Answer:
The correct answers are:
A) Purchase cost of a patent from a competitor. (Capitalized)
B) Research and development costs. (Expensed)
C) Organizational costs. (Expensed)
D) Costs incurred internally to create goodwill. (Expensed)
Explanation:
Basically, for accounting purposes, the difference between capitalization and expenditure relies on the period the assets will be used. When assets are acquired to be used more than in a single period, they are capitalized. When those assets are purchased to be used within part of the current period, they are expensed. Thus:
A) Purchase cost of a patent from a competitor. (Capitalized)
B) Research and development costs. (Expensed)
C) Organizational costs. (Expensed)
D) Costs incurred internally to create goodwill. (Expensed)
The income statement for Nadeen, Inc. shows income before income taxes $700,000, income tax expense $210,000 and net income $490,000. If Nadeen has 100,000 shares of common stock outstanding throughout the year, earning per share is:
A $7.00
B $4.90
C $2.10
D None
Answer:
B $4.90
Explanation:
The earnings per share ratio (EPS), is an entities net income after tax that is available the shareholders divided by the weighted average number of shares of common stock that are outstanding during the period of the earnings.
As such, given;
net income after tax = $490,000
number of shares = 100,000
EPS = net income after tax/number of shares
= $490,000/100,000
= $4.90
You wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $24,000 for 25 years after retirement. During the period before retirement you can earn 10 percent annually, while after retirement you can earn 12 percent on your money. What annual contributions to the retirement fund will allow you to receive the $24,000 annuity? Use Appendix C and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.
Answer:
$3,286.52
Explanation:
PVA= A×({1 −[1 / (1 + i)n]} / i)= $24,000 ×({1 −[1 / (1.12)25]} / .12)
= $188,235.34
FVA= A×{[(1 + i)n−1] / i}A=
FVA/ {[(1 + i)n−1] / i}= $188,235.34 / {[(1.10)20−1] / .10}= $3,286.52
To determine the annual deposit into an account earning 10 percent that is necessary to accumulate$188,235.34 after 20 years, solve for the annuity:
N= 20
I/Y=10
PV=0
PMT=CPT PMT -3286.52
FV=188 235.34
Answer: $3,286.52
Suppose that the total benefit and total cost from a continuous activity are, respectively, given by the following equations:
B(Q) = 100 + 36Q – 4Q^2 and C(Q) =80 + 12Q.
(Note: MB(Q) = 36 – 8Q and MC(Q) = 12.)
Use a negative sign (-) where appropriate.
a. Write out the equation for the net benefits.
b. What are the net benefits when Q = 1? Q = 5?
c. Write out the equation for the marginal net benefits.
Answer:
a. 20 + 24Q - 4Q^2
b. 40 ; 40
c. 24 - 8Q
Explanation:
The equations are as follows:
a. The net benefit is
= Total benefits - Total costs
where,
Total benefits = B(Q) = 100 + 36Q – 4Q^2
Total costs = 80 + 12Q.
So, the net benefit is
= 100 + 36Q - 4Q^2 - 80 - 12Q
= 20 + 24Q - 4Q^2
b. When Q = 1,
N(Q) = 20 + 24 ×1 - 4×1^2
= 40
When Q = 5,
N(Q) = 20 + 24 × 5 - 4×5^2
= 40
c. MNB(Q) = dN(Q) ÷ dQ
= 24 - 8Q
We use the derivatives
The equation for net benefits is NB(Q) = 20 + 24Q - 4Q^2. When Q = 1, the net benefits are 40, and when Q = 5, the net benefits are also 40. The equation for marginal net benefits is MNB(Q) = 24 - 8Q.
Explanation:a. The equation for net benefits is NB(Q) = B(Q) - C(Q). Substituting the given equations for B(Q) and C(Q), we have NB(Q) = (100 + 36Q - 4Q^2) - (80 + 12Q). Simplifying further, NB(Q) = 20 + 24Q - 4Q^2.
b. To find the net benefits when Q = 1, we substitute Q = 1 into the equation NB(Q). NB(1) = 20 + 24(1) - 4(1)^2 = 20 + 24 - 4 = 40. Similarly, when Q = 5, NB(5) = 20 + 24(5) - 4(5)^2 = 20 + 120 - 100 = 40.
c. The equation for marginal net benefits is calculated by taking the derivative of the net benefits equation. Taking the derivative of NB(Q) = 20 + 24Q - 4Q^2, we get the marginal net benefits equation as MNB(Q) = 24 - 8Q.
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People with high collectivism:
a. accept unequal distribution of power.
b. also have low individualism.
c. value harmonious relationships in the groups to which they belong.
d. value thrift, savings, and persistence.
e. appreciate the unique qualities that distinguish themselves from others
Answer:
The correct answer is letter "C": value harmonious relationships in the groups to which they belong.
Explanation:
Collectivism is the idea of sharing before reserving certain goods to individuals. People and communities with this point of view tend to promote a cooperative environment where the main objective is the satisfaction of all the members of the societies.
