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Omobola Adesoye-Amoo Home Search coursesSubmit Page path Home My courses BUS 5110 - AY2020-T4 14 May...




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BUS 5110 - AY2020-T4


14 May - 20 May


Written Assignment Unit 6


Written Assignment Unit 6

Submission phase

Workshop timeline with 5 phasesSkip to current tasks

Setup phase

Submission phase

Current phase

Task to doSubmit your work


Task infoOpen for submissions from Thursday, 14 May 2020, 6:05 AM (5 days ago)


Task infoSubmissions deadline: Thursday, 21 May 2020, 5:55 AM (2 days left)


Assessment phase

Task infoOpen for assessment from Thursday, 21 May 2020, 6:05 AM (2 days left)


Task infoAssessment deadline: Thursday, 28 May 2020, 5:55 AM (9 days left)


Grading evaluation phase

Closed

Instructions for submission

Submit a written paper which is 3-4 pages in length (no more than 4-pages), exclusive of the reference page. Your paper should be double spaced in Times New Roman (or its equivalent) font, which is no greater than 12 points in size. The paper should cite at least three sources in APA format. One source can be your textbook.
Please describe the circumstances of the following case study and recommend a course of action. Explain your approach to the problem, perform relevant calculations and analysis, and formulate a recommendation. Ensure your work and recommendation are thoroughly supported.
Case Study:
A manufacturing company is evaluating two options for new equipment to introduce a new product to its suite of goods. The details for each option are provided below:
Option 1

$65,000 for equipment with useful life of 7 years and no salvage value.


Maintenance costs are expected to be $2,700 per year and increase by 3% in Year 6 and remain at that rate.


Materials in Year 1 are estimated to be $15,000 but remain constant at $10,000 per year for the remaining years.


Labor is estimated to start at $70,000 in Year 1, increasing by 3% each year after.


Revenues are estimated to be:
Year 1Year 2Year 3Year 4Year 5Year 6Year 7- 75,000 100,000 125,000 150,000 150,000 150,000

Option 2

$85,000 for equipment with useful life of 7 years and a $13,000 salvage value


Maintenance costs are expected to be $3,500 per year and increase by 3% in Year 6 and remain at that rate.


Materials in Year 1 are estimated to be $20,000 but remain constant at $15,000 per year for the remaining years.


Labor is estimated to start at $60,000 in Year 1, increasing by 3% each year after.


Revenues are estimated to be:

Year 1Year 2Year 3Year 4Year 5Year 6Year 7- 80,000 95,000 130,000 140,000 150,000 160,000
The company’s required rate of return and cost of capital is 8%.
Management has turned to its finance and accounting department to perform analyses and make a recommendation on which option to choose. They have requested that the four main capital budgeting calculations be done: NPV, IRR, Payback Period, and ARR for each option.
For this assignment, compute all required amounts and explain how the computations were performed. Evaluate the results for each option and explain what the results mean. Based on your analysis, recommend which option the company should pursue.
Superior papers will:

Perform all calculations correctly.


Articulate how the calculations were performed, including from where values used in the calculations were obtained.


Evaluate the results computed and explain the meaning of the results, including why certain measurements are more accurate than others.


Recommend which option to pursue, supported by well-thought-out rationale, and considering any other factors that could impact the recommendation.


In: Accounting

On June 1, 2018, Riverbed Company and Marin Company merged to form Headland Inc. A total...

On June 1, 2018, Riverbed Company and Marin Company merged to form Headland Inc. A total of 802,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis.

On April 1, 2020, the company issued an additional 625,000 shares of stock for cash. All 1,427,000 shares were outstanding on December 31, 2020.

Headland Inc. also issued $600,000 of 20-year, 8% convertible bonds at par on July 1, 2020. Each $1,000 bond converts to 38 shares of common at any interest date. None of the bonds have been converted to date.

Headland Inc. is preparing its annual report for the fiscal year ending December 31, 2020. The annual report will show earnings per share figures based upon a reported after-tax net income of $1,507,000. (The tax rate is 20%.)

Determine the following for 2020.

(a) The number of shares to be used for calculating: (Round answers to 0 decimal places, e.g. $2,500.)

(1)

Basic earnings per share

enter a number of shares rounded to 0 decimal places

shares
(2)

Diluted earnings per share

enter a number of shares rounded to 0 decimal places

shares


(b) The earnings figures to be used for calculating: (Round answers to 0 decimal places, e.g. $2,500.)

(1)

Basic earnings per share

$enter a dollar amount rounded to 0 decimal places

(2)

Diluted earnings per share

$enter a dollar amount rounded to 0 decimal places

In: Accounting

Exercise 16-23 On June 1, 2018, Marin Company and Headland Company merged to form Sage Inc....

Exercise 16-23 On June 1, 2018, Marin Company and Headland Company merged to form Sage Inc. A total of 834,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis. On April 1, 2020, the company issued an additional 552,000 shares of stock for cash. All 1,386,000 shares were outstanding on December 31, 2020. Sage Inc. also issued $600,000 of 20-year, 8% convertible bonds at par on July 1, 2020. Each $1,000 bond converts to 40 shares of common at any interest date. None of the bonds have been converted to date.

Sage Inc. is preparing its annual report for the fiscal year ending December 31, 2020. The annual report will show earnings per share figures based upon a reported after-tax net income of $1,584,000. (The tax rate is 20%.) Determine the following for 2020. (a) The number of shares to be used for calculating: (Round answers to 0 decimal places, e.g. $2,500.)

(1) Basic earnings per share enter a number of shares rounded to 0 decimal places shares

(2) Diluted earnings per share enter a number of shares rounded to 0 decimal places shares

(b) The earnings figures to be used for calculating: (Round answers to 0 decimal places, e.g. $2,500.)

