Answer:
a. In preparing the trial balance, Courtney omitted a $5,000 Notes Payable. The debit to Cash was correct
Liabilities (credit balance) are understated by $5,000 ⇒ TOTAL DEBITS DO NOT EQUAL TOTAL CREDITSb. Courtney posted a $11000 Utilities Expense as $100. The credit to Cash was correct.
Expenses (debit balance) are understated by $10,900 ⇒ TOTAL DEBITS DO NOT EQUAL TOTAL CREDITSc. In recording a $600 payment on account, Courtney debited Furniture instead of Accounts Payable-
Assets (debit balance) are understated by $600 and liabilities (credit balance) are overstated by $600. ⇒ TOTAL DEBITS DO NOT EQUAL TOTAL CREDITSd. In journalizing a receipt of cash for service revenue, Courtney debited Cash for $50 instead of the correct amount of $500. The credit was correct.
Assets (debit balance) are understated by $450 ⇒ TOTAL DEBITS DO NOT EQUAL TOTAL CREDITSe. Courtney recorded a $210 purchase of office supplies on account by debiting Office Supplies for $120 and crediting Accounts Payable for $120.
both assets (debit balance) and liabilities (credit balance) are understated by $90. ⇒ TOTAL DEBITS EQUAL TOTAL CREDITSTwo investment advisers are comparing performance. One averaged a 21% rate of return and the other a 18% rate of return. However, the beta of the first investor was 1.4, whereas that of the second investor was 1. a. Can you tell which investor was a better selector of individual stocks (aside from the issue of general movements in the market)? First investor Second investor Cannot determine b. If the T-bill rate was 7% and the market return during the period was 13%, which investor would be considered the superior stock selector? Second investor First investor Cannot determine c. What if the T-bill rate was 4% and the market return was 17%? First investor Second investor Cannot determine
Crocetti Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit $ 121 Budgeted unit sales (all on credit): January 7,000 February 7,500 March 11,900 April 14,900 Credit sales are collected: 40% in the month of the sale 60% in the following month The budgeted accounts receivable balance at the end of February is closest to:
Answer:
The budgeted accounts receivable balance at the end of February is closest to: $4,500.
Explanation:
Prepare a Accounts Receivable Budget for January and February
January February
Balance b/d $0 $4,200
Credit Sales $7,000 $7,500
Cash Received (40%) ($2,800) ($3,000)
Cash Received (60%) $0 ($4,200)
Balance c/d $4,200 $4,500
Conclusion:
Therefore, the budgeted accounts receivable balance at the end of February is closest to: $4,500
Benjamin Graham, the father of value investing, once said, "In the short run, the market is a voting machine, but in the long run, the market is a weighing machine." In this quote, Benjamin Graham was referring to the key difference between the "price" and the "value" of a security. In November 2006, Citigroup's stock (NYSE: C) was trading at $49.59. Following the credit crisis of 2007-2008 and by the end of October 2009, Citigroup's stock price had plummeted to $4.27. Several banks went under, and others saw their stock prices lose more than 60% of their value. Based on your understanding of stock prices and intrinsic values, which of the following statements is true?
a. A stock's intrinsic value is based only on the perceived risk of a stock.
b. A stock's intrinsic value is based on true investor returns.
Which of the following describe the reason(s) why maximization of intrinsic stock value benefits society.
a. Most investors prefer companies that can rise prices beyond reasonable levels.
b. Successful companies can avoid raising external funds in the financial markets.
c. successful companies higher more employees.
d. stock price maximization requires efficient, low-cost businesses.
Answer:
1- a. A stock's intrinsic value is based on true investor return.
2- a. Most investors prefer companies that can rise prices beyond reasonable levels.
b. Successful companies can avoid raising external funds in the financial markets.
Explanation:
Intrinsic value of a company's stock is the real value of stock which is based on systematic factors affecting the company. The factors affecting the intrinsic value of company are usually internal factors. The performance of company management, employee satisfaction and its operational efficiencies are the factor which drive intrinsic value of a company.
Assume your required internal rate of return on similar investments is 11 percent. What is the net present value of this investment opportunity? What is the going-in internal rate of return on this investment? Should you make the investment?
