Answer:
The Parts Division of Nydron Corporation
The transfer price applicable to this transaction should range from $16.85 to $17.00.
Relevant costs for producing Part Y6P per unit are determined as variable or marginal costs:
Sales price to external companies = $17
Cost price from external supplier = $16.85
Marginal Costs:
Direct Materials $7
Direct Labor $3
Variable Manufacturing Overhead $4.50
Total Variable Costs = $14.50
Fixed Costs = $1.20
Total Costs = $15.20
Explanation:
This is a decision related to transfer pricing in a make-or-buy scenario. Management at Nydron Corporation should focus on relevant costs as well as the minimum and maximum transfer pricing. The costs that matter are those that could be avoided, known as avoidable costs, which influence decision-making. Since relevant costs amount to $14.50 (excluding the must-have fixed cost of $1.20, which remains constant regardless of the decision), and the part can be sold for $17.00 to customers outside, the transfer price will fall between the relevant manufacturing costs and the external sale price. Given that the part can be sourced from outside at $16.85, this sets the lower limit for the transfer price, while $17.00 becomes the cap.
The transfer price is defined as the amount one division can charge another division within the same company, as well as between subsidiaries and parent companies. Transfer pricing is a practice used for accounting and taxation that establishes prices for transactions conducted internally within companies and between subsidiaries under the same ownership. This practice encompasses both domestic and international transactions and carries tax implications.
After the stock dividend, earnings per share stand at $3.636. To elaborate, there are 200,000 shares currently available, with after-tax profits recorded at $800,000. The current price of the shares is set at $48, while the stock dividend is at 10%. After the dividend, the updated number of shares is calculated as 200,000*(1+10%) = 220,000. Consequently, the earnings per share after the dividend is $800,000/220,000, resulting in $3.636.
Response:
For the year 2010
Degree of combined leverage equals 3.82
For the year 2011
Degree of combined leverage equals 4.11
Clarification:
The degree of combined leverage of the company is computed using the formula provided:
Degree of combined leverage = Contribution margin / EBT
Where
Contribution margin is calculated as:
Contribution margin = Sales - Variable Costs
EBT (Earnings before tax) is calculated as:
EBT = EBIT - Interest
Now, calculate accordingly using the formula:
For 2010:
Contribution margin: $700,000 - $406,000
= $294,000
EBT = $119,000 - $42,000
= $77,000
Degree of combined leverage: $294,000 / $77,000
= 3.82
For 2011:
Contribution margin: $760,000 - $448,000
= $312,000
EBT: $122,000 - $46,000
= $76,000
Degree of combined leverage: $312,000 / $76,000
= 4.11
Answer:
P14 = $55.69545045394 rounded to $55.70
Explanation:
The dividend discount model (DDM) based on constant growth can help determine the current stock price. It assesses a stock’s price using the present value of the anticipated future dividends. The formula for determining today's price with a constant growth DDM is,
P0 = D1 / (r - g)
Where,
- D1 represents the expected dividend for Year 1 or the following year
- g denotes the constant growth rate for dividends
- r signifies the discount rate or the required rate of return
To find the stock price today, we will utilize the dividend expected in Year 1. Consequently, to compute the stock price 14 years into the future, we calculate D15. D15 can be figured out as follows,
D15 = D1 * (1+g)^14
D15 = 0.50 * (1+0.09)^14
D15 = $1.67086351362 rounded to $1.67
Now applying the DDM formula for the price,
P14 = 1.67086351362 / (0.12 - 0.09)
P14 = $55.69545045394 rounded to $55.70
Julie is eligible for the following amounts in child and dependent care credits based on different scenarios referred to below: - In the first case, she spent $2,000 on dependent care, and her qualified expenses amount to $3,000, with an earned income of $50,000. Thus, the eligible expenses for the credit are capped at $2,000 (the lowest of a, b, and c), granting her a credit rate of 20% (since AGI exceeds $43,000), totaling $400. - In the second scenario, Julie spent $5,000, where the qualifying expenses remain $3,000, resulting in a credit of $400 calculated similarly as before. - In the third case, spending $4,000 with an income of $25,000 results in a credit of $900 (as the rate is 30% with a qualifying expense of $3,000). - The fourth case of $2,000 spent and an income of $14,000 leads to a credit of $700 (as the percentage is 35%). - Lastly, a $4,000 expenditure under an income comprising $2,000 salary and $12,000 unearned results in a credit of $700 as well.
