About this capital investment analyze and write

Choosing aircraft to acquire when expanding your business is a critical decision in Airline. In addition to deciding on the specific aircraft to acquire, you must also decide on how to finance your acquisitions. Making a good decision will lead to lower operating costs, increased profitability, and higher return on equity. Aircraft purchases can be funded out of cash on hand, new debt, or equity issuance. Each funding method has a cost, and the new asset is depreciated at a rate of 1.75% per quarter in Airline. The cost of debt is easiest to calculate, since the long-term rate is fixed at 9% in the simulation. It might not seem that there is a cost to using cash, but you need to consider the opportunity cost of alternative investment options. The cost of equity is the most difficult to assess, but keep in mind that shareholders expect a return on their investment, and issuing stock will dilute shareholder equity. In addition to purchasing aircraft, there is also an option to lease. The advantage of a lease is that no capital investment is required to acquire aircraft. Buying may be a better option if the aircraft will be used for a long period of time.

1. There are many ways to calculate the cost of equity. One fairly simple way is to consider the additional dividend that would have to be paid on the shares of stock that are issued to maintain the expected return for all investors. What would be the additional “cost” if the dividend is 15¢ per share each quarter, and you issue 200,000 new shares? What is the annual return to the investor if the stock price is $20 and there is no change in price?

2. Assume an aircraft costs $3,000,000 to purchase and $125,000 to lease. Compute the quarterly expenses for purchasing the aircraft with all cash, all loan, and all stock.

Cash    Loan Stock Lease

Capital Required    $3,000,000    $3,000,000   $3,000,000 $0

Cost of Capital* $0

Depreciation @ 1.75% per qtr $0

Total Quarterly Expense $125,000

*Note: Assume a CD would earn 5%; the loan rate is 9% per annum; stock price is currently $20 with a quarterly dividend of 10¢ per share

3. Why might you not want to use just stock to fund your capital investment? What other factors might you consider when evaluating the investment options? Which option (or combination of options) from the table in question 2 makes the most sense?.

Tangshang Industries production budget from the 2^nd quarter of 2018, projected the following amounts of units to be produced:

April    1,000 units

May     1,200 units

June     1,250 units

Each unit requires 2 parts of component A and 3 parts of component B. Component A cost is $1.25 per unit and component B cost is $.80 per unit.

Each unit requires the following labor:

2 hours in the processing department

1 hour in the assembly department

Processing department labor rate is $4/hour

Assembly department labor rate is $6/hour

Variable Factory overhead is $.60 per unit

Fixed Factory overhead is $1,000 monthly

Using the information from the production budget of Tangshang Industries

1.Calculate total product cost per unit for the quarter April - June 2018

2.If the sale price is $32.50, what will be the Gross Profit per unit?

3.If the sale price is $32.50 for the units produced during the quarter, what will be the Total Gross Profit?

3-19 Jaime’s Hat Shop sells hats with college logos on them; the hats sell for $22 each. This year, Jaime’s expects to sell 350 hats in May, 300 in June, 400 in July, 800 in August, 1,040 in September, and 750 in October. On average, 25 percent of its customers purchase on credit. Jaime’s allows those customers to pay for their purchases the month after they have made their purchases. Required: Prepare a sales budget for Jaime’s Hat Shop for the third quarter of this year.

I'VE ALREADY DONE THIS, JUST NEED HELP WITH THE QUESTION BELOW, THE QUESTION ABOVE (3-19) IS JUST FOR REFERENCE

Refer to 3-19. Jaime’s ended the second quarter of this year with 60 hats on hand.

Required:

(1) Notice that Jaime’s ended the second quarter with less than 20 percent of projected sales for July. What do you think accounts for the difference?

2) How many hats should Jaime’s purchase in July?

1. Company budgeted sales in units for the next four months as follows:

1. Prepare the sales budget for the company knowing that each unit is sold for $50. (1 pt)

2. Past experience has shown that the ending inventory for each month should be equal to 20% of the next month's sales in units. The inventory in the beginning of July was only 1,000 units, & the inventory on September 30 is expected to be equal to 1,300 units .

