Alaskan Fisheries, Inc., processes salmon for various distributors and it uses the weighted-average method in its process costing system. The company has two processing departments—Cleaning and Packing. Data relating to pounds of salmon processed in the Cleaning Department during July are presented below:

Alaskan Fisheries, Inc., processes salmon for various distributors and it uses the weighted-average method in its process costing system. The company has two processing departments—Cleaning and Packing. Data relating to pounds of salmon processed in the Cleaning Department during July are presented below:

		Percent Completed
	Pounds of Salmon	Materials		Labor and Overhead
Work in process inventory, July 1	30,000	100	%	55	%
Work in process inventory, July 31	19,000	100	%	70	%

A total of 470,000 pounds of salmon were started into processing during July. All materials are added at the beginning of processing in the Cleaning Department.

Required:

Compute the Cleaning Department's equivalent units of production for materials and for labor and overhead in the month of July.

Chocolaterie de Geneve, SA, is located in a French-speaking canton in Switzerland. The company makes chocolate truffles that are sold in popular embossed tins. The company has two processing departments—Cooking and Molding. In the Cooking Department, the raw ingredients for the truffles are mixed and then cooked in special candy-making vats. In the Molding Department, the melted chocolate and other ingredients from the Cooking Department are carefully poured into molds and decorative flourishes are applied by hand. After cooling, the truffles are packed for sale. The company uses a process costing system. The T-accounts below show the flow of costs through the two departments in April:

Chocolaterie de Geneve, SA, is located in a French-speaking canton in Switzerland. The company makes chocolate truffles that are sold in popular embossed tins. The company has two processing departments—Cooking and Molding. In the Cooking Department, the raw ingredients for the truffles are mixed and then cooked in special candy-making vats. In the Molding Department, the melted chocolate and other ingredients from the Cooking Department are carefully poured into molds and decorative flourishes are applied by hand. After cooling, the truffles are packed for sale. The company uses a process costing system. The T-accounts below show the flow of costs through the two departments in April:

Work in Process—Cooking
Balance 4/1	8,000	Transferred out	160,000
Direct materials	42,000
Direct labor	50,000
Overhead	75,000

Work in Process—Molding
Balance 4/1	4,000	Transferred out	240,000
Transferred in	160,000
Direct labor	36,000
Overhead	45,000

Required:

Prepare journal entries showing the flow of costs through the two processing departments during April.

Answer  

You are given the following information for Watson Power Co. Assume the company’s tax rate is 22 percent. Debt: 12,000 6.1 percent coupon bonds outstanding, $1,000 par value, 27 years to maturity, selling for 109 percent of par; the bonds make semiannual payments. Common stock: 450,000 shares outstanding, selling for $63 per share; the beta is 1.14. Preferred stock: 19,500 shares of 3.9 percent preferred stock outstanding, currently selling for $84 per share. The par value is $100 per share. Market: 5 percent market risk premium and 4.9 percent risk-free rate. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

You are given the following information for Watson Power Co. Assume the company’s tax rate is 22 percent.

Debt:	12,000 6.1 percent coupon bonds outstanding, $1,000 par value, 27 years to maturity, selling for 109 percent of par; the bonds make semiannual payments.
Common stock:	450,000 shares outstanding, selling for $63 per share; the beta is 1.14.
Preferred stock:	19,500 shares of 3.9 percent preferred stock outstanding, currently selling for $84 per share. The par value is $100 per share.
Market:	5 percent market risk premium and 4.9 percent risk-free rate.

What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

WACC is 8.37% Explanation Note: Intermediate answers are shown below as rounded, but the full answer was used to complete the calculation.​   We will begin by finding the market value of each type of financing. We find:   MVD = 12,000($1,000)(1.09) = $13,080,000 MVE = 450,000($63) = $28,350,000 MVP = 19,500($84) = $1,638,000 And the total market value of the firm is:   V = $13,080,000 + 28,350,000 + 1,638,000 V = $43,068,000   Now, we can find the cost of equity using the CAPM. The cost of equity is:   RE = .049 + 1.14(.05) RE = .1060, or 10.60%   The cost of debt is the YTM of the bonds, so:   P0 = $1,090 = $30.50(PVIFAR%,54) + $1,000(PVIFR%,54) R = 2.729% YTM = 2.729% × 2 = 5.46%   And the aftertax cost of debt is:   RD = (1 – .22)(.0546) RD = .0426, or 4.26%   The cost of preferred stock is:   RP = $3.90/$84 RP = .0464, or 4.64%   Now we have all of the components to calculate the WACC. The WACC is:   WACC = .0426(13.080/43.068) + .1060(28.350/43.068) + .0464(1.638/43.068) WACC = .0845, or 8.45%   Notice that we didn’t include the (1 – TC) term in the WACC equation. We used the aftertax cost of debt in the equation, so the term is not needed here.