Answer:
High prices of products as well as increases poverty.
Explanation:
The stock market declines sharply, reducing consumers’ wealth that leads to high prices of products as well as increases poverty. The federal government increases spending on national defense that decreases the foreign reserves and money for other fields of the country. A technological improvement raises productivity which increases the economy of the country as well as standard of living. A recession overseas causes foreigners to buy fewer U.S. goods that leads to lower income of the country and purchasing power of the country. Due to this, there is less money for other fields and institutions.
Answer:
b. The federal government increases spending on national defense.
Explanation:
Hope this helps
Panther Co. had a quality-assurance warranty liability of $350,000 at the beginning of 2021 and $310,000 at the end of 2021. Warranty expense is based on 4% of sales, which were $50 million for the year. What amount of warranty costs were paid during 2021?
a. $0.
b. $1,960,000.
c. $2,000,000.
d. $2,040,000.
Answer:B
Explanation: :)
You report to Sofia Cardenas-Bratton, the Marketing Manager for Klamath, but she confesses that her experience with social media consists of an online course that she took on how businesses effectively use social media, so she is relying on you to help shape Klamath's social media strategy. You suggest that you'd like to start with regularly publishing a blog to reinforce Klamath's value to its customers. You point out it's important to publish posts on a regular basis in order to keep visitors engaged, and one study found that publishing blogs at least 11 times per month generated the most traffic on company websites. You and Sofia brainstorm about topics for the first week's blogs and come up with a list of three topics that you both feel will be of value to Klamath's customers: improving your credit score, the advantages of community banks vs. large banks, and buying a house. In which order are you going to tackle these blogs
The order in which I would tackle these blogs are: buying a house, improving your credit score, and the advantages of community banks.
Since the blogs are meant to benefit the customers of Klamath the most, the first issue to tackle is on the purchase of a house, which is always rated high by customers.
The purchase of a house will also help to improve the credit scores of customers because customers who own their houses attract higher credit scores than those without houses of their own.
Then, the issue of credit scores will be tackled in the next blog, followed by the advantages of community banks vs. large banks.
Thus, tackling this blog dealing on an issue that is very dear to customers will be the first before other issues are tackled.
Learn more about a blogger in social media here: https://brainly.com/question/14757365
If labor productivities were exactly proportional to wage levels internationally, this would A) not negate the logical basis for trade in the Ricardian model. B) render the Ricardian model theoretically correct but practically useless. C) negate the logical basis for trade in the Ricardian model. D) negate the applicability of the Ricardian model if the number of products were greater than the number of trading partners. E) demonstrate the validity of the Ricardian model.
Answer:
A)not negate the logical basis for trade in the Ricardian model.
Explanation:
Trade can be regarded as basic economic concept which involves the buying as well as selling of goods and services, having a compensation that is been paid by a buyer to a seller.
The Ricardian model can be regarded as model that incorporates the standard assumptions of a perfect competition. This model in it's simplest form give assumption of two countries that are producing two goods, but uses one factor of production, the goods here are usually assumed to be identical, or to be homogeneous, within as well as across countries. It should be noted that when there is higher wage, there will be greater number of workers that are willing to work and vice versa, which defined the relationship between wages and productivity. productivity gives the
measurement of how efficiently labor
is been utilized when producing goods and services.
It should be noted that If labor productivities were exactly proportional to wage levels internationally, this would not negate the logical basis for trade in the Ricardian model.
The balance in retained earnings at December 31, 2020 was $1,440,000 and at December 31, 2021 was $1,164,000. Net income for 2021 was $1,000,000. A stock dividend was declared and distributed which increased common stock $500,000 and paid-in capital $220,000. A cash dividend was declared and paid.
The stock dividend should be reported on the statement of cash flows (indirect method) as: ____________
a. an outflow from investing activities of $720,000.
b. an outflow from financing activities of $720,000.
c. an outflow from financing activities of $500,000.
d. Stock dividends are not shown on a statement of cash flows.
