Answer:
$5,000
Explanation:
Amber offer = 120,000 + 25,000 = $145,000
Original claim = ($50,000 + $25,000) + [$100,000 × (1 - 0.35) = $140,000
Difference = $145,000 - $140,000 = $5,000
So, the after-tax difference to Khalid between Khalid's original claim and Amber's offer is $5,000
Chapter 5 Activity Based Costing Licensed Gear Co. manufactures and sells college athletic fan gear and uses activity-based costing for overhead costs. Licensed Gear Co. supplied the following financial information concerning its overhead costs and the activity based costing system in 2020: Overhead costs: Distribution of resource consumption: The amount of activity for the year is as follows: How much OVERHEAD cost would be allocated to Cyclone Tailgaters, a customer who initiated 20 orders and 5 custom designs in 2020
Question Completion:
Overhead costs:
Wages & salaries $ 925,000
Factory depreciation 125,000
Marketing department expenses 330,000
Total $ 1,380,000
Distribution of resource consumption:
Activity Cost Pools
Customer Product Others Total
Orders Designs
Wages & salaries 42% 46% 12% 100%
Factory depreciation 53% 33% 14% 100%
Marketing
department expenses 41% 34% 5 100%
The amount of activity for the year is as follows:
Cost Pool Activity
Customer Orders 2,125 Orders
Product Designs 325 Designs
Answer:
Licensed Gear Co.
The Overhead cost allocated to Cyclone Tailgaters is:
= $15,475.70
Explanation:
a) Data and Calculations:
Distribution of resource consumption:
Activity Cost Pools
Customer Product Others Total
Orders Designs
Wages & salaries 42% 46% 12% 100%
Factory depreciation 53% 33% 14% 100%
Marketing
department expenses 41% 54% 5 100%
Activity Cost Pools: Wages Factory Marketing Total
& salaries Dept. Dept.
Customer orders $388,500 $66,250 $135,300 $590,050
Product Designs 425,500 41,250 178,200 644,950
Others 111,000 17,500 16,500 145,000
Total $925,000 $125,000 $330,000 $1,380,000
Overhead rates: Amount Activity Overhead Rates
Customer orders $590,050 2,125 Orders $277.67
Product Designs $644,950 325 Designs $1,984.46
Cyclone Tailgaters Activity Overhead Rate Allocated Overhead
Customer orders 20 $277.67 $5,553.40
Product designs 5 $1,984.46 $9,922.30
Total overhead costs allocated to Cyclone $15,475.70
Fill in the blanks to complete the sentence.
A company expects to sell 500 units during the second quarter and 550 units in the third quarter. Currently, during the second quarter, they have 46 units on hand. If they desire safety stock of 10% of the next quarter's sales, __________units will need to be produced in the second quarter.
Answer:
509 Units
Explanation:
At second quarter,
safety stock = 10%
With 550 units, for target of the next quarter
Then, safety stock = [(550 ×( 10/100) ]
= 55 units.
Buy the remaining unit is 46, and the expected unit to be sold is 500
Then, units that will be neededto be produced in the second quarter. Is
= (55 + 500) -46
=509 units
The monetary unit assumption: Multiple Choice Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. Means that we can express transactions and events in monetary, or money, units. Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods. Means that a business is accounted for separately from other business entities, including its owner. Prescribes that a company record the expenses it incurred to generate the revenue reported.
Answer:
Means that we can express transactions and events in monetary, or money, units.
Explanation:
monetary unit assumption: Means that we can express transactions and events in monetary, or money, units.
Going concern assumption - accounting information reflects a presumption that the business will continue operating instead of being closed or sold.
Time period assumption - Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods.
Business entity assumption - Means that a business is accounted for separately from other business entities, including its owner
Matching principle - Prescribes that a company record the expenses it incurred to generate the revenue reported.
