Answer: $4,000
Explanation:
The house is worth $200,000 in the present when you bought it.
When you sell it in a year, it would have appreciated by 2% over the capital that you invested as per the expected increase in Real Estate rates.
Your capital gain therefore is that 2%;
= 2% * 200,000
= $4,000
Barredo Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.60 Direct labor $ 3.65 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 2.80 Fixed selling expense $ 0.70 Fixed administrative expense $ 0.40 Sales commissions $ 0.50 Variable administrative expense $ 0.45 If 4,000 units are sold, the variable cost per unit sold is closest to:
Answer:
The variable cost per unit sold is closest to $11.90.
Explanation:
Only variable manufacturing costs are included in product costing under the variable costing method.
Both the fixed manufacturing costs and non-manufacturing costs are treated as period costs, expensed in the profit and loss.
Calculation of Variable Unit Cost
Direct materials $ 6.60
Direct labor $ 3.65
Variable manufacturing overhead $ 1.65
Total Variable Unit Cost $11.90
Conclusion :
The variable cost per unit sold is closest to $11.90.
The potential sources of noise and bias in accounting data are: Group of answer choices Rigidity in accounting rules Random forecast errors Systematic reporting choices made by corporate manager to achieve specific objectives All of the above None of the above
Answer: All of the above
Explanation:
Accounting data can have bias or data that should not necessarily be included due to a couple of factors.
Accounting rules are too rigid because when they are applied, the Accountants will ibe unable to remove the noise and entries made by Management without removing a substantial part of Accounting records. There is need for more flexible rules so that Accountants can restrict how easily Management can introduce bias.
Accounting works a lot of forecasted information and it is impossible to make completely accurate forecasts as events can simply happen out of nowhere and disrupt operations. Also there is Human error in the forecasts so this can lead to noise and bias.
Finally, Accounting bias and noise can be linked to pressure from Corporate management to report data in a certain way for a myriad of reasons such as to improve management benefits if they are performance related, to avoid taxes, and to avoid Government regulations amongst others.
A corporation issued 5,600 shares of $10 par value common stock in exchange for some land with a market value of $82,000. The entry to record this exchange is:
Answer:
The entry for the exchange is therefore;
Dr Land $82,000
Cr common stock $56,000
Cr Paid in capital in excess of par value common stock $26,000
Explanation:
The land was gotten at a price of $82,000(its fair value)
Common stock issue = 5,600 shares x $10 par value common stock
= $56,000
Paid in capital in excess of par value common stock = $82,000 - $56,000
=$26,000
The entry for the exchange is therefore;
Dr Land $82,000
Cr common stock $56,000
Cr Paid in capital in excess of par value common stock $26,000
A progressive tax is one which
Answer:
A progressive tax is one which charges more tax for those with higher income.
The amount of tax paid depends on the general income of the person.
Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 25,000 to 100,000 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Memory Chips Produced 40,000 60,000 90,000 Total Variable Costs $1,400,000 D J Total Fixed Costs 800,000 E K Total Costs $2,200,000 F L Variable Costs per Unit A G M Fixed Cost Per Unit B H N Total Cost per Unit C I O Find the missing amounts for A-O A. ______________ B. ______________ C. ______________ D. ______________ E. ______________ F. ______________ G. ______________ H. ______________ I. _______________ J. ________________ K. _______________ L. _________________ M. _________________ N. _____________________ O. __________________
Answer and Explanation:
The computation of the missing amount is as follows
Components produced 40,000 60,000 90,000
Total cost
Total variable cost $1,400,000 $2,100,000 $3,150,000
(60,000 × $35) (90,000 × $35)
Total fixed cost $800,000 $800,000 $800,000
Total cost $2,200,000 $2,900,000 $3,950,000
Cost per unit
Variable cost per unit $35 $35 $35
($1,400,000 ÷ 40,000)
Fixed cost per unit $20 $13.33 $8.89
($800,000 ÷ 40,000) ($800,000 ÷ 60,000) ($800,000 ÷ 90,000)
Total cost per unit $55 $46.33 $43.89
The total cost per unit come from
= Variable cost per unit + fixed cost per unit
What special asset does Heartland Telecom's acquisition of Surety Wireless identify? The acquisition identifies the asset goodwill . How should Heartland Telecom account for this asset after acquiring Surety Wireless? Explain in detail. Heartland Telecom should measure the ▼ of this asset each year. If this asset has increased in value, Heartland should ▼ . If the value of the asset has decreased, Heartland should
Answer: 1. Goodwill
2. a. Record no entry in the books
b. Record a loss in the books
Explanation:
