THE JOURNAL OF FINANCE • VOL. LIII‚ NO. 4 • AUGUST 1998 Agency Costs‚ Risk Management‚ and Capital Structure HAYNE E. LELAND* ABSTRACT The joint determination of capital structure and investment risk is examined. Optimal capital structure ref lects both the tax advantages of debt less default costs ~Modigliani and Miller ~1958‚ 1963!!‚ and the agency costs resulting from asset substitution ~Jensen and Meckling ~1976!!. Agency costs restrict leverage and debt maturity and increase yield spreads
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Which of the following involves significant financial investments in projects to develop new products‚ expand production capacity‚ or remodel current production facilities? A) capital budgeting B) working capital C) master budgeting D) project-cost budgeting Answer: A Diff: 1 Terms: capital budgeting Objective: 1 AACSB: Reflective thinking 2) The two factors capital budgeting emphasizes are: A) qualitative and nonfinancial B) quantitative and nonfinancial C) quantitative
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this formula Direct labor cost = 40000 = 6250 Hours Per D.Labor hours rate 6.40 1) Prime Cost (2) Conversion Cost Material opening 24000 Direct labor 40000 + purchase 56000 FOH Applied Material available for use 80000 6250 Hours@ 8 50000 - Material ending (20000) Conversion cost 90000 Material used 60000 + Direct labor 40000 Prime Cost 100000 (3) Cost of goods manufactured (4) Cost of goods sold Prime cost 100000 Cost of goods manufactured
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quality of decisions made using that information. True False 3. An operating unit of an organization is called a profit center if it is responsible: only for revenues. for investments in assets. for costs and revenues. only for costs. 4. Properly designed management control systems have both fixed compensation and contingent compensation. True False 5. Controllable revenue is included in a performance report of a:
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fully allocating all costs to products‚ customers‚ and other costing objects in an activity-based costing system. This results in overstated costs. More accurate product costs may result in increasing the selling prices of some products. 3. Matt Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 8‚000 units and of Product B is 6‚000 units. There are three activity cost pools‚ with total cost and total activity as
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Chapter 9—Break-Even Point and Cost-Volume-Profit Analysis MULTIPLE CHOICE 1. CVP analysis requires costs to be categorized as a. | either fixed or variable. | b. | direct or indirect. | c. | product or period. | d. | standard or actual. | ANS: A PTS: 1 DIF: Easy OBJ: 9-1 NAT: AACSB: Reflective Thinking LOC: AICPA Functional Competencies: Decision Modeling 2. With respect to fixed costs‚ CVP analysis assumes total fixed costs a. | per unit remain constant
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Introduction: Purpose of the audit: A health and safety audit is an audit that focuses on some or all aspects of health and safety. It is a review performed to determine whether health and safety regulations and company policies are being adequately implemented and complied with. Bashundhara Group audits provide an in-depth review of workplace safety programs and are conducted for the purpose of health‚ safety‚ and fire hazard identification. Audits assess a company’s compliance to applicable
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Cost Accounting: In a broad aspects‚ Cost Accounting is a method of accounting in which all costs incurred in carrying out an activity or accomplishing a purpose are collected‚ classified‚ and recorded. This data is then summarized and analyzed to arrive at a selling price‚ or to determine where savings are possible. So Cost Accounting consists of the identification‚ measurement‚ collection‚ analysis‚ preparation‚ and communication of financial information For example‚ calculating the cost of product
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Essay June How did I get the job in the travel agency At the time I still went to school I had to think about something I would like to do in the future. My mom worked in a travel agency for many years and she always told me about all the countries she has visited and the good time she had while working there. When I was younger my parents used to travel a lot with my brother and me‚ so I got to know many countries. That is why I’m very interested in different cultures‚ languages and countries
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40 a- Cost of goods manufactured = Direct cost + Indirect cost = [Direct Cost of Material + Direct Cost of Labor] + [Indirect Cost of Material + Indirect Cost of Labor + Utilities Overhead] = Total Cost of Material + Total Cost of Labor + Utilities Overhead = 120‚000 + 90‚000 + 40‚000 = $ 250‚000 b- Total Cost of Operation = Cost of goods manufactured + Selling‚ General admin. and expenses. = 250‚000 + 60‚000 = $ 310‚000 c- Prime Cost =Direct Material Cost + Direct Labor
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