Calculate the unit product cost under absorption costing using the following information.
Direct materials: $50/unit
Direct labor: $75/Unit
Variable manufacturing overhead:$27/Unit
Fixed manufacturing overhead: $30,000
Units produced: 10,000
Units sold: 6,000
In: Accounting
What is the profit maximizing level of output for a firm with the marginal cost function MC = 1.6Q2-15Q+60 and a marginal revenue function MR = 280-20Q?
In: Economics
According to the Ending Inventory Report, how would you calculate the cost of Sales?
Ending Inventory Report
| Administrative Salaries | $100,000 |
|---|---|
| Amortization Expense | $20,000 |
| Beginning Inventory | $75,000 |
| Ending Inventory | $60,000 |
| Office Supplies Expense | $25,000 |
| Purchases | $125,000 |
| Travel & Entertainment Expense | $5,000 |
A.) $75,000 + 125,000 - $60,000
B.) $125,000 - $20,000
C.) $75,000 + 125,000 - $60,000 + $20,000
D.) $75,000 - $60,000
E.) $75,000 + 125,000 - $60,000 - $20,000
In: Accounting
Answer the following questions: a. In comparing a health care system to a cost center, Neel says, “The way to protect our margins is to figure out where the waste is — and get rid of it.” b. What role do patients play in determining cost and quality in health care? c. What public policies can reduce overuse? d. How might you identify waste where you work? Describe a time when you witnessed medical care that you thought was unnecessary. What was done to mitigate it?
In: Nursing
1) A bank with a leverage ratio of 20 has a cost of debt of
1.5%pa and a portfolio of assets with an expected yield of 3.5%pa.
What are the expected ROA net of debt funding costs and the
expected ROE of the bank, using the approach to defining leverage
taken in the lecture slides? Show your workings. (2 marks)
2) What will the ROA and ROE actually be if the yield on assets
turns out to be 3%? Show your workings. (1 mark)
3) What will the ROA and ROE actually be if the yield on assets
turns out to be 1%? Show your workings. (2 marks)
In: Finance
McNabb Construction Company is trying to calculate its cost of capital for use in making a capital budgeting decision. Mr. Reid, the vice-president of finance, has given you the following information and has asked you to compute the weighted average cost of capital.
The company currently has an outstanding bond with a 9.5 percent coupon rate and another bond with a 7.8 percent rate. The firm has been informed by its investment dealer that bonds of equal risk and credit ratings are now selling to yield 10.5 percent. The common stock has a price of $98.44 and an expected dividend(D1) of $3.15 per share. The historical growth pattern (g) for dividends is as follows:
| $2.00 | |
| 2.24 | |
| 2.51 | |
| 2.81 | |
The preferred stock is selling at $90 per share and pays a dividend of $8.50 per share. The corporate tax rate is 30 percent. The flotation cost is 2 percent of the selling price for preferred stock. The optimum capital structure for the firm is 30 percent debt, 10 percent preferred stock, and 60 percent common equity in the form of retained earnings.
a. Compute the historical growth rate.(Round your intermediate calculations to 2 decimal places. Round the final to 2 decimal places.)
b. Compute the cost of capital for the individual components in the capital structure. (Round growth rate to nearest whole number. Round the final answers to 2 decimal places.)
| Debt (Kd) | 7.35 7.35 Correct % |
| Preferred stock (Kp) | 9.64 9.64 Correct |
| Common equity (Ke |
c. Calculate the weighted cost of each source of capital and the weighted average cost of capital. (Round your intermediate calculations to 2 decimal places. Round the final answers to 2 decimal places.)
| Debt (Kd) | 2.21 2.21 Correct % |
| Preferred stock (Kp) | 0.96 0.96 Correct |
| Common equity (Ke) | 7.32 7.32 Incorrect |
| Weighted average cost of capital(Ka) | 10.49 10.49 Incorrect % |
In: Finance
An unlevered firm has a cost of capital of 13.6 percent and earnings before interest and taxes of $138,000. A levered firm with the same operations and assets has both a book value and a face value of debt of $520,000 with an annual coupon of 7 percent. The applicable tax rate is 21 percent. What is the value of the levered firm? Multiple Choice
$996,421
$907,679
$1,184,929
$910,818
$1,191,506
In: Finance
A-Rod Manufacturing Company is trying to calculate its cost of
capital for use in making a capital budgeting decision. Mr. Jeter,
the vice-president of finance, has given you the following
information and has asked you to compute the weighted average cost
of capital.
The company currently has outstanding a bond with a 11.0 percent coupon rate and another bond with an 8.6 percent rate. The firm has been informed by its investment banker that bonds of equal risk and credit rating are now selling to yield 11.9 percent. The common stock has a price of $64 and an expected dividend (D1) of $1.84 per share. The historical growth pattern (g) for dividends is as follows:
| $ | 1.39 |
| 1.53 | |
| 1.68 | |
| 1.84 | |
The preferred stock is selling at $84 per share and pays a dividend
of $8.00 per share. The corporate tax rate is 30 percent. The
flotation cost is 3.0 percent of the selling price for preferred
stock. The optimum capital structure for the firm is 25 percent
debt, 20 percent preferred stock, and 55 percent common equity in
the form of retained earnings.
a. Compute the average historical growth rate.(Do not round intermediate calculations. Round your answer
to the nearest whole percent and use this value as g.
Input your answer as a whole percent.)
b. Compute the cost of capital for the
individual components in the capital structure. (Use the
rounded whole percent computed in part a for g. Do not
round any other intermediate calculations. Input your answers as a
percent rounded to 2 decimal places.)
c. Calculate the weighted cost of each source
of capital and the weighted average cost of capital. (Do
not round intermediate calculations. Input your answers as a
percent rounded to 2 decimal places.)
In: Finance
Dog Up! Franks is looking at a new sausage system with an installed cost of $900 which will be fully depreciated straight-line over the project's 3-year life and then scrapped for $150. The system will save the firm $280/year in pretax operating costs, and the system requires an initial investment in a constant level of net working capital of $65. If the tax rate is 21% and the discount rate is 9%, what should the firm do?
In: Finance
The treasurer of Riley Coal Co. is asked to compute the cost of
fixed income securities for her corporation. Even before making the
calculations, she assumes the aftertax cost of debt is at least 1
percent less than that for preferred stock.
Debt can be issued at a yield of 13.4 percent, and the corporate tax rate is 40 percent. Preferred stock will be priced at $67 and pay a dividend of $5.50. The flotation cost on the preferred stock is $5.
a. Compute the aftertax cost of debt. (Do
not round intermediate calculations. Input your answer as a percent
rounded to 2 decimal places.)
b. Compute the aftertax cost of preferred
stock. (Do not round intermediate calculations. Input your
answer as a percent rounded to 2 decimal places.)
c. Based on the facts given above, is the
treasurer correct?
multiple choice
No, the treasurer is incorrect.
No, the treasurer is incorrect.
In: Finance