1. The Special asset created by Heartland Telecom's acquisition of Surety Wireless is Goodwill.
Goodwill is the difference between what the company was worth and what it was purchased for if the purchase price was higher than the worth (market value).
2. a. Goodwill should be accounted for by recoding it in the Long term Assets under Intangible Assets in the balance sheet. It should not be amotrized. If Goodwill increases, there should be no recording this gain on the books.
b. If the value of the asset has decreased, Heartland should record a loss in the books to represent the loss on this account.
Under which model of oligopoly are firms more likely to engage in a price war, driving down prices to marginal cost and resulting in no profit?
Answer:
The price leardership model of oligopoly
Paid-ln Capital:
Common Stock—$10 Par Value; 350,000 shares authorized, 30,000 shares issued and outstanding : $300,000
Paid-ln Capital in Excess of Par—Common 310,000
Total Paid-ln Capital 610,000
Retained Earnings 161,000
Total Stockholders' Equity 771,000
Feb 6. Declared a 5% stock dividend on common stock. The market value of Patrick's stock was $27 per share.
15 Distributed the stock dividend.
Jul 29 Purchased 1 , 700 shares of treasury stock at $27 per share.
Nov. 27 Declared a $0. 10 per share cash dividend on the common stock outstanding.
Requirements
a. Record the transactions in the general journal.
b. Prepare a retained earnings statement for the year ended December31, 2016. Assume Fleck's net income for the year was $85,000.
c. Prepare the stockholders' equity section of the balance sheet at December 31,2016.
Answer:
a. General Journal:
Date Description Debit Credit
Feb. 6
Stock Dividend (Retained earnings) $15,000
Stock Dividend Payable $15,000
To record the declaration of 5% stock dividend or new 1,500 shares
Feb. 15
Stock Dividends Payable $15,000
Common Stock $15,000
To record the distribution of the stock dividend
July 29:
Treasury Stock $17,000
Paid-in Capital in Excess of Par $28,900
Cash Account $45,900
To record the repurchase of 1,700 shares of treasury stock at $27 each.
Nov. 27:
Cash Dividend $2,980
Dividend Payable $2,980
To record the declaration of a $0.10 per share cash dividend on 29,800 common stock shares outstanding
b. Retained Earnings Statement for the year ended December 31, 2016:
Retained Earnings b/f $161,000
Dividends (stock) (15,000)
Dividends (cash) (2,980)
Ending balance
c. Stockholders' Equity Section of the Balance Sheet at December 31, 2016:
Paid-in Capital:
Common Stock—$10 Par Value; 350,000 shares
authorized, 31,500 shares issued and outstanding : $315,000
Treasury Stock, 1,700 shares (17,000)
Paid-ln Capital in Excess of Par—Common 281,100
Total Paid-in Capital 579,100
Retained Earnings 143,020
Total Stockholders' Equity $722,120
Explanation:
a) Stock Dividend: 5% of stock outstanding was 1,500 (30,000 x 5%). The effect of the stock dividend is to increase the Common Stock shares from 30,000 to 31,500 shares. This is also reflected in the Common Stock account at the par value of $10, totalling $15,000 (1,500 x $10). This is because the market value of $27 per share does not involve any cash flows for the entity, but an inflow for the stockholders who decide to sell their shares at that point. The Retained Earnings is also reduced by $15,000, just as it is in the case of cash dividend.
b) Paid-in Capital in Excess of Par:
beginning balance $310,000
Treasury stock (28,900)
ending balance $281,100
This account reflects the changes in Treasury stock above and below the par values. It is also used to record the above and below the par values when shares are issued.
c) Treasury Stock: This is a contra account to the Common Stock. It records the repurchase of entity's own stock. Two methods are allowed for accounting for treasury stock. One is the par value method, where the differences in par value are recorded in the Paid-in Capital in Excess of Par. The other method is the costing method, where the differences in par value are recorded in the Treasury stock account.
