Chapter 5 1. John and Marry work for a direct marketing firm. (in one Hour) Total completed calls Sales John 50 2 Mary 50 1 We may clearly infer that John has achieved more efficient work than Mary...

Chapter 5
1. John and Ma
y work for a direct marketing firm.
     (in one Hour)
    Total completed calls
    Sales
    John
    50
    2
    Mary
    50
    1
We may clearly infer that John has achieved more efficient work than Mary because both have completed 50 calls, but John has two sales while Mary has only one, implying that John has obtained the best possible result with the least amount of money. Mary, on the other hand, is more effective at completing the particular mission.
2. Joan purchased a 30 – year federal government bond for $10,000, rate 4% annual interest.
Jim Purchased a 30 – year corporate rate bonds for $20,000 that pays 7% annual interest.
    (Owner)
    Time
    Amount
    Rate
    Goal
    Joan
    30
    $10,000
    4%
    $400
    Jim
    30
    $20,000
    7%
    $1,400
a. In comparison to Joan, Jim is more efficient because he wants high returns in the same amount of time. He will achieve high returns after one year that conclude the efficiency of the Jim. Utilizing the amount smartly.
. Joan is more effective because he only seeks returns. It could be high or low. He will get the returns on time that shows the effectiveness.
3. a.) Accounting Profit of Sam will be $20,000 and Entrepreneurial profit is $10,000.
.) Accounting benefit is the amount of money a company has left over after deducting all costs from its earnings. The economic principle of opportunity cost underpins entrepreneurial profit. This is capital gained in excess of what would have been gained had any investment or venture been undertaken.
6. Owner’s option to not invest to avoid losses.
7. cost per cabinet = $80
45 minutes for one cabinet, each cabinet maker works 8 hours a day $18 per hour
Raw material = $25
20 day a month
2 cabinet makers
Fixed cost = $5000
a. contribution margin = Price charged per unit – Variable cost
d.)
Excel Spread sheet
Chapter 7
1.
Cash = $3,500
Account Payable = $10,200
Account Receivable = $15,000
Sales Taxes = $750
Sale taxes due at horizon department = $3,450
Inventory = $17,500
Wages payable = $5,350
Taxes payable = $2,570
Money market fund = $12,300
Computer = $3,400
a. Cu
ent asset,
Cash = $3,500
Account Receivable = $15,000
Inventory = $17,500
Money market fund = $12,300
Cu
ent Liability,
Account Payable = $10,200
Wages payable = $5,350
Taxes payable = $2,570
Sales Taxes = $750
Sale taxes due at horizon department = $3,450
Total cu
ent assets = $48,300
Total cu
ent Liability = $ 22,320
. Gross working capital = $48,300
c. Net working capital = ($48,300-22,320) = $25,980
d. Cu
ent Ratio = 1.86
2.
3.
a.
10 days extra every month which mean = 10*12 = $120
Rate = 2%,
Additional amount earned = $124.4.
.
Transfer of funds Float is created when a company writes a check, resulting in a drop in the company's book value but a shift in the available balance. When a company gets a check, it increases its book value but does not adjust its usable balance. This is refe
ed to as collection float. This problem represent disbursement of float as the payment is delayed by 10 days .

8.
a.
.
We should not order as it will increase the cost, and from the above we have computed economic order quantity which is equal to 40.
9.
10.
a.
A items = Roses and Cernatio.
.
C items = Ri
on, Bud vases, pin, Glass bowl, ceremic pot, wrapping pape
Chapter 8
9.
13.
16.
17.
Break Even Analysis
Fixed Cost    0    75    150    225    300    375    450    5000    5000    5000    5000    5000    5000    5000    Variable cost    0    75    150    225    300    375    450    0    3900    7800    11700    15600    19500    23400    Total Cost    0    75    150    225    300    375    450    5000    8900    12800    16700    20600    24500    28400    Revenue    0    75    150    225    300    375    450    0    6000    12000    18000    24000    30000    36000    
Amount-50,000.00 $
Rate2% XXXXXXXXXX
Time1month
50,083.33$
Sheet1
        Amount    $ -50,000.00
        Rate    2%     XXXXXXXXXX
        Time    1    month
            $ 50,083.33
EOQSqrt (D*S)/(I*P)6,00,000.00$
Total cost2,00,000.00$
Annual demand6,000.00$
Costing per year26,700.00$
Price5.34
Fixed cost XXXXXXXXXX
40
Average inventory
Sheet1
        EOQ    Sqrt (D*S)/(I*P)        Average inventory        $ 600,000.00
                        Total cost    $ 200,000.00
        Annual demand    $ 6,000.00
        Costing per year    $ 26,700.00
        Price    5.34
        Fixed cost     XXXXXXXXXX
            40                    0
EOQSqrt (D*S)/(I*P)5,00,000.00$
Total cost1,00,000.00$
Annual demand10,000.00$
Costing per year3,00,000.00$
Price50
Fixed cost XXXXXXXXXX
82
Average inventory
Sheet1
        EOQ    Sqrt (D*S)/(I*P)        Average inventory        $ 500,000.00
                        Total cost    $ 100,000.00
        Annual demand    $ 10,000.00
        Costing per year    $ 300,000.00
        Price    50
        Fixed cost     XXXXXXXXXX
            82                    0
Roses10,000.00$ 49.10%
Ribon100.00$ XXXXXXXXXX%
Bud vases1,000.00$ 4.91%
Pin15.00$ XXXXXXXXXX%
Glass bowl500.00$ XXXXXXXXXX%
ceremic pot3,000.00$ XXXXXXXXXX%
wrapping paper250.00$ XXXXXXXXXX%
carnation5,500.00$ XXXXXXXXXX%
20,365.00$ 100.00%
Year10
Rate5%
Fv21,000.00$
payment-1,669.60 $
Sheet1
        Year    10
        Rate    5%
        Fv    $ 21,000.00
        payment    $ -1,669.60
Year20
Rate3%
PV-10,000.00 $
FV18,061.11$
Sheet1
        Year    20
        Rate    3%
        PV    $ -10,000.00
        FV    $ 18,061.11
Amount-50000
Rate500000
Rate12%
Year20
Sheet1
        Amount    -50000
        Rate    500000
        Rate    12%
        Year    20
a.
