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everfi module 1-6 (business finance)
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Terms in this set (85)
which of the following is NOT a common feature of a financial institution?
access to investment products, investment trading, access to investment advice
which of the following statements about check cashing companies is TRUE?
they charge high fees
which of the following financial institutions typically have the highest fees?
check cashing and payday loan companies
which of the following statements about check cashing companies is FALSE?
they charge low fees
which type of bank account typically offers the least (if any) interest?
checking account
savings accounts typically offer more interest than what type of account?
checking account
which type of bank account is best for everyday transactions?
checking account
t/f: a savings account that compounds interest daily will earn a higher return than a savings account that pays simple interest daily
true
which savings account will earn you the least money?
one that earns simple interest monthly
which savings account will earn you the most money?
one that compounds interest daily
why is it important to reconcile your bank statements?
to avoid spending more than what is in your account, to detect any errors in your account, and to determine if you were charged any fees
how can you avoid spending more than what is in your bank account?
keep your own records to compare with your financial institution's records
how would you reconcile your bank account to avoid spending more than you have?
compare your own records of your spending with your financial institution's records
what should you do before you withdraw money from the ATM?
inspect the ATM to make sure it wasn't tampered with
what should you do before you approach an ATM?
check for any suspicious people lurking nearby
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Verified questions
ACCOUNTING
Metrics to minimize inventory buildups. Mountain Press produces textbooks for high school accounting courses. The company recently hired a new editor, Jan Green, to handle production and sales of books for an introductory accounting course. Jan’s compensation depends on the gross margin associated with sales of this book. Jan needs to decide how many copies of the books to produce. The following information is available for the fall semester of 2017: $$ \begin{matrix} \text{Estimated sales} & \text{50,000 books}\\ \text{Beginning inventory} & \text{0 books}\\ \text{Average selling price} & \text{\$160 per book}\\ \text{Variable production costs} & \text{\$100 per book}\\ \text{Fixed production costs} & \text{\$750,000 per semester}\\ \text{The fixed-cost allocation rate is based on expected sales and is therefore equal to \$750,000/50,000 books=\$15 per book.}\\ \end{matrix} $$ Jan has decides to produce either 50,000, 65,000, or 70,000 books. 1. Calculate expected gross margin if Jan produces 50,000, 65,000, 70,000 books. (Make sure you include the production-volume variance as part of cost of goods sold.) 2. Calculate ending inventory in units and in dollars for each production level. 3. Managers who are paid a bonus that is a function of gross margin may be inspired to produce a product in excess of demand to maximize their own bonus. The chapter suggested metrics will accomplish this objective? Show your work. a. Incorporate a charge of 10% of the cost of the ending inventory as an expense for evaluating the manager. b. Include nonfinancial measures when evaluating management and rewarding performance.
ACCOUNTING
The Kuhl Brothers own a frozen custard ice cream shop. The brothers currently are using a machine that has been in use for the last 4 years. On January 1, 2017, the Kuhl Brothers are considering buying a new machine to make their frozen custard. The Kuhl Brothers have two options: (1) continue using the old freezing machine or (2) sell the old machine and purchase a new freezing machine. The seller of the new machine is not interested in a trade in of Kuhl’s old machine. The following information has been obtained: The Kuhl Brothers are subject to a 25% income tax rate. Any gain or loss on the sale of machines is treated as an ordinary tax item and will affect the taxes paid by the Kuhl Brothers in the year in which it occurs. The Kuhl Brothers have an after-tax required rate of return of 8%. Assume all cash flows occur at year-end except for initial investment amounts. $$ \begin{matrix} \text{A} & \text{B} & \text{C}\\ \text{} & \text{Old Machine} & \text{New Machine}\\ \text{Initial cost of machines} & \text{\$180,000} & \text{\$225,000}\\ \text{Useful life from acquisition date (year)} & \text{9} & \text{5}\\ \text{Terminal disposal value at the end of useful life on Dec. 31, 2021 (for depreciation purposes)} & \text{\$13,500} & \text{\$20,000}\\ \text{Expected annual cash operating costs:} & \text{} & \text{}\\ \text{Variable cost per serving} & \text{\$0.50} & \text{\$0.40}\\ \text{Total fixed costs} & \text{\$12,000} & \text{\$8,000}\\ \text{Depreciation method for tax purposes} & \text{Straight line} & \text{Straight line}\\ \text{Estimated disposal value machines:} & \text{} & \text{}\\ \text{January 1, 2017} & \text{\$75,000} & \text{\$225,000}\\ \text{December 31, 2021} & \text{\$10,000} & \text{\$18,000}\\ \text{Expected servings made and served} & \text{240,000} & \text{240,000}\\ \end{matrix} $$ 1. The Kuhl Brothers ask you whether they should by the new machine. To help in your analysis calculate the following: 1. One-time after-tax cash effect of disposing of the old machine on January 1, 2017. b. Annual recurring after-tax cash operating savings from using the new machine (variable and fixed). c. Cash tax savings due to differences in annual depreciation of the old machine and the new machine. d. Difference in after-tax cash flow from terminal disposal of new machine and old machine. 2. Use your calculations in requirement 1 and the net present value method to determine whether the Kuhn Brothers should continue to use the old machine or acquire the new machine. 3. ow much more or less would recurring after-tax cash operating savings of the new machine need to be for the Kuhl Brothers to earn exactly the 8% after-tax required rate of return? Assume that all other data about the investment do not change.
ACCOUNTING
The sales journal and accounts receivable ledger forms for Classic Appliances are given in the Working Papers. Your instructor will guide you through the following examples. Start a new page for an accounts receivable ledger account for Venice Cafe. The account number is 120, and the balance on September 1 of the current year is $\$390.34$.
ACCOUNTING
The Greenspace Company started business on January 1, 2017. The company adopted a standard costing system for the production of ergonomic backpacks. Greenspace chose direct labor as the application base for overhead and decided to use the proration method to account for variances at year-end. In 2017, Greenspace expected to make and sell 160,000 backpacks; each was budgeted to use 2 yards of fabric and require 0.5 hours of direct labor work. The company expected to pay $2 per yard for fabric and compensate workers at an hourly wage of$12. Greenspace has no variable overhead costs, but budgeted $800,000 for fixed manufacturing overhead in 2017. In 2017, Greenspace actually made 180,000 backpacks and sold 144,000 of them for a total revenue of 2592000. The cost incurred were as follows:$ $$ \begin{matrix} \text{Fixed manufacturing costs} & \text{\$ 875.000}\\ \text{Fabric costs (370.000 yards bought and used)} & \text{\$ 758.500}\\ \text{Direct manufacturing labor costs (100.000 hours)} & \text{\$ 1.260.000}\\ \end{matrix} $$ $ 1. Compute the following variances for 2017, and indicate whether each is favorable (F) or unfavorable (U): a. Direct materials efficiency variance, b. Direct materials price variance, c. Direct manufacturing labor efficiency variance, d. Direct manufacturing labor price variance, e. Fixed overhead flexible-budget variance, f. Fixed overhead production-volume variance. 2. Compute Greenspace Company's gross margin for its first year of operating.
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