Scranton, Inc. reports net income of $260,000 for the year ended December 31. It also reports $100,700 depreciation expense and a $6,500 gain on the sale of equipment. Its comparative balance sheet reveals a $41,500 decrease in accounts receivable, a $18,750 increase in accounts payable, and a $14,500 decrease in wages payable. Calculate the cash provided (used) in operating activities using the indirect method.
Answer:
$399,950
Explanation:
The computation of cash provided (used) in operating activities using the indirect method is shown below:-
Cash flow from operating activities
Net income reported $260,000
Add: depreciation expenses $100,700
Less: gain on sale of equipment -$6,500
Add: decrease in accounts receivables $41,500
Add: increase in accounts payable $18,750
Less: decrease in wages payable -$14,500
Cash flow from operating activities $399,950
We simply added the cash inflows and deduct the cash outflows to reach out the operating activities
We argued that when the economic growth in the US is greater than the (economic) growth rates of our trading partners, the trade deficit in the US should get larger, all else constant.
a. True
b. False
Answer:
The correct answer is the option B: False.
Explanation:
To begin with, given the fact that the economic growth of the United States is greater than the economic growth rates of its trading partners then the trade deficit in the US should get smaller, all else constant due to the fact that the economy is growing at a level that is higher than does of the partners and therefore that when that happens the country will be in a better position and the production of it will increase as expected and that will impact positively in the deficit by reducing it to small amounts.
An investor buys a 10-year, 7% coupon bond for $1,050, holds it for 1 year, and then sells it for $1,040. What was the investor's rate of return?
Answer:
The answer is 5.71%
Explanation:
Solution
Given that
Coupon rate = 7%
Bond = $1050
Sale of the bond = $1040
n = 10 years, n = 1 year
Now we find the investor's rate of return
Thus
Coupon payment = 7%* 1000
=70
1050 = 70/(1+r) + $1,040/(1+r)
r= 5.71%
Therefore the rate of return of the investor is 5.71%
or
Rate of return = (P1-P0+ Interest ) /P0
= (1040 -1050 + 70 )/1050
= .0571 or 5.71%
You are a real estate agent thinking of placing a sign advertising your services at a local bus stop. The sign will cost $ 5 comma 500 and will be posted for one year. You expect that it will generate additional revenue of $ 935 a month. What is the payback period? g
Answer:
5.34 months
Explanation:
Pay back period calculates how long it takes for the amount invested in a project to be recovered from the cumulative cash flows.
Payback period = amount invested / cash flows
$5000 / $ 935 = 5.34 months
I hope my answer helps you
Why Does Marketing Matter?
Answer:
Marketing matters because it educates, builds awareness and establishes initial connections.
Explanation:
Rick, who is single, has been offered a position as a city landscape consultant. The position pays $141,800 in cash wages. Assume Rick has no dependents. Rick deduct the standard deduction instead of itemized deductions and he is not eligible for the qualified business income deduction. (Use the tax rate schedules.)
Required:
a. What is the amount of Rick’s after-tax compensation (ignore payroll taxes) and his income tax liability?
b. Suppose Rick receives a competing job offer of $102,500 in cash compensation and nontaxable (excluded) benefits worth $4,900.
Answer:
I used the 2020 standard deduction and income tax brackets to calculate the answer.
a. What is the amount of Rick’s after-tax compensation (ignore payroll taxes) and his income tax liability?