After discontinuing the ordinary business operations and closing the accounts on May 7, the ledger of the partnership of Anna, Brian, and Cole indicated the following:
Cash 7,500
Noncash assets 105,000
Liabilities 27,500
Anna capital 45,000
Brian capital 15,000
Cole capital 25,000
112,500 112,500
The partners share net income and losses in the ratio of 3:2:1. Between May 7-30, the noncash assets were sold for 150,000, the liabilities were paid, and the remaining cash was distributed to the partners.
(A) Prepare a statement of partnership liquidation.
(B) Assume the facts as in (A) except that noncash assets were sold for 45,000 and any partner with a capital deficiency pays the amount of the deficiency to the partnership, prepare a statement of partner liquidation
Answer:
The Partnership of Anna, Brian, and Cole
A) Statement of Partnership Liquidation:
Available cash for distribution = $157,500
Payment of liabilities = 27,500
Cash available for distribution $130,000
Distribution to partners:
Anna 67,500
Brian 30,000
Cole 32,500
Total distributed $130,000
B) Statement of Partnership Liquidation:
Available cash for distribution = $52,500
Payment of liabilities = 27,500
Cash available for distribution $25,000
Capital accounts balances = 85,000
Deficiency = $60,000
Distribution of deficiency to partners:
Anna 3/6 30,000
Brian 20,000
Cole 10,000
Total distributed $60,000
Explanation:
a) Data and Calculations:
Cash 7,500
Noncash assets 105,000
Total assets 112,500
Liabilities 27,500
Anna capital 45,000
Brian capital 15,000
Cole capital 25,000
112,500
Profit sharing ratio = 3:2:1
Sales proceeds from noncash assets = $150,000
Total cash available = $157,500 ($150,000 + 7,500)
Total capital repaid $85,000
Balance to be redistributed: $45,000
Partners Excess Capital Total
Anna 3/6 22,500 45,000 $67,500
Brian 2/6 15,000 15,000 30,000
Cole 1/6 7,500 25,000 32,500
Sheridan Shoes Foot Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 45% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be $794000. What is the required journal entry as a result of this litigation
Answer:
No Journal entry. Disclose contingent liability of $794000 in Notes to Financial Statements
Explanation:
A Provision is recognized when it is Probable ( Probabity > 50%) that there would be an outflow of economic resources and that a reliable estimate can be made - IAS 37
Since there is a 45% chance of losing, it is not probable to recognize a provision. Thus a Contingent liability is recognized instead
Contingent Liabilities are only disclosed if the amounts are significant and are not shown on the face of the financial statement (no journal entry)
Farm workers in Oaks Farmville face a 1/85 probability of death at work and each of them receives a yearly wage of $159,106. Farm workers in Valley Farm face a 1/127 of death at work. Assume that both kinds of job require the same level of skills, effort and that all workers have the same preferences and tastes. The values of an statistical life is computed to be $1,262,558. How much should the workers in the less risky job should get paid
Answer:
$154,182.02
Explanation:
Probability of Farm workers in ( O.F ) facing death at work = 1/85 = 0.012
Probability of Farm workers in ( V.F ) facing death at work = 1/127 = 0.008
Value of a statistical life = $1,262,558
Determine how much the workers in less risky job should get paid
The less risky job is working in Valley farm(V.F ) with a death probability of = 1/127 = 0.008
The more risky job is working in valley farm ( probability = 1/85 = 0.012 )
Yearly wage of risky job = $159106
payment for less risky job can be calculated using the relation below
statistical life = ( cost incurred to reduce risk) / ( percentage of risk to death reduced ) ---------------- ( 1 )
cost incurred to reduce risk = yearly wage to high risk workers - yearly wage to low risk workers
= 159106 - X
percentage of risk to death reduced = (probability of death to high risk workers) - ( probability of death to low risk worker )
= 1/85 - 1/127 = 0.0039
back to relation 1
1262558 = ( 159106 - X ) / ( 0.0039)
159106 - X = 1262558 ( 0.0039 )
hence X ( amount to be paid to workers in the less risky job )
X = 159106 - 4923.9762 = $154,182.02
