Answer:
3.5
Explanation:
Computation for the firm’s times interest earned ratio
Revenues$ 2.95 million
Cost of goods sold$ 2.45 million
Depreciation expense$ 178,000.00
Book values of Debt outstanding$ 1.15 million
Interest rate8.00
First step is to calculate for the EBIT
Using this formula
EBIT= Revenues -(Cost of goods sold +Depreciation expense$ 178,000.00)
EBIT=$2,950,000-($2,450,000+$178,000)
EBIT=$2,950,000- $2,628,000
EBIT=$322,000
Second step is to find the Interest
Using this formula
Interest =Debt outstanding with book value ×Interest rate
Let plug in the formula
Interest =$1,150,000×8%
Interest =$92,000
Now let find the firm’s times interest earned ratio
Using this formula
Firm’s times interest earned ratio=EBIT/INTEREST
Where,
EBIT=$322,000
INTEREST=$92,000
Let plug in the formula
Firm’s times interest earned ratio=$322,000/$92,000
Firm’s times interest earned ratio =3.5
Therefore the firm’s times interest earned ratio will be 3.5
Answer:
Sun Microsystems
Amount of Expenses to recognize during the months of June, July, and August in each of the following transactions:
a. Rent Expense = $30,000
b. Utility Expense = $4,650
c. Supplies Expense = $9,700
d. Property Taxes = $1,800
e. No expense is recognized.
f. Salary Expense = $4,500
g. Advertising Expense = $6,600
Explanation:
Data and Calculations:
a. Rent Expense = $180,000/12 * 2 = $30,000 Rent Prepaid $150,000
b. Utility Expense $4,560
c. Supplies Expense $9,700 ($12,600 - $2,900)
d. Property Taxes = $7,200 *3/12 = $1,800
e. No expense is recognized for the advance payment for delivery van.
f. Salary Expense $4,500
g. Advertising Expense $6,600
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Option 1:
You can have $72,000 per year for the next two years
Option 2:
You can have $61,000 per year for the next two years, along with a $17,000 signing bonus today. The bonus is paid immediately, and the salary is paid in equal amounts at the end of each month.
The interest rate is 9 percent compounded monthly.
To calculate the present value, we need to use the following formula:
PV= FV/(1+i)^n
First, we need to calculate the final value on both options:
FV= PV*(1+i)^n
For each year
Option 1:
i= 0.09/12= 0.0075
n= 12
Year 1= 72,000*1.0075^24= 86,141.77
Year 2= 72,000*1.0075^12= 78,754.09
Total= 164,895.86
PV= 164,895.86/1.0075^24= 137,825.14
Option 2:
Year 1= 61,000*1.0075^24= 72,981.23
Year 2= 61,000*1.0075^12= 66,722.22
Total= 139,703.45
PV= 139,703.45/ 1.0075^24= 116,768.53 + 17,000= 133,768.53
Option 1 is more profitable.
Each unit sells: $80
Each unit costs to make: $32
Fixed costs: 72,000
Goal: 2,000 units sold
If they meet their goal, let's see how that would go:
(2,000 * 80) - (2,000 * 32) - 72,000 = ?
160,000 - 64,000 - 72,000 = 24,000
24,000 is the profit they would make for hitting their goal.
Question 1:
What is the break-even point? The break-even means they make no money, but they also lose no money. So that final number (24,000) would be 0 instead. How many units would they have to make to hit zero?
(x * 80) - (x * 32) - 72,000 = 0.
80x - 32x = 72,000
48x = 72,000
x = 1500 units
We can verify by using our first formula we've already determined, using this new value for units.
(1,500* 80) - (1,500 * 32) - 72,000 = ?
120,000 - 48,000 - 72,000 = 0? True!
Question 2: If they increase their expenses by 16,000, what is their new break even point?
(x * 80) - (x * 32) - 72,000 - 16000 = 0.
80x - 32x - 88000 = 0
48x = 88000
x = 1833
Question 3: 10% reduction in selling price and 10% increase in sales. (Assuming based off the original formula the problem provided.)
Original: (2,000 * 80) - (2,000 * 32) - 72,000 = ?
10% Reduction in price: 8
80-8 = 72
10% increase in sales: 200
2000 + 200 = 2200
Plugin to our formula:
(2200 * 72) - (2200 * 32) - 72,000 = ?
158400 - 70400 - 72,000 = 16,000
Since this number is positive, this is income. (D)
Answer:
$14
Explanation:
24 each batch minus 10 is total profit