Rick's gross income $141,800
- standard deduction $12,400
taxable income $129,400
income taxes = (10% x $9,875) + (12% x $30,250) + (22% x $45,400) + (24% x $43,875) = $25,135.50
after tax income = $141,800 - $25,135.50 = $116,664.50
b. Suppose Rick receives a competing job offer of $102,500 in cash compensation and nontaxable (excluded) benefits worth $4,900.
Rick's gross income $102,500
- standard deduction $12,400
taxable income $90,100
income taxes = (10% x $9,875) + (12% x $30,250) + (22% x $45,400) + (24% x $4,575) = $15,703.50
after tax income = $102,500 - $15,703.50 + $4,900 = $91,696.50
Milltown Company specializes in selling used cars. During the month, the dealership sold 31 cars at an average price of $15,900 each. The budget for the month was to sell 29 cars at an average price of $16,900. Compute the dealership's sales price variance for the month.
Answer:
The dealership's sales price variance for the month is $31,000 U
Explanation:
In order to calculate the dealership's sales price variance for the month we would have to calculate the following formula:
Sales price variance = Actual quantity sold x (Actual price - Budgeted price)
According to the given data que have the following:
Actual quantity sold=31 cars
Actual price=$15,900
Budgeted price=$16,900
Therefore, Sales price variance = 31 * ($15,900 - $16,900)
Sales price variance = $31,000 U
The dealership's sales price variance for the month is $31,000 U
Stock market prices plunged tremendously in 1929, contributing to the Great Depression as the AD curve shifted greatly to the left. The ordinary AS/AD model predicts that a falling short-run aggregate supply would bring deflation and move the economy back to potential output. Which of the following describes the impact of dynamic feedback effects on this return to potential output?
a. expectations that stock prices would rise back again would cause the AD curve to shift left.
b. expectations that stock prices would fall further could shift the AD curve further to the left.
c. expectations that stock prices will fall further would cause the AD curve to shift to the right.
d. falling stock prices would make people feel poorer which would cause the AD curve to shift to the right.
Answer:
b. expectations that stock prices would fall further could shift the AD curve further to the left.
Explanation:
The AS/ AD model stated the aggregate supply and aggregate demand model which stated level of prices and its output by maintaining the relation between the supply and demand
As in the given situation, it is mentioned that the aggregate supply of short run decline and that brings deflation and it moves the economy back to the output i.e potential. It impacts the expectation of stock prices would result in declines and further it shifted the AD curve to the left side
Hence, the correct option is B.
According to Nikki, the design and development manager at Holden Outerwear, it is difficult for the company to push its vendors toward new developments because the vendors:
Answer: b. do not want to develop products that may not get used.
Explanation:
According to the case study, Manager Nikki Brush tells of how they introduce new ways of doing things by being able to encourage and push their vendors in a way that they are not used to. She does admit though that it is getting harder to do so because the vendors are seeing their costs rise and don't want to make goods that people might not want to use because they are new and untested.
The Case in question is attached.
The chief executive officer of Oracle defends his practice to hire private investigators to sift through the garbage of which competitor?
Complete Question:
The chief executive officer of Oracle defends his practice to hire private investigators to sift through the garbage of which competitor?
A) Red Hat
B) McAfee
C) Norton
D) Microsoft
Answer:
D) Microsoft
Explanation:
In this scenario, the chief executive officer of Oracle defends his practice to hire private investigators to sift through the garbage of its competitor, Microsoft.
This is simply an example of competitive intelligence research.
A competitive intelligence can be defined as the systematic ability to collect, analyze, and use information collected on business environment, customers, competitors, and other market factors owing to another firm's competitive advantage. In order to gather such essential informations, companies would need the services of private investigators or a market intelligence consultant to glean information from their rivals in the same industry.
Both Microsoft and Oracle are both multinational computer technology firms that offer similar services such as cloud storage.
"A firm's peak borrowing needs will probably be overstated if it bases its monthly cash budget on the assumption that both cash receipts and cash payments occur uniformly over the month but in reality receipts are concentrated at the beginning of each month." True or False
Answer: True
Explanation:
If the firm borrows on the assumption that it will be receiving cash throughout the month this means that they are borrowing because they would like to offset costs as they come in then pay as they receive money.
