A company issued 7%, 5-year bonds with a par value of $100,000. The market rate when the bonds were issued was 7.5%. The company received $97,946.80 cash for the bonds. Using the effective interest method, the amount of interest expense for the second semiannual interest period is:
A. $3,673.01.
B. $3,679.49.
C. $7,000.00.
D. $3,500.00.
E. $7,346.03.
Answer: B
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Which of the following conditions would cause the break-even point to decrease?
A) Total fixed costs increase B) Unit selling price decreases C) Unit variable cost decreases D) Unit variable cost increases
A caution
A) tells the reader if an action might harm the product. B) tells the reader to read all instructions before beginning the task at hand. C) tells the reader an interesting fact about the process to watch for.
On January 4, Year 1, Barber Company purchased 5100 shares of Convell Company for $60,500 plus a broker's fee of $1020. Convell Company has a total of 25,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $73,000 and $68,000 for Year 1 and Year 2, respectively. What is the book value of Barber's investment in Convell at the end of Year 2?
A. $89,720. B. $88,720. C. $52,850. D. $81,050. E. $61,520.
AAA Metal Bearings produces two sizes of metal bearings (sold by the crate)—standard and heavy
The standard bearings require $200 of direct materials per unit (per crate), and the heavy bearings require $245 of direct materials per unit. The operation is mechanized, and there is no direct labor. Previously AAA used a single plantwide allocation rate for manufacturing overhead, which was $1.55 per machine hour. Based on the single rate, gross profit was as follows: Per unit Standard Heavy Direct materials cost $200.00 $245.00 Manufacturing overhead cost 124.00 93.00 Total manufacturing cost $324.00 $338.00 Sales price per unit 350.00 370.00 Gross profit per unit $26.00 $32.00 Although the data showed that the heavy bearings were more profitable than the standard bearings, the plant manager knew that the heavy bearings required much more processing in the metal fabrication phase than the standard bearings, and that this factor was not adequately reflected in the single plantwide allocation rate. He suspected that it was distorting the profit data. He suggested adopting an activity-based costing approach. Working together, the engineers and accountants identified the following three manufacturing activities and broke down the annual overhead costs as shown below: Activities: Estimated Cost Metal fabrication $420,000 Machine processing 152,000 Packaging 17,000 Total overhead cost $589,000 Engineers believed that metal fabrication costs should be allocated by weight and estimated that the plant processed 12,000 kilos of metal per year. Machine processing costs were correlated to machine hours, and the engineers estimated a total of 380,000 machine hours for the year. Packaging costs were the same for both types of products, and so they could be allocated simply by the number of units produced. The production plan provided for 4,000 units of standard and 1,000 units of heavy bearings to be produced during the year. Additional data on a per unit basis was as given below: Standard Heavy Kilos per unit 2.00 4.00 Machine hours per unit 80.00 60.00 Using the data above, calculate the predetermined overhead allocation rates using activity-based costing. Then, following the ABC methodology, calculate the production cost and gross profit for one unit of standard bearings. (Round your intermediate calculations to two decimal places.) What will be an ideal response