Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $53 to buy from farmers and $18 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $25 or processed further for $18 to make the end product industrial fiber that is sold for $39. The beet juice can be sold as is for $32 or processed further for $28 to make the end product refined sugar that is sold for $79.Which of the intermediate products should be processed further?

Garrison 16e Rechecks 2017-09-13, 2017-11-11

Multiple Choice

beet fiber should be processed into industrial fiber; beet juice should NOT be processed into refined sugar

beet fiber should be processed into industrial fiber; beet juice should be processed into refined sugar

beet fiber should NOT be processed into industrial fiber; beet juice should be processed into refined sugar

beet fiber should NOT be processed into industrial fiber; beet juice should NOT be processed into refined sugar

Answers

Answer 1
Answer:

Answer:

Beet fiber should NOT be processed into industrial fiber; beet juice should be processed into refined sugar

Explanation:

A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.

Also note that all cost incurred up to the point of crush are irrelevant to the decision to process further

Product        Additional Rev.    Further process cost.     Net income(loss)

Fiber              14 i.e (39 -25)                  18                                     (4)

Juice              47.i,e  (79- 32) i.e           28                                    19

The beet fiber should not be process further  while the beet juice should be be processed further into refined sugar . Processing Beet Juice further will generate additional income of 19 per unit


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The welding department supplies parts to the final assembly line. Management decides to implement a kanban system and has collected the following data. The daily demand is 2000 units The production lead time is 4 days (this includes processing time, transport time, and waiting time) Management has decio One container fits 400 units How many kanban containers will be needed to support this system? _____ containers

Answers

Answer:

25 kanban containers

Explanation:

Given that,

Daily demand = 2,000 units

Production lead time = 4 days

Container size = 400 units

Lead time demand:

= Daily demand × Production lead time

= 2,000 units × 4 days

= 8,000 units

Safety Stock:

= Number of days × Daily demand

= 1 day × 2,000 units per day

= 2,000 units

Number of Kanban containers needed:

= (Lead time demand + Safety Stock) ÷ Container size

= (8,000  + 2,000) ÷ 400

= 10,000 ÷ 400

= 25

FarCry Industries, a maker of telecommunications equipment, has 6 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10 thousand bonds. If the common shares are selling for $27 per share, the preferred shares are selling for $15 per share, and the bonds are selling for 119 percent of par ($1,000), what weight should you use for debt in the computation of FarCry's WACC?

Answers

Answer:

Market value of common stock (6,000,000 x $27) =$162,000,000                                                                

Market value of preferred stock (1,000,000 X $15) = $15,000,000                                                                

Market value of debt (10,000 x $1,190)                    =  $11,900,000

Market value of the company                                      $188,900,000

Weight of debt in the capital structure

= $11,900,000/$188,900,000 x 100

=  6.299% = 6.30%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Explanation:

In this case, there is need to calculate the market value of the company, which is the aggregate of market value of common stock, market             value of preferred stock and market value of debt. The market value of each stock is obtained by multiplying the number of units outstanding by the current market price per stock.  The weight of debt is determined by                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                dividing the market value of debt by the market value of the company.                                                                                                                                                                                                                                                                                                                                                                                                                    

The office product division in Hyacinth Company reported $11,250 net operating income with $75,000 average operating assets this year. The office product division has a new investment opportunity that would increase net operating income by $4,375 with $35,000 additional investment. 1. Which of the following statements is TRUE given that the company's minimum required rate of return is 10%?
Multiple Choice:
O Regardless of whether the division is evaluated on the basis of ROI or Residual income, the manager will not accept the new investment because it is bad for the company.
O If the division is evaluated on the basis of Residual income, the manager of the office product division would not accept the new investment because it is bad for the company.
O If the division is evaluated on the basis of Residual income, the manager of the office product division would accept the new investment because it is good for the division.
O If the division is evaluated on the basis of ROI, the manager of the office product division would accept the new investment because it is good for the division.
O If the division is evaluated on the basis of ROI, the manager of the office product division would not accept the new investment because it is bad for the company.

