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Bas_tet [7]
3 years ago
15

Sheridan Company makes and sells widgets. The company is in the process of preparing its selling and administrative expense budg

et for the month. The following budget data are available: Item Variable Cost Per Unit Sold Monthly Fixed Cost Sales commissions $1 $10000 Shipping $3 Advertising $4 Executive salaries $120000 Depreciation on office equipment $4000 Other $2 $6000 Expenses are paid in the month incurred. If the company has budgeted to sell 94000 widgets in October, how much is the total budgeted selling and administrative expenses for October
Business
1 answer:
iren [92.7K]3 years ago
5 0

Answer:

$1,080,000

Explanation:

Calculation to determine how much is the total budgeted selling and administrative expenses for October

October Total budgeted selling and administrative expenses=

[($1 + $3 + $4 + $2) x 94,000] + ($10,000 +

$120,000 + $4,000 + $6,000)

October Total budgeted selling and administrative expenses=(10*94,000)+$140,000

October Total budgeted selling and administrative expenses=$940,000+$140,000

October Total budgeted selling and administrative expenses=$1,080,000

Therefore the total budgeted selling and administrative expenses for October is $1,080,000

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You are given the following information for Lightning Power Co. Assume the company’s tax rate is 24 percent. Debt: 19,000 6.8 pe
diamong [38]

Answer:

Company's WACC is 9.6%

Explanation:

WACC is the average cost of capital of the firm based on the weightage of the debt and weightage of the equity multiplied to their respective costs.

Formula for WACC

Weighted Average Cost of Capital = (Cost of Equity x Weightage of equity) + (Cost of preferred Stock x Weightage of preferred Stock ) + (Cost of Debt (1 -t) x Weightage of Debt)

Market Values

Equity = 520,000 x $70 = $36,400,000

Preferred = 23,000 x $91 = $2,093,000

Debt  = $1,110 x 19,000 = $21,090,000

Total Value = $36,400,000 + $2,093,000 + $21,090,000 = $59,583,000

Cost of Equity :

We can calculate cost of equity using CAPM

Capital asset pricing model measure the expected return on an asset or investment. it is used to make decision for addition of specific investment in a well diversified portfolio.

Formula for CAPM

Cost of Equity = Risk free rate + beta ( market return - risk free rate )

Cost of Equity = Rf + β ( Rm - Rf )

Cost of Equity = 5.5% + 1.21 ( 6% )

Cost of Equity = 12.76%

Cost of Preferred stock = 4.6%

We need to calculate the yield to maturity

Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]

Placing value in the formula

Yield to maturity = [ 34 + ( $1,000 - $1,110 ) / 48 ] / [ ( $1,000 + $1,110 ) / 2 ]

Yield to maturity = 3% semiannually = 6% annually

Placing values in the formula

Weighted Average Cost of Capital = (12.76% x $36,400,000 / $59,583,000 ) + ( 4.6% x $2,093,000 / $59,583,000 ) + (6% (1 - 0.24 ) x $21,090,000 / $59,583,000 )

Weighted Average Cost of Capital = 7.80% + 0.16% + 1.61% = 9.57%

7 0
3 years ago
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Answer:

As long as Mitch acted in good faith and tried to make the best possible decision regarding all available information, and his decision was something that any other person could have made, his mistake has to be considered a bad or negative business judgement (business judgement rule). He thought that his actions would benefit the corporation, but he was wrong and the corporation lost money. That types of mistakes are considered normal and just that, mistakes that anyone can make.

In regards with the second issue, that Mitch is a shareholder and a director of a firm that will directly compete with Numero Uno, he must inform the board about this and resign to either Numero Uno or One of a Kind.

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Answer:

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Explanation:

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