Answer:
Hello some parts of your question is missing attached below are the missing parts
You are considering the purchase of a small income-producing property for $150000 that is expected to produce the following net cash flows
End of year cash flow
1 $50000
2 $50000
3 $50000
4 $50000
Answer : a) $5122.28 (b) 12.59% (c) You should make the investment
Explanation:
Internal rate of return = 11 %
initial cash flows = $150000
period = 4 years
Find the NPV (net present value )( using present value tables)
= preset value of cash flows - initial cash flows
= ∑ present cash flows for 4 years - $150000
= $155122.28 - $150000 = $5122.28
The going-in internal rate of return on investment
N (number of years ) = 4
pv ( present value ) = $150000
PMT = -$50000
Fv ( future value ) = 0
IRR = 12.59% ( making use of the cash flow list in our financial calculator )
how much would you have to earn each month to cover your living expense
Answer:
about $4,100 a month
Explanation:
Power and influence (Connect, Perform)
Complete the following sentences with the correct term.
1. When a manager uses relationships and formal authority to cause other people in the organization to change their behavior, the manager _______.
2. The homeroom teacher has ______ because she can choose to give the best-behaving students passes to the school library, which students find a more pleasant place to study than the classroom.
3. Management at Work As the training and development manager at the Anderson Windows and Doors Company, part of your job involves helping managers learn to become better leaders. You are thinking about starting a class titled "Power and Influence for Managers," and you’ve been gathering some examples to use during the training session. Select which type of power the manager is using in the following example.
Example--- Type of Power Used Jeffrey has 20 years of management experience, and he can answer any question. Because Jeffrey is one of the most knowledgeable managers in the company, people naturally follow his advice when making complicated decisions. In reviewing research on power, you discover that there are three other common sources of power in organizations.
Which of the following are included in that list? Check all that apply.
A. Network of relationships
B. Personal effort
C. Locus of control
D. Information
4. Select the type of influence principle that best describes each of the following examples.
Example- Type of Influence Principle. A real estate agent gets new clients by being known as a "good guy" whose clients trust and respect him. A parent smiles at a child whenever the child is being quiet. In turn, the child is quiet more often. When discussing influence tactics with your managers, you should tell them that:
A. The best managers use a variety of influence tactics
B. The best managers avoid the use of influence tactics
C. The best managers use hard tactics, such as asking for what they want and using rational persuasion
D. The best managers use soft tactics, such as making people like them and developing allies
Answer:
1. Is exercising influence.
2. Reward power.
3a. Referent power.
3b. A, B and D.
4a. Make people like you.
4b. Reward the behaviors you want.
5. A. The best managers use a variety of influence tactics.
Explanation:
1. When a manager uses relationships and formal authority to cause other people in the organization to change their behavior, the manager is exercising influence.
2. The homeroom teacher has reward power because she can choose to give the best-behaving students passes to the school library, which students find a more pleasant place to study than the classroom.
3a. Jeffrey has 20 years of management experience, and he can answer any question. Because Jeffrey is one of the most knowledgeable managers in the company, people naturally follow his advice when making complicated decisions. The type of power used by Jeffrey is referent power.
3b. The three (3) common sources of power are;
I. Network of relationships.
II. Personal effort.
III. Information.
4a. A real estate agent gets new clients by being known as a "good guy" whose clients trust and respect him. The type of influence principle here is, make people like you because he is termed a "good guy" meaning he his trustworthy, respectful and nice. Hence, people would like his personality and by extension be his clients.
4b. A parent smiles at a child whenever the child is being quiet. In turn, the child is quiet more often. The type of influence principle used here is, reward the behaviors you want because the parent is happy that the child isn't crying or disturbing. Therefore, to reinforce the child's quietness; the parent smiles at the child.
5. When discussing influence tactics with your managers, you should tell them that: the best managers use a variety of influence tactics. In order to be able to lead your subordinates effectively, efficiently and successfully as a manager, you will have to know how and when to use a variety of influence tactics such as rational persuasion, consultation, ingratiation, legitimating, pressure, personal appeals, coalitions, exchange and inspirational appeals depending on the context or situation.
Hence, the more tactics you have as a manager, the higher your chances of achieving your influence goals.
The rate of return on the common stock of Lancaster Woolens is expected to be 18 percent in a boom economy, 8 percent in a normal economy, and only 2 percent in a recessionary economy. The probabilities of these economic states are 12 percent for a boom and 10 percent for a recession. What is the variance of the returns on this common stock
Answer:
Variance of the return on this common stock is 0.15%
Explanation:
Note: See the attached excel file for the calculation of the variance of the returns on this common stock.