The welding department supplies parts to the final assembly line. Management decides to implement a kanban system and has collected the following data. The daily demand is 2000 units The production lead time is 4 days (this includes processing time, transport time, and waiting time) Management has decio One container fits 400 units
How many kanban containers will be needed to support this system? _____ containers
Answer:
25 kanban containers
Explanation:
Given that,
Daily demand = 2,000 units
Production lead time = 4 days
Container size = 400 units
Lead time demand:
= Daily demand × Production lead time
= 2,000 units × 4 days
= 8,000 units
Safety Stock:
= Number of days × Daily demand
= 1 day × 2,000 units per day
= 2,000 units
Number of Kanban containers needed:
= (Lead time demand + Safety Stock) ÷ Container size
= (8,000 + 2,000) ÷ 400
= 10,000 ÷ 400
= 25
To support the Kanban system in the welding department, 20 Kanban containers will be needed, based on the daily demand, production lead time, and container capacity.
To calculate the number of Kanban containers needed in the welding department to support the Kanban system, we can use the following formula:
(Daily demand) * (Production lead time in days) / (Container capacity)
Using the data provided:
Daily demand = 2000 units
Production lead time = 4 days
One container fits = 400 units
Now, let's plug in the values:
(2000 units per day) * (4 days) / (400 units per container) = 20 containers
Therefore, 20 Kanban containers will be needed to support this system efficiently.
1. Organize around outcomes, not tasks. 2. Identify all the organization’s processes and prioritize them in order of redesign urgency. 3. Integrate information processing work into the real work that produces the information.4. Treat geographically dispersed resources as though they were centralized.5. Link parallel activities in the workflow instead of just integrating their results.6. Put the decision point where the work is performed, and build control into the process.7. Capture information once and at the source.This is
Answer:
Business Process Re-engineering
Explanation:
This involves redesign business processes in such a manner that repetition is avoided and wastes as well as its costs are avoided.
By re-engineering business processes,organizations can identify those activities that are value adding and prioritize,while those that do not add value are eliminated.
When Andy Forsummer, the owner of Barcelona Restaurants Group, rejects management philosophies that stress employee social relations and employee happiness, he is refuting ideas championed bya.the human relations approach to management.b.the systems approach to management.c.Henri Fayol's administrative management.d.Max Weber's bureaucratic management.
Answer:
The correct answer is letter "C": Henri Fayol's administrative management.
Explanation:
Turkish economist Henri Fayol (1841-1925) is considered the father of modern management. Fayol summarized his ideas on corporate management in 14 principles in which he emphasizes organizational hierarchy, fair and kind employee treats, and corporate spirit.
Mr. and Mrs. Dane and their six children own 100 percent of the stock in three family corporations. Do these corporations qualify as an affiliated group eligible to file a consolidated corporate tax return?
Mr. and Mrs. Dane and their six children may be an affiliated group eligible to file a consolidated corporate tax return if they meet the IRS criteria of common control and unitary business. An individual who owns a corporation and is the sole employee is liable for federal income tax, self-employment tax, and possibly corporate income tax, depending on the structure of the corporation.
Explanation:The question pertains to whether Mr. and Mrs. Dane and their six children, who own 100 percent of the stock in three family corporations, are considered an affiliated group eligible to file a consolidated corporate tax return. Under IRS regulations, a group of corporations may file a consolidated tax return if they are engaged in a unitary business under common control. Typically, common control entails direct ownership of at least 80 percent of the voting power and value of the stock. If Mr. and Mrs. Dane and their children meet these criteria with each of their family corporations, they could potentially file a consolidated return. However, there are additional rules and complexities to consider when determining eligibility for filing a consolidated return.
Regarding the question about the types of federal tax an individual would have to pay if they own a corporation and are the only employee, the individual will generally be responsible for several types of taxes. These typically include federal income tax, self-employment tax (which covers Social Security and Medicare taxes), and potentially corporate income tax, depending on the corporate structure. If the corporation is a C corporation, it would pay its own corporate income tax, whereas if it's an S corporation or LLC taxed as a disregarded entity, income and losses are passed through to the owner's personal tax return.
If a company is considering the purchase of a parcel of land that was acquired by the seller for $96,000 is offered for sale at $172,000, is assessed for tax purposes at $106,000, is recognized by the purchaser as easily being worth $162,000, and is purchased for $159,000, the land should be recorded in the purchaser's books at:a. $106,000. b. $159,000. c. $160,500. d. $162,000. e. $172,000.
Answer:
correct option is b. $159,000
Explanation:
given data
purchase land = $96,000
offer sale = $172,000
assessed for tax purposes = $106,000
recognized purchaser worth = $162,000
purchased = $159,000
solution
we know that when we purchase a parcel of land then
the price paid for by the purchaser is the amount and that amount is to be recorded in the books
so that land will record in the purchaser books is $159,000
so correct option is b. $159,000
Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods. Group of answer choices True False
Answer:
True
Explanation:
Both the countries can achieve gains from the trade because the trade is largely based on the principle of comparative advantage. The principle of comparative advantage states that a country has a comparative advantage in producing a good if it produces that good with a lower opportunity cost than the other country.
