An accounting firm has 780 hours of staff time and 272 hours of reviewing time available each week. The firm charges $1900 for an audit and $270 for a tax return. Each audit requires 60 hours of staff time and 16 hours of review time.Each tax return requires 10 hours of staff time and 4 hours of review time. What numbers of audits and tax returns will yield an optimal revenue?auditstax returnsWhat is the optimal revenue?

Given information:The accounting firm has 780 hours of staff time and 272 hours of reviewing time…

Answered: An accounting firm has 780 hours of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

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You're an industry analyst for the telecomm sector, and have been analyzing financial reports from two companies: CellT Corp. and Talk2Me Inc. The corporate tax rate for both firms is 35%. Your associate analyst has calculated and compiled, in the following table, a list of important figures you'll probably need for the analysis: Data Collected CellT Corp. Talk2Me Inc. EBIT $172,500 $122,820 Depreciation $69,000 $49,128 Total operating capital $1,014,300 $791,430 Net investment in operating capital $483,000 $255,300 WACC 8.84% 11.50% In your analysis, you want to look for several characteristics-one of them being the return on invested capital (ROIC). Using the information available, complete the following statements: • The net operating profit after tax (NOPAT) for CellT Corp. is , whereas the NOPAT for Talk2Me Inc. is • CellT Corp. has a free cash flow of , whereas, Talk2Me Inc. has cash flow of • CellT Corp. has a return on invested capital than Talk2Me Inc. has.
Assessment task:Collect the latest annual report of an ASX listed company for the last 2 financial years. Please read the financialstatements (balance sheet, income statement, cash flow statement) and notes attached to financialstatements on income tax issues very carefully. Please remember some aspects of your firm’s treatment of itstax – can be a very complicated area, particularly for some firms. Based on your understanding of the topic“accounting for income tax” and based on your reading of the collected annual reports, do the following tasks.i Briefly explain the concepts of accounting profit, taxable profit, temporary difference, taxable temporarydifference, deductible temporary difference, deferred tax assets and deferred tax liability.ii Briefly explain the recognition criteria of deferred tax assets and deferred tax liability.iii What is your firm’s tax expense in its latest financial statements?iv Is this figure the same as the company tax rate times your firm’s accounting…
A company wants to set up a new office in a country where the corporate tax rate is: 15% of first $50,000 profits, 25% of next $25,000, 34% of next $25,000, and 39% of everything over $100,000. Executives estimate that they will have gross revenues of $500,000, total costs of $300,000, $30,000 in allowable tax deductions, and a one-time business start-up credit of $8000. What is taxable income for the first year, and how much should the company expect to pay in taxes?
Answer in typing
am. 117.
Grotto Ltd has already sent $19,600 to the ATO in respect to PAYG, and this figure shown as a debit in the Income Tax Expense account. The Profit and Loss account is then prepared and the Net Profit (before tax) is found to be $75,000. The current company tax rate is 30%. Required: Prepare general journal entries for the following Correct the Income Tax Expense account Close the Income Tax Expense account Transfer Net Profit (after tax) to Retained Earnings
JBC Inc. has the following information reported by its chief accountant for the current year: Sales Operating income Total assets Current liabilities Target rate of return Corporate tax rate WACC $4,500,000 $505,000 $2,500,000 $150,000 18% 35% 13% How much is stakeholders' expected return in dollars? O a) $55,500 O b) $22,750 c) $305,500 d) $305,500
Suppose your firm receives a $4.93 million order on the last day of the year. You fill the order with $1.89 million worth of inventory. The customer picks up the entire order the same day and pays $1.23 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $3.70 million within 40 days. Suppose your firm's tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following: a. Revenues b. Earnings c. Receivables d. inventory e. cash
Suppose your firm receives a $4.34 million order on the last day of the year. You fill the order with $1.82 million worth of inventory. The customer picks up the entire order the same day and pays $1.17 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $3.17 million within 40 days. Suppose your firm's tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following: d. Inventory e. Cash a. Revenues b. Earnings c. Receivables a. Revenues Revenues will increase by $ million. (Select from the drop-down menu and round to two decimal places.) b. Earnings Earnings will increase by $ million. (Select from the drop-down menu and round to two decimal places.) c. Receivables Receivables will increase by $ million. (Select from the drop-down menu and round to two decimal places.) d. Inventory Inventory will decrease by $ million. (Select from the drop-down menu and round to two decimal places.) е. Cash…
Suppose your firm receives a $5.82 million order on the last day of the year. You fill the order with $1.97 million worth of inventory. The customer picks up the entire order the same day and pays $1.09 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $4.73 million within 40 days. Suppose your firm's tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following: a. Revenues b. Earnings c. Receivables d. Inventory e. Cash a. Revenues Revenues will ▼ increase or decrease by $___ million. (Select from the drop-down menu and round to two decimal places.)
Ginnian and Fitch, a regional accounting firm, performs yearly audits on a number of different for-profit and not-for-profit entities. Two years ago, Luisa Mellina, Ginnians partner in charge of operations, became concerned about the amount of audit time required by not-for-profit entities. As a result, she instituted a series of training programs focusing on the auditing of not-forprofit entities. Now, she would like to see if the training seemed to work. So, she ran a multiple regression on 22 months of data for Ginnian for three variables: the total monthly cost of audit professional time, the number of not-for-profit audits, and the hours of training in the audit of not-for-profit entities. The following printout was obtained: Required: 1. Write out the cost equation for Ginnians audit professional time. 2. If Ginnian expects to have 9 audits of not-for-profits next month and expects that audit professionals will have a total of 130 hours of not-for-profit training, what is the anticipated cost of professional time? 3. Are the hours spent auditing not-for-profit entities positively or negatively correlated with audit professional costs? Is percentage of experienced team members positively or negatively correlated with audit professional cost? 4. What does R2 mean in this equation? Overall, what is your evaluation of the cost equation that was developed for the cost of audit professionals?

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