Note that the probability of a normal economy can be obtained as follows:
Probability of normal economy = 100% - Probability of a boom - Probability of a recession = 100% - 12% - 10% = 78%
These probabilities are used in the attached excel file.
Mercury Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $150,000 was sold for its book value in Year 2. There were no other equipment purchases or sales during the year. The following selected information is available for Mercury Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $ 600,000 $ 750,000 Accumulated Depreciation-Equipment 428,000 500,000
Answer:
Mercury Company
Sale of Equipment account:
Equipment $150,000
Acc. Depreciation 112,000
Book value $38,000
Cash received $38,000
Explanation:
a) Data and Calculations:
Equipment Account:
Beginning balance $750,000
Ending balance 600,000
Sale of equipment $150,000
Accumulated Depreciation - Equipment account:
Beginning balance $500,000
Depreciation expense 40,000
Ending balance 428,000
Sale of Equipment $112,000
b) The Cash received from the sale of Mercury Company's equipment is equal to the book value in Year 2 according to the question. Since the book value (value after accumulated depreciation) is $38,000, that means that the equipment was sold at $38,000 recording no profit or loss for the company on the sale.
Foyle Corp. prepared the following reconciliation of income per books with income per tax return for the year ended December 31, 2008: Book income before income taxes $1,200,000 Add temporary difference Construction contract revenue which will reverse in 2009 160,000 Deduct temporary difference Depreciation expense which will reverse in equal amounts in each of the next four years (640,000) Taxable income $720,000 Foyle's effective income tax rate is 34% for 2008. What amount should Foyle report in its 2008 income statement as the current provision for income taxes
Answer:
$244,800
Explanation:
Calculation for the amount that Foyle should report in its 2008 income statement as the current provision for income taxes
Using this formula
Amount to reported =Taxable income*Effective income tax rate
Let plug in the formula
Amount to be reported=($720,000 × 34%)
Amount to be reported = $244,800
Therefore the amount that Foyle should report in its 2008 income statement as the current provision for income taxes should be $244,800
Health and Wealth Company is financed entirely by common stock that is priced to offer a 12 percent expected return. If the company repurchases 20 percent of the common stock and substitutes an equal value of debt yielding 8 percent, what is the expected return on the common stock after refinancing
Answer: 13%
Explanation:
By substituting 20% of debt for debt yielding 8%, the company now has 20% financing from debt and 80% from equity.
The expected return on common stock after refinancing can be calculated by;
Return after refinancing = Return before refinancing + [tex]\frac{Debt}{Equity}[/tex](return before refinancing - Debt yield)
= 12% + [tex]\frac{0.2}{0.8} (0.12 - 0.08)[/tex]
= 13%
Torino Company has 1,200 shares of $10 par value, 5.5% cumulative and nonparticipating preferred stock and 12,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $500 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:
Answer:
$820
Explanation:
Dividend on Preferred Shares = 1,200 * 10 *5.5% = 660
Dividend in arrears for first year ($660 - $500) = $160
Dividend for second year = $660
Dividend to be paid to preferred shareholder = $820
before common shareholders
Marco was an economics major in college until he discovered he could major in strength and conditioning. Then he switched majors. Clearly, learning about this field is important to him. Mike and Bob are addressing
n the video, Marco says he was an economics major in college until he discovered he could major in strength and conditioning. Then he switched majors. Clearly, learning about this field is important to him. Mike and Bob are addressing ............... when they send Marco to seminars instead of, for example, increasing his salary in exchange for his continued high performance at MBSC. They could maintain Marco’s high level of motivation by:........................
A. Sending him on an all-expense-paid Caribbean cruise for two weeks
B. Reimbursing his tuition as he seeks a master’s degree in fitness management
C. Reassuring him that he has a job with MBSC as long as he performs well
D. Setting up an employee discount program at a nearby coffee shop, laundromat, and tasalon
Answer:
Valence
C. Reassuring him that he has a job with MBSC as long as he performs well
Explanation:
By sending Marco to seminars, Mike and Bob are addressing VALENCE; a psychological value an individual put on another person, in relation to the attractiveness of individual whose a psychological value has been placed. In this case, a psychological value placed on Macro by his managers is the valuable rewards they would get from his professional development, rather than increasing his salary in exchange for high performance.
Therefore, they could maintain Marco’s high level of motivation by reassuring him that he has a job with MBSC as long as he performs well.
