Answer:
The market for lettuce would be impacted in three ways: labor supply would increase, meaning that lettuce producers can now hire more workers for a lower price.
This cheaper labor would likely increase supply, because more producers would try to enter the market to take advantage of the cheap workers.
Finally, the lower labor costs, and the higer supply, would reduce the price of lettuce, meaning that consumers will be able to buy more lettuce for less money.
The Physical Inventory Worksheet is used when: Multiple Choice inventory items are physically placed in the warehouse All of the choices are correct the computer system goes down taking a physical count of inventory on hand
Answer:
taking a physical count of inventory on hand
Explanation:
The Physical Inventory Worksheet is used when taking a physical count of inventory on hand. This is the only way to tell how many items are really available for sale and allows a business to do it efficiently. An example would be counting the number of steaks the restaurant has on hand on a Saturday afternoon. This also allows the business to analyze the expected sales with the actual inventory in order to determine whether or not they need more.
The price elasticity of supply for basmati rice (an aromatic strain of rice) is likely to be which of the following?
A. High in both the long run and the short run, because the inputs required to produce basmati rice can easily be duplicated.
B. Low in both the long and short runs, because rice farming requires only unskilled labor.
C. High, because consumers have a lot of other kinds of rice and other staple foods to choose from.
D. Higher in the long run than the short run, because farmers cannot easily change their decisions about how much basmati rice to plant once the current crop has been planted.
Answer: D. Higher in the long run than the short run, because farmers cannot easily change their decisions about how much basmati rice to plant once the current crop has been planted.
Explanation:
Price Elasticity of Supply refers to how Supply changes in response to a change in price. Essentially, if the price of a good increases, will Supplier supply more or less of that good as a result and by how much will they do so.
In the short run, the farmers would have already planted the crops and so would be unable start changing the quantity that they expect from the harvest. They will therefore supply the amount they harvested regardless of a price change.
In the long run however, they can change the amount of rice planted depending on the price of the rice in the market. Price Elasticity is therefore higher in the long run than in the short run.
When talking about economic profits in a perfectly competitive market, the difference between the long run and the short run is that, in the short run, firms:
The detailed day-to-day operational decisions essential to the overall success of marketing strategies are referred to as
Answer:
Marketing tactics.
Explanation:
The detailed day-to-day operational decisions essential to the overall success of marketing strategies are referred to as marketing tactics.
Marketing tactics can be defined as both a strategic short-term and long-term actions employed by an organization to promote its goods and services with the intention of increasing sales and achieving a competitive market advantage by satisfying customers wants or need.
Hence, the purpose of a marketing tactics is to achieve substantial level of customer satisfaction as well as using the organization's limited financial resources efficiently in order to boost the effective promotion and sales of its products.
Some examples of marketing tactics are;
1. An organization sending newsletters or emails to its new and existing customers.
2. Participating in the exhibition of products in a trade fair.
3. Promotion of products on social media platforms.
A local swimming pool charges nonmember $10 per visit. If you join the pool, you can swim for $5 per visit but you have to pay an annual fee of F. Use an optimal choice model to find the value of F such that you are indifferent between joining and not joining. Suppose that the pool charged you exactly that F. Would you go to the pool more or fewer times than if you did not join? For simplicity, assume that the price of all other goods is $1.
Answer:
The answer is below
Explanation:
Using an optimal choice model to find the value of F such that you are indifferent between joining and not joining.
Let N be the number of visits per year
1) N-number of visits per year 10N=5N+F
Given that 10N=5N+F
Hence F=5N
F = 5N
2) Therefore, Would I go to the pool more or fewer times than if i did not join?
Then, if F is fixed and I join the local Swimmng pool member, I would go more times.
Increased use of portfolio and performance assessment techniques in the schools has been suggested to:
Answer:
Reduce the pressure to test for only fact and specific skills
Explanation:
PORTFOLIO assessments techniques can be defined as a form of assessment that help to focus on the self-reflection as well as the evidence of growth over time , and this is carried out through the samples of work products.
PERFORMANCE assessments techniques can be defined as the type of assessment that require the students to directly apply all what they might have learned in realistic situations.
Therefore Increased use of the portfolio as well as the performance assessment techniques in the schools has been suggested to help reduce the pressure on the students to test only fact and specific skills thereby enhancing their performance.
Swinnerton Clothing Company's balance sheet showed total current assets of $1,800, all of which were required in operations. Its current liabilities consisted of $575 of accounts payable, $300 of 6% short-term notes payable to the bank, and $145 of accrued wages and taxes. What was its net operating working capital that was financed by investors? Select the correct answer. a. $1,096 b. $1,088 c. $1,112 d. $1,080 e. $1,104
Answer:
d. $1,080
Explanation:
The computation of the net operating working capital that was financed by investors is shown below:
= Total current assets - account payable - accrued wages and taxes
= $1,800 - $575 - $145
= $1,080
By deducting the account payable and accrued wages from the total current assets we can calculate the net operating working capital and the same is to be considered
Suppose $1 comma 500 is deposited in a bank account today (time 0), followed by $1 comma 500 deposits in years 2, 4, 6, and 8. At 9% annual interest, how much will the future equivalent be at the end of year 12?