Ira-300000
Fv600000
Rate3%
Year23
c.
.Ira-300000Ira-300000
Fv600000Fv1200000
Rate6%Rate9%
Year12Year16
Sheet1
    a.
        Ira    -300000
        Fv    600000
        Rate    3%
        Year    23
                c.
    b.    Ira    -300000        Ira    -300000
        Fv    600000        Fv    1200000
        Rate    6%        Rate    9%
        Year    12        Year    16
Price80
cabinet maker0.313.5
2 cabinet maker27
Raw material per cabinet25
Variable cost52
a.Contribution28
Fixed cost 5000
Contribution28
.Break even179
c.
Cost oer cabinet80
Breakeven Quantity179
For extra $2000 owner needs to sell25Quantity more
Revenue
Total XXXXXXXXXX,285.71$
For profit of $2000 monthly revenue will be
Sheet1
        Price    80
        cabinet maker    0.3    13.5
        2 cabinet maker    27
        Raw material per cabinet    25
        Variable cost    52
    a.    Contribution    28
        Fixed cost     5000
        Contribution    28
    b.    Break even    179
    c.    For profit of $2000 monthly revenue will be
        Cost oer cabinet    80
        Breakeven Quantity    179
        For extra $2000 owner needs to sell        25    Quantity more
                    Revenue
        Total     204    80    $ 16,285.71
Sales Price80.00$
Variable cost
Material25.00$
Labour27.00$
Variable overhead52.00$
Contribution28.00$ XXXXXXXXXXUnits
0
Fixed Cost5,000.00$ 75
150
Breakeven point (quantity)FC/Contribution per unit225
179per units300
Breakeven Point (value)BEP (quantity)*Sales Price375
14,286$ XXXXXXXXXX450
Variable cost9,286$
Total Cost Fixed + vairable cost
14,286$
Break even point is where sales and total cost meets
$- $5,000.00 $10,000.00 $15,000.00 $20,000.00 $25,000.00 $30,000.00 $35,000.00 $40,000.00
Sheet1
        Sales Price    $ XXXXXXXXXX
        Variable cost                                VC    $ XXXXXXXXXX
        Material    $ XXXXXXXXXX                            Sales    $ XXXXXXXXXX
        Labour    $ XXXXXXXXXX                            Fc    $ 5,000.00
        Variable overhead    $ XXXXXXXXXX
        Contribution    $ XXXXXXXXXX            Units    Fixed Cost    Variable cost    Total Cost    Revenue            BEP
                        0    $ 5,000.00    $ - 0    $ 5,000.00    $ - 0            179
        Fixed Cost    $ 5,000.00            75    $ 5,000.00    $ 3,900.00    $ 8,900.00    $ 6,000.00
                        150    $ 5,000.00    $ 7,800.00    $ 12,800.00    $ 12,000.00
    Breakeven point (quantity)    FC/Contribution per unit                225    $ 5,000.00    $ 11,700.00    $ 16,700.00    $ 18,000.00
        179    per units            300    $ 5,000.00    $ 15,600.00    $ 20,600.00    $ 24,000.00
    Breakeven Point (value)    BEP (quantity)*Sales Price                375    $ 5,000.00    $ 19,500.00    $ 24,500.00    $ 30,000.00
        $ 14,286                450    $ 5,000.00    $ 23,400.00    $ 28,400.00    $ 36,000.00
    Variable cost    $ 9,286
    Total Cost     Fixed + vairable cost
        $ 14,286
    Break even point is where sales and total cost meets
Break Even Analysis
Fixed Cost    0    75    150    225    300    375    450    5000    5000    5000    5000    5000    5000    5000    Variable cost    0    75    150    225    300    375    450    0    3900    7800    11700    15600    19500    23400    Total Cost    0    75    150    225    300    375    450    5000    8900    12800    16700    20600    24500    28400    Revenue    0    75    150    225    300    375    450    0    6000    12000    18000    24000    30000    36000