Answer and Explanation:
The Preparation of direct material budget is shown below:-
Direct Material budget
Particulars Amount
Units to be produced $90,000 Y
Material per unit 2
Total pounds needed for
production M $180,000 2Y
Add: Desired ending Direct
Material Inventory 20% $36,000 (.2 × 2Y = .4Y)
Total Material requirement $216,000 (2.4Y
)
Less: beginning Raw material
Inventory $9,000 (.1Y)
Material to be purchased
Account $207,000 (2.3Y)
Cost per pound C $5
Total cost of direct Material
Purchases A $1,035,000
2Y + .4Y - .1Y = $207,000
Y = $207,000 ÷ 2.3 $90,000
Answer:
79,000 tons
Explanation:
When you use the weighted average method for determining equivalent units, the total number of equivalent units = units completed and transferred out + equivalent units in ending inventory.
In this case, since the materials are added at the beginning of the production process, all the units are 100% complete regarding direct materials.
Answer:
The answer is:
Asset will be overstated
Net income will be overstated
Explanation:
Because of the incorrect capitalization(the process of converting or adding to a firm's asset):
1. Assets are overstated. Assets that shouldn't are added to the entire assets are added. So it's increasing the company's asset whereas it's not.
2. Net income are overstated. Because depreciation too will have to be charged for the asset that wasn't there, therefore, net asset will be overstated.
Answer:
A) $1.82
Explanation:
the dividends discount model is used to determine the value of stock given the distributed dividends and the required rate of return:
current dividend $0.20 per stock
dividends year 1 = $0.23 per stock
dividends year 2 = $0.2645 per stock
dividends year 3 = $0.3042 per stock
dividends year 4 = $0.35 per stock
after year 4, we need to calculate the growing perpetuity = dividend / (return rate - growth rate) = $0.35 / (17.4% - 2.5%) = $0.35 / 14.9% = $2.35
now we must find the present value of the cash flows:
PV = $0.23/1.174 + $0.2645/1.174² + $0.3042/1.174³ + $0.35/1.174⁴ + $2.35/1.174⁵ = $0.1959 + $0.1919 + $0.188 + $0.1842 + $1.0537 = $1.82
Answer:
The current stock price should be at $60.15.
Explanation:
We have the dividend paid next year = 1.05 x 1.25 = $1.3125.
So, the present value of the growing annuity of dividend stream in the next 7 years is calculated as:
[ 1.3125 / (12% - 25%) ] x [ 1 - [ (1+25%)/( 1+12%) ] ^7 ] = $11.68.
The present value of the dividend stream from year 8 to infinity ( growing perpetuity):
[ 1.05 x 1.25^7 x 1.07/ (12% - 7%) ] / 1.12^7 = $48.47.
The price of the stock should be equal to the sum of present value of the two dividend stream above which is 11.68 + 48.47 = $60.15.
Thus, the answer is $60.15 per share.