Trade is not based on the absolute advantage but on the comparative advantage. A country is having a absolute advantage in producing a commodity if it uses the minimum resources than the other country.
It doesn't matter which country has a absolute advantage in a trade.
Suppose nominal GDP increased in a given year. Based on this information, we know with certainty that:
A. real output has increased.
B. the price level (GDP deflator) has increased.
C. real output and the price level (GDP deflator) have both increased.
D. either real output or the price level (GDP deflator) have increased.
E. real output has increased and the price level has decreased.
Answer:
D. either real output or the price level (GDP deflator) have increased.
Explanation:
GDP is the total value (price x quantity) of goods & services produced by an economy during an a time period.
Real GDP is calculated on the basis of base year price index. Nominal GDP is calculated on the basis of current year price index.
So: Real GDP increases only due to rise in output quantity, not by price. Nominal GDP can increase due to rise in both output quantity or in price level (reflected in deflator).
This makes Real GDP a better measure of Economic growth than Nominal GDP, since it captures effect of increased production only (& not price).
Deflator is a measure of average price level change =
Nominal GDP X 100
Real GDP
Deflator > 100 shows inflation in general price level, Deflator < 100 shows deflation in general price level.
A small business owner visits his bank to ask for a loan. The owner states that she can repay a loan at $2,500 per month for the next two years and then $3,000 per month for another two years after that. If the bank is charging customers 6.5 percent APR, how much would it be willing to lend the business owner?
Answer:
Present value = $115,278.17
Explanation:
Given data:
Monthly repay amount for 2 year = $2500
Monthly repay amount for another 2 year = $3500
APR =6%
monthly interest rate = 6.50/12 = 0.54167%
Present value is calculated as
Present value [tex]= \frac{monthly payment}{(1 + monthly rate)^n} [/tex]
Present value [tex]= \frac{2500}{(1 + 0.54167\%)^1} +\frac{2500}{(1 + 0.54167\%)^2} +........ + \frac{2500}{(1 + 0.54167\%)^{24}} + \frac{3000}{(1 + 0.54167\%)^{25}} + ...... + \frac{3000}{(1 + 0.54167\%)^{48}}[/tex]
Present value [tex]= 2500\times \frac{(1-(\frac{1}{1.0054167})^{24})}{0.0054167} + 3000\times \frac{(1-(\frac{1}{1.0054167})^{24})}{0.0054167}[/tex]
Present value = $115,278.17
Current Attempt in Progress Restate the following income statement for a retailer in contribution format. Sales revenue ($100 per unit) $ 66,000 Less cost of goods sold ($56 per unit) 36,960 Gross margin 29,040 Less operating costs: Commissions expense ($6 per unit) $ 3,960 Salaries expense 7,900 Advertising expense 5,800 Shipping expense ($3 per unit) 1,980 19,640 Operating income $ 9,400
Answer:
Contribution Margin Income Statement for the year end MM DD, YY
$ $
Sales revenue ($100 per unit) 66,000
Less: Variable Cost
Less cost of goods sold ($56 per unit) 36,960
Commissions expense ($6 per unit) 3,960
Shipping expense ($3 per unit) 1,980
42,900
Contribution Margin 23,100
Less: Fixed Cost
Salaries expense 7,900
Advertising expense 5,800
13,700
Net Income 9,400
Ries and Bax each have a partner’s capital balance of $17,500. They split profits and losses equally. Royce is accepted as a 1/3 partner in RB&R Company after contributing $10,000 cash. The partners agree that a 10% interest allowance will be given on each partner’s beginning-year capital balance. In addition, Bax and Royce are to receive $5,250 salary allowances. The remainder of the income or loss is to be divided between Ries, Bax, and Royce in a 3:2:1 ratio.
12/31/2015 - The partnership’s income for the year is $60,000.
12/31/2016 - The partnership incurred losses of $34,000 for the year. The balance sheet shows $12,500 cash, $135,000 inventory, and $77,000 of accounts payable as of 12/31/16. After selling inventory and using all assets to pay off accounts payable at book value, there is $18,600 cash remaining. The partnership decides to liquidate. Negative capital balances will be covered by other partners.
Answer:
tbh i did b
Explanation:
i did it
Square Hammer Corp. shows the following information on its 2018 income statement: Sales = $398,000; Costs = $298,000; Other expenses = $7,900; Depreciation expense = $15,400; Interest expense = $14,200; Taxes = $21,875; Dividends = $11,500. In addition, you’re told that the firm issued $5,700 in new equity during 2018 and redeemed $4,200 in outstanding long-term debt.
Net income is calculated by subtracting total costs, depreciation expense, other expenses, interest expense, and taxes from total sales. The equity issuance and long-term debt redemption do not factor into the net income calculation.
Explanation:The subject of your question is related to the calculation of net income for Square Hammer Corp. using the provided income statement and additional information. Fundamental to this is an understanding of business financial equations.
First, we begin with the total sales of $398,000. Subtracting the total costs ($298,000), depreciation expense ($15,400), other expenses ($7,900), interest expense ($14,200), and taxes ($21,875) from the sales gives us the net income.