Ian loaned his friend $30,000 to start a new business. He considers this loan to be an investment, and therefore requires his friend to pay him an interest rate of 8% on the loan. He also expects his friend to pay back the loan over the next four years by making annual payments at the end of each year. Ian texted and asked that you help him calculate the annual payments that he should expect to receive so that he can recover his initial investment and earn the agreed-upon 8% on his investment. Calculate the annual payment and complete the following capital recovery schedule:
Answer:
Payment = Pmt(8%, 4, -30000) = $9,057.62
Interest Paid = Beginning amount * 8%
Principal paid = Payment - Interest Paid
End Balance = Beg Amount - Payment
Payment Beg Amount Payment Interest paid Principal paid End Balance
1 30,000 $9,057.62 2,400 6,657.64 23,342.38
2 23,342.38 $9,057.62 1,867.39 7,190.23 16,152.14
3 16,152.14 $9,057.62 1,292.12 7,765.45 8,386.69
4 8,366.39 $9,057.62 670.94 8,386.69 -
Falisari Corporation has computed the following unit costs for the year just ended:
Direct material used $ 25
Direct labor 19
Variable manufacturing overhead 35
Fixed manufacturing overhead 40
Variable selling and administrative cost 17
Fixed selling and administrative cost 32
Which of the following choices correctly depicts the per-unit cost of inventory under variable costing and absorption costing?
Variable Costing Absorption Costing
A. $ 79 $ 119
B. $ 79 $ 151
C. $ 96 $ 119
D. $ 96 $ 151
E. None of the answers is correct.
Answer:
A. $ 79 $ 119
Explanation:
Calculation for the choices that correctly depicts the per-unit cost of inventory under variable costing and absorption costing
Calculation for Variable costing using this formula
Variable costing = Direct materials + Direct labor + Variable Manufacturing Overhead
Let plug in the formula
Variable costing = = $25 + $19 + $35
Variable costing = $79
Calculation for Absorption costing using this formula
Absorption costing = Direct materials + Direct labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead
Let plug in the formula
Absorption costing= $25 + $19 + $35 + $40
Absorption costing= $119
Therefore the choices that correctly depicts the per-unit cost of inventory under variable costing and absorption costing are :$ 79 $ 119
New technology: Group of answer choices seldom contributes to competitive advantage or operational efficiency. frequently enables competitive advantage from product/service differentiation at lower cost. seldom enables competitive advantage from product/service differentiation at lower cost. frequently enables competitive advantage from product/service differentiation, but typically at higher cost. frequently enables operational efficiencies, but seldom enables competitive advantage.
Answer:
frequently enables competitive advantage from product/service differentiation at lower cost.
Explanation:
According to economic theory, technology is one of the factors that contributes to economic growth.
It also increases the competitive advantage of a firm by increasing the amount of goods that can be produced and also increases the quality of the output.
Differentiation is achieved at a lower cost.
The Company is working on a new application for recording internal debts across teams. This program can be used to create groups that show all records of debts between the group members. Given the group debt records observed for this team (including the borrower name, lender name, and debt amount), who in the group has the smallest negative balance
Answer:
Creative crops has the smallest negative balance for debt.
Explanation:
Debt is a cheap source of finance but excess debt increase gearing of a company which creates liquidity crisis for a company. The company has secured debts from various companies and to keep track for repayment of debt company has designed an application which shows the records for all debts. The smallest negative balance for debt is creative crops.
Stosch Company's balance sheet reported assets of $117,000, liabilities of $30,000 and common stock of $27,000 as of December 31, Year 1. If Retained Earnings on the balance sheet as of December 31, Year 2, amount to $78,000 and Stosch paid a $29,000 dividend during Year 2, then the amount of net income for Year 2 was which of the following?