Moss County Bank agrees to lend the Sunland Company $605000 on January 1. Sunland Company signs a $605000, 6%, 9-month note. What is the adjusting entry required if Sunland Company prepares financial statements on June 30
Answer:
DR Interest Expense $18,150
CR Interest Payable $18,150
Explanation:
June 30 would mean that 6 months have elapsed since the note was issued. The interest rate is an annual one so will have to be adjusted for 6 months.
The interest expense so far will be;
= 605,000 * 6% * [tex]\frac{6}{12}[/tex]
= $18,150
This figure is to be debited to the Interest Expense account to show that it is an expense and credited to the Interest Payable account.
Greenbrier Industrial Products' bonds have a 7.60 percent coupon and pay interest annually. The face value is $1,000 and the current market price is $1,062.50 per bond. The bonds mature in 16 years. What is the yield to maturity
Answer:
6.9%
Explanation:
To find the answer, you have to use the formula to calculate the yield to maturity:
Yield to maturity= (C+(F-P/n))/(F+P/2), where:
C= Coupon payment= $1,000*7.60%= $76
F= Face value= $1,000
P= Price= $1,062.50
n= Years to maturity= 16
Yield to maturity=(76+(1,000-1,062.50/16))/(1,000+1,062.50/2)
Yield to maturity=72,09/1,031.25
Yield to maturity=0.069 → 6.9%
Accoriding to this, the yield to maturity is 6.9%.
The five major decisions addressed by logistics managers are A. transportation, warehousing, location, reverse logistics, and third-party logistics. B. location, transportation, warehousing, reverse logistics, and tactical. C. strategic, third-party logistics, warehousing, transportation, and location. D. None of the above answers is entirely correct.
Answer:
C. strategic, third-party logistics, warehousing, transportation, and location.
Explanation:
A logistics manager is an individual who is saddled with the responsibility of the entire or overall supply chain management of goods produced by an organization. They are usually responsible for the distribution and supply of goods through out the manufacturing and finished process of delivering to final consumers.
The five major decisions addressed by logistics managers are
1. Strategic.
2. Third-party logistics.
3. Warehousing.
4. Transportation.
5. Location.
Lola is responsible for redesigning work in her organization, and she frequently must persuade people to accept change, often not an easy task. She asks you for some tips. What advice do you give her
Explanation:
Organizational changes can occur for several reasons, it can be operational changes, inclusion of new technology, new procedures, new policies, etc.
So many employees may be resistant to change due to insecurities and lack of information.
Therefore, according to the scenario above, for Lola to convince people to accept changes in the work redesign, ideally, she should provide the necessary information so that employees are aware of the changes and feel included and necessary for it to happen. She can use various means of communicating the message, such as e-mail, panel, face-to-face meeting, etc., to be sure that she will create an environment of security and reliability of information, in addition to increasing persuasion by reinforcing an important message.
The exercise price on one of Chrisardan Companies call options is $20, its exercise value is $27, and its time value is $8. What are the options market value and the price of the stock
im gunna say say invest 15 dollars. i am not sure if thats what it wanted?
Shenshen Zhongxing Telecom (ZTE) is a Chinese company that is the only telecommunications company in China that produces and markets an inexpensive camera phone to sell to middle-class Chinese living in urban areas. Because ZTE targets a single segment within a limited geographical area, it can be said to have a(n):
Answer:
Niche competitive advantage
Explanation:
In this scenario, Shenshen Zhongxing Telecom (ZTE) is a Chinese company which is the only telecommunications company in China that produces and markets an inexpensive camera phone to sell to middle-class Chinese living in urban areas. Because ZTE targets a single segment within a limited geographical area, it can be said to have a niche competitive advantage.
Generally, companies using a niche competitive advantage are only seeking or interested in targeting and reaching a single but unique segment within a limited geographical area or market. ZTE specialize in producing a unique inexpensive camera phone which would avail them a competitive advantage over other companies in the industry.
Hence, the niche competitive advantage allow companies to specialize in a unique product, innovations, narrow competition from rival businesses, reaching target audience effectively and ability to take price decisions.