The equity issuance and long-term debt redemption are unrelated to net income calculations as they represent changes in financing, not operations. These activities are reflected in the statement of cash flows, though, which is linked to but separate from the income statement.
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Suppose the current issue of The New York Times reports an outbreak of mad cow disease in Nebraska, as well as the discovery of a new breed of chicken that gains more weight than existing breeds that consume the same amount of food. How will these developments affect the equilibrium price and quantity of chickens sold in the United States?
Answer:
Price and quantity of chickens sold will increase.
Explanation:
Due to the prevalence of the mad cow disease, demand for cow meat will go down. Since chicken is a substitute for cow meat and there is a breed that grows twice as much with the same feeds, the demand for chicken will rise.
In economics when other factors apart from price changes it results in demand shift. In this instance demand will shift to the right.
As illustrated in the attached diagram, there will be higher quantity demanded at higher prices than before.
eptune Accounting Services expects its accountants to work for 24 comma 000 direct labor hours per year. The company's estimated total indirect costs are $ 222 comma 000. The direct labor rate is $ 75 per hour. The company uses direct labor hours as the allocation base for indirect costs. If Neptune performs a job requiring 30 hours of direct labor, what is the total job cost? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)
Answer:
$2,527.5
Explanation:
Indirect labor hours:
= Estimated total indirect costs ÷ Direct labor hours per year
= $222,000 ÷ 24,000
= $9.25
Total job cost:
= Direct labor cost + Indirect labor cost
= (direct labor rate per hour × Number of direct labor hours) + (Number of direct labor hours × Indirect labor rate per hour)
= ($75 × 30) + (30 × $9.25)
= $2,250 + $277.5
= $2,527.5
Andy: "This is to confirm our telephone conversation of earlier today. 200 lbs. of T-bone at $2.89 per pound." Barb: "Yes, but that's 100 pounds at $2.99." Andy: "Too late, we already reached agreement by phone." Barb: "Too bad, it wasn't in writing." Which of the following statements is true? a. Barb is incorrect. The phone conversation was a contract. b. Barb is correct. The agreement must be in writing to be enforceable. c. Andy can enforce the agreement with the parol evidence rule. d. none of the above
Barb is correct. The agreement must be in writing to be enforceable.
Explanation:
A written agreement that is legally binding is a true agreement and can therefore be enforced.
It ensures that the people that signed the agreement must perform their duties under the agreement. We can be penalized if they do not.
Although documents need not be published to be legally binding, it is a good idea to keep a record in writing of what you have agreed. It minimizes the likelihood that you and the other side will find themselves on the same page in a disagreement. The article describes the conditions for a legally binding written agreement.
Marcos Company reported the following items on its financial statements for the year ending December 31, 2016:
Sales $ 560,000
Cost of goods sold $400,000
Salary expense 40,000
Interest expense 30,000
Dividends 20,000
Income tax expense 25,000.
Required:
1. How much will be reported as retained earnings on Las Palmas' balance sheet at December 31, 2017, if this is the first year of operations?
Answer:
$35,000
Explanation:
Gross Profit:
= Sales - Cost of Goods sold
= $560,000 - $400,000
= $160,000
Income before tax:
= Gross Profit - Salary Expense - Interest expense
= $160,000 - $40,000 - $30,000
= $90,000
Income after tax:
= Income before tax - Tax
= $90,000 - $25,000.
= $65,000
Transfer to Retained Earnings:
= Income after tax - Dividend
= $65,000 - $30,000
= $35,000
Closing Retained Earnings:
= Net Income (After tax) - Dividend payment
= $65,000 - $30,000
= $35,000
To calculate the retained earnings on the balance sheet, subtract the total expenses from the sales revenue to find the net income. Then, subtract any dividends paid out from the net income to find the retained earnings.
Explanation:To calculate the retained earnings on the balance sheet, we need to consider the net income of the company for the first year of operation. Net income is calculated by subtracting the total expenses from the sales revenue. In this case, net income would be calculated as: $560,000 (sales) - $400,000 (cost of goods sold) - $40,000 (salary expense) - $30,000 (interest expense) - $25,000 (income tax expense) = $65,000.
The retained earnings can then be calculated by subtracting any dividends paid out from the net income. In this case, the dividends paid out are $20,000, so the retained earnings would be: $65,000 - $20,000 = $45,000.
Therefore, the amount reported as retained earnings on the balance sheet at December 31, 2017, if this is the first year of operations, would be $45,000.
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Crane Machine Works produces soft serve ice cream freezers. The freezers sell for $17,000, and variable costs total $12,100 per unit. Crane incurs $25,860,000 in fixed costs during the year. The company’s tax rate is 28%. How many freezers must Crane sell to generate net income of $7,668,000? (Round answer to 0 decimal places, e.g. 5,275.)
Answer:
7,451
Explanation:
The net income is the profit/loss made after the deduction of all expenses from the revenue or sales made including taxes.
The cost elements includes the fixed cost and the variable cost which is dependent on the level of activities.