Answer: d. Stock dividends are not shown on a statement of cash flows.
Explanation:
A stock stock dividend refers to the dividend payment to the shareholders of s company that is not made in cash but rather it's made in shares.
It should be noted that the stock dividend is not reported on the cash flow statement. The reason for this is because it's a non cash item and also doesn't allow cash outflow. Therefore, it won't be reported.
Therefore, the correct option is D.
* Distinguish between Accounts Receivable and
Account Payable.
Explanation:
Accounts receivable is money owed to a company by its debtors.
Account payable amounts due to vendors or suppliers for goods or services received that have not been yet paid for.
Answer:
Accounts receivable are the amounts owed to a company by its customers. it is an asset to the company
accounts payable are the amounts that a company owes to its suppliers.it is a liability to the company
Explanation:
An important sustainability issue that has received much more scrutiny in recent years is the: focus on adequate inventory levels. reduction in packaging waste by using alternate materials. effort to move warehouse storage closer to consumers. emphasis on materials handling and warehouse design. none of the above
Answer:
reduction in packaging waste by using alternate materials.
Explanation:
An important sustainability issue that has received much more scrutiny in recent years is the reduction in packaging waste through the use of alternative materials. You can see this happening through new laws that prohibit the use of plastic bags in supermarkets and plastic drinking straws, for example.
There are several companies that seek the use of biodegradable packaging, even if these are not provided for by law. Companies seek to adopt sustainable actions in their processes to demonstrate to their stakeholders that they follow ideal standards of environmental preservation and social awareness. This is a positive type of marketing for companies, as the population is more aware and wants to consume more from environmentally responsible companies.These companies then become more valued by their consumers and consequently more competitive and well positioned in the market
Futures contracts differ from forward contracts in that a. futures contracts are between the individual hedger and speculator. b. futures contracts are personalized, unique contracts; forwards are standardized. c. futures contracts are marked to market daily with changes in value added to or subtracted from the accounts of the buyer and the seller. d. forward contracts always require a margin deposit.
Answer:
c. futures contracts are marked to market daily with changes in value added to or subtracted from the accounts of the buyer and the seller.
Explanation:
The future cost should be different from the forward contract in the case when the future contract are considered to be marked on the daily market along the value change that are added or deducted from the buyer and seller accounts
So as per the given situation, the option c is correct
A monopolist finds that a person’s demand for its product depends on the person’s age. The inverse demand function of someone of age y can be written p = A(y) − q, where A(y) is an increasing function of y. The product cannot be resold from one buyer to another and the monopolist knows the ages of its consumers. If the monopolist maximizes its profits:____.
Explanation:
A manufacturer of computer memory chips produces chips in lots of 1000. If nothing has gone wrong in the manufacturing process, at most 7 chips each lot would be defective, but if something does go wrong, there could be far more defective chips. If something goes wrong with a given lot, they discard the entire lot. It would be prohibitively expensive to test every chip in every lot, so they want to make the decision of whether or not to discard a given lot on the basis of the number of defective chips in a simple random sample. They decide they can afford to test 100 chips from each lot. You are hired as their statistician.
There is a tradeoff between the cost of eroneously discarding a good lot, and the cost of warranty claims if a bad lot is sold. The next few problems refer to this scenario.
