Answer: 6.69%
Explanation:
The weighted average cost of capital is calculated as:
= (Weight of equity * Cost of equity) + (Weight of debt * after-tax cost of debt)
Weight of equity:
= 30 million / (30 + 90 million)
= 25%
Weight of debt:
= 100% - Weight of equity
= 100% - 25%
= 75%
WACC = (25% * 11%) + (75% * 7% *(1 - 25% tax rate))
= 2.75% + 3.9375%
= 6.69%
For each transaction:
a. analyze the transaction using the accounting equation
b. record the transaction in journal entry form
c. post the entry using T-accounts to represent ledger accounts.
1. On May 15, DeShawn Tyler opens a landscaping company called Elegant Lawns by investing $7,000 in cash along with equipment having a $3,000 value in exchange for common stock.
2. On May 21, Elegant Lawns purchases office supplies on credit for $500.
3. On May 25, Elegant Lawns receives $4,000 cash for performing landscaping services.
4. On May 30, Elegant Lawns receives $1,000 cash in advance of providing landscaping services to a customer.
Answer:
Elegant Lawns
a. Analysis of transactions using the accounting equation:
1. May 15, Assets Cash $7,000 Equipment $3,000 Equity: Common stock $10,000
2. May 21, Assets: Office supplies $500 Liabilities: Accounts Payable $500
3. May 25, Assets: Cash $4,000 Equity: Service Revenue $4,000
4. May 30, Assets: Cash $1,000 Equity: Service Revenue $1,000
b. Journal Entries:
Date Account Titles Debit Credit
1. May 15, Assets: Cash $7,000
Assets: Equipment $3,000
Equity: Common stock $10,000
2.
May 21, Assets: Office supplies $500
Liabilities: Accounts Payable $500
3. May 25, Assets: Cash $4,000
Equity: Service Revenue $4,000
4. May 30, Assets: Cash $1,000
Equity: Service Revenue $1,000
c. T-accounts:
Cash
Date Account Titles Debit Credit
1. May 15 Common stock $7,000
3. May 25, Service revenue 4,000
4. May 30, Service revenue 1,000
Equipment
Date Account Titles Debit Credit
1. May 15 Common stock $3,000
Office Supplies
Date Account Titles Debit Credit
2. May 21, Accounts Payable $500
Common Stock
Date Account Titles Debit Credit
1. May 15 Cash $7,000
1. May 15 Equipment 3,000
Accounts Payable
Date Account Titles Debit Credit
2. May 21, Office supplies $500
Service Revenue
Date Account Titles Debit Credit
3. May 25, Cash $4,000
4. May 30, Cash 1,000
Explanation:
a) Data and Analysis with Accounting Equation:
1. May 15, Assets Cash $7,000 Equipment $3,000 Equity: Common stock $10,000
2. May 21, Assets: Office supplies $500 Liabilities: Accounts Payable $500
3. May 25, Assets: Cash $4,000 Equity: Service Revenue $4,000
4. May 30, Assets: Cash $1,000 Equity: Service Revenue $1,000
Vertical analysis can best be described as a technique for analyzing the percentage change in individual financial statement line items from one accounting period to the next.
a. True
b. False
Answer:
False
Explanation:
Vertical analysis can be regarded as accounting tool which gives room for
proportional analysis of some documents. This document is usually
financial statements.In carrying out vertical analysis, all the item line that is on the financial statement is been recorded as percentage of another item. Instance of this is an income statement.
) For humanitarian reasons, Taco Loco decides they would rather make product X than product Y. The dollar amount that they can both increase the price of Y and reduce the price of X by to accomplish this reversal of demand is
Answer:
81.80 cents.
Explanation:
Taco Laco should produce Y but should not produce X. The product X is not beneficial for Taco Laco. If the company decides to reduce the price of product X by 0.82 cents then its optimal product mix will contain zero units of X.
If nominal GDP is $1,200 billion and, on average, each dollar is spent five times in the economy over a year, then the quantity of money demanded for transactions purposes will be?