a. $47,000
b. $60,000 $
c. 29,000
d. $18,000
Answer:
See below
Explanation:
With regards to the following, recall that;
Retained earning at end = Beginning retained earning + Net income - dividend earned
$78,000 = Net income - $29,000
Net income = $78,000 + $29,000
Net income = $107,000
Therefore, the net income for year 2 would be $107,000
Are mixed economies the same?why or why not
Answer:
The economic system is the set of practices and principles that regulate the production, trade, distribution and allocation of resources to production in a society, as well as deciding who will produce. It is not possible to consider economic systems purely from a commercial perspective. On the contrary, the most defining feature of economic systems should be of political and ideological origin. The opposite of this proposition is also true, that is, economics is the main factor shaping political approaches. Politics and economics are intertwined and inseparable. From this point of view, it seems the most appropriate method to classify political structures in the world on the basis of economy. A classification of economic systems that are currently or recently applied or whose effects continue can be made as follows.
What type of business organization generates the most total sales
Answer:
probably the medical field
ABC Corp. was formed on 1/1/05 and is in the business of buying and selling erasers. The cost of purchasing erasers and the number of erasers held in inventory has steadily increased since the company was formed. Which of the following inventory methods will result in the lowest reported gross profit in the year ended 12/31/13 income statement?
a) Average cost
b) FIFO
c) LIFO
d) Can't be determined with the information provided
Answer:
c) LIFO
Explanation:
Indeed, the LIFO (Last in First Out) inventory method is known to give the lowest gross profit when calculating income statement.
Since this method takes account of the most recently purchased items as sold first, and the cost of purchasing erasers and the number of erasers held in inventory has steadily increased, it thus means that items bought costly would be accounted for first leading to low reported gross profit.
a) Determine a minimum inventory production plan (i.e., one that allows arbitrary hiring and firing). b) Determine the production plan that meets demand but does not hire or fire workers during the six-month period. c) Let’s say subcontracting is allowed. Let’s say we implement the constant workforce with subcontracting plan, what would the cost of subcontracting need to be to beat the cheaper of the two options above? d) Using this subcontracting cost of $50, formulate a LP and solve to optimality for the constraints of this problem
Answer:
Hello your question is incomplete attached below is the complete question
answer:
A) 32 units ( number of units per month per worker )
B) number of workers required = 975 / 32 ≈ 31
c) mean of the two values = 138 + 41 ) / 2 = $89.50
Explanation:
A) Determine a minimum inventory production plan ( i.e. one that allows arbitrary hiring and firing )
The number of units per month per worker = 32 units
To have a minimum/least inventory; production plan = demand by hiring or firing
of employees
attached below is the table
B) determine the production plan that meets demand but does not hire or fire workers during the six-month period
To determine this production plan we have to find the per month production = (Total demand - beginning inventory ) / 6
= ( 6350 - 500 ) / 6 = 975 units produced
number of workers required = 975 / 32 ≈ 31
C) Calculate The cost of subcontracting needed to beat the cheaper of the two options above
regular cost = 8 * 5 = $40
we will keep 30 workers in order to determine how much subcontracting is needed and the maximum and minimum value of each unit is kept hence the overall cost < $253900.
if subcontracting cost = $138 then total cost = $253820
If subcontracting cost = $41 then total cost = $245090.
Therefore mean of the two values = 138 + 41 ) / 2 = $89.50
D) subcontracting cost of $50 formulating a LP and solve to optimality for the constraints of this problem
Z <= (Y+1)*7680 , X + 32Y >= 5850
An Energy Star air conditioner unit costs $300 while a standard unit costs $200. The two units have the same cooling capacity. The Energy Star unit costs 5 cents per hour less to run. If you buy the Energy Star unit and run it for 12 hours per day for 6 months of the year, how long does it take to recover the $100 extra cost
Answer: 167 days
Explanation:
Energy star unit saves 5 cents per hour.
When run for 12 hours per day it saves:
= 5 * 12
= 60 cents
The extra cost of $100 in cents is:
= 100 * 100
= 10,000 cents
Days it will take for $100 to be recovered:
= 10,000 / 60
= 166.67 days
= 167 days
In 6 months you would have saved:
= 60 cents * 180 days
= 10,800 cents
= $108
It will take a period of 167 days to recover the $100 extra cost.