   Prepare the production budget for each month of the third quarter (starting July, ending September) and for the quarter in total.

3.Each unit produced requires 0.40 direct labor-hours and direct labor-hour workers are paid $10 per hour. Construct the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

You recently began an internship in the accounting department of Front Range Furniture. As your first assignment you were asked to perform a cost analysis and reporting for the year ended December 31, 2019.

Advertising expense $22,250                                       Direct labor $564,500

Depreciation expense – Office Equip $10,440            Income taxes expense $138,700

Depreciation expense – Selling Equip. $ 12,125          Indirect labor $61,000

Depreciation expense – Factory Equip. $37,400          Misc. Production costs $10,400

Factory supervision $123,400                                       Office salaries expense $ 72,875

Factory supplies used (indirect materials) $8,060         Raw Materials purchased $896,375

Factory utilities $39,500                                                 Rent expense- office $25,625

INVENTORIES:                                                              Rent expense- selling space $29,000

Raw Materials, Dec 31, 2018 $42,375                            Rent expense- factory building $95,500

Raw Materials, Dec 31, 2019 $72,430                            Maintenance expense- factory $32,375

Goods-in-Process, Dec 31, 2018 $14,500                      Sales $5,002,000

Goods-in-Process, Dec 31, 2019 $16,100                      Sales discounts $59,375

Finished Goods, Dec 31, 2018 $179,200                       Sales salaries expense $297,300

Finished Goods, Dec 31, 2019 $143,750

Prepare a Statement of Cost of Goods , Income Statement , Please use the T-Accounts provided in your working papers to demonstrate your understanding of cost flows, prepare a journal entries from the information in the table above and complete a cost classification chart.

The records of Fremont Corporation’s initial and unaudited accounts show the following ending inventory balances, which must be adjusted to actual costs.

As the auditor, you have learned the following information. Ending work-in-process inventory is 40 percent complete with respect to conversion costs. Materials are added at the beginning of the manufacturing process, and overhead is applied at the rate of 80 percent of the direct labor costs. There was no finished goods inventory at the start of the period. The following additional information is also available.

Required:

a. Prepare a production cost report for Fremont using the weighted-average method. (Hint: You will need to calculate equivalent units for three categories: materials, labor, and overhead.) (Round "Cost per equivalent unit" to 2 decimal places.)

b. Show the journal entry required to correct the difference between the unaudited records and actual ending balances of Work-in-Process Inventory and Finished Goods Inventory. Debit or credit Cost of Goods Sold for any difference. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

c. If the adjustment in requirement (b) is not made, will the company’s income and inventories be overstated or understated?

Suppose Cool Breeze Air Conditioner Company engaged in the following transactions during June of the current​ year: LOADING...​(Click the icon to view the​ transactions.) Requirement Journalize the transactions. Assume Cool Breeze uses a perpetual inventory system. The company estimates sales returns at the end of each month. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry table. Assume the company uses the net amount to record​ sales.) 3 Purchased inventory on account with credit terms of 4​/10, ​n/EOM, $ 2,500. 9 Returned 30​% of the inventory purchased on June 3. It was defective. 12 Sold goods for​ cash, $ 960 ​(cost, $ 576​). 15 Purchased goods for $ 4,000 on account. Credit terms were 3​/15, ​n/30. 16 Paid a $ 300 freight bill on goods purchased. 17 Sold inventory for $ 3,500 cash​ (cost, $ 3 comma 210​). 18 Sold inventory for $ 2,500 on account with credit terms of 2​/10, ​n/30 (cost, $ 1,500​). 22 Received returned goods from the customer of the June 17​ sale, $ 1,500 ​(cost, $ 900​). 24 Paid supplier for goods purchased on June 15. 28 Received cash in full settlement of the account from the customer who purchased inventory on June 18. 29 Paid the amount owed on account from the purchase of June 3. 30 The company estimated that $ 300 of merchandise sold will be returned with a cost of $ 230.