Choices
1,200
6,000
600
240
960
Out of the choices provided above, it can be concluded to state that the quantity of money demanded for transactions will be $6,000 if the conditions given above with respect to the nominal GDP are satisfied in an economic situation. Therefore, the option B holds true.
What is the significance of nominal GDP?The nominal GDP of an economy can be referred to or considered as the unit of measurement that is used to represent the final value of finished goods and services, where no adjustments for the prevailing inflation rates are taken into consideration.
The quantity of money demanded can be computed using the given nominal GDP's information as under,
Quantity of Money Demanded = Nominal GDP x Dollar Spending
Quantity of Money Demanded = 1200 × 5
Quantity of Money Demanded = $6,000
Therefore, the option B holds true and states regarding the significance of nominal GDP.
Learn more about nominal GDP here:
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Determine: SHOW ALL WORK a. Predetermined factory overhead rate. $ b. Determine the factory overhead applied assume the actual direct labor hours for Job 50 was. 20000 and for J0b 51 was 24000 . $ c. Determine the balance in the factory overhead account assuming that the actual cost
Answer:
Note See complete question as attached as picture below
a. Predetermined factory overhead rate = Estimated factory overhead cost / Direct labr hours
Predetermined factory overhead rate = $1,750,000 / 500,000 hours
Predetermined factory overhead rate = $3.50 per direct labor hours
b. Particulars Amount
Job 50 (20,000*3.50) $70,000
Job 51 (24,000*3.50) $84,000
Factory overhead applied $154,000
c. Balance in factory overhead = $154,000 - $153,000
Balance in factory overhead = $1,000
d. Over-applied factory overhead = $1,000
Use the drop-down menus to indicate whether each of the following events would be recorded as revenues or expenses at the time it happens under accrual-basis and cash-basis accounting methods.
Event Accrual-Basis Cash-Basis
September: Receive cash in advance from customers for services to be performed in November.
selectRecord revenueDo not record revenue
selectRecord revenueDo not record revenue
October: Purchase supplies totaling $10,000 on account.
selectRecord expenseDo not record expense
selectRecord expenseDo not record expense
November: Receive cash for services performed in November.
selectRecord revenueDo not record revenue
selectDo not record revenueRecord revenue
November: Perform services for customers who paid in advance during October.
selectRecord revenueDo not record revenue
selectRecord revenueDo not record revenue
December: Pay cash for the supplies that were purchased in October.
selectRecord expenseDo not record expense
selectRecord expenseDo not record expense
Answer and Explanation:
The classification is as followS:
Transactions Accrual basis Cash basis
1. Cash received in advance Not record record the revenue
2. Purchase supplies Not record Not record the expense
3. Received cash for services record revenue record revenue
4. Perform services Record revenue Not record the revenue
5. Pay cash for the supplies Not record record the expense
In this way it should be classified
Kentucky Corporation uses a process-cost accounting system. The company adds direct materials at the start of its production process; conversion cost, on the other hand, is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 40% complete. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?
A. Materials, 40%; conversion cost, 40%.
B. Materials, 40%; conversion cost, 100%.
C. Materials, 100%; conversion cost, 40%.
D. Materials, 100%; conversion cost, 60%.
E. Materials, 100%; conversion cost, 100%.
Answer:
The following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory:
D. Materials, 100%; conversion cost, 60%.
Explanation:
The above is actually the best option which would be used to calculate the correct number of equivalent units in the ending work-in-process inventory.
Heavy use of long-term debt can be of benefit to a firm to help expand, although it adds to the firm's overall level of risk.
A. True
B. False.
Answer:
A
Explanation:
Long term debt is debt that has a maturity that is longer than a year.
The higher the use of debt, the higher the risk a firm takes on. This is because the greater the use of debt, the higher the chances of the firm defaulting on debt.
firms that use a high amount of debt, have an higher beta. As a result of the higher beta, the required return is also higher.
use of long-term debt provides firms with the necessary cash flows that would be needed to carry out necessary projects. Thus, it benefits a firm by helping it expand
what is least likely to get managers to act in best interest of the owner threat of a prozy fight stock option plans
Answer:
The least likely to get managers to act in the best interest of the owner is:
stock option plans.
