Rogers Manufacturing sells an old machine to KSS Corp which is having financial difficulty. Rogers agrees to accept payment over 3 years. The adjusted basis of the machine to the seller is $5,000 and the buyer is expected to make payments of $2,000 per year for 3 years. What amount of net profit is recognized by the seller in year 3 if the seller uses the installment method? (Assume that the
buyer makes the payments.)
a. $2,000
b. $1,000
c. $333.33
d. $0
e. $666.67
C
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What are the total proceeds from the February 1 sale?
a. $52,400 b. $51,500 c. $50,000 d. $52,000
Consider three alternative bonds that you might invest in, each of which matures in one year. The following table shows the probability that you will receive each possible return. For example, if you buy bond A, the probability is 90 percent that your return will be 20 percent and the probability is 10 percent that your return will be ?100 percent (in other words, you lose the entire amount invested).
BondProbability Return Bond A90% 20% 10% ?100% Bond B75% 40% 25% ?40% Bond C60% 10% 40% ?10% ? a.Calculate the expected return for all three bonds in percentage terms. b.The standard deviations of the returns on these bonds are: Bond A, 36.0 percent; Bond B, 34.6 percent; Bond C, 9.8 percent. If you are extremely risk averse, which of the three bonds would you buy? Why? c.Would a risk-averse investor ever buy Bond A instead of one of the other bonds? Why or why not? Explain and show all your work. In your calculations, you may round after three significant digits. What will be an ideal response?
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Indicate whether the statement is true or false
The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. Product A Product BNumber of units produced 10,000units 2,000unitsDirect labor @ $20 per direct labor hour (DLH) 0.50DLH per unit 2.00DLH per unitDirect materials cost$2per unit $30per unit Overhead costs:Total Cost ActivityDriverProduct AProduct BMachine setup$1,200.00 setups5setups15setupsQuality inspections 24,000.00 inspections60inspections140inspectionsTotal$25,200.00 Using activity-based costing to assign overhead costs, the total product cost per unit for Product B is:
A. $13.40 per unit B. $78.85 per unit C. $75.60 per unit D. $12.75 per unit E. $14.60 per unit