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Firm A has $10,000 in assets entirely financed with equity. Firm B also has $10,000 in assets, but these assets are financed by $5,000 in debt (with a 10 percent rate of interest) and $5,000 in equity. Both firms sell 10,000 units of output at $2.50 per unit. The variable costs of production are $1, and fixed production costs are $12,000. (To ease the calculation, assume no income tax.) a. What is the operating income (EBIT) for both firms? b. What are the earnings after interest? c. If sales increase by 10 percent to 11,000 units, by what percentage will each firm's earnings after interest increase? To answer the question, determine the earnings after taxes and compute the percentage increase in these earnings from the answers you derived in part b. d. Why are the percentage changes different?
During this year, Topflight purchased $8,250 worth of store supplies. On December 31, $1,125 worth of store supplies remained. Calculate amount of Topflight Company's store supplies expense for the current year.
In addition, Willow assumed the $150,000 mortgage on Tree’s building. What are Willow and Tree realized gains or losses on properties exchanged, respectively?
Who has to comply with accounting standards? How is this determined and where can I find accounting standards?
What was the net amount of bad debts expense recognized through the year?
Purpose the journal entries needed in the Capital Projects Fund to account for the above transactions. Manage closing entries.
What is the total increase or decrease in cash flow from having entered into this forward contract hedge?
Explain the negative tax considerations (if any) with respect to Debbie making gifts of the assets that you have recommended.
By how much must the assets be reduced to bring the TATO to the industry average - Investment analysis and calculation of Return on Equity.
The company must pay $28,000 in income tax if it achieves the goal. The contribution margin ratio is 30%. What dollar amount of sales must be achieved to reach the goal if fixed costs are $64,000? SHOW YOUR WORK
The stock, which trades on a regional stock exchange, has a $25,000 FMV on the contribution date. Illustrate what is Yellow Corporation’s charitable contributions deduction for the current year?
If a business had sales of $4,000,000, fixed costs of $1,300,000, a margin of safety of 25%, and a contribution margin ratio of 40%, what was the break-even point?
Evaluate Bugaboo's plant-wide factory overhead rate for May. Determine May's product cost for each type of cookie.
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