On July 1, 2016, the Southwest Forging Corporation arranged for a line of credit with the First National Bank (FNB) of Dallas. The terms of the agreement call for a $120 comma 000 maximum loan with interest set at 1 percent over prime. In addition, the firm has to maintain a 21 percent compensating balance in its demand deposit account throughout the year. The prime rate is currently 3 percent (assume a 360-day year). a. If Southwest normally maintains a $25 comma 200 to $37 comma 200 balance in its checking account with FNB of Dallas, what is the annualized cost of credit through the line-of-credit agreement when the maximum loan amount is used for a full year? b. Recompute the annualized cost of credit to Southwest if the firm borrows the compensating balance and also borrows the maximum possible under the loan agreement. Again, assume the full amount of the loan is outstanding for a whole year.

Big trail running company has started to produce running apparel in addition to the trail running shoes that they have manufactured for years. they feel that a departmental overhead rate would best reflect their overall manufacturing overhead usage. based on research the following information was gathered for the upcoming year: machining department finishing department estimated manufacturing overhead by department $ 600 comma 000 $ 400 comma 000 trail running shoes 440 comma 000 machine hours 11 comma 000 direct labor hours running apparel 60 comma 000 machine hours 39 comma 000 direct labor hours manufacturing overhead is driven by machine hours for the machining department and direct labor hours for the finishing department. at the end of the year, the following information was gathered related to the production of the trail running shoes and running apparel: machining department finishing department trail running shoes 442 comma 000 hours 10 comma 500 hours running apparel 57 comma 000 hours 40 comma 000 hours how much manufacturing overhead will be allocated to the trail running shoes

Refers to the way we conduct ourselves

You are chairman of the board of a successful technology firm. there is a nominal federal corporate tax rate of 35 percent, yet the effective tax rate of the typical corporation is about 12.6%. your firm has been clever with use of transfer pricing and keeping money abroad and has barely paid any taxes over the last 5 years; during this same time period, profits were $28 billion. one member of the board feels that it is un-american to use various accounting strategies in order to avoid paying taxes. others feel that these are legal loopholes and corporations have a fiduciary responsibility to minimize taxes. one board member quoted what the ceo of exxon once said: “i’m not a u. s. company and i don’t make decisions based on what’s good for the u. s.” what are the alternatives? what are your recommendations? why do you recommend this course of action?