Given,
Fixed cost = $25,860,000
Variable cost per unit = $12,100
Selling price per unit = $17,000
Tax rate = 28%
Net income planned = $7,668,000
Let the number of freezers to be sold be p
17000p - (12100p + 25,860,000) - 0.28((17000p - (12100p + 25,860,000))= 7,668,000
0.72((17000p - (12100p + 25,860,000)) = 7,668,000
3528p = 7,668,000 + 18619200 = 26287200
p = 26287200 /3528
p = 7451
Crane Machine Works would have to sell 7,451 freezers to make a net profit of $7,668,000.
Final answer:
Crane Machine Works must sell approximately 7,451 soft serve ice cream freezers,
Explanation:
To calculate how many soft serve ice cream freezers Crane Machine Works must sell to generate a net income of $7,668,000, we first need to determine the contribution margin per unit, which is the selling price minus the variable costs. The contribution margin is $17,000 - $12,100 = $4,900 per freezer.
Next, we must calculate the total amount needed to cover the fixed costs and desired net income before taxes. This amount is $25,860,000 (fixed costs) + $7,668,000 (desired net income) = $33,528,000. As Crane's tax rate is 28%, the pre-tax income must be $7,668,000 / (1 - 0.28) = $10,650,000. Therefore, the total amount needed before taxes would be $25,860,000 + $10,650,000 = $36,510,000.
Finally, dividing this amount by the contribution margin per unit gives us the number of freezers Crane needs to sell: $36,510,000 / $4,900 approx. 7,451 freezers.
Of all the companies on the New York Stock Exchange, profits are normally distributed with a mean of $6.54 million and a standard deviation of $10.45 million. In a random sample of 73 companies from the NYSE, what is the probability that the mean profit for the sample was between 3.0 million and 6.0 million?
Answer:
[tex]P(3.0<\bar X<6.0)= P(-2.894< Z< -0.442) = P(Z<-0.442) -P(Z<-2.894) = 0.329 -0.0019=0.327[/tex]
Explanation:
Previous concepts
Normal distribution, is a "probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean".
The Z-score is "a numerical measurement used in statistics of a value's relationship to the mean (average) of a group of values, measured in terms of standard deviations from the mean".
Solution to the problem
Let X the random variable that represent the profits of a population, and for this case we know the distribution for X is given by:
[tex]X \sim N(6.54,10.45)[/tex]
Where [tex]\mu=6.54[/tex] and [tex]\sigma=10.45[/tex]
We are interested on this probability :
[tex]P(3.0<\bar X<6.0)[/tex]
And the best way to solve this problem is using the normal standard distribution and the z score given by:
[tex]z=\frac{x-\mu}{\frac{\sigma}{\sqrt{n}}}[/tex]
And we can find the z score for the two limits 3.0 and 6.0 and we got:
[tex] z_1 = \frac{3-6.54}{\frac{10.45}{\sqrt{73}}} = -2.894[/tex]
[tex] z_2 = \frac{6- 6.54}{\frac{10.45}{\sqrt{73}}} =-0.442 [/tex]
So then we can calculate the probability on this way:
[tex]P(3.0<\bar X<6.0)= P(-2.894< Z< -0.442) = P(Z<-0.442) -P(Z<-2.894)[/tex]
And we can use the normal standard distribution or excel to calculate the probabilities and we got:
[tex]P(3.0<\bar X<6.0)= P(-2.894< Z< -0.442) = P(Z<-0.442) -P(Z<-2.894) = 0.329 -0.0019=0.327[/tex]
Consider the following income statement: Sales $510,944 Costs 332,416 Depreciation 77,300 EBIT ________? Taxes (32%) ________? Net income ________? What is the amount of the depreciation tax shield?
Answer:
$101,228; $68,835; $24,736
Explanation:
Given that,
Sales = $510,944
Costs = $332,416
Depreciation = $77,300
Tax rate = 32%
EBIT:
= Sales - costs - Depreciation
= $510,944 - $332,416 - $77,300
= $101,228
Net income = EBIT - Taxes
= $101,228 - ($101,228 × 32%)
= $101,228 - $32,393
= $68,835
Depreciation tax shield:
= Depreciation × Tax rate
= $77,300 × 32%
= $24,736
Which of the following statements is true of costing systems? A. A construction company would likely use a process costing system. B. An accounting firm would likely use a job order costing system. C. A job order costing system would be used by manufacturers of baking utensils. D. A process costing system would be used by manufacturers of customminusmade perfumes.
Answer:
B. An accounting firm would likely use a job order costing system
Explanation:
The job order costing is the cost which is depended upon the various job needs that reflects the differential costing based on the instructions given by the customer.
On the other hand, the process costing deals with different processes that are held in the company premises.
As we cant say which costing is used but the job order costing is used by the accounting firm as it gives the various services depending upon the customer needs and for that separate fees is to be charged.
