getmeaplus

Tuesday, 21 January 2020

Merchandising firms consider which of the following cost elements as a period cost?

ANSWER

INCORRECT

Cost of shipping merchandise to the store

YOU WERE SURE AND INCORRECT

Cost of merchandise purchased for resale

THE CORRECT ANSWER

Cost of leasing the retail locations

Cost of import duties paid on merchandise purchased from overseas suppliers

I DON'T KNOW YET

Identify the indirect cost element, assuming the cost object is one factory in which a product is manufactured for a large corporation.

ANSWER

INCORRECT

Materials to produce units manufactured in the factory

Factory supervisor’s salary

YOU WERE SURE AND INCORRECT

Assembly labor used in the factory

THE CORRECT ANSWER

CEO’s salary

I DON'T KNOW YET

________ are costs that relate to the cost object but cannot be traced specifically to the cost object.

ANSWER

INCORRECT

THE CORRECT ANSWER

Indirect costs

Cost objects

YOU WERE SURE AND INCORRECT

Labor costs to assemble units

Direct costs

I DON'T KNOW YET

The ________ is the cost of making one more unit.

ANSWER

INCORRECT

total cost

average cost

YOU WERE SURE AND INCORRECT

product cost

THE CORRECT ANSWER

marginal cost

I DON'T KNOW YET

An example of a service company includes ________.

ANSWER

INCORRECT

General Motors Corporation

Best Buy

THE CORRECT ANSWER

Verizon

YOU WERE SURE AND INCORRECT

Sam’s Club

I DON'T KNOW YET

Merchandising firms consider which of the following cost elements as a period cost?

ANSWER

INCORRECT

THE CORRECT ANSWER

Cost of leasing the retail locations

Cost of merchandise purchased for resale

Cost of shipping merchandise to the store

YOU WERE SURE AND INCORRECT

Cost of import duties paid on merchandise purchased from overseas suppliers

I DON'T KNOW YET

A direct cost ________.

ANSWER

INCORRECT

THE CORRECT ANSWER

is a cost that can be traced to the cost object

YOU WERE SURE AND INCORRECT

is always expensed in the period in which it is incurred and never becomes part of an inventory account

includes the costs of all resources used throughout the value chain

never has a one-to-one correlation between the cost and the cost object

I DON'T KNOW YET

Identify the indirect cost element, assuming the cost object is one factory in which a product is manufactured for a large corporation.

ANSWER

INCORRECT

THE CORRECT ANSWER

CEO’s salary

YOU WERE SURE AND INCORRECT

Materials to produce units manufactured in the factory

Factory supervisor’s salary

Assembly labor used in the factory

I DON'T KNOW YET

Merchandising firms consider which of the following cost elements as a period cost?

ANSWER

INCORRECT

THE CORRECT ANSWER

Cost of leasing the retail locations

Cost of import duties paid on merchandise purchased from overseas suppliers

Cost of shipping merchandise to the store

YOU WERE SURE AND INCORRECT

Cost of merchandise purchased for resale

I DON'T KNOW YET

A direct cost ________.

ANSWER

INCORRECT

is always expensed in the period in which it is incurred and never becomes part of an inventory account

never has a one-to-one correlation between the cost and the cost object

YOU WERE SURE AND INCORRECT

includes the costs of all resources used throughout the value chain

THE CORRECT ANSWER

is a cost that can be traced to the cost object

I DON'T KNOW YET

Utilities, plant insurance, and depreciation expense are examples of ________.

ANSWER

INCORRECT

YOU WERE SURE AND INCORRECT

period expenses

administrative expenses

THE CORRECT ANSWER

other indirect manufacturing costs

costs that are expensed as incurred

I DON'T KNOW YET

Sunday, 17 November 2019

When a bond is issued at a discount, the semiannual amount of interest expense will be greater than the cash payment for interest.

Read each statement below, indicate if it is true or false, and give a brief explanation of your answer.
1. When a bond is issued at a discount, the semiannual amount of interest expense will be greater than the cash payment for interest. True

A.
when a bond is issued at a discount, the cash payment for interest will be greater than the semiannual amount of interest expense.

B.
when a bond is issued at a discount, the semiannual amount of interest expense equals the cash payment for interest.

C.
because when a bond is issued at a discount, the market rate is lower than the contract (stated) rate.

D.
because interest expense includes both cash interest and amortization of the discount.
Your answer is correct.
2. When a bond is sold at a discount, the maturity value is less than the present value of the principal and interest payments, based on the market rate of interest on the date of issue.
False

A.
the maturity value is less than the present value of the principal and interest payments, based on the contract (stated) rate.
Your answer is not correct.

B.
the market rate of interest is lower than the contract (stated) rate.

C.
the market rate of interest is higher than the contract (stated) rate.

D.
the maturity value is greater than the present value of future cash flows, which is why the bond was issued at a discount.
This is the correct answer.
3. When a bond is issued at a discount, the semiannual cash interest payments are calculated using the market interest rate on the date of issue. False

A.
the market rate is only used to calculate cash interest payment when a bond is issued at a premium.

B.
because the bond is issued at a discount.

C.
the contract (stated) rate, not the market rate, is always used to calculate the cash interest payment.
Your answer is correct.