Problem 8. (Continues previous problem.) A type I error occurs if (Q12)
Problem 9. (Continues previous problem.) A type II error occurs if (Q13)
Problem 10. (Continues previous problem.) Under the null hypothesis, the number of defective chips in a simple random sample of size 100 has a (Q14) distribution, with parameters (Q15)
Problem 11. (Continues previous problem.) To have a chance of at most 2% of discarding a lot given that the lot is good, the test should reject if the number of defectives in the sample of size 100 is greater than or equal to (Q16)
Problem 12. (Continues previous problem.) In that case, the chance of rejecting the lot if it really has 50 defective chips is (Q17)
Problem 13. (Continues previous problem.) In the long run, the fraction of lots with 7 defectives that will get discarded erroneously by this test is (Q18)
Problem 14. (Continues previous problem.) The smallest number of defectives in the lot for which this test has at least a 98% chance of correctly detecting that the lot was bad is (Q19)
(Continues previous problem.) Suppose that whether or not a lot is good is random, that the long-run fraction of lots that are good is 95%, and that whether each lot is good is independent of whether any other lot or lots are good. Assume that the sample drawn from a lot is independent of whether the lot is good or bad. To simplify the problem even more, assume that good lots contain exactly 7 defective chips, and that bad lots contain exactly 50 defective chips.
Problem 15. (Continues previous problem.) The number of lots the manufacturer has to produce to get one good lot that is not rejected by the test has a (Q20) distribution, with parameters (Q21)
Problem 16. (Continues previous problem.) The expected number of lots the manufacturer must make to get one good lot that is not rejected by the test is (Q22)
Problem 17. (Continues previous problem.) With this test and this mix of good and bad lots, among the lots that pass the test, the long-run fraction of lots that are actually bad is (Q23)
. If Canace Company, with a break-even point at $313,500 of sales, has actual sales of $570,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $fill in the blank 1 2. fill in the blank 2 % b. If the margin of safety for Canace Company was 25%, fixed costs were $1,419,375, and variable costs were 75% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.) $fill in the blank 3
Answer:
Canace Company
a-1) Margin of safety is:
= $256,500.
a-2) Margin of safety is:
= 55%.
b) The amount of actual sales is:
= $5,677,500.
Explanation:
a) Data and Calculations:
Break-even point sales = $313,500
Actual sales = $570,000
Margin of safety = $256,500 ($570,000 - $313,500)
Margin of safety as a percentage of sales = 55% ($313,500/$570,000 * 100)
2) Margin of safety = 25%
Fixed costs = $1,419,375
Break-even point in sales dollars = $1,419,375
Variable costs = 75% of sales
Contribution margin at break-even point = 25% (100% - 75%) = $1,419,375
Actual sales in dollars = $5,677,500 ($1,419,375/25%)
MC Qu. 87 Riemer, Inc. has four... Riemer, Inc. has four departments. Information about these departments is listed below. Maintenance is a service department. If allocated maintenance cost is based on floor space occupied by each of the other departments, compute the amount of maintenance cost allocated to the Cutting Department. (Do not round your intermediate computations.) Maintenance Cutting Assembly Packaging Direct costs$18,000 $24,000 $64,000 $39,000 Sq. ft. of space 750 1,250 2,250 2,500 No. of employees 7 3 7 7
The following items may appear on a bank statement: 1. NSF check 2. EFT Deposit 3. Service charge 4. Bank correction of an error from recording a $300 deposit as $30. Indicate whether the item would appear as debit or credit memo on the bank statement and whether the item would increase or
Answer:
1. NSF check
- Appears on the Bank Statement as: Debit Memo
- Decreases the Balance of the Company's Bank Account
2. EFT Deposit
- Appears on the Bank Statement as: Crediit Memo
- Increases the Balance of the Company's Bank Account
3. Service charge
- Appears on the Bank Statement as: Debit Memo
- Decreases the Balance of the Company's Bank Account
4. Bank correction of an error from recording a $300 deposit as $30
- Appears on the Bank Statement as: Debit Memo
- Increases the Balance of the Company's Bank Account
MC Qu. 90 Marks Corporation has two operating... Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period: Office ExpensesTotal Allocation Basis Salaries$44,000 Number of employees Depreciation 21,000 Cost of goods sold Advertising 44,000 Net sales ItemDrilling Grinding Total Number of employees 900 2,100 3,000 Net sales$350,000 $525,000 $875,000 Cost of goods sold$91,200 $148,800 $240,000 The amount of salaries that should be allocated to Grinding for the current period is:
Answer:
$30,800
Explanation:
Amount of salaries to allocated to Grinding = Total salary cost * Number of employees in grinding/Total Number of employees
Amount of salaries to allocated to Grinding = $44,000 * 2,100/3,000
Amount of salaries to allocated to Grinding = $44,000 * 0.7
Amount of salaries to allocated to Grinding = $30,800
So, the amount of salaries that should be allocated to Grinding for the current period is $30,800
The following cost behavior patterns describe anticipated manufacturing costs for 2013: raw material, $8.10/unit; direct labor, $11.10/unit; and manufacturing overhead, $373,100 $9.10/unit. Required: If anticipated production for 2013 is 41,000 units, calculate the unit cost using variable costing and absorption costing. (Round your answers to 2 decimal places.)
