2. Company A and Company B had the following balance sheets as of December 31, 20N5 (thousands of dollars)
Current assets
Fixed assets (net)
Total assets
Short-term liabilities
Long-term liabilities
Common stock
Retained earnings
Total liabilities and
equity
Company A
200 000
130 000
330 000
40 000
70 000
50 000
50 000
Company B
140 000
90 000
230 000
70 000
20 000
70 000
50 000
210 000
210 000
Earnings before interest and taxes for both firms are $40 million, and the effective federal plus-state tax
rate is 20%
a
What is the return on equity and return on total assets for each firm if the interest rate on short
term liabilities is 9% and the rate on long-term liabilities is 15%?
b. Assume that the short-term rate rises until 15% and the rate on long-term debt remains
unchanged. What would be the returns on equity for both companies under these conditions?
c. Which company is in a riskier position? Why?

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?

Royal motor corp. generates a major portion of its revenues by manufacturing luxury sports cars. however, the company also derives an insignificant percent of its annual revenues by selling its sports merchandise that includes apparel, shoes, and other accessories under the same brand name. which of the following terms best describes royal motor corp.? a. aconglomerate b. a subsidiary c. adominant-businessfirm d. a single-business firm

Maria's family drove 140 mi to her grandparents' house and averaged 56 mi/h on the way thereon the return trip, they averaged 50 mi/hwhat was the total time maria's family spent driving to and from her grandparents' house? o2.5 ho 2.6 ho5.2 ho 53 hnext