Explanation:
But with the threat of a proxy fight, managers get up to speed, acting in the best interest of the owners of the firm because their jobs are at stake. The main purpose of a proxy fight is the removal of the current management of the firm. During a proxy fight, contest, or battle, some shareholders in a company attempt to oppose and vote out the current management or board of directors. On the other hand, stock option plans reward managers with employee ownership rights at discounted prices.
After considering the Burberry story, identify which business-level strategy the company is attempting to pursue?
a. Focused Differentiation
b. Focused Low Cost
c. Broad Low Cost
d. Integrated Differentiation and Low Cost
Answer:
The answer is "Option a".
Explanation:
The concentrated product differentiation wants to deliver unique characteristics which satisfy the business requirements of a specific market. Many companies who adopt a focused product differentiation focus exclusively on a certain distribution platform, also including selling upon on the Internet alone.
By studying that tale of Burberry, the company is trying it develop a strategy of places in the world. The strategy of places in the world involves the arise from different of products to a limited group of customers for premium objects usually.
Division of labor and specialization
Answer:
Division of Labour vs Specialization. Basically, both these concepts involve dividing the main process into different tasks, assigning each task to individual workers or group of workers. Thus, there is no significant difference between division of labour and specialization.
Explanation:
A 20-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for $1,100. (Assume that the bond has just been issued.)
Required:
a. What is the bond's yield to maturity?
b. What is the bond's current yield?
c. What is the bond's capital gain or loss yield?
d. What is the bond's yield to call?
Answer:
A. 3.57%
B. 7.27%
C. 5.45%
Explanation:
a. Calculation to determine What is the bond's yield to maturity
Using this formula
SemiannualYTM=PMT+Par−Price÷N÷Par+Price/22
Where,
Par = $1,000
Annual payment = $1,000 x 8% = $80
Semiannual payment = $80 x 0.5 = $40
Price = $1,100
Call price = $1,040
Time to call = 5 years
Time to maturity = 20 years
Let plug in the formula
SemiannualYTM=$40+$1,000−$1,100÷20×2÷$
1,000+$1,100/2
SemiannualYTM=3.57%
b. Calculation to determine What is the bond's current yield
Using this formula
Current yield=Annual payment/price
Let plug in the formula
Current yield=80/1100
Current yield=7.27%
c. Calculation to determine What is the bond's capital gain or loss yield
Using this formula
Capital loss=Call price-Current price/Current price
Let plug in the formula
Capital loss=1040-1100/1100
Capital loss=5.45%
Irwin Company has budgeted direct labor hours for the coming three months as follows: July, 6,500 hours; August, 8,100 hours; and September, 8,300 hours. Manufacturing overhead is budgeted at $13,300 per month plus $3.30 per direct labor hour. What is the budgeted manufacturing overhead for August
Answer:
the budgeted manufacturing overhead for August is $40,030
Explanation:
The computation of the budgeted manufacturing overhead for August is shown below:
= Budgeted manufacturing overhead + direct labor hour rate × direct labor hours for august
= $13,300 + $3.30 × 8,100 hours
= $13,300 + $26,730
= $40,030
Hence, the budgeted manufacturing overhead for August is $40,030
a sales rep, has just learned that she will be allowed to text with her colleagues and clients during work hours. What is the best advice you can give her to ensure that she is using this tool professionally
Answer:
Remember this is your workplaces, if you wouldn't do it in front of your boss, dont do it at all.
Explanation:
It can be very tempting to text or play on your phone while bored at work. It's best to put it away and use it only during lunch.
Which statement is true of the relationship between risk and return?
O The grear the risk, the greater the potential return.
O The relationship between risk and return varies.
The greater the risk, the lower the potential return.