Answer:
Variable costing $28.3
Absorption costing $37.4
Explanation:
Calculation to determine the unit cost using variable costing and absorption costing.
VARIABLE COSTING
Material $8.10/unit
Direct labor $11.10/unit;
Variable manufacturing overhead per unit $9.10/unit
Units cost $28.3
ABSORPTION COSTING
Material $8.10/unit
Direct labor $11.10/unit;
Variable manufacturing overhead per unit $9.10/unit.
Fixed manufacturing overhead per unit $9.10/unit.
($373,100 ÷ 41,000 units)
Units cost $37.4
Therefore the unit cost using variable costing and absorption costing are:
Variable costing $28.3
Absorption costing $37.4
A student got a $5000 grant per quarter and the opportunity to work on campus at a rate of $12 per hour, but no more than 15 hours per week. The quarter last 10 weeks. The student aid office charges 5% of handling fees and the state has an 8% income tax. If E is 'earnings at the end of the quarter,' H is 'hours of work per week,' the model that calculates the income of the student at the end of the quarter is :____________
Hi, you've asked an incomplete question. The options read;
a) E= 5000 (1-0.05) + 10 * 12 * H * (1 - 0.08).
b) E= 5000 (1-0.05) + 10 * 12 * H * (1 - 0.08) H≤15 (this reads: H less or equal to 15.
c) E= 5000 * (1 - 0.95) + 12 * H * (1 - 0.08) H≤15 [this reads: H less or equal to 15].
d) E= 5000 (1-0.05) + 12 * H * (1-0.08).
Answer:
b) E= 5000 (1-0.05) + 10 * 12 * H * (1 - 0.08) H≤15 (this reads: H less or equal to 15.
Explanation:
Using this model we note the following,
H is represented by 15 (hours)5% handling fee represented by 0.058% income tax is represented by 0.08rate is represented by 12 ($)Substituting this data into the model we have:
⇒ 5000 (1-0.05) + 10 * 12 * 15 * (1 - 0.08)
⇒ 4750 + 1800 (1-0.08)
⇒ 4750+1656 = $6406.
Alieia Boat Company manufactures 10 luxury yachts per month. A navigation system is included in each yacht. Alieia Boat manufactures the navigation system in-house but is considering the possibility of outsourcing this function. At present, the variable cost per unit is $300, and the fixed costs are $38,000 per month. If it outsources the security system, fixed costs could be reduced by half, and the vacant facilities could be rented out to earn $3000 per month of rental income. What is the maximum contract cost that Alieia should pay for outsourcing?
a) any cost lower than $2500 per unit
b) any cost lower than $2200 per unit
c) any cost lower than $300 per unit
d) any cost lower than $3800 per unit
Answer:
a) any cost lower than $2500 per unit
Explanation:
total avoidable costs = ($300 * 10) + ($38,000 / 2) + $3,000 = $25,000
total number of navigation systems prodcued per month = 10
avoidable cost per navigation system = $25,000 / 10 = $2,500
this means that th e comapny could pay up to $2,500 per navigtion system provided by an extrenal supplier
An electronics store introduces three new types of music players to its customers. Each of the new music players are priced at $99, $79, and $59. Which psychological pricing approach is the store using to price the music players
Answer: The case of the number nine
Explanation:
Studies have shown that the human brain prefers to buy things whose prices end with the number 9 as opposed to zero such as 10 or 100.
