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insens350 [35]
3 years ago
10

Under variable costing, if a manager's bonus is tied to operating income, then increasing inventory levels compared to last year

would result in: being unable to determine the manager's bonus using only the above information not affecting the manager's bonus increasing the manager's bonus decreasing the manager's bonus
Business
1 answer:
inysia [295]3 years ago
7 0

Answer: not affecting the manager's bonus

Explanation:

Under Variable costing, fixed manufacturing overhead is not charged on inventories produced or not sold for the year which means that regardless of inventory level, the relevant inventory here when it comes to calculating operating profit is the one that was sold.

The manager's bonus will therefore not change as a result of higher inventory levels. Were this absorption costing where fixed overhead was charged to inventory that was not sold, the manager's bonus would increase because the higher inventory level would absorb more of the cost.

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"Water and Power Co. is a small company and is considering a project that will require $650,000 in assets. The project will be f
musickatia [10]

Answer:

The answer is =16.7%

Explanation:

Earnings before interest and taxes(EBIT) = $145,000

Tax rate is 25%

Therefore, the applicable tax rate on the earnings is 100% - 25% = 75%

So the Net income is 0.75 x $145,000

Net income = $108,750

The project is financed by 100percent equity and the cost is $650,000.

ROE(Return on Equity) = net income/equity

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=16.7%

7 0
3 years ago
Zhang Industries sells a product for $750. Unit sales for May were 400 and each month's sales are expected to grow by 3%. Zhang
Colt1911 [192]

Answer:

Total= $292,520

Explanation:

Giving the following information:

Zhang Industries sells a product for $750. Unit sales for May were 400 and each month's sales are expected to grow by 3%. Zhang pays a sales manager a monthly salary of $4,000 and a commission of 2% of sales in dollars. Assume 30% of Zhang's sales are for cash. The remaining 70% are credit sales; these customers pay in the month following the sale.

Cash budget for June:

Sales= [(400*1.03)*750]*0.3= 92,700

Sales from May= (400*750)*0.7= 210,000

Salary= (4,000)

Commision= [(400*1.03)*750]*0.02= (6,180)

Total= $292,520

6 0
3 years ago
You're a project manager in your company. an end user has suggested that everyone undergo extensive training to learn how to use
Sidana [21]

You're the project manager in your company. An end-user has suggested that everyone undergo extensive training to learn how to use a new system being developed. The next step you should take will be to analyze the impact of including the training in the project.

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The primary responsibility for designing, carrying out, overseeing, controlling, and wrapping up projects falls on project managers. The entire project scope, the project team and resources, the project budget, and the project's success or failure are all under their responsibility.

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1 year ago
You can buy a car that is advertised for $24,600 on the following terms: (a) pay $24,600 and receive a $4,600 rebate from the ma
Vadim26 [7]

Answer:

A. $20,000

B. $17,234.18

C.Option (b)

Explanation:

Obviously, the option with lower Present Value would be the best option to buy the car. The Present Value of the options can find out as following

REQUIREMENT A

Price of car = $24,600  

Rebate = $4,600

Present value of the payments for option  = Price of the car – rebate  

Present value of the payments for option (a) = $24,600 - $4,600

Present value of the payments for option = $20,000

REQUIREMENT B

We can use the following Present Value of an Annuity formula to calculate the present value of the payments

PV of the payments for option  = PMT * [1-(1+i) ^-n)]/i

PV of the payments for option (b) (PV) =?

Monthly payment PMT =$410 per month

Number of payments n = 5 years *12 months = 60

Monthly interest rate i=1.25% per month or 0.0125

PV of the payments for option  = $410 x [1- (1+0.0125) ^-60]/0.0125

PV of the payments for option  = $17,234.18

REQUIREMENT C.

Which is the better deal?

Option (b) is better deal as the present value of payments ($17,234.18) is less than Present value of the payments for option (a); $20,000.

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3 years ago
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fomenos

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1 year ago
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