O The relationship depends on the individual investment.
Answer:
the relationship depends on the individual investment
Answer:
The relationship depends on the individual investment
The following activities occur at Greenwich Corporation. a company that manufactures a variety of products.a. Various individuals manage the parts inventories.b. A clerk in the factory issues purchase orders for a job.c. The personnel department trains new production workers.d. The factory’s general manager meets with other department heads such as marketing to coordinate plans.e. Direct labor workers assemble products.f. Engineers design new products.g. The materials storekeeper issues raw materials to be used in jobs.h. The maintenance department performs periodic preventive maintenance on general-use equipment.Required:Classify each of the activities above as either a unit-level, batch-level, Product-level, or organizationsustaining activity.
Answer:
Product level activities have to do with the individual products themselves and issues concerning them.
Batch level activities are related to uses that concern a group of products including their sales and raw material acquisition.
Unit level activities are those that concern the production volumes of units and include direct materials and direct labor.
Organization sustaining or Facility level entails issues that relate to the general facility used in production and is more of an administrative measure.
Batch Level Activities
b. A clerk in the factory issues purchase orders for a job.
g. The materials storekeeper issues raw materials to be used in jobs.
Product Level Activities
a. Various individuals manage the parts inventories.
f. Engineers design new products.
Unit Level Activities
e. Direct labor workers assemble products.
Organization sustaining Level
c. The personnel department trains new production workers.
d. The factory’s general manager meets with other department heads such as marketing to coordinate plans.
h. The maintenance department performs periodic preventive maintenance on general-use equipment.
Suppose banks increase excess reserves by $ 471845 . If the reserve ratio is 12 percent, what is the maximum increase in the money supply
Answer:
$3,932,025.94
Explanation:
Multiplier = 1 / rr
Multiplier = 1 / Reserve ratio
Multiplier = 1 / 0.12
Multiplier = 8.3333
Increase in money supply = Multiplier * Increase in excess reserves
Increase in money supply = 8.3333 * $471,845
Increase in money supply = $3,932,025.94
So, the maximum increase in the money supply is $3,932,025.94.
Razor Corporation's cost of preferred stock is 8%. The company's stock sells for $100 a share with selling costs are $5. What is the annual dividend to the preferred stock
Answer:
Razor Corporation
The annual dividend to the preferred stockholders is:
= $8 per share
Explanation:
a) Data and Calculations:
Cost of preferred stock = 8%
Selling price per preferred stock = $100
Annual dividend to the preferred stock = $100 * 8% = $8 per share
b) The $8 per share annual dividend of Razor's preferred stock dividend is computed by applying the fixed percentage to the preferred stock's total par value. In the above case, it is assumed that the par value or nominal value of the stock is $100. The cost of selling or issuing the stock is not factored when calculating the dividend.
Eric, a ghost writer, conducted market research and discovered a niche market in writing scripts for corporate online videos. He also knows now the market will bear $250 per script. What question should he ask next about placement of his marketing mix
Answer: What is the best way to get his service to his target customers
Explanation:
Market research is the process of determining how viable a product will be after research has been conducted in the market. This is vital in getting opinions of customers.
Marketing mix are the marketing tools which an organization can use in order to pursue its marketing objectives.
The question that should be asked about the marketing mix placement is "What is the best way to get his service to his target customers". This is vital in knowing the best method to use in making the product available to the customers.
Q1. Identify the different types of external and internal trends that have impact on HRM? Give an example of each trends in your own words. (Words limit up to 350)
Answer:
Internal influences on HRM - Corporate objectives, Operational strategies, Marketing strategies, Financial strategies
External influences - Market changes, economic changes, social changes, technology changes, Political & legal changes
Explanation:
Internal influences on HRM
a) Corporate objectives
Example – Objective of cost optimisation leads to restructuring, redundancies, delayering, etc.