The brain apparently interprets the number 9 at the end of a price to mean that the person is saving money and getting better value by buying the product. In making all three prices end in nine, the electronics store is using this psychological pricing strategy.
During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $6 per unit, Direct labor, $4 per unit, Variable overhead, $5 per unit, and Fixed overhead, $240,000. The company produced 30,000 units, and sold 20,000 units, leaving 10,000 units in inventory at year-end. Income calculated under variable costing is determined to be $370,000. How much income is reported under absorption costing?
a. $370,000
b. $290,000
c. $610,000
d. $450,000
Answer: d. $450,000
Explanation:
In absorption costing, the fixed costs are absorbed by the products so that the cost of goods sold is inclusive of fixed costs.
First find the fixed overhead for the ending inventory:
= Fixed overhead per unit * Number of units in ending inventory
= 240,000 / 30,000 * 10,000
= $80,000
This is the fixed overhead that is deferred to the next year.
Income under absorption costing = Income under variable costing + Fixed overhead deferred:
= 370,000 + 80,000
= $450,000
If farmer sam macdoanld can produce 200 pounds of cabbages and 0 pounds of patotes or 0 pound of cabbes and 100 pounds of potatoes and faces a linear produciton possiblies curve for his farm, the opportunity cost of production an additional pound of cabbage is:_____.
a. 1/2.
b. 2.
c. 100.
d. 200.
Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. Households deposit $5,000 in currency into the bank, and the bank adds that currency to its reserves. What amount of excess reserves does the bank now have
Answer:
$4000
Explanation:
Fractional banking is a banking system where a portion of customer's deposits is kept as reserves while remaining portion is lent out. The amount kept as reserves is determined by the required reserve ratio set by the Central bank.
Reserve ratio is the percentage of deposits that is required of commercial banks to keep as reserves
Total deposits = $100,000 + $5,000 = $105,000
Required reserves = 0.2 x 105000 = 21,000
total reserves = $20,000 + 5000 = 25,000
excess reserves = 25,000 - 21,000 = 4000
Lap Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 80,000 units, 100% complete with respect to materials and 25% complete with respect to conversion costs. The total dollar value of this inventory was $226,000. During the month, 150,000 units were transferred out of the department. The costs per equivalent unit for the month were $2.00 for materials and $3.50 for conversion costs. The cost of the units completed and transferred out of the department was:
Answer:
Lap Corporation
The cost of the units completed and transferred out of the department was:
= $825,000.
Explanation:
a) Data and Calculations:
Beginning work in process inventory = 80,000 units
Degree of completion = 100% materials and 25% conversion
Cost of beginning work in process = $226,000
Units transferred out = 150,000
Materials Conversion Total
Costs per equivalent unit $2 $3.50
Cost of units transferred out $300,000 $525,000 $825,000
= (150,000 * $2) (150,000 * $3.50)
You wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $30,000 for 25 years after retirement. During the period before retirement you can earn 11 percent annually, while after retirement you can earn 13 percent on your money. What annual contributions to the retirement fund will allow you to receive the $30,000 annuity
Answer:
$3,425.08
Explanation:
The computation of the annual contributions to the retirement fund is shown below:
The Present value of the annuity is
= $30,000 × [1 - (1 ÷ (1 + 13%)^25)] ÷ 13%
= $219,899.55
Now
Future value of annuity = P×[(1+r)^n-1]÷r
$219,899.55 = P×[(1+11%)^20-1]÷11%
Hence, Annual contribution required, P = $3,425.08
Demand for a specific design of dinning sets has been fairly large in the past several years and Statewide Furnishings, Inc. usually orders new dinning sets 10 times a year. It is estimated that the ordering cost is $400 per order. The carrying cost is $50 per unit per year. Furthermore, State Wide Furnishings, Inc. has estimated that the stock out cost is $120 per unit per year. Based on forecast, the annual demand is 600 units. State Wide Furnishings, Inc. has 350 working days in a year and its lead time is 14 working days.
