Koza Automotive purchased a CNC machine for $20,000 in year 0. The useful life of the machine is 10 years, at the end of which the machine is estimated to have a salvage value of zero. The machine generates net annual revenues of $6,000. The annual operating and maintenance expenses are estimated to be $1,000. If their MARR is 15%, how many years will it take before this machine becomes profitable?

According to Article , “U.S. Debt Is Set to Exceed Size of the Economy Next Year, a First Since World War II,” what happened to the government spending from April to June of 2020? What happened to the national saving as a result? Assume that saving depends on the real interest rate, plot the effect of this fiscal policy on the real interest rate and the amount of investment in the market for loanable funds.

Pineapples grow in Hawaii all year round and there are many farms and gardens that produce pineapples for the local market. The demand curve for pineapples in Hawaii is given by Q = 240−2P, where Q is in tons of pineapples. The marginal cost of producing an additional ton of pineapples is constant and equal to $50 for all producers in the market.

(a) Given that there are many producers of pineapples in Hawaii and that pineapples are a homogeneous good, let’s assume that the market for pineapples is perfectly competitive. Calculate and show on a graph the equilibrium quantity sold in the market, total sur- plus, and deadweight loss. (Hint: recall the relationship between the supply curve and marginal cost curves of firms.)

(b) Now suppose one of the pineapple producers, Noa, inherits a large sum of money and decides to buy out all of the island’s land on which pineapples can be grown (including all the farms and gardens of his competitors). That is, Noa becomes a monopolist in the market for pineapples in Hawaii. Calculate and show on a graph the new equilibrium quantity and price; consumer, producer, and total surplus; and deadweight loss. [For this problem it will help to recall that when the demand curve is linear, the monopolist’s marginal revenue curve is a line with the same “y-intercept” as the demand curve, but a slope that’s twice as steep as the demand curve.]

(c) If Noa produces Q tons of pineapples, his total cost is 250 + 50Q. Calculate Noa’s profit if he operates at his profit-maximizing quantity and price.

(d) Sketch Noa’s average total cost function on a new graph. Does Noa experience increasing, decreasing, or constant returns to scale?

A firm has a fixed cost of $20,000 in its first year of operation. When the firm produces 1,000 units of output, its total costs are $80,000. When it produces 1,100 units of output, its variable costs are $70,000. If the marginal cost of each of the 100 additional units of output is the same then the marginal cost of producing the 1,050th unit of output is less than $90.

True

false

The average variable cost curve and average total cost curve will eventually intersect as output increases because average fixed cost eventually becomes negative.

True

False

If marginal cost is rising, then it is likely that marginal product is decreasing because the additional input costs are spread over fewer units of output.

True

False

Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $160,000, and budgeted direct labor hours were 16,000. The average wage rate for direct labor is expected to be $20 per hour. During June, Naranjo Company worked on four jobs. Data relating to these four jobs follow: Job 39 Job 40 Job 41 Job 42 Beginning balance $23,300 $32,900 $19,700 $700 Materials requisitioned 19,800 20,800 12,900 15,200 Direct labor cost 10,900 17,900 7,550 6,100 Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 120 percent of cost. (Naranjo had originally developed Job 40 to order for a customer; however, that customer was near bankruptcy and the chance of Naranjo being paid was growing dimmer. Naranjo decided to hold Job 40 in inventory while the customer worked out its financial difficulties. Job 40 is the only job in Finished Goods Inventory.) Jobs 41 and 42 remain unfinished at the end of the month.

Required: 1. Calculate the balance in Work in Process as of June 30. $

2. Calculate the balance in Finished Goods as of June 30. $

3. Calculate the cost of goods sold for June. $

4. Calculate the price charged for Job 39. Round your answer to the nearest cent. $

At the beginning of Year 2, the Redd Company had the following balances in its accounts:

During Year 2, the company experienced the following events:

1. Purchased inventory that cost $13,100 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $990 were paid in cash.
2. Returned $900 of the inventory it had purchased from Ross Company because the inventory was damaged in transit. The seller agreed to pay the return freight cost.
3. Paid the amount due on its account payable to Ross Company within the cash discount period.
4. Sold inventory that had cost $12,500 for $21,500 on account, under terms 2/10, n/45.
5. Received merchandise returned from a customer. The merchandise originally cost $2,150 and was sold to the customer for $3,000 cash. The customer was paid $3,000 cash for the returned merchandise.
6. Delivered goods FOB destination in Event 4. Freight costs of $880 were paid in cash.
7. Collected the amount due on the account receivable within the discount period.
8. Sold the land for $7,300.
9. Recognized accrued interest income of $650.
10. Took a physical count indicating that $5,100 of inventory was on hand at the end of the accounting period. (Hint: Determine the current balance in the inventory account before calculating the amount of the inventory write down.)

Record the events in general journal format. Assume that the perpetual inventory method and gross method is used.

On January 1 of year 1, Falk Company signed a contract to lease space in a building for 3 years. The lease contract calls for annual (prepaid) rental payments of $141,000 on each January 1 throughout the life of the lease and for the lessee to pay for all additions and improvements to the leased property. Present value of the three lease payments is $392,400.

Required:

1. Assume the lease is accounted for as a finance lease. Prepare entries for Falk to record (a) the lease asset and obligation at January 1, Year 1, and (b) the $130,800 per year straight-line amortization at December 31 of Year 1, 2, and 3.

a).Record lease asset and obligation.

b).Record annual amortization of RoU asset.

Required:

2.Assume the lease is accounted for as an operating lease. Prepare entries for Falk to record (a) the lease asset and obligation at January 1, Year 1, and (b) the annual straight-line amortization at December 31 of Year 1, 2, and 3 equal to $140,986, $120,872, and $130,542, respectively. (Do not round your intermediate calculations.)

a).Record the lease asset and obligation at January 1, Year 1.

b).Record the annual straight-line amortization at December 31 of Year 1.

c).Record the annual straight-line amortization at December 31 of Year 2

d).Record the annual straight-line amortization at December 31 of Year 3.