If they however receive all the money that they were to receive for the month in the beginning of the month, there would be no need to borrow as much to offset costs because the money received will act as a reserve which will offset the payments that will be uniform throughout the month.
Refer to highlight change metrics which of the following statements best describes why the business leaders altered their approach to the organizational crisis?
Answer:
A. Upon assessment of the competitive environment using evidence-based analytics, Continental's leaders recognized that the organization's emphasis was misplaced, and changed its strategic objectives
Explanation:
Evidence-based analytics refers to the method for decision making on a plan, procedure or policy based on the best available empirical evidence and guided by field-based experiential evidence and applicable contextual data.
It provides problem-solving based on research. This can be used to make such good decisions about crisis management within an organisation. It's used by successful leaders to make sound business decisions.
Therefore the correct answer is A.
On November 1, 2018, Master's Co. borrows $500,000 from its bank for five years at an annual interest rate of 10%. According to the terms of the loan, the principal amount will not be due for five years. Interest accrues monthly on the first day of each month, beginning November 1, 2018. With respect to this borrowing, Master's December 31, 2018, balance sheet included only a long-term note payable of $500,000. As a result:_______
a. Liabilities are understated by $12,500 accrued interest payable
b. Liabilities are understated by $4,167 accrued interest payable
c. The December 31, 2018, financial statements are accurately presented
d. Liabilities are understated by $8,333 accrued interest payable
Answer:
b. Liabilities are understated by $4,167 accrued interest payable
Explanation:
You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gummies, frizzles, and mookies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies increases by 5%, the quantity of frizzles sold decreases by 4% and the quantity of mookies sold increases by 5%. Your job is to use the cross-price elasticity between guppy gummies and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price elasticity between guppy gummies and frizzles, and then between guppy gummies and mookies. In the second column, determine if guppy gummies are a complement to or a substitute for each of the goods listed. Finally, complete the final column by indicating which good you should recommend marketing with guppy gummies. Relative to Guppy Gummies Recommend Marketing with Guppy Gummies Cross-Price Elasticity of Demand Complement or Substitute Frizzles Mookies
Answer:
Cross Price Elasticity of Demand is a measure of the complimentary or substitutional nature of two goods. It enables one to know if goods go together or are replacements for each other.
When the Cross Price Elasticity is Positive then both of the goods are Substitutes.
This is because when the price of one increased, some people abandoned it and went to the other one which then increased the demand of the latter.
If the Cross Price Elasticity is negative then both the goods are compliments because when the price of one increased, people decided to stop buying it and because the other good is a compliment (goes together) people didn't buy the latter either thereby reducing its demand.
The formula for Cross Price Elasticity is,
= % Change in Quantity Demanded of Good A / % Change in price of Good B
Guppy Gummies and Frizzles.
= -4%/ 5%
= - 0.8%
Cross Price Elasticity is Negative so they are Compliments.
It IS RECOMMENDED to market Frizzles with Guppy Gummies.
Guppy gummies and Mookies
= 5% / 5%
= 1
Cross Price Elasticity is positive so these are Substitutes.
It is therefore NOT recommended to market Mookies with Guppy Gummies.
If economies of scale are so pronounced in an industry that only one firm can survive in the industry, this firm is called a(n) __________ monopoly.
Answer:
The answer is a natural monopoly
Explanation:
A natural monopoly is one of the forms monopoly that exists due to the high capital needed or powerful economies of scale of conducting a business in a specific industry. A natural monopoly will naturally have very high fixed costs, meaning that it is almost impossible to have more than one firm producing the good.
A firm that is blessed with a natural monopoly might be the only provider of a product or service in an industry or geographic location. Example of natural monopoly is the electricity grid.
