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3 years ago

The following condensed information was reported by Peabody Toys, Inc., for 2018 and 2017:

Business

1 answer:

Helga [31]3 years ago

4 0

Answer:

1a. Profit margin on sales 3.46%

1b. Return on assets 10%

1c. Return on equity 34.29%

2. Dividend paid $130,000

Explanation:

1a. Calculation to determine the Profit margin on sales

Using this formula

Profit margin on sales = Net Income / Net Sales

Let plug in the formula

Profit margin on sales = 180/5200

Profit margin on sales = 3.46%

1b. Calculation to determine Return on assets

First step is to calculate the Average total assets using this formula

Average total assets = ( Beginning assets + Ending Assets)/2

Let plug in the formula

Average total assets = = ( 1,700+1,900)/2

Average total assets = $1,800 thousands

Now let calculate the Return on assets using this formula

Return on assets = Net Income/Average total assets

Let plug in the formula

Return on assets = 180/1,800

Return on assets = 10%

1c Calculation to determine the Return on

shareholders’ equity

First step is to calculate the Beginning equity using this formula

Beginning equity = Beginning Paid-in capital + Beginning retained earnings

Let plug in the formula

Beginning equity= 400+100

Beginning equity= $500 thousands

Second step is to calculate the Ending equity using this formula

Ending equity = Ending Paid-in capital + ending retained earnings

Let plug in the formula

Ending equity = 400+150

Ending equity = $550 thousands

Third step is to calculate Average equity using this formula

Average equity = ( Beginning equity + Ending equity)/2

Let plug in the formula

Average equity= (500+550)/2

Average equity= $525 thousands

Now let calculate Return on equity using this formula

Return on equity = Net Income/Average equity

Let plug in the formula

Return on equity= 180/525

Return on equity= 34.29%

2. Calculation to Determine the amount of dividends paid to shareholders during 2018

Using this formula

Dividend paid = Retained earnings, beginnings + Net Income - retained earnings, ending

Let plug in the formula

Dividend paid=$100,000+$180,000-$150,000

Dividend paid= $130,000

Therefore the amount of dividends paid to shareholders during 2018 is $130,000

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. (Pitman 3.4.9) Suppose we play the following game based on tosses of a fair coin. You pay me $10, and I agree to pay you $n 2

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Answer:

$6 per game

Explanation:

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3 years ago

Read 2 more answers

Black Bear Auto Company incurred $120,000 of indirect advertising costs for its operations. The following 2017 data have been co

Alex

Answer:

a. Allocating cost using direct advertising costs

We have:

Cost allocated to New Cars = $60,000

Cost allocated to Used Cars = $48,000

Cost allocated to Parts and Service = $12,000

b. Allocating cost using Newspaper ad space

We have:

Cost allocated to New Cars = $72,000

Cost allocated to Used Cars = $36,000

Cost allocated to Parts and Service = $12,000

c. Allocating cost using Sales

We have:

Cost allocated to New Cars = $60,000

Cost allocated to Used Cars = $48,000

Cost allocated to Parts and Service = $12,000

Explanation:

Given:

New Cars Used Cars Parts and Service

Direct advertising costs $30,000 $24,000 $6,000

Newspaper ad space 60% 30% 10%

Sales $250,000 $200,000 $50,000

The costs allocated to each department can now be calculated as follows:

a. Allocating cost using direct advertising costs

The indirect advertising costs can be allocated using the following formula:

Cost allocated to a department = (Direct advertising costs of the department / Sum of direct advertising costs of the 3 departments) * Indirect advertising costs ................... (1)

Using equation (1), we have:

Cost allocated to New Cars = ($30,000 / ($30,000 + $24,000 +$6,000)) * $120,000 = $60,000

Cost allocated to Used Cars = ($24,000 / ($30,000 + $24,000 +$6,000)) * $120,000 = $48,000

Cost allocated to Parts and Service = ($6,000 / ($30,000 + $24,000 +$6,000)) * $120,000 = $12,000

b. Allocating cost using Newspaper ad space

The indirect advertising costs can be allocated using the following formula:

Cost allocated to a department = Percentage of Newspaper ad space of the department * Indirect advertising costs ................... (2)

Using equation (2), we have:

Cost allocated to New Cars = 60% * $120,000 = $72,000

Cost allocated to Used Cars = 30% * $120,000 = $36,000

Cost allocated to Parts and Service = 10% * $120,000 = $12,000

c. Allocating cost using Sales

The indirect advertising costs can be allocated using the following formula:

Cost allocated to a department = (Sales of the department / Sum of Sales of the 3 departments) * Indirect advertising costs ................... (3)

Using equation (3), we have:

Cost allocated to New Cars = ($250,000 / ($250,000 + $200,000 + $50,000)) * $120,000 = $60,000

Cost allocated to Used Cars = ($200,000 / ($250,000 + $200,000 + $50,000)) * $120,000 * $120,000 = $48,000

Cost allocated to Parts and Service = ($50,000 / ($250,000 + $200,000 + $50,000)) * $120,000 * $120,000 = $12,000

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