(1) Basic earnings per share $enter a dollar amount rounded to 0 decimal places

(2) Diluted earnings per share $enter a dollar amount rounded to 0 decimal places

In: Accounting

On June 1, 2018, Novak Company and Splish Company merged to form Blossom Inc. A total...

On June 1, 2018, Novak Company and Splish Company merged to form Blossom Inc. A total of 837,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis.

On April 1, 2020, the company issued an additional 576,000 shares of stock for cash. All 1,413,000 shares were outstanding on December 31, 2020.

Blossom Inc. also issued $600,000 of 20-year, 7% convertible bonds at par on July 1, 2020. Each $1,000 bond converts to 36 shares of common at any interest date. None of the bonds have been converted to date.

Blossom Inc. is preparing its annual report for the fiscal year ending December 31, 2020. The annual report will show earnings per share figures based upon a reported after-tax net income of $1,395,000. (The tax rate is 20%.)

Determine the following for 2020.

(a) The number of shares to be used for calculating: (Round answers to 0 decimal places, e.g. $2,500.)

(1)

Basic earnings per share

enter a number of shares rounded to 0 decimal places

shares
(2)

Diluted earnings per share

enter a number of shares rounded to 0 decimal places

shares


(b) The earnings figures to be used for calculating: (Round answers to 0 decimal places, e.g. $2,500.)

(1)

Basic earnings per share

$enter a dollar amount rounded to 0 decimal places

(2)

Diluted earnings per share

$

In: Accounting

On June 1, 2018, Waterway Company and Wildhorse Company merged to form Sheffield Inc. A total...

On June 1, 2018, Waterway Company and Wildhorse Company merged to form Sheffield Inc. A total of 769,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis. On April 1, 2020, the company issued an additional 599,000 shares of stock for cash. All 1,368,000 shares were outstanding on December 31, 2020. Sheffield Inc. also issued $600,000 of 20-year, 8% convertible bonds at par on July 1, 2020. Each $1,000 bond converts to 36 shares of common at any interest date. None of the bonds have been converted to date. Sheffield Inc. is preparing its annual report for the fiscal year ending December 31, 2020. The annual report will show earnings per share figures based upon a reported after-tax net income of $1,688,000. (The tax rate is 20%.) Determine the following for 2020. (a) The number of shares to be used for calculating: (Round answers to 0 decimal places, e.g. $2,500.) (1) Basic earnings per share enter a number of shares rounded to 0 decimal placesEntry field with incorrect answer 1.39 shares (2) Diluted earnings per share enter a number of shares rounded to 0 decimal placesEntry field with incorrect answer 4800 shares (b) The earnings figures to be used for calculating: (Round answers to 0 decimal places, e.g. $2,500.) (1) Basic earnings per share $enter a dollar amount rounded to 0 decimal placesEntry field with incorrect answer 1.78 (2) Diluted earnings per share

In: Accounting

Empire Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced...

Empire Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced assistant accountant has prepared the following income statement for the month of October 2020.

EMPIRE COMPANY
Income Statement
For the Month Ended October 31, 2020
Sales revenue               $795,000   
Less:   Operating expenses                  
Raw materials purchases       $264,600           
Direct labor cost       190,200           
Advertising expense       91,000           
Selling and administrative salaries       77,800           
Rent on factory facilities       61,000           
Depreciation on sales equipment       45,800           
Depreciation on factory equipment       32,500           
Indirect labor cost       28,200           
Utilities expense       11,600           
Insurance expense       8,300        811,000   
Net loss               $(16,000)  

Prior to October 2020, the company had been profitable every month. The company’s president is concerned about the accuracy of the income statement. As her friend, you have been asked to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired additional information as follows.

1. Inventory balances at the beginning and end of October were:

October 1
October 31
Raw materials       $19,700       $36,000
Work in process       19,400       14,700
Finished goods       29,900       53,500

2. Only 75% of the utilities expense and 60% of the insurance expense apply to factory operations. The remaining amounts should be charged to selling and administrative activities.
(a)
Prepare a schedule of cost of goods manufactured for October 2020.

EMPIRE COMPANY
Cost of Goods Manufactured Schedule

In: Accounting

The water diet requires one to drink two cups of water every half hour from when...

The water diet requires one to drink two cups of water every half hour from when one gets up until one goes to bed, but otherwise allows one to eat whatever one likes. Four adult volunteers agree to test the diet. They are weighed prior to beginning the diet and after six weeks on the diet. The weights ( in pounds) are Person 1 2 3 4 Weight before diet 180 125 240 150 Weight after diet 170 130 215 152 For the population of all adults, assume that the weights loss after six weeks on the diet ( weight before beginning the diet---weight after six weeks on the diet) is Normally distributed with mean μ. a. Test the hypothesis if the diet leads to weight loss. b. Construct a 95% confidence interval for the mean difference.

In: Statistics and Probability

The following information is available for three companies: Rope Co. Chain Co. Line Co. Face value...

The following information is available for three companies:

Rope Co. Chain Co. Line Co.
Face value of bonds payable $ 211,000 $ 628,000 $ 517,000
Interest rate 7 % 6 % 5 %
Income tax rate 35 % 20 % 25 %

Required
a. Determine the annual before-tax interest cost for each company in dollars.

Before tax Cost
Rope Company
Chain Company
Line Company


b. Determine the annual after-tax interest cost for each company in dollars. (Round your answers to the nearest dollar amount.)

After Tax Cost
Rope Co.
Chain Co.
Line Co.


c. Determine the annual after-tax interest cost for each company as a percentage of the face value of the bonds. (Round your answers to 1 decimal place.)

After Tax Interest cost
Rope Co.
Chain Co.
Line Co.

In: Accounting