Energy star unit saves 5 cents per hour and when its run for 12 hours per day, it saves:
= 5 * 12
= 60 cents
The extra cost of $100 in cents is:
= 100 * 100
= 10,000 cents
The number of days it will take for $100 to be recovered:
Days = 10,000 / 60
Days = 166.67 days
Days = 167 days
In 6 months you would have saved::
Saved amount = 60 cents * 180 days
Saved amount = 10,800 cents
Saved amount = $108
In conclusion, It will requires a period of 167 days to recover the $100 extra cost.
Read more about extra cost
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A company has two products: standard and deluxe. The company expects to produce 37,775 standard units and 63,640 deluxe units. It uses activity-based costing and has prepared the following analysis showing budgeted cost and cost driver activity for each of its three activity cost pools. Budgeted Activity of Cost Driver Activity Cost Pool Budgeted Cost Standard Deluxe Activity 1 $ 103,850 2,500 5,250 Activity 2 $ 106,000 4,500 5,500 Activity 3 $ 95,120 3,000 2,800 Required: 1. Compute overhead rates for each of the three activities. 2. What is the expected overhead cost per unit for the standard units
Answer:
Results are below.
Explanation:
First, we need to calculate the activity rates for each cost pool:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Activity 1= 103,850 / (2,500 + 5,250)= $13.4 per unit of activity
Activity 2= 106,000 / (4,500 + 5,500)= $10.6 per unit of activity
Activity 3= 95,120 / (3,000 + 2,800)= $16.4 per unit of activity
Now, we can allocate overhead to Standard:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Standard:
Activity 1= 13.4*2,500= $33,500
Activity 2= 10.6*4,500= $47,700
Activity 3= 16.4*3,000= $49,200
Total allocated costs= $130,400
Finally, the unitary cost:
Unitary cost= 130,400 / 37,775
Unitary cost= $3.45
Qtr5g66677
Math problem
Answer:
The dot over a number signifies that it is a repeater which would go on for ever, as when we endeavor to describe 1/3 decimally as 0.33333 . . . . (etc)
With a series of numbers we place the dot over the first and last, as with 0.97979797979 . . . (etc)
The remarkable feature being that a proper fraction divided by 9s e.g. 46/99 is exactly equal to the numerator with the repeater sign followed by the decimal.
3. Why accrue an expense?
In year 1 the average price of X is $10, and in year 2 the average price of X is $23. If consumers buy more units of X in year 2 than in year 1, it follows that a. the law of supply does not hold for good X. b. demand for good X could be lower in year 2 than in year 1. c. supply of good X could be less in year 2 than in year 1. d. good X buyers have received an increase in income between year 1 and year 2, and good X is a normal good. e. good X buyers have received a decrease in income between year 1 and year 2, and good X is a normal good.
Answer:
D
Explanation:
Normal goods are goods that are goods whose demand increases when income increases and falls when income falls
If good X is a normal good and the consumers income increases, the demand for good X would increase
It would have been that the Law of demand not supply that didn''t hold
according to the law of supply, the higher the price, the higher the quantity supplied and the lower the price, the lower the quantity supplied.
According to the law of demand, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.
What is capital market
Answer:
Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc. The buying/selling is undertaken by participants such as individuals and institutions. Capital market consists of primary markets and secondary markets. ...
Explanation:
how gross profit or loss is calculated
Answer: See explanation
Explanation:
The Gross Profit for a company simply refers to the income that a particular company has left after the company has paid it's direct expenses that was incurred during production.
The formula to calculate the gross profit is:
Gross Profit = Revenue – Cost of Goods Sold.
In a case whereby the cos of goods sold is more than the revenue, we will get a gross loss.
Journalize the following selected transactions for January. Journal entry explanations may be omitted.
Jan. 1 Received cash from the investment made by the owner, $14,000.
