Discuss the negative consequences that arise when auditors fail to identify and report going-concern problems.

Answers

Answer 1

Answer:

Consequences arising when auditors fail to identify and report on going-concern problems:

1. The purpose of the audit is defeated.

2. Credibility in the audit process and opinion is eroded.

3. Confidence in the efficiency of market information is shattered.

4. Investors and the general public are misinformed and misled.

5. More governmental oversight and regulations will be required.

6. The auditors involved may have their licenses withdrawn and the audit firm could be closed like Arthur Andersen.

Explanation:

For instance, Company A's auditors are always expected to identify and report on going-concern issues of the company.  Failure to identify and report on problems affecting going-concern means that Company A could be at the risk of liquidation and auditors still report it as if it were continuing in business for the next foreseeable future.   That means that Company A's assets and liabilities are reported in the Balance Sheet as if the business could continue indefinitely, whereas the assets and liabilities should have been reported on a sale-out basis.

The auditors involved in making the wrong conclusion about Company A will be sued with huge damages  and their license may be withdrawn, assuming that Company A is unable to survive the next 12 months after being reported on by the auditors.


Related Questions

A stock is bought for $24.00 and sold for $26.00 one year​ later, immediately after it has paid a dividend of​ $1.50. What is the capital gain rate for this​ transaction?

Answers

Answer:

8.33%

Explanation:

A stock is bought for $23.00

The stock is sold for $26 after one year

The dividend paid is $1.50

Therefore, the capital gain rate can be calculated as follows

Capital gain= P1-Po/Po

= 26-24/24

= 2/24

= 0.0833 ×100

= 8.33%

Hence the capital gain rate for this transaction is 8.33%

An investment adviser representative's friend provides him with a list of 10 prospective clients. The representative agrees to pay his friend a referral fee for each person on the list that opens an account with the adviser. Which statement is TRUE

Answers

Answer: C. The arrangement is permitted only if it is in writing between the investment adviser and the friend and the arrangement is disclosed in writing to any customer opening an account

Explanation:

The friend in this case will be ruled to be a Solicitor under SEC Rules as they are referring clients to the Investment Adviser for a fee.

As such this business relationship between the friend and the Investment Adviser representative will fall under SEC Rule 206(4)-3 Cash payments for client solicitations. This rule makes it clear amongst other things that the investment adviser will have to prepare a written disclosure document which will inform any customer opening an account  of the agreement between the adviser and his friend.

Based on your case knowledge, to what extent do you agree or disagree with the following statement - "Kay Whitmore - Kodak CEO, had an understanding of Kodak's potential in the PC market. This was illustrated by her strong engagement with Bill Gates and Microsoft."
1. Strongly Agree
2. Mildly Agree
3. Neither Agree nor Disagree
4. MIldly Disagree
5. Strongly Disagree
6. Not Applicable

Answers

Answer:

3. Neither Agree nor Disagree

Explanation:

The reason was that the Kay Whitmore's engagement with Bill Gates and Microsoft has not much impacts on the potential of Kodak's products to exploit additional opportunities in Microsoft hence statement in consideration is not a one side argument as it is doubtful position.

So I am neither agreeing nor disagreeing with the statement hence the option 3 is correct here.

Builtrite has calculated the average cash flow to be $16,000 with a standard deviation of $4000. What is the probability of a cash flow being less than $9000? (Assume a normal distribution.)

Answers

Answer:

4%

Explanation:

For Builtrite, we can find the probability of cash flows by using the following formula:

Z = (X - C) / S

Average Cash Flow is $16000 which denoted by "C"

Standard Deviation is $4000 and is denoted by "S"

And

For cash flows that are less than $9000 which is denoted by X in the equation, "Z" can be calculated as under:

Z = (X - C) / S = ($9,000 - $16,000) / $4,000 = -1.75

As Z is less than -1.75, now we can see that the probability from the Z-table is 4% for -1.75.

Hence the probability of cash flow below $9,000 is 4%.

An appraiser estimated the replacement cost new of a building at $560,000. The building has an estimated economic life of 40 years and an estimated remaining life of 30 years. What is the current value of the building

Answers

Answer:

The answer is $420,000

Explanation:

To find the amount of depreciation being charged years, we use the following formula:

Cost of the asset ÷ number of useful life

Cost of the asset - $560,000

Number of useful life - 40 years

$560,000 ÷ 40 years

$14,000.

