Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y3 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:

It is expected that 21,875 units will be sold at a price of $160 a unit. Maximum sales within the relevant range are 27,000 units.

Required:

1. Prepare an estimated income statement for 20Y3.

2. What is the expected contribution margin ratio?

%

3. Determine the break-even sales in units and dollars.

4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?

5. What is the expected margin of safety in dollars and as a percentage of sales?

6. Determine the operating leverage. If required, round your answer to one decimal place, e.g. 15.4.

Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:

It is expected that 5,920 units will be sold at a price of $150 a unit. Maximum sales within the relevant range are 7,000 units.

Required:

1. Prepare an estimated income statement for 20Y7.

2. What is the expected contribution margin ratio? Round to the nearest whole percent.
%

3. Determine the break-even sales in units and dollars.

4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
$

5. What is the expected margin of safety in dollars and as a percentage of sales?

6. Determine the operating leverage. Round to one decimal place.

1. Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:

   		Estimated Fixed Cost			Estimated Variable Cost (per unit sold)
   Production costs:
   	Direct materials				$26
   	Direct labor				17
   	Factory overhead	$114,300			13
   Selling expenses:
   	Sales salaries and commissions	23,700			6
   	Advertising	8,000
   	Travel	1,800
   	Miscellaneous selling expense	2,000			5
   Administrative expenses:
   	Office and officers' salaries	23,200
   	Supplies	2,900			2
   	Miscellaneous administrative expense	2,660			3
   	Total	$178,560			$72

   It is expected that 5,580 units will be sold at a price of $144 a unit. Maximum sales within the relevant range are 7,000 units.

   Required:

   1. Prepare an estimated income statement for 20Y7.

   Belmain Co.
   Estimated Income Statement
   For the Year Ended December 31, 20Y7
   			$
   Cost of goods sold:
   		$
   Cost of goods sold
   Gross profit			$
   Expenses:
   Selling expenses:
   	$
   Total selling expenses		$
   Administrative expenses:
   	$
   Total administrative expenses
   Total expenses
   Income from operations			$

   2. What is the expected contribution margin ratio? Round to the nearest whole percent.
   %

   3. Determine the break-even sales in units and dollars.

   Units	units
   Dollars	units

   4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
   $

   5. What is the expected margin of safety in dollars and as a percentage of sales?

   Dollars:	$
   Percentage: (Round to the nearest whole percent.)		%

   6. Determine the operating leverage. Round to one decimal place.

Study the Comprehensive WACC Example document attached in the Module 6 assignment tab on Canvas. After becoming comfortable with the concepts and calculations in this example, complete the activities below for this week’s participation assignment. (Following the Comprehensive WACC Example document for each step should make this assignment easier!)

1. Hearty Foods, Inc. (HFI) is a mid-cap consumer staples company started in 2008 to produce organic food products for major grocery chains. To capitalize their business, they have issued 21.5 million shares of common stock in the past three years and are currently trading on the NASDAQ exchange at $18.75 per share.

Calculate the equity market value of the company.

2. HFI has also issued 175,000 bonds over this same timeframe. Each bond was issued with a $1,000 face amount and a 20-year maturity.

What is the value of the debt portion of their capital structure?

3. HFI is trying to determine what their cost of equity is today. The current risk-free rate of return is 3.75% and the beta is 1.15. It is generally agreed that the expected market rate of return is 6.75%.

Using the CAPM formula, what would be BHT’s cost of equity?

4. The issued HFI bonds have interest rates ranging from 2.75% to 5.25% over this timeframe. In order to calculate the cost of debt, HFI decides to use the interest expense method. Referring to the most current income statement, the interest expense is $3.78 million and the long-term bonds value is $120 million.

Using this information, what is the cost of debt?

5. Using the same income statement, HFI can see their income before tax was $4.115 million. The income tax paid for the fiscal year was $1,008.175.

Calculate the income tax rate for BHT.

