Fixed and Variable Rate Loans: Which Is Better? An ARM may be an excellent choice if low payments in thenear termare your primary requirement, or if you dont plan to live in the property long enough for the rates to rise. If the contribution margin is $22 per unit and 26,000 units are sold, net operating profit will be: Profit = (selling price per unit x quantity sold) - (variable expense per _________ x quantity sold) - _________ expenses. Choose the correct journal entry, debit accounts receivable; credit fees earned. Total costs are simply just fixed and variable costs for the business added together, giving the total overall costs for the business. a. When forced to be in public, the demure Kelly Construct a logical sentence by adding a pair of correlative conjunctions from the italicized list. Which of the following can be achieved by implementing just-in-time (JIT) manufacturing? Who would you rather be? The main advantage of a fixed-rate loan is that the borrower is protected from sudden and potentially significant increases in monthly mortgage payments if interest rates rise. Refer to the above diagram. The partialamortizationschedule below demonstrates the way in which the amounts put toward principal and interest alter over the life of the mortgage. Which of the following must be subtracted from sales to reach the contribution margin? when a corporation adopts a fiscal year that ends when business activities have reached the lowest point in its annual operating cycle, the ability of a business to pay its debts. But liquid assets generate little, if any, profits for the firm. read more. which of the accounts below would be closed by posting a debit to the account? This brings the total of Covid-related spending in the 2021 budget to Lk17.2bn (1 percent of GDP). c) both are estimated in advance by analysts. Actual costs of a support department should not be allocated to producing departments because: The benefit of the dual-rate charging method of cost allocation is: A profit-volume graph is a graph of the _____. Fixed-rate mortgages are easy to understand and vary little fromlenderto lender. - *not only but. _____ are variables or activities within a producing department that provoke the incurrence of support costs. The rice milling process of Zigma Enterprises yields 6,000 pounds of rice grain and 2,000 pounds of hay. Gapminder uses cookies to improve its statistics and user experience. Which of the following accounts will be closed with a debit? Chapter 21 Test. Other Quizlet sets. Selling price is $7 per unit, contribution margin is $4 per unit, and the fixed expenses total $632,000. The company sells a single product for $50 per unit. The annual accounting period adopted by a business. decrease liabilities, increase net income, increase revenues reported for the period, The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed, Prepaid rent, representing rent for the next six months' occupancy, would be reported on the tenant's balance sheet as a(n), As time passes, fixed assets other than land lose their capacity to provide useful services. Regardless of the loan type you select, choosing carefully will help you avoid costly mistakes. Run Like the Wind sells ceiling fans. - *whetheror* He received his double major Bachelor of Arts in professional and creative writing from Carnegie Mellon University and his Master of Journalism at Temple University. Ideally, you should use the savings compared to a fixed-rate mortgage to make extra principal payments each month, so that the total loan is smaller when the reset occurs, further lowering costs.. Which of the following are examples of subsections found on a classified balance sheet? Sales this year equals $927,500. Although it sounds like a perfect renewable energy source, the amount of solar energy we can use varies according to the time of day and the season of the year as well as geographical location. Cengage Unlimited is a subscription that gives you access to all Cengage online learning platforms, plus our entire library of Cengage eTextbooks for a one-time, flat price. What is the BREAK-EVEN point in unit sales? On January 31, it is determined that $600 supplies are remaining. The excess of the current assets of a business over its current liabilities. A 2/28 adjustable-rate mortgage (2/28 ARM) maintains a low fixed interest rate for a two-year period, after which the rate floats semiannually. This is then the rate until the next reset, which may be the following year. The company's fixed costs are $305,000. b. change in cost resulting specifically from the decision. How will the following adjusting journal entry affect the accounting equation? If the move is made, profits will: The equation used to calculate the variable expenses ratio using total values is total variable expenses divided by total: Plush & Cushy sells high-end desk chairs. A graduated payment mortgage (GPM) is a type of mortgage for which the payment increases from a low initial rate to a higher rate. E. net income minus the addition to retained earnings., 15. Polly's Day Planners sells its planners for $35 each. If the ARM is held long enough, the interest rate will surpass the going rate for fixed-rate loans.. B. fixed assets, include land and assets that depreciate over period of time (equipment, machinery, building), balance sheet that is expanded by adding subsection for assets and liabilities, assets commonly divided into 2 sections on balance sheet, current assets and property, plant and equipment, liabilities divided into 2 sections on balance sheet, accounts that are relatively permanent from year to year. Luke_Finchum Teacher. DIY Seo Software From Locustware Is Exactly What You Need! Explain the factors that influence a country's ability to control territory. ", Consumer Financial Protection Bureau. A. _____ a slave _____ a slaveholder, all people are harmed by slavery. Study with Quizlet and memorize flashcards containing terms like In the above diagram the range of diminishing marginal returns is:, In the above diagram, total product will be at a maximum at:, Refer to the above diagram. This would be recommended when: Which of the following loan sources is the most expensive? The contribution margin per unit is $32 and fixed costs total $120,000. 