The asset has 30 years remaining, that means it has used 10 years. So the accumulated depreciation is $140,000

And the current value of the building now is $420,000($560,000 - $140,000)

The current value of the building is $420000

The estimated economic life is 40 years, hence after 40 years the value of the house would be 0.

Since the estimated remaining life is 30 years. Hence:

Percentage value of house = 30 remaining years / 40 economic year

Percentage value of house = 0.75 * 100 = 75%

The current value of the building = 75% * $560000 = $420000

The current value of the building is $420000

Find out more on current value at: https://brainly.com/question/24304697

Martin works as a pizza delivery person.He parks his bike outside Regalia Inc.to deliver an order.Meanwhile,a damaged book rack in Regalia,which is situated on the first floor of the building,falls down through an open window and crashes on his bike.However,no one admits to having seen the rack fall.Can Martin recover against Regalia for negligence?
A) Martin can recover only if he finds a witness who saw the book rack crashing on the bike.
B) Martin can recover if he can prove that book racks do not fall out of windows in the absence of negligence and that Regalia Inc. had exclusive control of the rack prior to the fall.
C) Martin will be unable to recover because parking under an open floor window amounts to contributory negligence and he is therefore liable for the accident too.
D) Martin will be unable to recover because parking under an open window amounts to assumption of risk.

Answers

Answer:

B) Martin can recover if he can prove that book racks do not fall out of windows in the absence of negligence and that Regalia Inc. had exclusive control of the rack prior to the fall.

Explanation:

Negligence is defined as a situation where a person does not take due care and conduct oneself like a reasonable person in a given circumstance.

When a defendant is negligent he will be held responsible for damage that results from his negligence.

In this scenario Martin's parked his bike and makes a delivery, meanwhile a book rack falls on his bike.

Martin's can only recover against Regalia if he proves that he was not negligent in any way, and that Regalia had control of the rack before the fall.

For example if Martins did not park his bike in a designated parking spot, he can be seen to be negligent. In that case he will not be able to recover against Regalia.

Specialty Auto Parts Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for​ 2018: Net cash provided by operating​ activities: $108,000 Net cash used for investing​ activities: ($118,500) Net cash provided by financing​ activities: $16,000 If the cash balance at the beginning of the year was​ $13,200, what is the ending cash​ balance? A. ​$18,700 B. ​$13,200 C. ​$10,500 D. ​$5,500

Answers

Answer: $18,700

Explanation

Net cash provided by the operating activities = $108,000

Add: Net cash provided by the financing activities = $16,000

Less : The net cash used for the investing activities = $118,500

The net increase in Cash will now.be:

= ($108,00 + $16,000) - $118,500

= $5,500

Add: Cash at the beginning of the year. This will be:

= $5500 + $13,200

= $18,700

Ending cash balance will be $18700

The present value of $10,000 to be received in 10 years, discounted at an annual rate of 6.78%, is closest to:

Answers

Answer:

PV= $5,189.21

Explanation:

Giving the following information:

The present value of $10,000 to be received in 10 years, discounted at an annual rate of 6.78%.

To calculate the present value, we need to use the following formula:

PV= FV/(1+i)^n

PV= 10,000/(1.0678^10)

PV= $5,189.21

You can use the discounted cash flow method to estimate the cost of a company’s internal equity when the company ______________. g

Answers

Answer:

Pays any amounts of dividends

Explanation:

​Break-even EBIT​ (with and without ​taxes). Alpha Company is looking at two different capital​ structures, one an​ all-equity firm and the other a levered firm with ​$ million of debt financing at ​% interest. The​ all-equity firm will have a value of ​$ million and shares outstanding. The levered firm will have shares outstanding. a. Find the​ break-even EBIT for Alpha Company using EPS if there are no corporate taxes. b. Find the​ break-even EBIT for Alpha Company using EPS if the corporate tax rate is ​%. c. What do you notice about these two​ break-even EBITs for Alpha​ Company? a. What is the​ break-even EBIT for Alpha Company using EPS if there are no corporate​ taxes?