Process A has fixed costs of $1000 and variable costs of $5 per unit. Process B has fixed costs of $500 and variable costs of $7.50 per unit. What is the crossover point between process A and process B? 50 units 250 units $9,500 $5,000 200 units
Answer:
200 units
Explanation:
The computation of the crossover point between process A and process B is shown below:
Let us assume the cross over point be x
We made a question i.e given below:
Total Cost of A = Total Cost of B
$1,000 + 5x = $500 +7.50x
$1,000 - $500 = 7.50x - 5x
$500 = 2.5x
So, the x is 200 units
Hence, the cross over point is 200 units by applying the above formula so that the correct units could arrive
200 units are the correct option
When we computation of the crossover point between process A and process B is shown below:
ComputationLet us assume the cross over point be x
Total Cost of A = Total Cost of B
Then $1,000 + 5x = $500 +7.50x
Then $1,000 - $500 = 7.50x - 5x
Now $500 = 2.5x
So, the x is 200 units
Hence, the cross over point is 200 units by applying the above formula so that the correct units could arrive.
Find out more information about computation here:
https://brainly.com/question/24643173
Sally goes to Honest Harry's used car lot to purchase a car. After test driving the car, she sits down to negotiate the contract. She asks about a warranty and Harry says that all cars that he sells come with a 30 day unconditional warranty on all parts and labor. She signs the contract and the next day the engine blows a rod. When she calls Harry she's told that there is no warranty according to the contract. She reads her contract and it says "as is"
Answer:
Sally can do very little in this case due to the parol evidence rule. In common law, the parol evidence rule limits what type of evidence one party can use in a court in order to support their arguments. In this case, Sally cannot present the evidence of an oral contract because it was previous to the signing of the written contract. This rule doesn't allow certain older evidence to be presented in order to support a change of an existing contract.
I.e. an individual cannot try to change the terms of a contact once they have been signed just because in older contracts certain parts were different.
ightweight personal locator beacons are now available to hikers, making it easier for the Forest Service's rescue teams to locate those lost or in trouble in the wilderness. True or False: Forest Service costs will likely rise due to moral hazard.
Answer: True
Explanation:
Moral Hazard refers to the tendency of entities to take on more risk than they usually would have if they have a way to mitigate that risk. As a result of hikers now having trackers, they will be found easily in cases of distress. This will encourage hikers to go deeper into the forest or engage in activity they would not have before because they know that the Forest Service will be able to help them. The new trackers will also encourage more people to start forest hiking as they will view it as safer.
When all these happen, the Forest service will have to increase it's size as well as conduct more operations which will cost money thereby increasing their cost.
Use the following information for Jett Co. to answer the following question: 2015 2014 Sales 1,200 1,000 COGS 850 700 Operating Expenses 200 200 Income Taxes 30 35 Jett Co.'s average tax rates for 2015 and 2014 are: A. 15.5% and 10.0% B. 20.0% and 35.0% C. 25.8% and 35.4%. D. 31.4% and 36.8%.
Answer:
B. 20.0% and 35.0%
Explanation:
Jett Co.'s Average tax rates for 2015 = Income taxes paid / Taxable income
When, Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,200 - $850 - $200
= $150
Hence, Jett Co.'s Average tax rates for 2015 = $30 / $150
= 20%
Jett Co.'s Average tax rates for 2014 = Income taxes paid / Taxable income
When Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,000 - $700 - $200
= $100
Hence, Jett Co.'s Average tax rates for 2014 = $35 / $100
= 35%
Compare and contrast the views of management and accountants regarding the changes required by the Sarbanes-Oxley Act on internal controls and how these changes have affected corporations, accounting firms, and investors?
Answer and Explanation:
The SoX sarbanes oxley act of 2002 was enacted to address company fraud that was exemplary of Eron and worldcom and bring back the confidence held in the financial market
It was meant to increase the effectiveness of internal control in companies in keeping accounting records or financial reports reliable and fraud-proof. The SOX act increased the independence of company auditors making their reports more reliable as they didn't have to compromise because they were dependent on top managers. In addition top managers were held responsible for any fraud in accounting statements and so were to certify the reliability of reports released to the public
Bee Inc. is working on its cash budget for March. The budgeted beginning cash balance is $55,000. Budgeted cash receipts total $139,000 and budgeted cash disbursements total $134,000. The desired ending cash balance is $80,000. To attain its desired ending cash balance for March, the company needs to borrow:
Answer:
$20,000
Explanation:
The computation of the borrowed amount is shown below:
As we know that
Ending cash balance = beginning cash balance + cash receipts - cash disbursements + cash borrowings
$80,000 = $55,000 + $139,000 - $134,000 +cash borrowings
$80,000 = $194,000 - $134,000 + cash borrowings
So, the borrowing is $20,000
The risk-free rate of return is 3.2 percent and the market risk premium is 6.1 percent. What is the expected rate of return on a stock with a beta of 1.19? (round answer to whole number with two decimal points: i.e., use 1.23 percent instead of 0.0123)
Answer:
10.46%
Explanation:
The risk-free rate of return is 3.2%
The market risk premium is 6.1%
The stock beta is 1.19
Therefore, the expected rate of return on the stock can be calculated as follows
Rate of return= Risk-free rate+beta(market Risk premium)
= 3.2% + 1.19×6.1%
= 3.2% + 7.259
= 10.46%
Hence the expected rate of return on the stock is 10.46%
A product sells for $240 per unit, and its variable costs are 70% of sales. The fixed costs are $318,000. What is the break-even point in sales dollars?
