Delsing Canning Company is considering an expansion of its facilities. Its current income statement is as follows:

The company is currently financed with 50 percent debt and 50 percent equity (common stock, par value of $10). In order to expand the facilities, Mr. Delsing estimates a need for $3.8 million in additional financing. His investment banker has laid out three plans for him to consider:

1. Sell $3.8 million of debt at 14 percent.
2. Sell $3.8 million of common stock at $20 per share.
3. Sell $1.90 million of debt at 13 percent and $1.90 million of common stock at $25 per share.

Variable costs are expected to stay at 50 percent of sales, while fixed expenses will increase to $2,480,000 per year. Delsing is not sure how much this expansion will add to sales, but he estimates that sales will rise by $1 million per year for the next five years.
Delsing is interested in a thorough analysis of his expansion plans and methods of financing.He would like you to analyze the following:

a. The break-even point for operating expenses before and after expansion (in sales dollars). (Enter your answers in dollars not in millions, i.e, $1,234,567.)
  

b. The degree of operating leverage before and after expansion. Assume sales of $6.8 million before expansion and $7.8 million after expansion. Use the formula: DOL = (S − TVC) / (S − TVC − FC). (Round your answers to 2 decimal places.)
  

c-1. The degree of financial leverage before expansion. (Round your answer to 2 decimal places.)
  

c-2. The degree of financial leverage for all three methods after expansion. Assume sales of $7.8 million for this question. (Round your answers to 2 decimal places.)
  

d. Compute EPS under all three methods of financing the expansion at $7.8 million in sales (first year) and $10.7 million in sales (last year). (Round your answers to 2 decimal places.)
  

Casual Shoe Company makes loafers. During the most recent year, Casual incurred total manufacturing costs of $18,500,000. Of this amount, $2,800,000 was direct material used and $10,800,000 was direct labor. Beginning balances for the year were Direct Materials, $800,000; Work-in-process Inventory, $600,000; and Finished Goods Inventory, $700,000. At the end of the year, balances were direct materials, $700,000; Work-in-process inventory, $1,600,000; and Finished goods inventory, $590,000.

Requirement 1. Analyze the inventory accounts to determine the cost of direct materials purchased during the year.

Direct material used -

Beginning direct materials -

Ending Direct Materials -

Purchases -

Requirement 2. Analyze the inventory accounts to determine the cost of goods manufactured for the year.

Beginning Work-in-Process Inventory

Direct Materials Used

Direct Labor

Manufacturing Overhead

Total Manufacturing Costs Incurred during the Year

Total Manufacturing Costs to Account For

Ending Work-in-Process Inventory

Cost of Goods Manufactured

Requirement 3. Analyze the inventory accounts to determine the cost of goods sold for the year.

Beginning Finished Goods Inventory

Cost of Goods Manufactured

Cost of Goods Available for Sale

Ending Finished Goods Inventory

Cost of Goods Sold

1. As an elected official, you have been informed that real GDP is below its potential and that action should be taken to encourage economic growth and bring the economy to its long-run equilibrium. The marginal propensity to consume is 0.6, and the amount of new government spending is $600 billion.

What is the multiplier? Compute this to the first place beyond the decimal.____________?

2. By how much would the economy be stimulated?

$ _________ billion

3.Suppose the economy is in a recession. The economy needs to expand by at least $400 billion, and the marginal propensity to consume is 0.7.

What is the least amount the government can spend to overcome the $400 billion gap?
$ ____________billion

4. The multiplier effect of fiscal policy predicts that an increase in government spending of $200 billion will increase total income by $1000.00 billion if the marginal propensity to consume is 0.80. If we account for crowding-out, then the increase in aggregate demand will be

Choose one:

A. exactly $1000.00 billion.

B. more than $1000.00 billion

C. less than $1000.00 billion.

The following events took place for Focault Inc. during July 20Y2, the first month of operations as a producer of road bikes: • Purchased $404,710 of materials • Used $344,090 of direct materials in production • Incurred $298,900 of direct labor wages • Applied factory overhead at a rate of 78% of direct labor cost • Transferred $814,310 of work in process to finished goods • Sold goods with a cost of $781,480 • Sold goods for $1,396,720 • Incurred $319,130 of selling expenses • Incurred $120,230 of administrative expenses Required: A. Prepare the July income statement for Focault. Assume that Focault uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. B. Determine the inventory balances at the end of the first month of operations...

1. Suppose the assumptions of a Keynesian model apply and that a country has a flexible exchange rate regime.   There are no restrictions on private capital moving into or out of the country. Which of the following is true if the domestic government decides to undertake a large infrastructure program as a stimulus program to increase GDP?

1. The infrastructure program will tend to raise domestic interest rates, which then leads to a private capital account surplus as foreign investors increase their purchase of domestic bonds with higher interest rates. This inflow of foreign capital will tend to decrease domestic interest rates and spur even more domestic economic activity.

2. The money supply will increase as the government begins to spend more. This will decrease the interest rate, which will increase the amount of borrowing for housing and expansion of plants, which will spur even more domestic economic activity.

3. The infrastructure program will tend to raise domestic interest rates, which then leads to pressure for the domestic currency to depreciate. The falling value of the domestic currency will make domestic goods cheaper abroad, which will tend to increase aggregate demand and expand the economy.

4. None of the above is true.

e.    Only a. and c. are true.

Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,130 units at $35; purchases, 7,800 units at $37; expenses (excluding income taxes), $193,200; ending inventory per physical count at December 31, current year, 1,690 units; sales, 8,240 units; sales price per unit, $76; and average income tax rate, 30 percent.

Required information

Required:

1. Compute cost of goods sold and prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. (Round your final answers to nearest whole dollar. Do not round your intermediate calculations.)

2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)?

3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling?

Why could the second measurement of the absorbance of the most concentrated sample differ from the first?