The specific identification method (select all that apply): matches each unit of inventory with its actual cost is not an acceptable method of accounting would be beneficial to a company that makes inexpensive products with high sales volume would be beneficial to a company that makes fine jewelry
Answer:
The specific identification methoda) matches each unit of inventory with its actual cost
d) would be beneficial to a company that makes fine jewelry
Explanation:
The specific identification inventory valuation method is one of the inventory valuation method allowed by U.S. GAAP. The other allowed methods are weighted average; and first in, first out (FIFO). The specific identification method identifies every item kept in inventory and its price and tracks it from purchase to resale. Some types of businesses that use the specific identification method are jewelry companies and stores, car dealerships, art galleries, and furniture stores, who can easily identify each item and track the cost and price respectively.
The specific identification method of costing inventories is used when finding out the cost of the ending inventory.
Correct option is A and D.
The specific identification method is "matches each unit of inventory with its actual cost and would be beneficial to a company that makes fine jewelry."
One of the inventory methods permitted by US GAAP is the particular identification inventory valuation method. Weighted average and first in, first out are two alternative strategies that can be used. Every item in inventory, as well as its price, is identified and tracked using this system, from purchase through resale.
Jewelry companies and stores, auto dealerships, art galleries, and furniture stores are just a few examples of enterprises that use the particular identification method to quickly identify each item and track the cost and pricing.
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Frances is a retired teacher who lives in Denver and does some consulting work for extra cash. At a wage of $50 per hour, she is willing to work 10 hours per week. At $65 per hour, she is willing to work 19 hours per week. Using the midpoint method, the elasticity of Jake’s labor supply between the wages of $50 and $65 per hour is approximately _______ , which means that Jake’s supply of labor over this wage range is ______ .
Answer:
Midpoint elasticity = 2.38
Supply of labor is Elastic
Explanation:
Midpoint elasticity = (Change in labor supplied / Average labor supplied) / (Change in wage rate / Average wage rate)
When Change in labor supplied= 19-10=9
Average labor supplied=(19+10)/2 =14.5
Change in wage rate=65-50=15
Average wage rate =(65 + 50)/2=57.5
Midpoint elasticity = (9/14.5) / (15/57.5)
= 0.62/0.26
= 2,3846
= 2.38
Since elasticity is higher than 1, supply of labor is Elastic.
What are the components of an attitude?
A. A belief, a feeling, and a tendency to act
B. Values and reference groups
C. A beliefs, a value, and a custom
O D. Five levels of needs
Answer:
A. A belief, a feeling, and a tendency to act
Explanation: Research on humans has shown that
Attitude is made up of three components:
Affective Feelings andemotions about the attitude object; behavioral, that is behavior one exhibits when faced with the object; ( cognitive, the thoughts and beliefs one has about the object )The correct option is A. A belief, a feeling, and a tendency to act are the components of an attitude.
Three elements are believed to make up attitudes: an emotional element of feeling, a behavioral element of how the attitude affects conduct, and an intellectual element of beliefs and knowledge.
What is the importance of attitude?Your viewpoint has a significant impact on a number of things, including your ability to overcome challenges, productivity, earning potential, social life, and more. A positive outlook can make achieving success in these numerous spheres of life much easier, resulting in substantial advantages that can greatly raise your quality of life.
Characteristics of attitude include: Attitudes are the intricate fusion of what we term personality, beliefs, values, behaviors, and motives. Anywhere from highly favorable to very unfavorable can be considered to be where it falls on the continuum. No matter their social standing or intellectual ability, attitudes are a universal human trait.
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On January 1, 2013, an investor purchases 25,000 common shares of an investee at $9 (cash) per share. The shares represent 20% ownership in the investee. The investee shares are not considered "marketable" because they do not trade on an active exchange. On January 1, 2013, the book value of the investee's assets and liabilities equals $600,000 and $150,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values. During the year ended December 31, 2013, the investee company reported net income equal to $22,500 and dividends equal to $12,000.
Noncontrolling investment accounting (price equals book value)
Assume the investor does not exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2013.