Answer:
The Break-Even Point in Sales Dollars will be $1,060,000
Explanation:
Contribution Margin Ratio = 100% - Variable Cost Ratio
= 100% - 70%
= 30%
Therefore, the Break-Even Point in Sales Dollars = Total Fixed Costs / Contribution Margin Ratio
= $318,000 / 0.30
= $1,060,000
The Break-Even Point in Sales Dollars will be $1,060,000
Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect Andy's demand for ____________.
Answer:
Andy's demand for beer will increase.
Explanation:
Andy’s demand for beer will increase because it is given that pizza and beer are complements. Therefore, there is an inverse relationship between the price of one complement goods and the number of other complement goods. Here, we can see that price of one good ( say pizza) decreases so the demand for other goods (say beer) will increase because there is an inverse relationship between these commodities.
What is the role of the three questions of economics? A. To assess product profitability B. To aid in production decisions C. To offset a poor economy D. To determine quality and cost
Answer:
B. To aid in production decisions
Explanation:
Remember, the three questions of economics are–
what to produce?
how to produce?
for whom to produce?
These questions are asked ultimately to aid in making production decision. A producer needs to determine the specific product demanded by the market in which he or she operates, while also considering how to produce his selected product in order to achieve cost and quality efficiency. Finally, the producer should know who his product are made for so as customize them accordingly.
Answer:
B
Explanation:
se the following information for Jett Co. to answer the following question: 2015 2014 Sales 1,200 1,000 COGS 850 700 Operating Expenses 200 200 Income Taxes 30 35 Jett Co.'s gross profit, operating profit and net profit margins for 2015 are: A. 50.0%, 32.5%, 22.5% respectively. B. 29.2%, 12.5%, 10.0%, respectively. C. 27.0%, 11.0%, 10.5%, respectively. D. 21.5%, 17.5%, 12.0%, respectively.
Answer:
B. 29.2%, 12.5%, 10.0%
Explanation:
Gross Profit = Sales - Cost of goods sold / Sales
Gross Profit = $1,200 - $850 / $1,200
Gross Profit = $350 / $1,200
Gross Profit = 0.2917
Gross Profit = 29.17%
Operating profit = Sales - Cost of goods sold - Operating Expenses / Sales
Operating profit = $1,200 - $850 - $200 / $1,200
Operating profit = $150 / $1,200
Operating profit = 0.125
Operating profit = 12.5%
Net profit margin = Sales - Cost of goods sold - Income Taxes / Sales
Net profit margin= $1,200 - $850 - $200 - $30 / $1,200
Net profit margin $120 / $1,200
Net profit margin= 0.1
Net profit margin= 10%
A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8.10 per stone for quantities of 600 stones or more, $8.50 per stone for orders of 400 to 599 stones, and $9.00 per stone for lesser quantities. The jewelry firm operates 110 days per year. Usage rate is 28 stones per day, and ordering costs are $48.
a. If carrying costs are $2 per year for each stone, find the order quantity that will minimize total
annual cost.
b. If annual carrying costs are 30 percent of unit cost, what is the optimal order size?
c. If lead time is six working days, at what point should the company reorder?
Answer:
a.385 stones
b.349 stones
c.168 stones
Explanation:
Order quantity that minimizes total annual cost is known as the Economic Order Quantity.
Economic Order Quantity = √(2 × Annual Demand × Ordering Cost per Order) / Holding Cost per unit
= √(2×28×110×$48) / $2
= 384.5 or 385 stones
Economic Order Quantity = √(2 × Annual Demand × Ordering Cost per Order) / Holding Cost per unit
= √(2×28×110×$48) / ($8.10 × 30%)
= 348.8 or 349 stones
Re-oder point is the point at which the order should be placed to obtain additional inventories
Reorder Point = Lead Time × Usage
= 6 days × 28 stones
= 168 stones