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Neko [114]
3 years ago
15

Materials cost per yard: standard, $1.90; actual, $2.04 Standard yards per unit: standard, 4.69 yards; actual, 5.03 yards Units

of production: 9,400 Calculate the direct materials price variance. a.$1,316.00 unfavorable b.$6,619.48 unfavorable c.$6,619.48 favorable d.$6,172.04 favorable
Business
1 answer:
elena55 [62]3 years ago
5 0

Answer:

b.$6,619.48 unfavorable

Explanation:

Calculation to determine the direct materials price variance

First step is to calculate the Total number of actual quantity used

Total number of actual quantity used = 9400×5.03

Total number of actual quantity = 47,282

Now let determine the Material price variance

Using this formula

Material price variance = ( Standard price - Actual price ) × Actual quantity used

Let plug in the morning

Material price variance= ( $1.90 - $2.04 ) × 47,282

Material price variance=-0.14×47,282

Material price variance = -$6,619.48 unfavorable

Therefore the direct materials price variance is

-$6,619.48 unfavorable

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Savanna Company is considering two capital investment proposals. Relevant data on each project are as follows: Project Red Proje
liberstina [14]

Answer:

(a) Cash payback period:

     Project Red = 5.5 years

     Project blue  = 4.6 years

(b) Net present value for project Red = $19,760

     Net present value for project Blue =$164,580

(c) Annual rate of return:

Project Red =11.36%

Project Blue  =18.75%

(d) Project Blue

Explanation:

Given Data;  

Project Blue Capital investment = $640,000

Project Red Capital investment = $440,000

Project Red  Annual Net income = $ 25,000.

Project Blue Annual Net income = $ 60,000

Annual depreciation Project Red = (440000/8)

                                                       = 55,000

Annual depreciation Project Blue = (640000/8)

                                                       =  80,000

Annual cash inflow project A = $ 80,000

Annual cash inflow project B = $140,000

(a)

Cash payback period = Initial investment/cash flow per period

Project Red = 440000 /80000

                   = 5.5 years

Project blue = 640000/ 140000

                    = 4.6 years

(b)

Project Red  Present value of cash inflows = 80000 ×5.747

                                                                       = $459,760

Project Blue Present value of cash inflows  =140000×5.747

                                                                        = 804580

Net present value for project Red = $459,760 - $440,000

                                                        = $19,760

Net present value for project Blue = 804580 - $640,000  

                                                         =$164,580

(c) Annual rate of return:

Project Red   = $25,000 / ($440000)/2

                       =11.36%

Project Blue =  $60000/(640000/2)

                    =18.75%

(d) Savanna should select Project Blue because it has a higher positive NPV and a higher annual rate of return. AND Project Blue has early cash back period also

6 0
3 years ago
Let’s assume that we are about to appraise a house using the cost approach. The home was originally constructed in the early 190
guajiro [1.7K]

Answer:

$290,000

Explanation:

We start with the cost of building a replica of the house:

building a new house:                 $350,000

plus highest and best use             $25,000

minus perceived value loss          ($20,000)

minus physical deterioration        ($50,000)

<u>minus building obsolescence       ($15,000)  </u>

appraised value                            $290,000

8 0
3 years ago
Sheffield Corp. took a physical inventory on December 31 and determined that goods costing $165,000 were on hand. Not included i
Marina86 [1]

Answer: $272,570

Explanation:

4 0
3 years ago
The idea that investors today compare the returns on bonds with differing times to maturity to see which is expected to give the
Zielflug [23.3K]

Answer:

expectations theory

Explanation:

Expectations theory is defined as the prediction of what short-term interest rates will amount to in future based on the current long-term interest rates on an investment.

The theory suggests or states that "an investor will earn the same amount of interest by investing in two consecutive one-year bond investments that in one two-year bond investment".

Simply put, the theory say that one can invest twice in a one year bond and still make the same interest rate as investing once in a two-year bond.

This theory helps investors to make profits faster and even higher through multiple investments on bonds.

Cheers.

8 0
2 years ago
On December 31, 2021, Interlink Communications issued 6% stated rate bonds with a face amount of $119 million. The bonds mature
Tamiku [17]

Answer:

Price of the bond is $104,236,860.

Explanation:

Given:

Coupon rate is 6% or 0.06

Face value = $119,000,000

Coupon payment each year = 0.06×119,000,000

                                            = $7,140,000

Yield to maturity = 7% or 0.007

Maturity period = 30 years

Price of bond = Present value of face value + present value of coupon payment (annuity)

Price of bond = 119,000,000_{(PV\ 30,0.07)} + 7,140,000_{(PVA\ 30,0.07)}

PV of $1 for 7%,30 periods = 0.1314

PVA of $1 for 7%,30 periods = 12.409

Substitute the values in above formula:

Price of bond = (119,000,000 × 0.1314) + (7,140,000 × 12.409)

                     = 15,636,600 + 88,600,260

                    = $104,236,860

There will be slight difference in final answer as present value table is used. Excel spreadsheet gives an accurate answer.

So, price of bond is $104,236,860

8 0
2 years ago
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