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1 year ago

7

The Phelan Division produces and sells a product to external and internal customers. Per-unit information about its operations i

nclude: Selling price per unit to external customers $250 Variable manufacturing costs per unit 115 Fixed manufacturing overhead costs per unit 70 If Phelan is operating at capacity and has unlimited external customer demand, what should be the (internal) transfer price for Phelan's product

1 answer:

ioda1 year ago

6 0

Answer:

The answer is $250

Explanation:

Solution

From the example given, we are asked to find the internal transfer price of Phelan's product.

So, if Phelan is operating at capacity or speed and has unlimited external customer demand then the transfer price for Phelan's product is $250 as it has huge demand from customers

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Oriole, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct

algol13

Answer:

Oriole should buy the wickets.

Explanation:

The variable cost of producing wickets is $22/unit.

The fixed cost of production is $8/unit.

The total cost of producing wickets is $30/unit.

Saran company offers to sell 4900 units of wickets at $24.

If wickets are purchased it will cost $24/unit.

Since cost is lower when buying, Oriole should buy wickets.

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1 year ago

Masterson, Inc., has 4.1 million shares of common stock outstanding. The current share price is $84, and the book value per shar

Kitty [74]

Answer:

The answer is "8.37%".

Explanation:

$\text{MV of equity} = \text{equity price} \times \text{number of outstanding shares}$

$=84 \times 4100000\\\\=344400000$

$\text{MV of Bond1}=\text{Par value} \times \text{bonds outstanding} \times \text{age of percentage}$

$=1000 \times 70000 \times 0.98 \\\\=68600000$

$\text{MV of Bond2}=\text{Par value} \times \text{bonds outstanding} \times \text{age of percentage}$

$=1000 \times 50000 \times 1.08 \\\\=54000000$

$\text{MV of firm} = \text{MV of Equity} + \text{MV of Bond1}+ \text{MV of Bond 2}$

$=344400000+68600000+54000000\\\\=467000000$

$\text{Weight of equity W(E)} = \frac{\text{MV of Equity}}{\text{MV of firm}}$

$= \frac{344400000}{467000000}\\\\=0.7375$

$\text{Weight of debt W(D)}= \frac{\text{MV of Bond}}{\text{MV of firm}}$

$= \frac{122600000}{467000000}\\\\=0.2625$

Equity charges

By DDM.

$\text{Price = new dividend} \times \frac{(1 + \text{rate of growth})}{( \text{Equity expense-rate of growth)}}$

$84 = 3.95 \times \frac{(1+0.05)}{(\text{Cost of equity}- 0.05)}\\\\84 = 3.95 \times \frac{(1.05)}{(\text{Cost of equity} - 0.05)}\\\\84 = \frac{4.1475}{ (\text{Cost of equity} - 0.05)}\\\\\text{Cost of equity} -0.05 = \frac{4.1475}{84}\\\\\text{Cost of equity} -0.05 = 0.049375\\\\\text{Cost of equity} = 0.049375 + 0.05\\\\\text{Cost of equity} = 0.099375 \\\\\text{Cost of equity} \% = 9.9375 \% \ \ \ or \ \ \ 9.94 \% \\\\$

Debt expenses

Bond1

$K = N \times 2 \\\\$

$Bond \ Price = \sum [ \frac{\text{(Semi Annual Coupon)}}{(1 + \frac{YTM}{2})^k}] + \frac{Par\ value}{(1 + \frac{YTM}{2})^{N \times 2}}$

$k=1\\\\K =20 \times 2\\\\980 = \sum [ \frac {(5.1 \times \frac{1000}{200})}{(1 + \frac{YTM}{200})^k}] + \frac{1000}{(1 + \frac{YTM}{200})}^{20 \times 2}\\\\k=1\\\\\ YTM1 = 5.2628923903\\\\Bond2\\$

$K = N \times 2$

$Bond \ Price = \sum [ \frac{\text{(Semi Annual Coupon)}}{(1 + \frac{YTM}{2})^k}] + \frac{Par\ value}{(1 + \frac{YTM}{2})^{N \times 2}}$

$k=1\\\\K =12 \times 2\\\\$

$1080 =\sum [\frac{(5.6 \times \frac{1000}{200})}{(1 + \frac{YTM}{200})^k}] +\frac{1000}{(1 +\frac{YTM}{200})^{12 \times 2}} \\\\k=1\\\\YTM2 = 4.72\\\\$

$\text{Company debt costs} = YTM1 times \frac{(MV \ bond1)}{(MV \ bond1+MV \ bond2)}+YTM2 \times \frac{(MV \ bond2)}{(MV \ bond2)}\\\\$

The cost of the debt for the company:

$= 5.2628923903 \times \frac{(68600000)}{(68600000+54000000)}+4.72 \times \frac{(68600000)}{(68600000+54000000)}\\\\$

Business debt cost= $5.02 \% \\\\$

after taxation cost of debt:

$= \text{cost of debt} \times (1- tax \ rate)\\\\= 5.02 \times (1-0.21)\\\\= 3.9658\\\\$

$WACC= \text{after debt charges} \times W(D)+equity cost \times W(E) \\\\$

$=3.97 \times 0.2625+9.94 \times 0.7375 \\\\ =8.37 \% \\\\$

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1 year ago

Swifty Corporation had net sales of $2,419,200 and interest revenue of $39,300 during 2020. Expenses for 2020 were cost of goods

damaskus [11]

Answer:

Please find the income statement below;

Explanation:

<u>Single step Income statement</u>

Revenues

Net sales 2,419,200

Interest revenue 39,300

<em>Total revenues 2,458,500</em>

Expenses

Cost of goods sold 1,464,600

Admin. expenses 216,400

Selling expenses 294,800

Interest expense 46,000

<em>Total expenses 2,021,800</em>

<em><u>Net Income </u></em><em> </em><u><em>436,700</em></u>

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2 years ago

Raj, a senior engineer at a manufacturing firm, leads a designing team from the home country, while the team works from the host

anzhelika [568]

Answer:

The correct option is b.

Explanation:

Telephone as the fastest approach would be using a telephone. This mode is the fastest mode of communication for Raj to communicate with his team immediately.

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2 years ago

One of your customers has just made a purchase in the amount of $12,000. You have agreed to payments of $290 per month and will

34kurt

Answer:

It will take 51 months.

Explanation:

As we know the constant payment of $290 monthly is the annuity payment to pay $12,000 with interest rate of 0.84% per month. The Number of Months can be calculated by following formula.

Loan amount = PV = $12,000

Rate of interest = r = 0.84 %

Monthly Payment = P = $290

PV of annuity = P x [ ( 1- ( 1+ r )^-n ) / r ]

$12,000 = $290 x [ ( 1 - ( 1 + 0.84% )^-n / 0.84% ]

$12000 x 0.84% / $290 = 1 - ( 1 + 0.84% )^-n

0.347586 = 1 - ( 1 + 0.84% )^-n

0.347586 - 1 = - ( 1 + 0.84% )^-n

-0.652414 = - ( 1 + 0.84% )^-n

1 / 0.652414 = 1.0084^n

1.532769 = 1.0084^n

Log 1.532769 = n x log 1.0084

n = Log 1.532769 / log 1.0084

n = 51

6 0

1 year ago