27 terms. Study with Quizlet and memorize flashcards containing terms like Which of the following is not a factor in cost-volume-profit analysis? Explain why a probabilistic model is more appropriate than a deterministic model. The underbanked represented 14% of U.S. households, or 18. Please do have a look at it if you need more information. Which of the following account groups includes temporary (nominal) accounts? C. dividends paid plus the change in retained earnings. bought at 95.976? The downside to fixed-rate mortgages is that when interest rates are high, qualifying for a loan is more difficultbecause the payments are less affordable. Employing this strategy can be risky because life is unpredictable. A cost is anything that a business has to pay for. The fundamental goal of marketers when creating goods, services, or combinations of both, is to: They are usually fixed for at least a year and mean that a business will pay the same amount each week, month or year. Fixed or Variable Rate Mortgage: Which Is Better Right Now? With over 25 years of experience as a full-time communications professional, James writes about finance, food, and travel for a variety of publications and websites. Study with Quizlet and memorize flashcards containing terms like The marginal cost to produce an additional copy of a software product is effectively zero., With the advent of cloud computing and SaaS, smaller firms no longer have access to the kinds of sophisticated computing power they had access to in the past., The cost of producing an additional unit of a product is known What is the ability-to-repay rule? To achieve a target profit of $930,000, Sniffles' sales rounded to the nearest dollar must be: Pete's Putters sells each putter for $125. To qualify for a subsidized Stafford loan, you must: Credit unions lend money to qualified people who are: Which of the following is recommended if you loan money to a friend or relative? In this section's Application Preview, we considered the investment strategies of twins and found that starting early and stopping was a significantly better strategy than waiting, in terms of total contributions made as well as total value in the account at retirement. a rise in which of the following inputs will increase an absolute valuation? Over Which of the following is the best driver to use? Based on the following information, determine the amount of equipment on the balance sheet. Applying to Mortgage Lenders: How Many Are Necessary? Could you still afford an ARM if interest rates rise? you are promised a stream of fixed dividends. A measure of how sensitive net operating income is to a given percentage change in sales dollars is known as _________ __________. Monthly fixed costs traceable to each division are $\$ 200,000$. They include a new phase of short-term work arrangement (June 2021), fixed cost subsidy, hardship fund for small businesses, revenue replacement, and unemployment assistance. Whats the new market cap? If you can still afford it if the mortgage resets to the maximum cap in the future, an ARM will save you money every month. 55 terms. Prepare Robinns Company's responsibility income statement for the current month. In contrast, fixed assets are illiquid, but generate revenue for the firm. Units sold b. What effect will this adjustment have on the accounting records? Lets say you are looking for your first home and just graduated from medical or law school or earned an MBA. Variable costs are $4 per unit and fixed costs total $30,000. Also, shorter-term mortgages offer a lower interest rate, which allows for a larger amount of principal repaid with each mortgage payment. $34,000 Beginning Inventory (11,000) + Net Purchases (23,000) = Cost of Goods Available for Sale (34,000) and more. Taking out an adjustable-rate mortgage is very attractive tomortgage borrowers who have, or will have, thecashto pay off the loan before the new interest rate kicks in. Financial terms and calculations includes revenue, costs, profits and loss, average rate of return, and break-even. For an adjustable-rate mortgage (ARM), what are the index and margin, and how do they work?, Consumer Financial Protection Bureau. (select all that apply). assets liabilities and owner's equity are permanent (real) accounts and do not get closed at the end of the period, the post-closing trial balance will generally have fewer accounts than the trial balance, what is the first account that should be listed in the post-closing trial balance. A mortgage calculator can show you the impact of different rates on your monthly payment. A company has a target profit of $204,000. Variable costs are $15 per unit and fixed costs total $98,000. Which of the following are decisions in which using CVP analysis could be useful? The contribution margin income statement allows users to easily judge the impact of a change in _________ on profit. _____ loans do not have to be repaid until after you graduate from college. Adjustable-Rate Mortgage: What Happens When Interest Rates Go Up. the "fixed cost" (the one-time front-end load) is spread over a