Answers

Complete Question:

Alpha company is looking at two different capital structures, one an all-equity firm and the other a leverages firm with $2 million of debt financing at 8% interest. The all-equity firm will have a value of $4 million and 400,000 shares outstanding. The leveraged firm will have 200,000 shares outstanding.

a. Find the break even EBIT for Alpha company using EPS if there are no corporate taxes.

b.Find the break even EBIT for Alpha company using EPS if the corporate tax rate is 30%

c. What do you notice about these two break-even EBITs for Alpha company?

Answer:

Alpha Company

a. Break-even EBIT, using EPS without taxes:

= (EBIT - Interest 1) * (1 - taxes)/No. of shares =  (EBIT - Interest 2) * (1 - taxes)/No. of shares

With alternative 1, there are no taxes, so:

= (EBIT - Interest 1)/No. of shares = EBIT - Interest 2)/No. of shares

= (EBIT - 0)/400,000 = EBIT - ($2,000,000 x 8%)/200,000

= (EBIT/400,000( = (EBIT - $160,000)/200,000

cross-multiplying:

EBIT200,000 = EBIT$64,000,000,000

dividing by 200,000:

EBIT = $64,000,000,000/200,000

EBIT = $320,000

b. Break-even EBIT, using EPS with taxes:

= (EBIT - Interest 1) * (1 - taxes)/No. of shares =  (EBIT - Interest 2) * (1 - taxes)/No. of shares

= {(EBIT - $0) * (1 - 0.30)}/400,000 = {(EBIT - $160,000) * (1 - 0.30)}/200,000

= EBIT/400,000 = (EBIT - $112,000)/200,000

cross-multiplying:

= EBIT 200,000 = EBIT $44,800,000,000

EBIT = $44,800,000,000/200,000

= $224,000

c. The two break-even EBITs are not the same.  When there are taxes, the break-even EBIT is $224,000, less by $96,000.

Explanation:

a) Data:

Alternative 1: All Equity:

No. of shares = 400,000

Value of shares = $4,000,000

Debt = $0

Interest on Debt = $0

Alternative 2: Equity + Debt:

No. of shares = 200,000

Value of shares = $2,000,000

Debt = $2,000,000

Interest on Debt = 8% or $160,000

b) Alpha's break-even EBIT is the point when the EBIT under alternative 1 are equal to the EBIT under alternative 2.  This implies that under these given alternative financing options, the earnings before interest and taxes are before no matter the alternative chosen.

You have a $46,000 portfolio consisting of Intel, GE, and Con Edison. You put $20,800 in Intel, $10,400 in GE, and the rest in Con Edison. Intel, GE, and Con Edison have betas of 1.3, 1, and .8, respectively. What is your portfolio beta? Multiple Choice 1.071 0.976 0.824 1.393

Answers

Answer:  1.071

Explanation:

The portfolio beta is the weighted average of the constituent stock betas.

Intel Weight

= 20,800/46,000

= 0.45217

GE Weight

= 10,400/46,000

= 0.22609

Con Edison

= (46,000 - 20,800 - 10,400) / 46,000

= 0.32174

Portfolio Beta;

= (0.45217 * 1.3) + (0.22609 * 1) + (0.32174 * 0.8)

= 0.587821‬ + 0.22609 + 0.257392‬

= 1.071303‬

= 1.071

A customer redeems 1,000 shares of ABC Fund on Wednesday, June 14th. Under the provisions of the Investment Company Act of 1940, the customer must be paid the money no later than:

Answers

Answer:

Wednesday, June 21st

Explanation:

In this scenario, since the customer redeemed the shares on Wednesday, June 14th then he must be paid before Wednesday, June 21st. This is 7 days after the redemption. According to section 22 article (e) of the Investment Company Act of 1940, all companies are prevented from postponing the date of payment for more than seven days as stated below.

