. Therefore a fair value hedge of 5 million lb. (25,000 lb. × 200 contracts) of copper at $0.83/lb is expected to be delivered.

The price had risen to $0.85/lb at the date of the financial statements, Copper Monkey should record a loss and liability = (5 million lb) × ($0.83 – $0.85) = 5000000 × 0.02 = 100000

Copper Monkey should record a loss and liability of $100,000

5 0

3 years ago

Ocean Gate sells external hard drives for $200 each. Its total fixed costs are $30 million, and its variable costs per unit are

Angelina_Jolie [31]

Answer:

What is the firm's degree of operating leverage?

the degree of operating leverage measures the proportion of fixed costs vs. variable costs

total fixed costs = $30,000,000

contribution margin per hard drive = selling price - variable cost = $200 - $140 = $60

tax rate = 30%

expected sales = 2,000,000 hard drives

degree of operating leverage = contribution margin / (total sales - total costs) = (2,000,000 x $60) / ($400,000,000 - $280,000,000 - $30,000,000) = $120,000,000 / $90,000,000 = 1.33

DOL = 1.33

If the economy enters a recession, what will be the firm's after tax profit?

firm's EBIT = total revenue - variable costs - fixed costs

total revenue = 1,000,000 x $200 = $200,000,000
total variable costs = 1,000,000 x $140 = $140,000,000
total fixed costs = $30,000,000

EBIT = $200,000,000 - $140,000,000 - $30,000,000 = $30,000,000

firm's after tax profit = EBIT x (1 - tax rate) = $30,000,000 x (1 - 30%) = $21,000,000

firm's after tax profit = $21,000,000

7 0

3 years ago

Read 2 more answers