Badger World Wide manufactures military, work, sport, and casual footwear and leather accessories under a variety of brand names, such as Caterpillar, Hush Puppies, Wolverine, and Steve Madden. The following transactions occurred during a recent month.
a. Made cash sales of $54,600 (example).
b. Purchased $4,650 of additional supplies on account.
c. Borrowed $62,600 on long-term notes.
d. Purchased $25,200 in additional equipment, paying in cash.
e. Incurred $29,700 in selling expenses, paying two-thirds in cash and owing the rest on account.
f. Paid $8,200 in rent for this month, and $8,200 for next month.
Required:
For each of the transactions, complete the table below, indicating the account, amount, and direction of the effect (+ for increase and − for decrease) of each transaction under the accrual basis. Include revenues and expenses as subcategories of stockholders’ equity, as shown for the first transaction, which is provided as an example. Also, determine the company’s preliminary net income. (Enter any decreases to account balances with a minus sign.)
Answer:
a) The table is completed in the explanation
b) Net income = $16,700
Explanation:
The question is to complete a calculation table for each of the transactions as follows:
Transaction Assets = Liabilities + Stockholders Equity
a. Cash $54,000 Revenue 54,000
b. Supplies +4,650 Account Payable +4,650
c. Cash +62,600 Notes Payable +62,600
d. Equipment +25,200
Cash -$25,200
e. Cash -$19,800 Accounts Payable +9,900 Sell Exp -29,700
f. Prepaid Expense +$8,200 rent Exp -8,200
Cash -$16,400
$93.850 $77,150 $16,700
2. Calculate the Preliminary Net income for the company
Description Amount
Sales Rev. $54,600
Subtract:
Selling Expenses ($29,700)
Rent Expenses ($8,200)
Net Income $16,700
The transactions affected various accounts under the accrual basis in different ways, some increasing and some decreasing. The preliminary net income for the month was calculated to be $16,700.
Explanation:Transaction (a): Cash account increases by $54,600 (+). Revenues increase by $54,600 (+), affecting stockholders' equity positively.
Transaction (b): Supplies account increases by $4,650 (+). Accounts Payable increases by $4,650 (+), affecting stockholders’ equity negatively.
Transaction (c): Cash account goes up by $62,600 (+). Long-term Notes Payable increase by $62,600 (+), which doesn't affect stockholders' equity directly.
Transaction (d): Equipment account increases by $25,200 (+). Cash account decreases by $25,200 (-), which doesn't affect stockholders’ equity directly.
Transaction (e): Selling expenses amount to $29,700 (+), which decreases stockholders' equity. Cash goes down by $19,800 (-) and Accounts Payable go up by $9,900 (+).
Transaction (f): Prepaid Rent account goes up by $8,200 (+). Cash account decreases by $16,400 (-). Rent Expense decreases stockholders’ equity by $8,200 (-).
Preliminary Net Income: This is the total Revenue minus the Expenses. If we count the revenues as $54,600 and selling expenses as $29,700 and rent expense as $8,200, the preliminary net income will come out to $16,700.
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Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. Company is currently operating at 75 percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent.Segmented income statements appear as follows:Product Original Strawberry OrangeSales $ 33,300 $ 42,400 $ 50,900 Variable costs 23,310 38,160 40,720 Contribution margin $ 9,990 $ 4,240 $ 10,180 Fixed costs allocated to each product line 4,600 6,400 7,800 Operating profit (loss) $ 5,390 $ (2,160 ) $ 2,380 Required:a. Prepare a differential cost schedule.Status Quo Alternative:DropStrawberryDifference (all lower underthe alternative)Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) b. Should Cotrone drop the Strawberry product line?YesNo
Relevant Information:
The relevant information is as under:
Segmented income statements appear as follows:
Product Original Strawberry Orange
Sales 65,200 85,600 102,400
Variable costs (44,000) (77,200) (80,200)
Contribution margin 21,200 8,400 22,200
Fixed costs allocated (9,400) (12,000) (14,200)
Operating profit (loss) 11,800 (3,600) 8,000
Answer:
The product not be closed because it is generating net cash flows of ($3,060), which will generate loss for the organization. The better option would be to not abandoning the manufacturing of Strawberry.
Explanation:
Relevant costing says that any savings or losses are relevant if it satisfy following three conditions:
Is a cash flow.Future related (Not arising due to Past bindings).Differential or Incremental in nature.Its crystal clear that any inflows and outflows that are considered would be cash in nature, not related to past events it must be arising as a consequence of taking the decision whose consequences are we considering now, I mean it must arise in future due to the decision made which are considering. The last condition is the concept of differential that lies in the heart of relevant costing and is easily understood by following the following steps:
Step 1: What are the losses or savings if we don't make decision?
Step 2: What are the losses or savings if we make the decision?
Step 3: The difference between step one and two is differential or incremental cost.
Here we learned that relevant cost arises if we take the decision (closing manufacturing of Strawberry), and it doesn't arises if we don't take the decision (not abandoning manufacturing of Strawberry).