Assume shortage is allowed and the store manager is sure that shortages will not become lost sales, determine the annual ordering cost.
a. 592.82
b. 1472.01
c. 2051.28
d. 4116.11
e. None of the above
Answer:
e. None of the above
Explanation:
Annual demand, D = 600 units
Ordering cost, S = $400
Holding cost, H = $50
Economic order quantity without stock-out = SQRT(2*D*S/H)
Economic order quantity without stock-out = SQRT(2*600*400/50)
Economic order quantity without stock-out = 98
Total annual ordering cost = (D/Q)*S + (Q/2)*H
Total annual ordering cost = (600/98)*$400 + (98/2)*$50
Total annual ordering cost = $2,448.97 + $2,450
Total annual ordering cost = $4,898.97
Papermill Plc was acquired by a private equity firm, whose investment horizon is 5 years and minimum IRR requirement is 20.0%. The private equity firm estimates the exit EBITDA and exit EV EBITDA multiple to be 1,200.0 and 11.0x, respectively. The EBITDA at entry is 1,100.0 and the amount of debt financing raised at entry is 7.0x EBITDA. The cash flow model built by the private equity firm estimates the debt to be 5.0x EBITDA at exit. Using the assumptions above, estimate the equity funding of the deal at entry.
Sales 1,000.0
Cost of goods sold 600.0
Selling, general and administration 100.0
Interest expense 50.0
Tax expense 75.0
The estimated equity funding of the deal at entry is $2,893.52
EV means Enterprise value
EBITDA means Earnings Before Interest, Taxes, Depreciation, and Amortization
Given that the private equity firm estimates that:
Exit EBITDA = 1,200
EV / EBITDA = 11.0x
To derive EV from the EV / EBITDA, then EV / EBITDA is multiplied by EBITDA.
EV = EV / EBITDA * EBITDA (i.e.)
EV = 11 * 1,200
EV = 13,200
Given that the private equity firm estimates the debt to be 5.0x EBITDA at exit.
Debt = 5.0 * EBITDA at exit
Debt = 5.0 * 1,200
Debt = 6,000
To derive the equity value at exit, the debt is subtracted from the EV
Equity value at exit = EV - Debt
Equity value at exit = 13,200 - 6,000
Equity value at exit = 7,200
The equity funding of the deal at entry will be derived using this formula "Equity value at exit / (1 + IRR)^n" where IRR is 20% and n is 5 years
Equity funding of the deal at entry = 7,200 / (1 + 20%)^5
Equity funding of the deal at entry = 7,200 / (1 + 0.20)^5
Equity funding of the deal at entry = 7,200 / (1.20)^5
Equity funding of the deal at entry = 7,200 / 2.48832
Equity funding of the deal at entry = 2893.518518518519
Equity funding of the deal at entry = $2,893.52 (approx).
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You have a portfolio that is 29 percent invested in Stock R, 12 percent invested in Stock S, with the remainder in Stock T. The expected return on these stocks is 9.8 percent, 11.2 percent, and 13.5 percent, respectively. What is the expected return on the portfolio
Answer: 12.15%
Explanation:
The expected return is a weighted average of the returns of the individual stocks and the percentage of the portfolio invested in them.