Question 1 Suppose we have two goods, whose quantities are denoted by A and B, each being a real number. A consumer’s consumption set consists of all (A; B) such that A ≥ 0 and B > 4.

His utility function is: U (A, B) = ln(A + 5) + ln(B - 4). The price of A is p and that of B is q; total income is I. You have to find the consumer’s demand functions and examine their properties. You need not worry about second-order conditions for now.

(i) Solve the problem by Lagrange’s method, ignoring the constraints A ≥ 0, B > 4. Show that the solutions for A and B that you obtain are valid demand functions if and only if I ≥ 5p + 4q. (ii) Suppose I ≥ 5p + 4q. Solve the utility maximization problem subject to the budget constraint and an additional constraint A ≥ 0, using Kuhn-Tucker theory (Bear in mind that the Kuhn-Tucker conditions coincide with the ordinary first-order Lagrangian conditions). Show that the solutions for A and B you get here are valid demand functions if and only if 4q < I ≤ 5p + 4q. What happens if I ≤ 4q?

In each of the following parts, consider the above cases (i) and (ii) separately.

(iii) Find the algebraic expressions for the income elasticities of demand for A; B. Which, if either, of the goods is a luxury?

(iv) Find the marginal tendencies to spend on the two goods. Which, if either, of the goods is inferior?

(v) Find the algebraic expressions for the own price derivatives ?A/?p, ?B/?q. Which, if either, of the goods is a Giffen good?

Suppose we have two goods, whose quantities are denoted by A and B , each being a real number. A consumer’s consumption set consists of all (A; B ) such that A ≥ 0 and B > 4. His utility function is:
U (A, B) = ln(A + 5) + ln(B - 4).
The price of A is p and that of B is q; total income is I. You have to find the consumer’s demand functions and examine their properties. You need not worry about second-order conditions for now.
(i) Solve the problem by Lagrange’s method, ignoring the constraints A ≥ 0, B > 4. Show that the solutions for A and B that you obtain are valid demand functions if and only if I ≥ 5p + 4q.
(ii) Suppose I ≥ 5p + 4q. Solve the utility maximization problem subject to the budget constraint and an additional constraint A ≥ 0, using Kuhn-Tucker theory (Bear in mind that the Kuhn-Tucker conditions coincide with the ordinary first-order Lagrangian conditions). Show that the solutions for A and B you get here are valid demand functions if and only if 4q < I ≤ 5p + 4q. What happens if I ≤ 4q?
In each of the following parts, consider the above cases (i) and (ii) separately.
(iii) Find the algebraic expressions for the income elasticities of demand for A; B. Which, if either, of the goods is a luxury?
(iv) Find the marginal tendencies to spend on the two goods. Which, if either, of the goods is inferior?
(v) Find the algebraic expressions for the own price derivatives ?A/?p, ?B/?q. Which, if either, of the goods is a Giffen good?

Assume no time lags. Political turmoil in the us leads to a none period adverse spending shock in 2018. The repercussions are felt globally causing exchange rate in developing countries to strong depreciate. The prices of imported goods in the us would fall except for the imposition of tariffs so the us economy experiences a one period adverse supply shock also felt in 2018. Call the initial pre shock point a and call the after shock point B. I should see points a and b I both graphs on the left ( both labelled carefully). Illustrate the shock described using the AE/PC model without time lags. ( Use the AE PC graph similarly to the textbooks). For your analysis, chose as a starting point, and economy operating at potential GDP and at its inflation target. Describe the appropriate feds response by following if it is following non accommodative monetary policy. The response should start with point b as earlier shown. Introduce point c to show the intervention ( in 2018 ) and point d to indicate the final outcome of the intervention.

Shock ( two graphs)                                                                        RESPOSE                                        

( SPACE)                                                                                       

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(SPACE)

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