Relevant costs associated with the decision are as under:
Step 1 Step 2 Step 3
Make Decision If we Don't Differential
Revenue loss (85,600) - (85,600)
Variable Costs Savings 77,200 - 77,200
Fixed costs Savings (W1) 5340 - 5340
Operating Profit (3,060)
Working1: Fixed costs Savings
Total Fixed costs =21400+12000+14200 = $35,600
The saving is 15% of the total fixed cost and is as under:
Fixed costs Savings = $35,600 * 15% = $5340
Note:
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Problem 1-1A (Video) Ohno Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Ohno’s monthly manufacturing cost and other expense data are as follows. Rent on factory equipment $11,300 Insurance on factory building 1,700 Raw materials (plastics, polystyrene, etc.) 84,800 Utility costs for factory 1,000 Supplies for general office 300 Wages for assembly line workers 65,700 Depreciation on office equipment 800 Miscellaneous materials (glue, thread, etc.) 1,300 Factory manager’s salary 6,500 Property taxes on factory building 500 Advertising for helmets 15,100 Sales commissions 11,000 Depreciation on factory building 1,600 Enter each cost item on your answer sheet, placing the dollar amount under the appropriate headings. Total the dollar amounts in each of the columns.Compute the cost to produce one helmet.
Answer:
cost per helmet: $17.52
Explanation:
The manufacturing cost only should be considered that is overhead,labor and materials.
Overhead
Rent on factory equipment 11,300
Depreciation on factory building 1,600
Property taxes on factory building 500
Miscellaneous materials (glue, thread, etc.) 1,300
Factory manager’s salary 6,500
Insurance on factory building 1,700
Utility costs for factory 1,000
Depreciation on office equipment 800
Total Overhead: 24,700
Raw materials (plastics, polystyrene, etc.) 84,800
Wages for assembly line workers 65,700
Total Manufacturing Cost 175,200
helmet produced: 10,000
cost per Helment: 175,200 / 10,000 = $17.52
The total monthly cost of producing helmets is $174,400. When this total cost is divided by the number of helmets produced in a month (10,000), the result is $17.44. Therefore, the cost to produce one helmet is $17.44.
To figure out the cost to produce one helmet, all costs associated with production need to be added up. These include rent on factory equipment ($11,300), insurance on factory building ($1,700), raw materials ($84,800), utility costs ($1,000), wages for assembly line workers ($65,700), miscellaneous materials ($1,300), factory manager's salary ($6,500), property taxes on factory building ($500), and depreciation on factory building ($1,600).
The sum of these costs is $174,400. This total cost is then divided by the number of helmets produced per month, which is 10,000. $174,400 / 10,000 = $17.44.
Therefore, the cost to produce one helmet is $17.44.
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Builder Products Inc. uses the weighted-average method in its process costing system. It manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Cooking, is given below:Production data:Pounds in process, May 1; materials 100% complete; conversion 90% complete 83,000Pounds started into production during May 480,000Pounds completed and transferred out ?Pounds in process, May 31; materials 75% complete; conversion 25% complete 43,000Cost data:Work in process inventory, May 1:Materials cost $128,300Conversion cost $53,900Cost added during May:Materials cost $666,940Conversion cost $296,395Required:a. Compute the equivalent units of production for materials and conversion for Mayb. Compute the cost per equivalent unit for materials and conversion for Mayc. Compute the cost of ending work in process inventory for materials, conversion and in total for Mayd. Compute the cost of units transferred out to the next department for materials, conversion and in total for Maye. Prepare a cost reconciliation report for May
Answer:
We stablish that both the cost assigned and the cost accounted for the department matches at $1,327,735.00
Explanation:
Physical Unit Information
Units charged to production:
Beginning 83,000
Started 480,000
Total units accounted for by the Department 563000
Units to be assigned costs: Equivalent Units
Physical Units DM Conversion
Beginning 83,000 0 27,000
Started and completed 437,000 437,000 437,000
Transferred 520,000 437,000 464,000
Ending 43,000 32,250 10,750
Total units to be assigned costs 563,000 469250 474750
Costs per equivalent unit:
Direct Materials Conversion
Total cost $795,240 $350,295
Total equivalent units 469,250 474,750
Cost per equivalent unit $1.69 $0.74
Costs charged to production:
Direct Materials Conversion Total
Beginning $128,300.00 $53,900.00 $182,200.00
Costs incurred $795,240.00 $350,295.00 $1,145,535.00
Total costs accounted for by the Department $1,327,735.00
Cost allocated to completed and partially completed units:
Beginning $128,300.00 $53,900.00 $182,200.00
To complete beginning $- $19,921.99 $19,921.99
Cost of completed WIP $202,121.99
Started and completed $740,585.79 $322,441.11 $1,063,026.89
Transferred $1,265,148.88
Ending $54,654.21 $7,931.90 $62,586.12
Total costs assigned by the Department $1,327,735.00
The equivalent units of production, cost per equivalent unit, cost of ending inventory, cost of units transferred out, and cost reconciliation report for May are all computed using the provided production and cost data for Builder Products Inc.