(e) No registered investment company shall suspend the right

of redemption, or postpone the date of payment or satisfaction upon

redemption of any redeemable security in accordance with its terms

for more than seven days after the tender of such security to the

company or its agent designated for that purpose for redemption

What are examples of career fields Skills USA prepares students for? Check all that apply.
health science
O education
agriculture
construction
manufacturing
transportation
information technology
public safety

Answers

Answer:

everything except education and agriculture

Explanation:

hope this helps •_•

Answer:

Everything except education and ariculture

Explanation:

edu 2021

Part-time workers likely result in A. inaccurately high estimates of the labor force. B. inaccurately low estimates of the labor force. C. a disincentive for the unemployed to seek employment. D. lower incomes and fewer jobs.

Answers

Answer:

Correct answer:

A. inaccurately high estimates of the labor force.

Explanation:

Part-time work is the type of work where an individual has a flexible work plan is a given company unlike the traditional full-time work. Doing such work create the impression that, there is high labour force among the various industries and sectors. For example, someone might be working in two different firms under part-time basis same day which create an impression of two different individuals.

The ____________________ problem is the main source of market failure in the provision of nonexcludable public goods.

Answers

Answer: Free Rider

Explanation:

Non-excludable goods refers to public goods that are free to the public to use such goods and therefore there is no restriction to the  consumption of non-excludable goods because every single individual  has the right to access and consume it  For example,  Public parks, roads, and public infrastructures.

A non excludable good can overtime have a negative result in a community, because such good need to be constantly maintained so as to continue to be beneficial and  therefore may require small token of fair share among its consumers but there would always be some individuals who are referred to as Free Riders  who would rather use the good without paying for it and in the long run cause the good to not be adequate for all or difficult  to be maintained at its best resulting to failure in the provision of the non excludable public goods.

the free rider problem can be solved by

1. Government's intervention to subsidize the public good through fair distribution of tax, using the pay as you earn method .

2. Overused non excludable good can be privatized, ensuring that people who consume it, contribute to ts maintenance.

The following data were reported by a corporation: Authorized shares 38,000 Issued shares 33,000 Treasury shares 12,500 The number of outstanding shares is:

Answers

Answer:

20,500 shares

Explanation:

Authorized shares= 38,000

Issued shares= 33,000

Treasury shares= 12,500

Therefore, the number of outstanding shares can be calculated as follows

Outstanding shares= Issued shares-Treasury shares

= 33,000-12,500

=20,500

Hence the number of outstanding shares is 20,500

Assume that your parents wanted to have a 170,000 saved for college by your 18th birthday and they started saving on your first birthday. They saved the same amount each year on your birthday and earned 6.5% per year on their investmenets.Required:a. How much would they have to save each year to reach their goal?b. If they think you will take five years instead of four to graduate to graduate and decide to have $140,000 saved just in case, how much more would they have to save each year to reach their new goal?

Answers

Answer:

a. They will have to save $5,245.28 each year to reach their goal of $170,000.

b. They will have to save $925.63 less to reach their new goal of $140,000.

Note: The answer to part b is based on the information in the question. Therefore, the correct answer is "they will have to save $925.63 less" not  "save more" as suggested in the question. Kindly confirm this from your teacher.

Explanation:

a. How much would they have to save each year to reach their goal?

Since the saving started on your first birthday to have $170,000 saved, it implies the saving will be on your every birthday for 18 years. Therefore, the relevant formula to use to determine this is the formula for calculating the Future Value (FV) of an Ordinary Annuity as follows:

FV = M * {[(1 + r)^n - 1] / r} ................................. (1)

Where,

FV = Future value of the amount after your 18th birthday = $170,000

M = Yearly saving to have $170,000 = ?

r = interest rate = 6.5%, 0.065

n = number of years this savings will be made = 18

Substituting the values into equation (1) and solve for M, we have:

$170,000 = M * {[(1 + 0.065)^18 - 1] / 0.065}

$170,000 = M * 32.4100673759666

M = $170,000 / 32.4100673759666

M = $5,245.28

Therefore, they will have to save $5,245.28 each year to reach their goal of $170,000.

b. If they think you will take five years instead of four to graduate to graduate and decide to have $140,000 saved just in case, how much more would they have to save each year to reach their new goal?