2 Received cash for providing accounting services, $9,500.
3 Billed customers on account for providing services, $4,200.
4 Paid advertising expense, $700.
5 Received cash from customers on account, $2,500.
6 Owner withdrew $1,010.
7 Received telephone bill, $900.
8 Paid telephone bill, $900.
Answer:
Jan. 1 Received cash from the investment made by the owner, $14,000.
Dr Cash 14,000
Cr Capital, owner 14,000
Jan. 2 Received cash for providing accounting services, $9,500.
Dr Cash 9,500
Cr Service revenue 9,500
Jan. 3 Billed customers on account for providing services, $4,200.
Dr Accounts receivable 4,200
Cr Service revenue 4,200
Jan. 4 Paid advertising expense, $700.
Dr Advertising expense 700
Cr Cash 700
Jan. 5 Received cash from customers on account, $2,500.
Dr Cash 2,500
Cr Accounts receivable 2,500
Jan. 6 Owner withdrew $1,010.
Dr Withdrawals 1,010
Cr cash 1,010
Jan. 7 Received telephone bill, $900.
Dr Utilities expense 900
Cr Accounts payable 900
Jan. 8 Paid telephone bill, $900.
Dr Accounts payable 900
Cr Cash 900
What is Trumpism and what are its consequences for society?
Answer:
Trumpism is a term for the political ideology, style of governance, political movement and set of mechanisms for acquiring and keeping power that are associated ...Explanation:
The gross domestic product (GDP) of the United States is defined as the _ all _ _ in a given period of time.
Based on this definition, indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 2017.
2017 GDP
Scenario Included Excluded
Zippycar, a U.S. automobile company, produces a convertible at a manufacturing plant in Minneapolis on January 9, 2017. It sells the car at a dealership in Chicago on February 2, 2017.
Treetopplers, a U.S. lumber company, produces wood at a plant in Oregon on September 19, 2017. It sells the wood to Buildit and Partners, a developer for use in the production of a new house that will be built in the United States in 2017. (Note: Focus exclusively on whether production of the wood increases GDP directly, and ignore the effect of production of the new house on GDP.)
Fastlane, a Japanese automobile company, produces a sedan at a plant in Indiana on December 12, 2017. A family buys the sedan on December 24.
An accountant starts a client's 2017 tax return on April 14, 2018, finishing it just before midnight on April 15, 2018.
Roadway Motors, a U.S. automobile company, produces a convertible at a plant in Germany on March 17, 2017. Roadway Motors imports the convertible into the United States on May 21, 2017.
Answer:
The gross domestic product (GDP) of the United States is defined as the sum of the all final goods and services produced in a given period of time.
included
excluded
included
excluded
excluded
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Items not included in the calculation off GDP includes:
1. services rendered to oneself
2. Activities not reported to the government
3. illegal activities
4. sale or purchase of used products
5. sale or purchase of intermediate products
The sale of the car would be included in GDP as part of investment spending
The wood is an intermediate good and would not be included in GDP
The purchase of the sedan is added to GDP as part of consumption
The work the accountant did would be added to 2018s GDP
The car produced in Germany would be included in Germany's GDP
What are the reasons for economic marginalisation?
Answer:
People can be marginalised due to multiple factors, like gender, geography, ethnicity, religion, displacement, conflict or disability. Poverty is both a consequence and a cause of being marginalised.
For example you can take adivasis
Adivasis are becoming increasingly marginalised because they are losing their lands and access to the forests. Due to these things they lose their main sources of livelihood and food.