greater number of years. What is the first account that should be listed in the post-closing trial balance? Fixed-rate loans are preferable when interest rates are expected to rise. Company X was expected to have earnings per share of the results, the company reported earnings per share of $0.83. It does not provide information about the manufacturing costs associated with Theinitial interest rateon an ARM is setbelow the marketrate on a comparable fixed-rate loan, and then the rate rises as time goes on. All business have costs that need to be paid regularly. In which of the following types of accounts are decreases recorded by credits: Debts owed by business are referred to as: Of the following steps of the accounting cycle, which step should be completed first? Smith, Inc. earned revenue on account. \hline When demand is unit elastic, it refers to the effect on total revenue due to changes in price. The type of account and normal balance of Prepaid Insurance is. Once the borrower has the proceeds from the sale, they can turn around to pay off the ARM with the proceeds from the home sale. For an adjustable-rate mortgage (ARM), what are the index and margin, and how do they work? The new rate will be based on market rates, not the initial below-market rate. The cost of each item in the basket and the Study with Quizlet and memorize flashcards containing terms like Which of the following is true of fixed-rate loans? Sales generated by the Standard Division totaled $\$ 1,200,000$, and its contribution margin ratio averaged 50 percent. when an analyst is looking at a company for the first time, which of the following four activities does he do first? (b) Contracts negotiated under part 15 may be of any type or combination of types that will promote the Governments interest, except as restricted in this part (see 10 U.S.C.2306(a) and 41 U.S.C.3901).Contract types not described in this Of the following steps of the accounting cycle, which step should be completed last? Study with Quizlet and memorize flashcards containing terms like 11. (select all that apply). How might you use Kbler-Ross's stages of dying to help you determine whether a person is psychologically able to terminate his or her life. Fixed-Rate vs. and more. The Language of Composition: Reading, Writing, Rhetoric, Lawrence Scanlon, Renee H. Shea, Robin Dissin Aufses. The balance of the owner's drawing account on the adjusted trial balance of the end-of-period spreadsheet is reported on which of the following financial statements? Pamela Rodriguez is a Certified Financial Planner, Series 7 and 66 license holder, with 10 years of experience in Financial Planning and Retirement Planning. c. Fixed-rate loans are preferable when interest rates are expected to fall. The calculation for total costs is: Total costs = fixed costs + variable costs. Place the following items in the order in which sales dollars are applied on a contribution margin income statement: Sniffles, Inc. produces facial tissues. What Are the Main Types of Mortgage Lenders? Which of the following is true of a production report? The lists do not show all contributions to every state ballot measure, or each independent expenditure committee formed to support or The annual percentage rate is equivalent to the stated rate of interest when the _____ is used to calculate finance charges. In the process of preparing a production report for process costing, the step of unit cost calculation is followed by: The five steps that are needed to build a production report for process costing are as follows: Which of the following is true of the first-in, first-out (FIFO) costing method? Which of the following is true of consumer finance companies? Variable costs are costs that change depending on the output of a business. The company is considering improving the quality of materials which will increase variable costs to $19. The variable cost is $60 per putter and fixed costs total $400,000. A. defeat the competition. the cash flow from equities can continue indefinitely while the cash flow from most bonds comes to an end. What affect does the following transaction have on the accounting records? The post-closing trial balance should be completed: income statement, statement of owner's equity, balance sheet, the correct order to prepare the financial statements is, to zero out temporary accounts to prepare for the next accounting period, The pupose of closing temporary accounts is, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Fundamentals of Financial Management, Concise Edition, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Use summation notation to represent the given sum. Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as a(n), The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is, The account type and normal balance of Unearned Revenue is. ARMsare also attractive because their low initial payments often enable the borrower to qualify for a larger loan and, in a falling-interest-rate environment, allow the borrower to enjoy lower interest rates (and lower payments) without the need torefinancethe mortgage. Namely, some percentage change in price causes an equal percentage change in quantity demanded (Qd) and therefore, no effect on total revenues. By clicking Accept All Cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Closing entries are journalized and posted to the ledger. The probability of success is the same for each trial. Which of the following are considered temporary accounts? b) the estimated growth can be dramatically wrong. The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n). You can learn more about the standards we follow in producing accurate, unbiased