Determine the after-tax factor to use in the WACC formula.

6. The final inputs needed for the WACC formula is the weighted percentages of equity and debt.

Using the values above, calculate both percentages here.

Total market capitalization value

Weighted equity percentage

Weighted debt percentage

7. Now that you have gathered all of the inputs necessary for the WACC formula, calculate the WACC percentage. Show your work.

Weighted average cost of capital is a total cost of capital of a firm calculated on the basis of proportionally weight..Take the cost of debt or debentures net of tax. To determine the cost of debt..use the rate which company pays interest. So we can take a deduction of interest expenses while paying tax so there is a tax saving on it so we can deduct the amount of tax on it.

8. What does the weighted average cost of capital percentage mean to the owners of HFI?

Gilead Sciences, Inc. (GILD)                  $71.33

At close: July 2 4:03PM EDT

Income Statement

All numbers in thousands

Shares outstanding:             1.3 billion

Beta:                                       1.39                

The graph illustrates a normal distribution for the prices paid for a particular model of HD television. The mean price paid is $1600 and the standard deviation is $135.

What is the approximate percentage of buyers who paid less than $1330?
%

What is the approximate percentage of buyers who paid between $1465 and $1600?
%

What is the approximate percentage of buyers who paid between $1330 and $1600?

%

What is the approximate percentage of buyers who paid between $1465 and $1735?
%

What is the approximate percentage of buyers who paid less than $1195?
%

Unique produces screens for use in various smartphones. The company reports the following information at December 31.

Unique began operations on January 31 earlier that same year.

1.

What is the cost of direct materials​ used?

2.

What is the cost of indirect materials​ used?

3.

What is the cost of direct​ labor?

4.

What is the cost of indirect​ labor?

5.

What is the cost of goods​ manufactured?

6.

What is the cost of goods sold​ (before adjusting for any​ under- or overallocated manufacturing​ overhead)?

7.

What is the actual manufacturing​ overhead?

8.

How much manufacturing overhead was allocated to​ jobs?

9.

What is the predetermined manufacturing overhead rate as a percentage of direct labor​ cost?

10.

Is manufacturing overhead underallocated or​ overallocated? By how​ much?

An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.

a. Compute b₁ and b₀ (to 1 decimal).
b₁ [     ]
b₀ [     ]
Compute the estimated regression equation (to 1 decimal).
ŷ = [ ] + [ ]x

b. What is the variable cost per unit produced (to 1 decimal)?
$[     ]

c. Compute the coefficient of determination (to 3 decimals). Note: report r² between 0 and 1.
r² = [     ]
What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)?
[     ]%

d. The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to the nearest whole number)?
$[     ]

An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.

1. Compute b₁ and b₀ (to 1 decimal).
   b₁  
   b₀  
   
   Complete the estimated regression equation (to 1 decimal).
   =  +  x
   
2. What is the variable cost per unit produced (to 1 decimal)?
   $
   
3. Compute the coefficient of determination (to 3 decimals). Note: report r² between 0 and 1.
   r² =  
   
   What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)?
   %
   
4. The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to the nearest whole number)?
   $

An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.

a. Compute b₁ and b₀ (to 1 decimal).



Complete the estimated regression equation (to 1 decimal).
y^=___+___x

b. What is the variable cost per unit produced (to 1 decimal)?


c. Compute the coefficient of determination (to 3 decimals). Note: report r² between 0 and 1.


What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)?


d. The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to the nearest whole number)?

An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.

1. Compute b₁ and b₀ (to 1 decimal).
   b₁
   b₀
   
   Complete the estimated regression equation (to 1 decimal).
   yhat = ____ + _____ x
   
2. What is the variable cost per unit produced (to 1 decimal)?
   $
   
3. Compute the coefficient of determination (to 3 decimals). Note: report r² between 0 and 1.
   r² =
   
   What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)?
   %
   
4. The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to the nearest whole number)?