1.Production runs can be scheduled in
A. only one shift
B. always two shifts
C. one or two shifts
D. up to three shifts
2.Hiring the Needed Complement will always eliminate
A. Overtime
B. worker layoffs
C. a Second Shift
D. strikes
3.Management should strive to
A. increase Turnover
B. decrease Turnover
4.Increasing Capacity tends to
A. reduce the Needed Complement
B. reduce the number of workers on Second Shift
C. reduce Overtime
5.Increasing Training Hours tends to
A. increase the Needed Complement
B. decrease the Needed Complement
C. neither increase nor decrease the Needed Complement
D. both increase and decrease the Needed Complement
6.Recruiting Costs are incurred when
A. Automation levels increase
B. Production runs increase and teams match hiring to Needed Complement
C. workers are assigned to a Second Shift
7.Assuming the Productivity Index is greater than 100%, adding Overtime will
A. increase the Productivity Index
B. decrease the Productivity Index
8.Worker training is entered by the
A. Hour
B. Dollar
9.Teams can eliminate all Recruiting Costs if they wish
A. True
B. False
10.Generally, Separation Costs will be incurred when
A. Production levels increase
B. Automation Levels increase
C. Production Levels decrease
D. Production levels decrease and / or Automation levels increase
Answer:
Explanation:
10)production levels decrease and/or automation levels increase
Harold Manufacturing produces denim clothing. This year, it produced 5,000 denim jackets at a manufacturing cost of $45 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. Jackets can be sold as is to a secondhand clothing shop for $6 each.Jackets can be disassembled at a cost of $32,000 and sold to a recycler for $12 each.Jackets can be reworked and turned into good jackets. However, with the damage, management estimates it will be able to assemble the good parts of the 5,000 jackets into only 3,000 jackets. The remaining pieces of fabric will be discarded. The cost of reworking the jackets will be $102,000, but the jackets can then be sold for their regular price of $45 each.Required:1. Calculate the incremental income.
Answer:
ALTERNATIVE 1 $30,000
ALTERNATIVE 2 $28,000
ALTERNATIVE 3 $33,000
Explanation:
Calculation for the incremental income
ALTERNATIVE 1 Sell as it is
Incremental revenue $30,000
(5,000*$6)
Incremental costs $0
Incremental Income $30,000
ALTERNATIVE 2 Disassemble and sell to recycler
Incremental revenue $60,000
(5,000*$12)
Incremental costs $32,000
Incremental Income $28,000
ALTERNATIVE3 Rework and turn into good jackets
Incremental revenue $135,000
(3,000*$45)
Incremental costs $102,000
Incremental Income $33,000
Therefore based on the above calculation the company should choose ALTERNATIVE 3 of the amount of $33,000
g The following information is from Megabux, Inc.'s annual report for the years ended December 31: 2012 2011 2010 Sales $120,000 $110,000 $100,000 Cost of goods sold 58,000 52,000 46,000 Operating expenses 48,000 44,000 42,000 Interest expense 12,000 9,000 6,000 Net income $ 2,000 $ 5,000 $ 6,000 Refer to the Megabux annual report above. Which of the following describes the trend in the profit margin ratio for the three−year period? A. There is no significant change in the ratio over the three years. B. The ratio is getting worse because expenses are growing faster than sales. C. The ratio is getting worse because Megabux has increased its selling prices. D. The increase in sales each year is more than enough to cover the increase in expenses.
Answer:
B. The ratio is getting worse because expenses are growing faster than sales.
Explanation:
OPERATING EXPENSES-COST TABLE
2012 2011 2010
Operating exp 48,000 44,000 42,000
Interest expense 12,000 9,000 6,000
TOTAL 60,000 53,000 48,000
As can be clearly seen above that operating expenses having been increasing at a very high speed as compared to sales volumes and gross profits hence, leading to a fall in overall profitability.
Determine the variance and indicate if each variance is favorable (F) or unfavorable (U). Variances are absolute numbers so no ( ) or - for negative. Amounts are in whole dollars and can contain a $ and a comma or not. For example, $123,456 or 123456. Indicate F or U for each variance. Item Budget Actual Variance F or U Sales price $400 $390 Cost of goods sold $192,500 $180,000 Materials usage $90,000 $89,000 Sales revenue $360,000 $390,000 Selling & Admin Expense $24,500 $20,000
Answer:
Item Budget Actual Difference F/U
Sales price $400 $390 $10 U
COGS $192,500 $180,000 $12,500 F
Materials usage $90,000 $89,000 $1,000 F
Sales revenue $360,000 $390,000 $30,000 F
Sell&Admin Exp, $24,500 $20,000 $4,500 F