b) Operational strategies
Example – Improvisation is IT system may require reduction in staff and training of staff or hiring of new staff
c) Marketing strategies
Example – A new sales team is required to sell a new product or to enter into a new geography
d) Financial strategies
Example – Reduction in cost of training programme would require HRM team to outsource training
External influences
a) Market changes
Example – Loss in business in specific segment or region require changes in divisional management or job losses
b) Economic changes
Example – When economy is low, there will be more unemployment and hence availability of people at low cost.
c) Technological changes
For example – Introduction of technology platforms to create social networking with employees and customers
d) Social changes
Example – Adoption of flexible working options in times of pandemic
e) Political & legal changes
Example – Changes in maximum working time and other employment rights affect the workforce planning and remuneration of HRM
On June 1, 2018, Crane Company and Cheyenne Company merged to form Ayayai Inc. A total of 876,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis. On April 1, 2020, the company issued an additional 637,000 shares of stock for cash. All 1,513,000 shares were outstanding on December 31, 2020. Ayayai Inc. also issued $600,000 of 20-year, 8% convertible bonds at par on July 1, 2020. Each $1,000 bond converts to 44 shares of common at any interest date. None of the bonds have been converted to date. Ayayai Inc. is preparing its annual report for the fiscal year ending December 31, 2020. The annual report will show earnings per share figures based upon a reported after-tax net income of $1,491,000. (The tax rate is 20%.)
Determine the following for 2020.
(a) The number of shares to be used for calculating:
(1) Basic earnings per share
(2) Diluted earnings per share
(b) The earnings figures to be used for calculating:
(1) Basic earnings per share
(2) Diluted earnings per share
Answer:
A-1 Basic earnings per share=$1,353,750
A-2 Diluted earnings per share = 2,136,650
B-1 Basic earnings per share $1,491,000
B-2 Diluted earnings per share= $1,510,200
Explanation:
(a)Calculation of number of shares to be used for calculating
(1) Basic earnings per share = (876,000*3/12) + (1,513,000*9/12)
Basic earnings per share=$219,000+$1,134,750
Basic earnings per share=$1,353,750
Therefore Basic earnings per share is $1,353,750
(2) Diluted earnings per share = (876 000*3/12) (1,513,000*3/12) + (1,513,000 + ($600000/$1000 * 44)
Diluted earnings per share =219,000+378,250+(1,513,000+26,400)
Diluted earnings per share =219,000+378,250+1,539,400
Diluted earnings per share = 2,136,650
Therefore Diluted earnings per share is 2,136,650
(b) Calculation of earnings figures to be used for
(1) Calculation to determine the Basic earnings per share
Using this formula
Basic earnings per share = Net income after tax
Let plug in the formula
Basic earnings per share= $1,491,000
Therefore Basic earnings per share is $1,491,000
(2) Calculation to determine Diluted earnings per share
First step is to calculate the interest expense after tax adjustment
Interest Savings ($600000 * 8% * ½) $24000
Additional Tax ($24000 * 20%) $4800
Interest expense after tax adjustment $19,200
Now let calculate the Diluted earnings per share
Using this formula
Diluted earnings per share = Net income + interest expense after tax adjustment
Let plug in the formula
Diluted earnings per share= $1,491,000 +$19,200
Diluted earnings per share= $1,510,200
Therefore Diluted earnings per share is $1,510,200
Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,000 models, and transferred them to the Distribution Department. The company ended the month with 1,500 models in ending inventory. There were 2,500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs.
Required:
What were the equivalent units for conversion costs during October?
Answer:
11,125 units
Explanation:
Particulars Units
Beginning WIP (2500*0.75) 25% is completed 1,875
Units started and completed during the month 8500
[10,000 -1500 as ending Inventory]
Ending Inventory [1500*0.50] 750
Equivalent units 11,125
So, the equivalent units for conversion costs during October is 11,125 units
The IPO process involves several entities, such as the issuing company, institutional investors, brokers, lawyers, regulators, retail investors, and an intermediary company. Consider the following IPO deal:
In 1999, Goldman Sachs Group and its partners, Sumitomo Bank Capital Markets Inc. and Kamehameha Activities Association, raised $3.6 billion its initial public offering in the United States and Canada. Goldman Sachs & Co., Bear Stearns & Co. Inc., Credit Suisse First Corporation, Lehman Brothers Inc., and J.P. Morgan Securities Inc. became some of the U.S. representatives the deal by entering into an agreement to sell a certain number Of shares to potential investors at a predetermined.
