## Zero Coupon Bonds Suppose Your Company Needs To Raise 20

Zero Coupon Bonds suppose your company needs to raise \$20 million and you want to issue 30-year bonds for this purpose. Assume the required return on your bond issue will be 7 percent, and you’re evaluating two issue alternatives: a 7 percent annual coupon bond and a zero coupon bond. Your company’s tax rate is 35 percent.

a. How many of the coupon bonds would you need to issue to raise the \$20 million? How many of the zeroes would you need to issue?

b. In 30 years, what will your company’s repayment be if you issue the coupon bonds what if you issue the zeroes?

c. Based on your answers in (a) and (b), why would you ever want to issue the zeroes? To answer, calculate the firm’s after tax cash outflows for the first year under the two different scenarios. Assume the IRS amortization rules apply for the zero coupon bonds.

Posted in Uncategorized

## Zeon Large Profitable Corporation Is Considering

Zeon, a large, profitable corporation, is considering adding some automatic equipment to its production facilities. An investment of \$120,000 will produce an initial annual benefit of \$29,000, but the benefits are expected to decline \$3000 per year, making second year benefits \$26,000, third-year benefits \$23,000, and so forth. If the firm uses sum-of-years’ -digits depreciation, an 8-year useful life, and \$12,000 salvage value, will it obtain the desired 6% after-tax rate of return? Assume that the equipment can be sold for its \$12,000 salvage value at the end of the 8 years. Also assume a 46% income tax rate for state and federal taxes combined.

Posted in Uncategorized

## Zener Diode Voltage Regulator Is Shown In Fig. 29 35

A zener diode voltage regulator is shown in Fig. 29-35. Suppose that R = 1.80kΩ and that the diode breaks down at a reverse voltage of 130V. (The current increases rapidly at this point, as shown on the far left of Fig. 29-28 at a voltage of â 12V on that diagram). The diode is rated at a maximum current of 120mA.
(a) If Rload = 15.0kΩ, over what range of supply voltages will the circuit maintain the output voltage at 130V?
(b) If the supply voltage is 200V, over what range of load resistance will the voltage be regulated?

Posted in Uncategorized

## Zelmer Company Manufactures Tablecloths

Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2014. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours.

The master overhead budget was prepared on the expectation that 480,000 direct labor hours will be worked during the year. In June, 41,000 direct labor hours were worked. At that level of activity, actual costs were as shown below.
Variableâper direct labor hour: indirect labor \$0.44, indirect materials \$0.48, factory utilities \$0.32, and factory repairs \$0.25.
Fixed: same as budgeted.

Instructions
(a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2014, assuming production levels range from 35,000 to 50,000 direct labor hours. Use increments of 5,000 direct labor hours.
(b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget.
(c) Were costs effectively controlled? Explain.
(d) State the formula for computing the total budgeted costs for the Ironing Department.
(e) Prepare the flexible budget graph, showing total budgeted costs at 35,000 and 45,000 direct labor hours. Use increments of 5,000 direct labor hours on the horizontal axis and increments of \$10,000 on the verticalaxis.

Posted in Uncategorized

## Zelmer Company Manufactures Tablecloths Sales Have Grown Rapidly Over The

Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2012. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours.

The master overhead budget was prepared on the expectation that 480,000 direct labor hours will be worked during the year. In June, 42,000 direct labor hours were worked. At that level of activity, actual costs were as shown below. Variableâper direct labor hour: Indirect labor \$0.43, Indirect materials \$0.49, Factory utilities \$0.32, and Factory repairs \$0.24. Fixed: same as budgeted.

Instructions
(a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2012, assuming production levels range from 35,000 to 50,000 direct labor hours. Use increments of 5,000 direct labor hours.
(b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget.
(c) Were costs effectively controlled? Explain.
(d) State the formula for computing the total budgeted costs for the Ironing Department.
(e) Prepare the flexible budget graph, showing total budgeted costs at 35,000 and 45,000 direct labor hours. Use increments of 5,000 direct labor hours on the horizontal axis and increments of \$10,000 on the verticalaxis.