First, we have to calculate how much they will save each year, by also using the Future Value (FV) for calculating an Ordinary Annuity as follows:

FVn = Mn * {[(1 + r)^n - 1] / r} ................................. (1)

Where,

FV1 = New future value of the amount after your 18th birthday = $140,000

M1 = New yearly saving to have $140,000 = ?

r = interest rate = 6.5%, 0.065

n = number of years this savings will be made = 18

Substituting the values into equation (1) and solve for M1, we have:

$140,000 = M1 * {[(1 + 0.065)^18 - 1] / 0.065}

$140,000 = M1 * 32.4100673759666

M1 = $140,000 / 32.4100673759666

M1 = $4,319.65

Therefore, they will have to save $4,319.65 each year to reach their goal of $140,000.

To obtain difference in yearly savings, we have:

Difference in yealy saving = M - M1 = $5,245.28 - $4,319.65 = $925.63

Since $5,245.28 each year to reach their goal of $170,000 is greater than $4,319.65 each year to reach their goal of $140,000, it therefore implies that they will have to save $925.63 less to reach their new goal of $140,000.

An investment adviser places large block trades for securities positions that are being purchased for its customers' accounts in order to lower its commission costs. The trades are often executed piecemeal, at different prices. The adviser, after being confirmed that the entire block has been filled, allocates the shares to its accounts. As a favor to its most valuable employees, the adviser allocates the shares purchased at the lowest prices to its employees' accounts; and then allocates the remaining shares to its customer accounts pro-rata. The adviser has disclosed its allocation method only to its employees. Which statement is TRUE

Answers

Answer: The investment adviser has breached its fiduciary duty because it has not disclosed its method of allocating shares to its customers

Explanation:

The options to the question are:

a. The investment adviser has breached its fiduciary duty to its customers because the block order must be executed at one price, not in pieces at differing prices

b. The investment adviser has breached its fiduciary duty because it has not disclosed its method of allocating shares to its customers

c. The investment adviser has not breached its fiduciary duty because it has disclosed its method of allocating shares to its employees

d. The investment adviser has not breached its fiduciary duty to customers because it has obtained trade executions for customers at lower commission costs.

Based on the scenario in the question, it should be noted that the investment adviser has breached its fiduciary duty because it has not disclosed its method of allocating shares to its customers.

Fiduciary duty is a legal obligation whereby a party has to work in the best interest of the other party and should also be trustworthy but in this situation, this isn't thw case.

Jax Recording Studio purchased $8,200 in electronic components from Music World. Jax signed a 90-day, 10% promissory note for $8,200. Music World's journal entry to record the sales transaction is:

Answers

Answer:

World's journal entry to record the sales transaction is:

Note Receivable ; Jax Recording Studio $8,200 (debit)

Sales Revenue $8,200 (credit)

Explanation:

Music World is the seller and must recognize Revenue following the sale.The Revenue is initially recognized at the value of sale of $8,200. Music World must also recognize an Asset on the promissory note signed to the value of $8,200.

Quality is primarily related to satisfaction viewpoint of:___________.
a. Customer Manufacturer
b. Service provider
c. General public
d. all of above

Answers

Answer: Consumer

Explanation:

Quality has to do with the standard by which a product is being compared with other similar products.

Quality is primarily related to satisfaction viewpoint of consumers. If consumers are not satisfied with a particular product, it will have a negative impact on the sale of the product hence the product quality must be taken into consideration in order to enable consumers to buy such product.

Margin on price as a percentage is the expression of how much you mark your product up by to arrive at your retail price. True False

Answers

Answer:

False

Explanation:

The margin on price refers to a percentage by taking a difference between the gross profit and the selling price

Here gross profit comes by

= Selling price - cost price

Now in the cost price we added some markup percentage i.e most probably equivalent to the retail price

Hence, the given statement is false

Vijay Inc. purchased a 3-acre tract of land for a building site for $420,000. On the land was a building with an appraised value of $120,000. The company demolished the old building at a cost of $12,000, but was able to sell scrap from the building for $1,500. The cost of title insurance was $900 and attorney fees for reviewing the contract was $500. Property taxes paid were $3,000, of which $500 covered the period subsequent to the purchase date. The capitalized cost of the land is:

Answers

Answer:

$433,900

Explanation:

The computation of the capitalized cost of the land is shown below:-

Capitalized cost of the land = Purchase price + Demolition of building + Title insurance + Attorney fee + Property taxes covered during the period - Scrap value from the building

= $420,000 + $12,000 + $900 + ($3,000 - $500) - $1,500

= $420,000 + $12,000 + $900 + $2,500 - $1,500

= $435,400 - $1,500

= $433,900

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $620,000, and the sales mix is 40% bats and 60% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $90 $50 Gloves 105 65 a. Compute the break-even sales (units) for the overall enterprise product, E.