content in our, When to Buy a Home Based on Mortgage Rates. Which of the following is true of the cost of transferred-in material? Therefore, the credit to Supplies in the adjusting entry is for the amount of supplies. $8,400 b. ), The interest rate for an adjustable-rate mortgage is a variable one. The posting of depreciation expense will be done during which step of the accounting cycle? The annual percentage rate (APR) on a single-payment loan for $1,000 at a simple interest rate of 12% is: If you borrow money on a single-payment loan and discover that you cannot pay it back when it is due, you should: You want to borrow $1,000 at an interest rate of 10%. Individualspersonal financesoften experience periods of advance and decline, interest rates rise and fall, and the strength of theeconomywaxes and wanes. Total liabilities and owner's equity equals $44,750; total current assets equals $19,800; land equals $15,000; and accumulated depreciationequipment equals $1,550. How large a mortgage payment can you afford today? Choose the correct journal entry. ARMshave a fixed period of time during which the initial interest rate remains constant, after which the interest rate adjusts at a pre-arranged frequency. $3,250 c. $11,500 d. None of these choices are correct. Generally accepted accounting principles require that companies use the ____ of accounting. (For more, seeAdjustable Rate Mortgage: What Happens When Interest Rates Go Up. If Shonda must sell 284 pairs of shoes to break-even, sales dollars needed to break-even equals $___________. Nothing else changes. It does a 10-for-1 stock split. Adjustable Rate Mortgage: How they Work, Pros and Cons. Traditional lending institutions offer fixed-rate mortgages for a variety of terms, the most common of which are 30, 20, and 15 years. - *just asso* Following a bumpy launch week that saw frequent server trouble and bloated player queues, Blizzard has announced that over 25 million Overwatch 2 players have logged on in its first 10 days. Selling price c. Total variable costs d. Fixed costs of a product, Which of the following is not an assumption of cost-volume-profit analysis? Which of the following steps is optional during the closing process? The ARM, however, can pose some significant downsides. Coahffee. it then does a 1-for-16 reverse stock split. A portion of the total cost of an item, such as a car or house, that must be paid at the time of purchase. What is the purpose of the owner capital account in the closing process? which of the following accounts will be debited in the closing entry at the end of the year, beginning capital + net income - withdrawals = ending capital, assets liability and owner's equity account flow into. What may be a problem of comparing the P/E of a stock to the P/E of the overall market? For each in a sample of 24 recent movies, opening weekend box office revenue (in millions of dollars) was measured as well as the movie's tweet rate (the average number of tweets referring to the movie one week prior to the movie's release). The relative proportions in which a company's products are sold is referred to as __________ _________. D. dividends paid minus net new equity raised. In this method, we determine the cost of equity by summing up the beta and risk premium product with the risk-free rate. The most expensive method of calculating the dollar cost of the interest on this installment loan will be the: Sometimes it may be better to use one's savings rather than borrowing to make a purchase. ), Indeed, adjustable-rate mortgages went out offavorwith many financial planners after thesubprime mortgage meltdownof 2008, which ushered in an era offoreclosuresandshort sales. These costs are dependent on how much the business produces or sells. etermine the adjusting journal entry for the following scenario: $1,000 supplies are purchased January 1. $$. gracedansby. Which of the following accounts will not be closed at the end of the accounting cycle? Take a borrower who is buying one house and selling another one at the same time. Which of the following allocation methods is used by Zigma to allocate the joint costs of cultivating rice? The fixed-rate period can vary significantlyanywhere from one month to 10 years; shorter adjustment periods generally carry lower initial interest rates. When an increase or decrease in price does not change total revenue, demand is unit elastic. Common fixed costs for the month amount to $\$ 100,000$. Based on this information: (select all that apply), b. hich of the following is the last step during the posting process? With an ARM, your monthly payment may change frequently over the life of the loan. C) process focus, repetitive focus, and product focus. Study with Quizlet and memorize flashcards containing terms like 10) Three of the four types of processes are: A) goods, services, and hybrids. 