Explanation:The equivalent units of production for materials and conversion for May are computed by adding the completed units and a portion of the units still in process. Using the provided data, the equivalent units for materials are 500,000 (=480,000 units started + 83,000 units * 0% + 43,000 units * 75%) and for conversion are 482,275 (=480,000 units started + 83,000 units * 10% + 43,000 units * 25%).
The cost per equivalent unit for materials and conversion for May are then calculated by dividing the total cost by the equivalent units of production. Thus, the cost per equivalent unit for materials is $1.59 ($795,240/500,000) and for conversion is $0.72 ($350,295/482,275).
The cost of ending work in process inventory can be obtained by multiplying the cost per equivalent unit by the percentage completion of the inventory for materials and conversions. For materials, it is $64,450 (=43,000*75%*$1.59) and for conversion, it is $7,740 (=43,000*25%*$0.72). Therefore, total cost of ending work in process inventory is $72,190 ($64,450 + $7,740).
Cost of units transferred out is calculated as the difference between the total cost and the cost of ending work in process inventory. Therefore, the cost transferred out for materials is $730,790 ($795,240 - $64,450), for conversion is $342,555 ($350,295 - $7,740), and in total is $1,073,345 ($730,790 + $342,555).
In a cost reconciliation report for May, we start with the beginning inventory costs and costs added during May. Then we subtract the cost of units transferred out and the ending Work in Process inventory costs to get zero. In this case, the beginning inventory is $182,200, costs added is $963,335, cost of units transferred is $1,073,345, and ending Work in Process is $72,190, which equals zero when balanced correctly.
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The Alliance Corp. expects to sell the following number of units of copper cables at the prices indicated, under three different scenarios in the economy. The probability of each outcome is indicated.
Outcome Probability Units Price
A 0.20 315 $38
B 0.50 550 53
C 0.30 870 73
What is the expected value of the total sales projection?
Answer:
$36,022
Explanation:
Given that,
Outcome A:
Probability = 0.20
Units = 315
Price = $38
Outcome B:
Probability = 0.50
Units = 550
Price = $53
Outcome C:
Probability = 0.30
Units = 870
Price = $73
Therefore,
Expected value of the total sales projection:
= Outcome A + Outcome B + Outcome C
= (0.20 × 315 × $38) + (0.50 × 550 × $53) + (0.30 × 870 × $73)
= $2,394 + $14,575 + $19,053
= $36,022
The expected value of the total sales projection is $36,346.
Explanation:The expected value of the total sales projection can be calculated by multiplying the number of units sold in each scenario by the corresponding probability and price, and then summing up those values. In this case, we have three scenarios: A, B, and C. Here are the calculations:
Now, we can find the total expected value by summing up the values for each scenario:
Total expected value = $2,394 + $14,575 + $19,377 = $36,346
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You just graduated and landed your first job in your new career.
You remember that your favorite finance professor told you to begin the painless job of saving for retirement as soon as possible, so you decided to put away $2,000 at the end of each year in a Roth IRA.
Your expected annual rate of return on the IRA is 7.5%.
How much will you accumulate at retirement after 40 years of investing ***(note: this may assume that you are even retiring early)*** ?
which is best choice:
A). $1,088,632
B). $94,426
C). $247,921
D). $454,513
Answer:
correct option is D). $454,513
Explanation:
given data
Annuity = $2000
rate = 7.5 % = 0.075
time period = 40 year
solution
we get here Future value of annuity that is express as
Future value of annuity = Annuity × [tex]\frac{(1+r)^t -1}{r}[/tex] ......................1
here r is rate and t is time period so now put value and we get
Future value of annuity = $2000 × [tex]\frac{(1+0.075)^{40} -1}{0.075}[/tex]
Future value of annuity = $454513.03
so correct option is D). $454,513
The correct answer is D) $454,513, which is obtained by using the future value of an annuity formula that considers a $2,000 annual contribution, a 7.5% expected annual rate of return, and a 40-year investment period.
The question involves calculating the future value of an annuity when you plan to save $2,000 annually at the end of each year in a Roth IRA, with an expected annual rate of return of 7.5% over 40 years. To find the accumulated amount at retirement, we will use the future value of an annuity formula:
FV = P × [( 1 + r)^n – 1] / r
Where:
FV = Future Value of the annuity
P = Annual payment ($2,000)
r = Annual interest rate (7.5% or 0.075)
n = Number of years (40)
By plugging in the values:
FV = $2,000 × [( 1 + 0.075)^40 – 1] / 0.075
Therefore, After calculating the formula, we find that the amount you will accumulate at retirement after 40 years of investing is $454,513.
Which of the following options correctly completes the sentence?
The social security lump-sum election means the taxpayer elects to treat the lump-sum social security benefit as if the benefits:
a) For prior years had been received in those years, by amending the prior-year returns.
b) Had been evenly allocated among the reported years.
c) For prior years had been received in those years.
d) For prior years were received in the current years.
Answer:
The correct answer is letter "D": For prior years were received in the current years.
Explanation:
The Social Security lump-sum election refers to a payment made in the current year based on similar payments sent on previous years. That payment could be subject to taxes. The Average Gross Income (AGI) of the taxpayer will determine if the lump-sum is taxable or not.