Answers

Answer:

The true statement is that If the division is evaluated on the basis of Residual Income, the manager of the office product division would accept the new investment because it is good for the division

Explanation:

In order to find out which of the following statements is TRUE given that the company's minimum required rate of return is 10%, we would have to calculate the existing residual income and the post investment residual income as follows:

                                               Existing            Post Investment

Income                                  $ 11,250                   $15,625

Assets                                  $75,000           $110,000

ROI                                               15%                        14%

Charge on capital                $ 7,500.0                 $11,000.0

Residual Income                  $3,750.0          $4,625.0

Given that the  Existing Residual Income is $3,750.0 and the Post Investment  Residual Income is $4,625.0 If the division is evaluated on the basis of Residual Income, the manager of the office product division would accept the new investment because it is good for the division.

IRobot designs andmanufactures robots for consumer, commercial, and military use. For the fiscal year ended January 2, 2016, the company reported the following on its balance sheet and income statement(amounts in thousands): Accounts receivable, net of allowance of $33 at January 2, 2016, and $67 at December 27,2014, of $104,679 and $71,056, respectively.
Revenue for fiscal 2015 (i.e., the year ended January 2, 2016) of $616,778.
Bad debt expense for fiscal 2015 of $0.

Required:
Compute the amount of cash collected from customers during fiscal 2015.

Answers

Answer:

iRobot

The amount of cash collected from customers during fiscal 2015 = $583,155.

Explanation:

a) Data and Calculations:

Allowance at January 2, 2016 = $33

Allowance at December 27, 2014 = $67

Accounts Receivable at January 2, 2016 = $104,679

Accounts Receivable at December 27, 2014 = $71,056

Revenue for 2015, year ended Jan 2, 2016 = $616,778

Bad debt expense for 2015 = $0

Computation of the Cash collected from customers during fiscal 2015:

Accounts Receivable

Dec. 27, 2014  Balance                 $71,056

2015                 Revenue               616,778

Jan. 2, 2016     Balance                (104,679)

2015                 Cash                   $583,155

​AllCity, Inc., is financed 39 % with​ debt, 11 % with preferred​ stock, and 50 % with common stock. Its cost of debt is 6.1 %​, its preferred stock pays an annual dividend of $ 2.53 and is priced at $ 33. It has an equity beta of 1.11. Assume the​ risk-free rate is 2.2 %​, the market risk premium is 6.7 % and​ AllCity's tax rate is 35 %. What is its​ after-tax WACC?

Answers

Answer:

Cost of debt (Kd) = 6.1%

Cost of preferred stock = Dividend paid

                                        Current market price

                                      = $2.53

                                         $33

                                      = 0.0767 = 7.67%

Risk-free rate (Rf) = 2.2%

Beta (β) = 1.11

Market risk premium (Rm - Rf) = 6.7%

Cost of equity (Ke) = Rf +β(Rm - Rf)

Cost of equity (Ke) = 2.2 + 1.11(6.7)

Cost of equity (Ke) =  9.637%    

WACC = Kd(D/V)(1-T) + Kp(P/V) + Ke(E/v)

WACC = 6.1(39  /100)(1 -0.35) + 7.67(11/100) + 9.637(50/100)  

WACC  = 1.55 + 0.84 + 4.82  

WACC  = 7.21%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Explanation:

In this case, cost of debt has been given. Cost of preferred stock is calculated as current dividend paid divided by current market price.

Cost of equity is calculated based on capital asset pricing model, which is Risk-free rate plus beta multiplied by the market risk premium.

WACC equals after-tax cost of debt multiplied by the proportion of debt in the capital structure plus cost of preferred stock multiplied by the proportion of preferred stock in the capital structure plus cost of equity multiplied by proportion of equity in the capital structure.

Which of the following is a function of a human resources department? O planning for materials needs O setting strategic policies O administering compensation interpreting the legality of accounting practices​

Answers

Answer:

O administering compensation

Explanation:

The human resources department or the HR is the department responsible for employees' management in an organization.  Employees are the human resources in the organization. The HR's main task is to attract, train, and retain the best employees for the company.

Other functions of the Human resources department include

  • Recruiting and placing the right person for the right position.
  • Managing the employee compensation scheme
  • Ensure compliance with labor laws
  • Training and building employee's capacity
  • Creating and maintaining a good employer-employee relationship.