Identify one of the underwriters in the IPO deal described above.
a. J.P. Morgan Securities Inc.
b. Kamehameha Activities Association
Answer:
The IPO Process
One of the underwriters in the IPO deal described above is.
a. J.P. Morgan Securities Inc.
Explanation:
J.P. Morgan Securities Inc. and the following underwriters, Goldman Sachs & Co., Bear Stearns & Co. Inc., Credit Suisse First Corporation, and Lehman Brothers Inc. was involved in the Initial Public Offering (IPO) in 1999, where $3.6 billion was raised in the United States and Canada. An underwriter is a financial specialist, working closely with the issuing houses to determine the initial offering price of the securities. The underwriters usually buy the securities from the issuer and then sell them to investors using its distribution network.
You own a golf course in Florida and you need to determine how many golf carts you need to buy to maximize profits. Please answer the following questions given the information below.
A brand new golf cart costs 2000 rounds of golf and the rate of depreciation is 5%.
The real interest rate is 8%
The expected marginal product of capital is given by MPKf = 1000 – 10K.
a) What is the user cost of capital and what is it expressed in?
b) How many golf carts should you buy to maximize profits (i.e., what is K*)?
c) Draw a graph (the uc / MPK graph) depicting the state of affairs and label this initial profit maximizing point as point A.
Now suppose the (local) government with all their financial shortfalls embarks on a campaign to raise revenue to fund the fire department by imposing a so-called "luxury tax" (we know it as τ) equal to 15% of gross revenue. What happens to the profit maximizing number of golf carts? Please show all work and round to two decimal places.
Answer:
a) 260 rounds of golf
b) 74
c) attached below
d) 70 golf carts
Explanation:
a) Calculate the user cost of capital and what is it expressed in
user cost of capital = total depreciation + total interest
= ( rate of depreciation * Golf cart cost ) + ( real interest rate * Golf cart cost )
= ( d + r ) Golf cart cost
= ( 0.05 + 0.08 ) 2000 = 260 rounds of golf
b) determine the number of carts that should be bought to maximize profits
Profits are maximized when User Cost of capital = MPKF
(d +r) Golf cart cost = MP Kf = 1000 – 10K
( 0.05 + 0.08 ) 2000 = 1000 – 10K
260 = 1000 – 10K ∴ K = ( 1000 - 260 ) / 10 = 74
c) attached below is the required graph
d) Determine what happens to the profit maximizing number of golf carts
User cost of capital ( 1 - t ) = MPK^f
∴ User cost of capital ( 1 - t ) = 1000 – 10K
260 ( 1 - 0.15 ) = 1000 – 10K
305.88 = 1000 – 10K
K=69.41
that is approximately 70 golf carts is been bought to maximize profit
Your sister just deposited $5,500 into an investment account. She believes that she will earn an annual return of 8.8 percent for the next 6 years. You believe that you will only be able to earn an annual return of 8 percent over the same period. How much more must you deposit today in order to have the same amount as your sister in 6 years
Answer:
$5749.02
Explanation:
The first step is to determine the future value of my sister's deposit
The formula for calculating future value:
FV = P (1 + r)^n
FV = Future value
P = Present value
R = interest rate
N = number of years
5500 (1.088)^6 = $9122.97
the second step is to determine the present value of $9122.97 using an interest rate of 8%
$9122.97 / (1.08)^6 = $5749.02
Glaston Company manufactures a single product using a JIT inventory system. The production budget indicates that the number of units expected to be produced are 186,000 in October, 194,500 in November, and 191,000 in December. Glaston assigns variable overhead at a rate of $0.70 per unit of production. Fixed overhead equals $143,000 per month. Compute the total budgeted overhead for October.