Answers

Answer:

$15,500 units

Explanation:

For the computation of break-even sales (units) for the overall enterprise product, E first we need to follow some steps which is shown below:-

Contribution margin = (Selling price - Variable costs)

For Bats $90 - $50

= $40

For Gloves = $105 - $65

= $40

Overall contribution margin = (40 × 40%) + (40 × 60%)

= $40

a.Break-even point = Fixed costs ÷ Contribution margin

= $620,000 ÷ 40

= $15,500 units

Moorcroft sales are 40% cash and 60% credit. Credit sales are collected 20% in the month of sale, 50% in the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcroft purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase.Prepare a schedule of expected collections from customers for June.

Answers

Answer:

The budgeted sales are missing, so I looked for them. I found the following question, hopefully it will be similar:

Month        Sales

April           $300,000

May            $320,000

June           $370,000

Schedule of expected collections

For the month of June, 202x

Cash sales during June = $370,000 x 40% = $148,000

Collection from June's credit sales = $222,000 x 20% = $44,400

Collection from May's credit sales = $192,000 x 50% = $96,000

Collection from April's credit sales = $180,000 x 26% = $46,800

Total cash collections during June = $335,200

Wookie Company issues 8%, five-year bonds, on January 1 of this year, with a par value of $108,000 and semiannual interest payments.

Semiannual Period-End Unamortized Premium Carrying Value
(0) January 1, issuance $8,271 $116,271
(1) June 30, first payment 7,444 115,444
(2) December 31, second payment 6,617 114,617
Use the above straight-line bond amortization table and prepare journal entries for the following:

a) The issuance of bonds on January 1.

b) The first interest payment on June 30.

c) The second interest payment on December 31.

Answers

Answer:

See the journal entries and explanation below.

Explanation:

The journal entries will look as follows

a) The issuance of bonds on January 1.

Date         Accounts title                              Debit ($)         Credit ($)  

Jan. 1        Cash                                              111,671

                   Premium on Bonds Payable                                8,271

                   Bonds Payable (w.1)                                        108,000

          (To record issuance of bonds.)                                                  

b) The first interest payment on June 30.

Date         Accounts title                                 Debit ($)         Credit ($)  

Jun. 30    Interest Expense (w.4)                       3,493  

                 Premium on Bonds Payable (w.2)      827

                 Cash (w.3)                                                                 4,320

               (To record first interest payment)                                              

c) The second interest payment on December 31.

Date         Accounts title                                 Debit ($)         Credit ($)  

Dec. 31    Interest Expense (w.4)                       3,493  

                 Premium on Bonds Payable (w.5)      827

                 Cash (w.6)                                                                 4,320

               (To record second interest payment)                                              

Workings:

w.1: Bond payable = Cash - Premium on Bonds Payable = $111,671 - $8,271

w.2: Premium on Bonds Payable = January 1 Unamortized Premium - June 30 Unamortized Premium = $8,271 - $7,444 = $827

w.3: Cash = $108,000 * 8% * (6 / 12) = $4,320

w.4: Interest expense = w.3 - w.2 = $4,320 - $827 = $3.493

w.5: Premium on Bonds Payable = June 30 1 Unamortized Premium - December 31 Unamortized Premium = $7,444 - $6,617 = $827

w.6: Cash = $108,000 * 8% * (6 / 12) = $4,320

w.7: Interest expense = w.6 - w.5 = $4,320 - $827 = $3,493

A company has established 7 pounds of Material J at $2 per pound as the standard for the material in its Product Z. The company has just produced 1,000 units of this product, using 7,200 pounds of Material J that cost $13,080. The direct materials quantity variance is:

Answers

Answer:

-$400 unfavorable

Explanation:

The computation of direct materials quantity variance is shown below:-

Direct material quantity variance = (Standard Quantity × Standard Price) - (Actual quantity × Standard price)

= (1,000 × 7 × $2) - (7,200 × $2)

= $14,000 - $14,400

= -$400 unfavorable

Therefore for computing the direct material quantity variance we simply applied the above formula.

