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3 years ago

Having in mind the pandemic, should a company reduce its leverage in order to add value to its shareholders? and why?

Business

1 answer:

tensa zangetsu [6.8K]3 years ago

8 0

Answer:

No, taking into account the pandemic, companies should not reduce their leverage, as this would make it very difficult for small and medium investors to invest in a context of lack of income and shortage of available circulating money.

Therefore, leverage implies the possibility for investors to access the necessary funds to be able to invest their money, without the need to dispose of their savings or the money they use for essential activities.

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At the beginning of the year, Smith Company budgeted overhead of $129,600 as well as 13,500 direct labor hours. During the year,

andre [41]

Answer:

Part 1

$9.60

Part 2

$11,129

Part 3

Journal 1

Debit : Overheads $172,500

Credit : Equipment lease $ 6,800

Credit : Depreciation on building 19,340

Credit : Indirect labor 90,400

Credit : Utilities 14,560

Credit : Other overhead 41,400

<em>Being overheads incurred</em>

Journal 2

Debit : Work In Process $173,760

Credit : Overheads $173,760

<em>Being overheads applied</em>

Part 4

under-applied overheads is $1,260

Part 5

$636,860

Explanation:

Overhead rate = Budgeted Overheads ÷ Budgeted Activity

= $129,600 ÷ 13,500

= $9.60

Total cost (Job K456) = $2,750 + $5,355 + $3,024 = $11,129

Actual Overheads = $ 6,800 + $19,340 + $90,400 + $14,560 + $41,400 = $172,500

Applied overheads = 18,100 x $9.60 = $173,760

Since, Actual Overheads < Applied overheads, overheads have been under-applied. Amount of under-applied overheads is $1,260 ($173,760 - $172,500)

Under-applied overheads are added to cost of goods sold. Therefore, adjusted cost of goods sold will be $636,860 ($635,600 + $1,260)

7 0

2 years ago

Olive Corporation has two divisions, Pressing and Extracting. The company's primary product is Lavender Oil. Each division's cos

Alex777 [14]

Answer:

$15,000

Explanation:

Operating income is the difference between the net sales or revenue generated by a business and the operating expenses of the business.

The operating expenses of the business may be classified into 2 groups namely the fixed and variable costs.

The total operating cost of the business

= ( $9 + $6 + $28 + $32) per barrel

= $75

operating income of both divisions

= 200 ( $150 - $75)

= 200 * $75

= $15,000

5 0

3 years ago

The difference between a secured loan and an unsecured loan is _____.

PSYCHO15rus [73]

D. a secured loan requires collateral and an unsecured loan does not

5 0

3 years ago

Read 2 more answers

Your company is interested in producing and marketing a line of coffee that will penetrate the European market. Your firm is wil

Mrac [35]

A franchise can be used.

<h3><u>Explanation:</u></h3>

Franchise refers to the authorization that is given by the government for involving in commercial activities. It is the permission that is obtained legally for using the ideas, expertise and processes of some one else with their permissions.

In the example given, a firm is willing to provide all necessary materials for the preparation of coffee and wants to penetrate the European market. The company here provides all the equipment, ingredients, trademarks and operating systems and hence it can make use of franchise type of strategy.

7 0

2 years ago

When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold, the tax has.

Dmitry_Shevchenko [17]

When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold, the tax has caused a deadweight loss.

<h3>What is meant by deadweight loss?</h3>

The gap between the production and consumption of any given good or service, including taxes, is referred to as deadweight loss in economics. Deadweight loss is most frequently detected when the quantity generated compared to the quantity consumed deviates from the ideal surplus concentration.
Overproduction of commodities results in a loss of money. For instance, a baker might only sell 80 of the 100 loaves of bread they produce. There will be a deadweight loss since the 20 remaining loaves will become moldy and dry, and they will need to be thrown away.
The loss in economic activity that results when the market pricing of products or services change negatively affects consumers and businesses is referred to as deadweight loss.
You need to know the change in price and the change in quantity demanded in order to compute deadweight loss. Deadweight Loss is calculated using the following formula:. 5 * (P2 - P1) * (Q1 - Q2).

When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold, the tax has caused a deadweight loss.

To learn more about deadweight loss, refer to:

brainly.com/question/21335704

#SPJ4

8 0

1 year ago