= (Weight of R * Return of R) + (Weight of S + Return of S) + (Weight of T + Return of T)
= (29% * 9.8%) + (12% * 11.2%) + ( (1 - 29% - 12%) * 13.5%)
= 12.15%
Casey transfers property with a tax basis of $3,800 and a fair market value of $6,800 to a corporation in exchange for stock with a fair market value of $5,250 and $720 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $830 on the property transferred. Casey also incurred selling expenses of $461. What is the amount realized by Casey in the exchange
Answer:
$5789
Explanation:
Calculation to determine the amount realized by Casey in the exchange
Fair market value of stock $5250
Add Cash in transaction $ 720
Add Liability which is going to the buyer $ 830
Less Selling expenses ($461)
Amount realized $5789
($5250+$720+$830-$461)
Therefore the amount realized by Casey in the exchange is $5789
Dan's cat Empurrium is planning for the new opening in either Seattle, Everett or Bellevue! Using historical data from the first location, management has determined that over a 9 hour workday, on average we get a steady stream of customers throughout the day totaling 1,033 per day. Our new training program ensures that our staff can serve a customer within 2.7 minutes on average.
a. Your hiring department wants to know what the lowest number of staff we should hire.
b. How your queue should be set up in the new store and why? This should include the style of line and the number of servers. Justify your decisions using costs and queueing metrics?
Answer:
add all together 19 x1000
The total manufacturing cost variance is a.the difference between total actual costs and total standard costs for the units produced b.the difference between planned costs and standard costs for the units produced c.the flexible budget variance plus the time variance d.none of the above
Answer:
a.the difference between total actual costs and total standard costs for the units produced
Explanation:
The total manufacturing cost variance shows the difference between the total actual cost i.e. incurred and the standard cost incurred for the units that are produced or generated
In mathematically, it should be
Total manufacturing cost variance = standard cost - actual cost
hence, the first option is correct
Fixed expenses are $17,000 per month. The company is currently selling 800 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $5 per unit. In exchange, the sales staff would accept a decrease in their salaries of $6,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 200 units. What should be the overall effect on the company's monthly net operating income of this change?
Answer:
There is a cost-saving of $1,000 per month as a result of the change. This cost-saving increases the monthly net operating income by $1,000.
Explanation:
a) Data and Calculations:
Fixed monthly expenses = $17,000
Current sales units per month = 800
Proposed sales commission per unit = $5
Decrease in salaries per month = $6,000
Increase in sales units per month = 200
Change
Before After Difference
Fixed monthly expenses $17,000 $11,000 $6,000
Variable cost per month 0 5,000 -5,000
Total cost per month $17,000 $16,000 $1,000
Sales units per month 800 1,000 200 units
b) The effect on the company's monthly net operating income is a reduction in the total cost per month by $1,000. There is also an increase in the units sold per month by 200 units. If the selling price is determined, the net operating income will also increase by the product of the contribution margin per unit and 200.
Sheffield Corp. has old inventory on hand that cost $21000. Its scrap value is $30000. The inventory could be sold for $70000 if manufactured further at an additional cost of $21000. What should Sheffield do?
Answer:
Sell the inventory for $30000 scrap value
Explanation:
In the first place, if the old inventory is disposed of at $30,000 and cash inflow of $30,000 would be received
However, if manufactured by further by incurring an additional cost of $21,000,the incremental income is computed thus:
incremental income=sales value-scrap value-additional cost
Remember scrap value is a lost benefit if the inventory is processed further and not sold in its current state.
incremental income=$70,000-$30,000-$21000
incremental income=$19,000(less than cash flow when disposed of at scrap value, hence, the inventory should be sold at $30,000)
The following information relating to a company's overhead costs is available. Actual total variable overhead $ 73,000 Actual total fixed overhead $ 17,000 Budgeted variable overhead rate per machine hour $ 2.50 Budgeted total fixed overhead $ 15,000 Budgeted machine hours allowed for actual output 30,000 Based on this information, the total variable overhead variance is:
Answer: $2,000 favorable
Explanation:
Total variable overhead variance = Budgeted variable overhead - Actual total variable overhead
Budgeted variable overhead = Budgeted machine hours allowed for actual output * Budgeted variable overhead rate per machine hour
= 30,000 * 2.50
= $75,000
Total variable overhead variance = 75,000 - 73,000
= $2,000 favorable
Favorable because the actual amount was less than the budgeted one.
