Corporation has provided the following data for its two most recent years of operation:
| Selling price per unit | $50 |
| Manufacturing costs: | |
| Direct materials | $10 |
| Direct labor | $6 |
| Variable manufacturing overhead | $5 |
| Fixed manufacturing overhead per year | $72,000 |
| Selling and administrative expenses: | |
| Variable selling and administrative expense per unit sold | $5 |
| Fixed selling and administrative expense per year | $70,000 |
| Year 1 | Year 2 | |
| Units in beginning inventory | 0 | 3,000 |
| Units produced during the year | 9,000 | 8,000 |
| Units sold during the year | 6,000 | 9,000 |
| Units in ending inventory | 3,000 | 2,000 |
A. The unit product cost under variable costing in Year 1 is?
B. The net operating income (loss) under variable costing in Year 1 is?
C. The unit product cost under absorption costing in Year 2 is?
D. Assuming first-in first-out, net operating income (loss) under absorption costing in Year 2 is?
In: Accounting
Firm A wants to finance $5 million to support its new strategic plan. The firm expects that it will be able to generate $2 million in EBIT in the first year of implementing the strategy. The current stock price of Firm A is $10 and it has 1 million shares outstanding. The firm expects that it will be able to borrow money at 7% annual interest. Tax rate is 30%.
Firm A considers raising the entire amount by issuing new shares.
In: Finance
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Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $77, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million, a coupon rate of 6 percent, and sells for 97 percent of par. The second issue has a face value of $30 million, a coupon rate of 7 percent, and sells for 105 percent of par. The first issue matures in 21 years, the second in 4 years. |
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Suppose the most recent dividend was $4.90 and the dividend growth rate is 6 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 40 percent. What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| WACC ? |
In: Finance
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The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): |
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Budgeted unit sales | 11,100 | 12,100 | 14,100 | 13,100 |
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The selling price of the company’s product is $10 per unit. Management expects to collect 75% of sales in the quarter in which the sales are made, 20% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,400. |
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The company expects to start the first quarter with 1,665 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,865 units. |
| Required: |
| 1-a. |
Complete the company's sales budget. |
| 1-b. |
Complete the schedule of expected cash collections. |
| 2. |
Prepare the company’s production budget for the upcoming fiscal year. |
In: Accounting
Erna Corp. has 8 million shares of common stock outstanding. The current share price is $73, and the book value per share is $7. Erna Corp. also has two bond issues outstanding. The first bond issue has a face value of $85 million, has a 7 percent coupon, and sells for 97 percent of par. The second issue has a face value of $50 million, has an 8 percent coupon, and sells for 108 percent of par. The first issue matures in 21 years, the second in 6 years.
a. What are Erna’s capital structure weights on a book value basis? (Round your answers to 4 decimal places. (e.g., 32.1616))
Equity/Value=
Debt/Value=
b. What are Erna’s capital structure weights on a market value basis? (Round your answers to 4 decimal places. (e.g., 32.1616))
Equity/Value=
Debt/Value=
c. Which are more relevant, the book or market value weights?
Market value
Book value
In: Accounting
Please very important to explain all the transactions answers
Chapter 12 Monte Carlo Simulation and Risk Analysis
3. A professional football team is preparing its budget for the next year. One component of the budget is the revenue that they can expect from ticket sales. The home venue, Dylan Stadium, has five different seating zones with different prices. Key information is given below. The demands are all assumed to be normally distributed.
Seating Zone Seats available Ticket price Mean Demand Standard Deviation
First Level Sideline 15,000 $100.00 14,500 750
Second Level 5,000 $90.00 4,750 500
First Level End Zone 10,000 $80.00 9,000 1250
Third Level Sideline 21000 $70.00 17,000 2500
Third Level End Zone 14000 $60.00 8,000 3000
Determine the distribution of total revenue under these assumptions using an Excel data table with 50 simulated trials. Summarize your results with a histogram.
In: Statistics and Probability
The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | ||
| Budgeted sales (units) | 9,900 | 11,900 | 13,900 | 12,900 | |
The selling price of the company’s product is $39 per unit. Management expects to collect 55% of sales in the quarter in which the sales are made and 40% in the following quarter; 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which are expected to be collected in the first quarter, is $99,500.
The company expects to start the first quarter with 2,950 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 3,200 units.
Required:
1-a. Prepare the company's sales budget.
1-b. Prepare the schedule of expected cash collections.
2. Prepare the company's production budget for the upcoming fiscal year.
In: Accounting
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Hero Manufacturing has 8.8 million shares of common stock outstanding. The current share price is $74 and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $85 million, a coupon rate of 6.2 percent and sells for 109.1 percent of par. The second issue has a face value of $70.3 million, a coupon rate of 8.1 percent and sells for 112.9 percent of par. The first issue matures in 9 years, the second in 25 years. |
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Suppose the company’s stock has a beta of 1.3. The risk-free rate is 3.1 percent and the market risk premium is 7.2 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 25 percent. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
In: Finance
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The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): |
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Budgeted unit sales | 12,200 | 13,200 | 15,200 | 14,200 |
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The selling price of the company’s product is $21 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $72,600. |
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The company expects to start the first quarter with 2,440 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,640 units. |
| Required: |
| 1-a. |
Compute the company’s total sales. |
| 1-b. |
Complete the schedule of expected cash collections. |
| 2. |
Prepare the company’s production budget for the upcoming fiscal year. |
In: Accounting
8
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Hero Manufacturing has 10 million shares of common stock outstanding. The current share price is $82 and the book value per share is $5. The company also has two bond issues outstanding, both with semiannual coupons. The first bond issue has a face value $85 million and a coupon of 5 percent and sells for 97 percent of par. The second issue has a face value of $55 million and a coupon of 6 percent and sells for 105 percent of par. The first issue matures in 20 years, the second in 9 years. |
| a. |
What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) |
| b. | What are the company's capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) |
| c. |
Which are more relevant? |
Market value weights
Book value weights
In: Finance