D.
the contract (stated) rate is used to calculate the present value of the future cash flows from the bond.
4. When a bond is sold at a discount, the cash received is less than the present value of the future cash flows from the bond, which are based on the market rate of interest on the date of issue. False

A.
the discount amount equals to the difference between the cash received and the present value of the future cash flows.

B.
the cash received is equal to the present value of the future cash flows discounted at the market rate of interest on the date of issue.
Your answer is correct.

C.
because the market rate of interest is used when calculating the present value of the future cash flows.

D.
the cash received is more than the present value of the future cash flows.
5. When the year-end accrual of interest and amortization of discount is recorded, the carrying value of Bonds Payable on the balance sheet will increase. True

A.
as the balance in the discount account increases (as it is amortized), the carrying value of the bonds increases.

B.
as the balance in the discount account decreases (as it is amortized), the carrying value of the bonds increases.
Your answer is correct.

C.
as the balance in the discount account decreases (as it is amortized), the carrying value of the bonds decreases.

D.
as the balance in the discount account increases (as it is amortized), the carrying value of the bonds decreases.
6. The amortization of the discount on a bond payable results in additional interest expense recorded over the life of the bond. True

A.
the discount is amortized to interest expense over the life of the bond, the discount is actually additional interest expense that has to be paid because the bond's contract rate was more than the market rate on the bond issue date.

B.
the discount is amortized to interest expense over the life of the bond, but the discount actually decreases the interest expense that has to be paid because the bond's contract rate was less than the market rate on the bond issue date.

C.
the discount is amortized to interest expense over the life of the bond, the discount is actually additional interest expense that has to be paid because the bond's contract rate was less than the market rate on the bond issue date.
Your answer is correct.

D.
the discount is amortized to interest expense over the life of the bond, but the discount actually decreases the interest expense that has to be paid because the bond's contract rate was more than the market rate on the bond issue date.

Thursday, 7 November 2019

Top 15 Most Population Country-Comparison of Countries Population (1963 ...

Thursday, 17 October 2019

The internal rate of return method is used by Merit Construction Co. in analyzing a capital expenditure proposal that involves an investment of

The internal rate of return method is used by Merit Construction Co. in analyzing a capital expenditure proposal that involves an investment of $82,220 and annual net cash flows of $20,000 for each of the six years of its useful life.

a. Determine a present value factor for an annuity of $1, which can be used in determining the internal rate of return.

b. Using the factor determined in part (a) and the present value of an annuity of $1 table appearing in this chapter (Exhibit 2), determine the internal rate of return for the proposal.

Thanks

Munch N’ Crunch Snack Company is considering two possible investments: a delivery truck or a bagging machine.

Munch N’ Crunch Snack Company is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $43,056 and could be used to deliver an additional 95,000 bags of pretzels per year. Each bag of pretzels can be sold for a contribution margin of $0.45. The delivery truck operating expenses, excluding depreciation, are $1.35 per mile for 24,000 miles per year. The bagging machine would replace an old bagging machine, and its net investment cost would be $61,614. The new machine would require three fewer hours of direct labor per day. Direct labor is $18 per hour. There are 250 operating days in the year. Both the truck and the bagging machine are estimated to have seven-year lives. The minimum rate of return is 13%. However, Munch N’ Crunch has funds to invest in only one of the projects.

a. Compute the internal rate of return for each investment. Use the present value of an annuity of $1 table appearing in this chapter (Exhibit 2).

b. Provide a memo to management, with a recommendation.

Buckeye Healthcare Corp. is proposing to spend $186,725 on an eight-year project that has estimated net cash flows of $35,000 for each of the eight years.

a. Compute the net present value, using a rate of return of 12%. Use the present value of an annuity of $1 table in the chapter (Exhibit 2).

b. Based on the analysis prepared in part (a), is the rate of return (1) more than 12%, (2) 12%, or (3) less than 12%? Explain.

c. Determine the internal rate of return by computing a present value factor for an annuity of $1 and using the present value of an annuity of $1 table presented.

Thanks

Daisy’s Creamery Inc. is considering one of two investment options. Option 1 is a $75,000 investment in new blending equipment that is expected to produce equal annual cash flows of

Daisy’s Creamery Inc. is considering one of two investment options. Option 1 is a $75,000 investment in new blending equipment that is expected to produce equal annual cash flows of $19,000 for each of seven years. Option 2 is a $90,000 investment in a new computer system that is expected to produce equal annual cash flows of $27,000 for each of five years. The residual value of the blending equipment at the end of the fifth year is estimated to be $15,000. The computer system has no expected residual value at the end of the fifth year.

Assume there is sufficient capital to fund only one of the projects. Determine which project should be selected, comparing the (a) net present values and (b) present value indices of the two projects. Assume a minimum rate of return of 10%. Round the present value index to two decimal places.

Thanks