36 terms. Adjustable-Rate Mortgages: What's the Difference? Examples of costs for a business include rent, bills, and raw materials, staffing costs, petrol and postage. When making a decision using incremental analysis consider the: (select all that apply). If you're very lucky, it may be lower depending on what the market rates are like at the time of the rate reset. A company's selling price is $90 per unit, variable cost per unit is $28 and total fixed expenses are $320,000. All income statement accounts will be closed at the end of the period. Total costs = fixed costs + variable costs For example if a business have fixed costs of 18,500 and variable costs of 9,250 their total costs would be 18,500 + 9,250 = 27,750. In another scenario, if you expect to start receiving money from atrustat a certain age, you could get an ARM that resets in the same year. Accounts that report amounts for only one period. **Describing** What aspects of the economy do communist governments control. a) defines the industries in which the company operates. The company's contribution margin ratio is 77%. If a loan has a prepayment penalty, there will be _____. B. operating cash flow minus cash flow to creditors. \hline \text { Textbook } & \$ 45.50 & \$ 21.35 & \\ While thatdoesnt include the vast majority of Americans, there are situations in which it may be possible to pull it off. Which of the following forms is used to identify direct materials, quantity and prices, and work order numbers? If Daisy incurred $250,000 of fixed expenses, net operating income for the year is: To estimate the effect on profits for a planned increase in sales, multiply the increase in units sold by the unit __________ __________. If an owner wanted to know how much money flowed into and out of the company, which financial statement would the owner use? Which of the following is a feature of a home equity loan? If each fan's contribution margin is $32 and fixed costs total $222,640, the number of fans required to meet the company's goal is: Contribution margin divided by sales is the formula for ___________ ___________ ____________. If, though, you are purchasing a home with an eye toward upgrading to a bigger home once you start a familyor you think youll be relocating for workthen an ARM may be right for you. By matching revenues and expenses in the same period in which they incur, net income or loss will be properly reported on the income statement, Supplies are recorded as assets when purchased. Current assets divided by current liabilities. a. Each doll's variable cost was $19. If break-even sales equals $935,000, Seth's margin of safety in dollars is: If a company only has a single product, total sales can be calculated using only: c. Sales price per unit multiplied by the number of units sold. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called, The unexpired insurance at the end of the fiscal period represents, An end-of-period spreadsheet includes columns for, is used to summarize account balances and adjustments for the financial statements. The monthly payment on an 8%, 36-month, add-on loan for $10,000 would be: Which of the following is true of installment loans? To put your loan selection into the context of these factors, consider the following questions: If you are considering an ARM, you should run the numbers to determine the worst-case scenario. (a) Contracts resulting from sealed bidding shall be firm-fixed-price contracts or fixed-price contracts with economic price adjustment. However, if you know you are going to move within a short period, or you dont plan to hold on to the house for decades to come, then an ARM is going to make a lot of sense.. (also)* If, on the other hand,you ultimately decide to stay in the house longer, especially if rates are higher when your loan adjusts, then the mortgage is going to cost more than the fixed-rate loan would have. Study with Quizlet and memorize flashcards containing terms like When critics of unemployment insurance claim that some of the unemployed are not exerting much effort to find jobs because of the unemployment benefits, they are referring to the moral hazard problem. Total Rewards refers to all forms of pay and compensation, tangible benefits, and other intangible rewards that an organization provides Having a lower-cost product or service at the highest priority throughout its processes. How do earnings yields differ from bond yields? which of the following is most likely to be the most challenging part of this first step of absolute valuation process? Lance, Inc. has sales of 9,000 units. No more guesswork - Rank On Demand Thus, extremely high levels of liquidity guard against liquidity crises but at the cost of lower returns on assets. Another situation in which an ARM would make sense is if you can afford to accelerate the payments each month by enough to pay it off before it resets. You are building a financial model of a bifocal lens manufacturer. In that case, an ARM will work for you. The trials are independent, meaning that the outcome of one trial does not affect the outcome of any other trial. If you plan to move before the five-year ARM resets, you are going to save a lot of money on interest. Prepaid insurance is reported on the balance sheet as a, Accrued expenses are ordinarily reported on the balance sheet as, Accounts payable would appear on the balance sheet as a(n), Accumulated Depreciation and Depreciation Expense are classified, respectively, as, If there is a balance in the unearned subscriptions account after adjusting entries are made, it represents a(n). How long do you intend to live on theproperty? WebStudy with Quizlet and memorize flashcards containing terms like The marginal cost to produce an additional copy of a software product is effectively zero., With the advent of cloud computing and SaaS, smaller firms no longer have access to the kinds of sophisticated computing power they had access to in the past., The cost of producing an additional unit Variable costs are $15 per pillow. Which of the following statements is true about the support department of an organization? How many units does JVL have to sell to BREAK-EVEN? Prop 30 is supported by a coalition including CalFire Firefighters, the American Lung Association, environmental organizations, electrical workers and businesses that want to improve Californias air quality by fighting and preventing wildfires and reducing air pollution from vehicles. 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