Answer:
Budgeted overhead (October)= $273,200
Explanation:
Giving the following information:
Production= 186,000 in October
Predetermined variable overhead= $0.70 per unit.
Fixed overhead equals $143,000 per month.
To calculate the budgeted overhead for October, we need to use the following formula:
Budgeted overhead (October)= 0.7*186,000 + 143,000
Budgeted overhead (October)= $273,200
Mark owns a driving range in New York City. He has taken notice of the three competitors who are located very close to his business. Mark decides to look at his competitors' pricing and then determine his best pricing strategy based on all of the information. In this scenario, Mark is utilizing ________.
Answer:
competitor-based pricing
Explanation:
Since in the given situation, it is mentioned that mark look to the competitor pricing and them measures it pricing startegy
So here Mark is utilizing competitor based pricing as the mark has decided the price that depend upon his competiton. It is mainly applied for those products who are almost same with the competitor products.
Therefore the above should be the answer for the given scenario.
A manufacturer reports the information below for three recent years.
Year 1 Year 2 Year 3
Variable costing income 140,000 146,400 143,950
Beginning finished goods inventory (units) 0 2,200 1,700
Ending finished goods inventory (units) 2,200 1,700 1,800
Fixed manufacturing overhead per unit 1.20 1.20 1.20
Compute income for each of the three years using absorption costing.
Year 1 Year 2 Year 3
Absorption costing income
Answer:
Year 1
Fixed Overhead in ending inventory = (2,200 * $1.20) = $2,640
Year 2
Fixed Overhead in ending inventory = (1,700 * $1.20) = $2,040
Fixed overhead in beginning inventory = (2,200 * $1.20) = $2,640
Year 3
Fixed Overhead in ending inventory = (1,800 * $1.20) = $2,160
Fixed overhead in beginning inventory = (1,700 * $1.20) = $2,040
Absorption costing income
Particulars Year 1 Year 2 Year 3
Variable costing income $140,000 $146,400 $143,950
Fixed Overhead in ending inventory $2,640 $2,040 $2,160
Fixed overhead in beginning inventory $0 ($2,640) ($2,040)
Absorption costing income $142,640 $145,800 $144,070
If the best surgeon in town is also the best at cleaning swimming pools, then according to economic reasoning, this person should
Answer:
specialize in being a surgeon because its opportunity cost is lower.
Explanation:
Opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.
Simply stated, it is the cost of not enjoying the benefits, profits or value associated with the alternative forgone or best alternative choice available.
Assuming the best surgeon in town is considered to be the best at cleaning swimming pools, then from an economic perspective and reasoning, this person should specialize in being a surgeon because its opportunity cost is lower.
This ultimately implies that, the benefits, profits or value associated with cleaning swimming pools i(alternative forgone) is lower compared to what is obtainable from being a surgeon.
Weighted Average Cost Flow Method Under Perpetual Inventory System The following units of a particular item were available for sale during the calendar year:
Jan. 1 Inventory 4,000 units at $40
Apr. 19 Sale 2,500 units
June 30 Purchase 4,500 units at $44
Sept. 2 Sale 5,000 units
Nov. 15 Purchase 2,000 units at $46
Required:
The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale.
Answer:
Cost of goods sold:
Apr. 19 = $100,000
Sept. 2 = $215,000
Inventory Balance on:
Apr. 19 = $60,000
Sept. 2 = $43,000
Explanation:
a) Data and Calculations:
Date Description Units Unit Price Inventory Cost of Sales
Jan. 1 Inventory 4,000 $40 $160,000
Apr. 19 Sale 2,500 $40 $60,000 $100,000
June 30 Purchase 4,500 $44 $258,000 ($44 * 4,500 + $60,000)
Sept. 2 Sale 5,000 $43 $43,000 $215,000
Nov. 15 Purchase 2,000 $46 $135,000 ($46 * 2,000 + $43,000)