Explanation:
Bring ur as over here and ill use my dic
Exercise 9-17 Flexible Budget Performance Report [LO9-1, LO9-2, LO9-3, LO9-4]
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:
Fixed Component
per Month Variable
Component per Job Actual Total
for February
Revenue $ 275 $ 38,500
Technician wages $ 8,100 $ 7,950
Mobile lab operating expenses $4,800 $ 33 $ 9,590
Office expenses $ 2,400 $ 2 $ 2,550
Advertising expenses $1,590 $ 1,660
Insurance $ 2,850 $ 2,850
Miscellaneous expenses $ 960 $ 2 $ 565
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,800 plus $33 per job, and the actual mobile lab operating expenses for February were $9,590. The company expected to work 150 jobs in February, but actually worked 160 jobs.
Required:
Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Answer:
AirQual Test Corporation
Flexible Budget Performance Report for February:
Fixed Variable Flexible Actual
Component Budget Total
Revenue $ 275 $38,500 $ 38,500 0 None
Technician wages $ 8,100 $8,100 $ 7,950 150 F
Mobile lab operating
expenses $4,800 $ 33 $10,080 $ 9,590 490 F
Office expenses $ 2,400 $ 2 $2,720 $ 2,550 170 F
Advertising expenses $1,590 $1,590 $ 1,660 70 U
Insurance $ 2,850 $2,850 $ 2,850 0 None
Miscellaneous expenses $ 960 $ 2 $1,280 $ 565 715 F
Explanation:
Fixed Component Variable Budget Actual
Revenue $ 275 $41,250 $ 38,500
Technician wages $ 8,100 $8,100 $ 7,950
Mobile lab operating
expenses $4,800 $ 33 $9,750 $ 9,590
Office expenses $ 2,400 $ 2 $2,700 $ 2,550
Advertising expenses $1,590 $1,590 $ 1,660
Insurance $ 2,850 $2,850 $ 2,850
Miscellaneous expenses $ 960 $ 2 $1,260 $ 565
b) Variable elements for the flexible budget:
1) Mobile lab operating expenses = $4,800 + ($33 x 160) = $10,080
2) Office Expenses = $2,400 + ($2 x 160) = $2,720
3) Miscellaneous expenses = $960 + ($2 x 160) = $1,280
c) A flexible budget is a budget that is flexed with regard to the volume of activity, with respect to the variable elements. This budget type changes in value as a result of the changes in the volume of activity. It is different from a static budget, which does not change in value following the level of activity and does not account for changing incomes and expenses.
Refer to Exhibit 26- 1. If average-cost pricing is imposed on the natural monopoly firm, what price is charged?
a. P1
b. P2
c. P3
d. any of the three prices
Answer: b. P2
Explanation:
Average Cost Pricing regulations being imposed on natural monopolies means that the regulators want them to charge customers a price that is close to or is the same as the Average cost it costs to produce goods and services.
The price that the Monopoly will charge is therefore the intersection between the Average Total Cost Curve and the Demand curve.
From the graph that price is P2 so that is the price that will be charged.
Prepare the journal entries to record the following transactions on Markowitz Company’s books using a perpetual inventory system.
On February 6, Markowitz Company sold $75,000 of merchandise to the Lyman Company, terms 2/10, net /30. The cost of the merchandise sold was $50,000. On February 8, the Lyman Company returned $10,000 of the merchandise purchased on February 6. The cost of the merchandise returned was $5,000. On February 16 Markowitz Company received the balance due from the Lyman Company.
Answer:
Journal entries for Markowitz Company’s books are given below
Explanation:
February 6
Debit Credit
Receivable $75000
Sales $75000
Debit Credit
Cost of good sold $50,000
Inventory $50,000
February 8
Debit Credit
Sales Return $10,000
Receivable $10,000
Debit Credit
Inventory $5,000
Cost of good sold $5,000
February 16
Debit Credit
Cash $63,700
Sale discount $1300
Receivable 65,000
Workings for february 16
Discount = 65,000 x 2% = 1300
Cash = 65000 x 98% = 63,700
Account Receivable = 75,000 - 10,000 = 65,000