Answer: See explanation
Explanation:
a. What was the initial cost to Mitchell Labs to go private?
This will be calculated as:
= Price per share × Number of shares
= $17.50 × 3.3 million
= $57.75 million
b. What is the total value to the company from (1) the proceeds of the divisions that were sold, as well as (2) the current value of the 3.30 million shares (based on current earnings and an anticipated P/E of 12)?
This will be calculated as:
= $13.5 Million + $9.25 Million + $23 Million + [(12 X $ 1.40) × 3.3 Million]
= $45.75 Million + $55.44 Million
= $101.19 Million
c. What is the percentage return to the management of Mitchell Labs from the restructuring?
This will be calculated as:
= {$101.19 Million - $57.75 Million} /$57.75 Million
= $43.44/$57.75 × 100
= 0.7522 × 100
= 75.22%
Answer:
c. with multiple, diverse products
Explanation:
Activity based costing is a method that is used to share overhead and indirect costs among various products and services offered by a company.
So products that are produced in larger volume will receive more cost allocation.
The cost driver rate is used in this allocation and is calculated by dividing total pool cost by the cost driver.
So cost is allocated based on units of goods produced.
Examples of indirect cost shared are salaries and utilities.
Activity based costing is best for multiple diverse products. So that cost can effectively be allocated based on the amount of activity attributed to a particular product.
Answer:
$459,000
Explanation:
Calculation to determine How much is Newark's cost of goods sold
First step is to calculate the Net sales
Net sales = $640,000 + $1,540,000 - $109,000 - $62,000.
Net sales =$2,009,000
Now let Calculate the cost of goods sold using this formula
Cost of goods sold=Net Sales -Gross profit,
Let plug in the formula
Cost of goods sold=$2,009,000-$1,550,000
Cost of goods sold= $459,000
Therefore the amount of Newark's cost of goods sold is $459,000
Answer:
Costs and benefits are weighed to determine if producing the good will be profitable.
Explanation:
Production of goods refers to the process through which raw material and resources are converted to a finished product. In most economies, production of goods are services is necessary to meet the demand for these goods. Companies and firms utilize resources like labor and materials to produce finished products. This is usually a costly activity that needs to be planned and organized for it to be successful. Since most businesses is for profit making, the production process has to be done in such a way that in the end, profits are made. Production processes requires financial strategies to be applied and assessed to ensure that the process is profitable in the long run.
An example of a financial analysis that can be used is the cost benefit analysis. The cost benefit analysis involves determination of all the resources that will be needed as input. The input is then convert into monetary terms, then summed together. The total amount of input in monetary terms is the cost, since that i the total amount needed to process the raw materials to finished goods. The future benefits are also forecasted and converted into monetary terms. The comparison of the costs versus the benefits forms what is collectively termed as the cost and benefits analysis.
When the costs outweigh the benefits, then the good should not be produced. When the costs are equal to the benefits, it means the business will break-even, so there will be no profits, it is advisable not to produce the good. Finally, when the benefits outweigh the costs, it is advisable to produce the good.