Posted in Uncategorized

## Zeller Company Uses Standard Costing The Company Has Two Manufacturing

Required
1. Compute the budgeted fixed cost per labor hour for the fixed overhead separately for each plant:
a. Excluding allocated common fixed costs
b. Including allocated common fixed costs
2. Compute the variable overhead spending variance and the variable overhead efficiency variance separately for each plant.
3. Compute the fixed overhead spending and volume variances for each plant:
a. Excluding allocated common fixed costs
b. Including allocated common fixed costs
4. Did Jack Jones’s attempt to make the Ohio plant look better than the Nevada plant by allocating common fixed costs work? Why or why not?
5. Should common fixed costs be allocated in general when variances are used as performance measures? Why or why not?
6. What do you think of Jack Jones’s behavior overall?

Posted in Uncategorized

## Zeigler Manufacturing Company Purchased A Robot For 720000 At The

Zeigler Manufacturing Company purchased a robot for \$720,000 at the beginning of year 1. The robot has an estimated useful life of four years and an estimated residual value of \$60,000. The robot, which should last 20,000 hours, was operated 6,000 hours in year 1; 8,000 hours in year 2; 4,000 hours in year 3; and 2,000 hours in year 4.

Required
1. Compute the annual depreciation and carrying value for the robot for each year assuming the following depreciation methods:
(a) Straight-line,
(b) Production,
(c) Double-declining-balance.
2. If the robot is sold for \$750,000 after year 2, what would be the amount of gain or loss under each method?
3. What conclusions can you draw from the patterns of yearly depreciation and carrying value in requirement 1? Do the three methods differ in their effect on the company’s profitability? Do they differ in their effect on the company’s operating cash flows? Explain.

Posted in Uncategorized

## Zappy Kitchens Manufactures A Range Of Household Products Susan Masters

Zappy Kitchens manufactures a range of household products. Susan Masters, the company’s management accountant, plans to implement a standard costing system. Masters has collected information from several people in the company that will assist her in developing standards.
One of Zappy’s products is a handcrafted wooden cutting board. Each cutting board requires 1 metre of timber and 20 minutes of direct labour time to prepare and cut the timber. The cutting boards are inspected after they are cut. Because the cutting boards are made of natural wood that has imperfections, one board is normally rejected for every ten that are accepted. Four rubber footpads are attached to each good cutting board. A total of 15 minutes is required to attach all four pads and totis each cutting board. The timber for the cutting boards costs \$7.50 per metre, and each footpad costs \$0.05. Direct labour is paid at the rate of \$25 per hour.
Required:
1. Develop the standard cost for direct material and direct labour of one cutting board.
2. Explain the role of each of the following people in developing the standards:
(b) Production manager.
(c) Management accountant.
3. The production manager has complained that the standards are unrealistic, stifle motivation by concentrating only on unfavourable variances, and are out of date too quickly. He noted that the recent switch from sassafras to black-wood for the cutting boards has resulted in higher material costs but decreased labour hours. The net result was no increase in the total cost to produce the boards. However, the monthly cost reports continue to show an unfavourable material variance and a favourable labour variance, despite indications that the workers are slowing down.
(a) Explain how a standard costing system can strengthen cost management.
(b) Provide at least two explanations of why a standard costing system might negatively impact the motivation of production employees?

Posted in Uncategorized

## Zap Is A Retailer That Specialises In Electrical Goods It

Zap is a retailer that specialises in electrical goods. It is a division of a large retail company, data relate to the most recent year of operations:
Profit………………………………………….\$6,000,000
Saks revenue………………………………….75,000,000
Average invested capital………………………30,000,000
Required:
1. Calculate Zap’s return on sales, investment turnover arid return on investment.
2. Use the two component ratios to demonstrate two ways in which the manager of Zap could ROI, increasing it to 25 per cent.
3. Assume that the retail company has a minimum required rate of return of ii per cent, and calculate, the residual income for Zap.

Posted in Uncategorized

## Zambrano Companys Net Income For 2010 Is Usd40000

(EPS with Options, Various Situations) Zambrano Company’s net income for 2010 is \$40,000. The only potentially dilutive securities outstanding were 1,000 options issued during 2009, each exercisable for one share at \$8. None has been exercised, and 10,000 shares of common were outstanding during 2010. The average market price of Zambrano’s stock during 2010 was \$20.

(a) Compute diluted earnings per share. (Round to the nearest cent)

(b) Assume the same facts as those assumed for part (a), except that the 1,000 options were issued on October 1, 2010 (rather than in 2009). The average market price during the last 3 months of 2010 was \$20.

Posted in Uncategorized