Suppose that Dunkin Donuts reduces the price of its regular coffee from $2 to $1 per cup, and as a result, the quantity sold per day increased from 10 to 40. Over this price range, the price elasticity of demand for Dunkin Donuts’ regular coffee is:

Answers

Answer:price elasticity of demand for Dunkin Donuts’ regular coffee is 1.8

Explanation: Using the midpoint formnulae

Price elasticity of Demand =percentage change in quantity demanded/ Percentage change in price.

Percentage change in quantity = new quantity  - old quantity  / (new quantity + old quantity)/2  x 100

= 40-10/(40+10)/ 2 = 30 /25 = 1.2 x 100 =120%

Percentage change in price  = new price   - old price   / new price + old price)/2   x 100

= 1- 2 / (1+2)/2= -1/1.5x 100 = -66.67 %

Price elasticity of Demand =percentage change in quantity demanded/ Percentage change in price.

= 120%/-66.67%= -1.79 = -1.8

For Price elasticity of demand, the sign is not included and the basis for elasticity is on the value itself . here we can conclude that the Price elasticity of demand for Dunkin donut is 1.8 and elastic because a fall in price led to an increase in amount being sold.

The following information describes the production activities of Mercer Manufacturing for the year.
Actual direct materials used 28,000 lbs. at $4.90 per lb.
Actual direct labor used 8,650 hours for a total of $174,730
Actual units produced 51,600
The budgeted standards for each unit produced are 0.50 pounds of direct material at $6.85 per pound and 10 minutes of direct labor at $21.20 per hour.
1. Compute the direct materials price and quantity variances. Do not round intermediate calculations.
2. Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. Do not round intermediate calculations.

Answers

Answer:

Actual Quantity = 28,000

Actual Price  = 4.90

Standard Quantity = 25,800  

Standard Price  = 4.85

1)a. Direct Material Price variance = (Standard price – Actual Price)*Actual Quantity

= (4.85 - 4.90) * 28,000

= $1,400 U

b. Direct Material Quantity variance = (Standard Quantity – Actual Quantity)*Standard price

= (51,600*0.5 - 28,000)*4.85

= $10,670 U

2) a. Direct Labor Rate Variance = (Standard Rate – Actual Rate)*Actual Hours

= (21.20 - 20.2) * 8,650

= $8,650 F

b. Direct Labor Efficiency variance = (Standard Hours – Actual Hours)*Standard rate

= (51,600*1/6 - 8,650) * 21.20

= $1,060 U

Orleans Corporation, a U.S. corporation, reported U.S. taxable income of $2,000,000. Included in the computation of taxable income was a $400,000 dividend from a 5%-owned Canadian subsidiary. A withholding tax of $8,000 was imposed on the dividend. What is Orleans’s net U.S. tax liability?

Answers

Answer:

$420,000

Explanation:

Calculation for Orleans’s net U.S. tax liability

Using this formula

Tax liability=Taxable income×U.S tax rate

Let plug in the formula

Tax liability=$2,000,000×21%

Tax liability=$420,000

Therefore Orleans’s net U.S. tax will be $420,000. The withholding tax amount of $8,000 was not included because it was already imposed on the dividend.

True or False:
Transactions that result in significant investing and financing activities bu that do not involve cash are reported either directly after the statement of cash flows or in a note to the financial statements

Answers

Answer: True

Explanation:

Transactions that do not increase or decrease cash, but that result in significant investing and financing activities, are reported as noncash activities either directly after the cash flow statement or in a note to the financial statements.

It is true that In cash-flow statement, any transaction that do not involve cash are reported directly after the statement or in a note to the financial statements

Non-cash activities includes depreciation amortization, unrealized gain, unrealized loss etc

In accounting, non-cash investing or financing activities are required to be disclosed in the footnotes to the financial statements or within the cash flow statement.

Therefore, It is true that In cash-flow statement, any transaction that do not involve cash are reported directly after the statement or in a note to the financial statements.

Read more about Non-cash activities here

brainly.com/question/16200596

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