Answer:
$15,391.91
Explanation:
the first step is to find the present value of the cash flows. After the future value of the sum would be determined.
present value is the sum of discounted cash flows.
present value can be determined using a financial calculator
Cash flow in year 0 = $1500
Cash flow in year 1 = 0
Cash flow in year 2 = $1500
Cash flow in year 3 = 0
Cash flow in year 4 = $1500
Cash flow in year 5 = 0
Cash flow in year 6 = $1500
Cash flow in year 7 = 0
Cash flow in year 8 = $1500
I = 9%
PV = $5472.36
The formula for calculating future value:
FV = P (1 + r) n
FV = Future value
P = Present value
R = interest rate
N = number of years
$5472.36(1.09)^12 = $15,391.91
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
On June 8, Alton Co. issued an $77,774, 12%, 120-day note payable to Seller Co. Assuming a 360-day year for your calculations, what is the maturity value of the note? When required, round your answer to the nearest dollar. Select the correct answer. $87,107 $80,885 $9,333 $77,774
Answer:
The correct option is $80,885
Explanation:
Maturity value is the amount that the issuer of notes payable, Alton Co. would pay to the beneficiary of the notes, Seller Co. after 120days.
Maturity value=face value+(face value*120days/360days*12%)
i.e face value plus 120-day interest
Maturity value=$77,774+($77,774*120/360)*12%
maturity value=$77,774+$3110.96
maturity value=$80,884.96
Payback period The Ball Shoe Company is considering an investment project that requires an initial investment of $ 544,000 and returns after-tax cash inflows of $77,624 per year for 10 years. The firm has a maximum acceptable payback period of 8 years. a. Determine the payback period for this project. b. Should the company accept the project?
Answer:
Payback period is 7.01 years
The project should be accepted
Explanation:
The payback period is the time taken for the initial cash outlay of $544,000 to recoup itself, in other words,the length of time taken for the company to receive cash inflows equivalent to the amount invested initially.
payback period=initial capital outlay/annual after-tax cash inflows
payback period=$544,000/$77,624= 7.01 years.
It shows that the project's payback is lesser than the company's target,hence,the project should be accepted
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years, because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $14 per share 10 years from today and will increase the dividend by 5 percent per year thereafter.
Required:
If the required return on this stock is 14 percent, what is the current share price?
Answer:
we have to divide the money
Explanation:
as it is written its
Suppose a monopoly firm produces a medical device and can sell 15 items per month at a price of $2,000 each. In order to increase sales by one item per month, the monopolist must lower the price of its medical device by $100 to $1,900. The marginal revenue of the 16th item is: Group of answer choices
Answer: $400
Explanation:
Marginal Revenue is the revenue that is added by one additional unit.
When the product was selling at $2,000 it sold 15 units meaning the total revenue was;
= 2,000 * 15
= $30,000
When the product started selling for $1,900 it would be able to sell 16 units so the total Revenue is;
= 16 * 1,900
= $30,400
The difference in total Revenue is as a result of 1 extra unit, the 16th unit which contributed an amount of;
= 30,400 - 30,000
= $400
Chang Co. issued a $50,172, 120-day, discounted note to Guarantee Bank. The discount rate is 10%. Assuming a 360-day year, the cash proceeds to Chang Co. are:___________.
A. $55,189
B. $50,172
C. $50,590
D. $48,500
Assuming a 360-day year, the cash proceeds to Chang Co. are $50,172. Thus, option (B) is correct
What is the rate?A number, amount, or degree measured in relation to another object. She typed at a speed of 80 words per minute. a charge or payment based on another quantity. more specifically: the premium per insurance unit. A rate in mathematics is the comparison of two related values expressed in different units.
Discounted note to Guarantee Bank. The discount rate is 10%. Assuming a 360-day year, the cash proceeds to Chang Co. are $50,172Investors buy discount notes at a price less than the note's face value since they are issued at a discount to par.
60 miles per hour is a standard or measure for a specific number or amount of one item when compared to a unit of another thing. a set price per quantity unit: 10 cents per pound is the price. To lower costs and prices for all home furniture.
Therefore, Thus, option (B) is correct
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how to calculate WACC using the CAPM
Answer:
The CAPM formula is widely used in the finance industry. It is vital in calculating the weighted average cost of capital. The WACC formula is = (E/V x Re) + ((D/V x Rd) x (1-T)).
sysyster corp. has an ROE of 16 percent and a payout ratio of 24 percent. what is its sustainable growth rate?
Answer:
The answer is 13.84 percent
Explanation:
The formula for sustainable growth rate is:
(Return on equity(ROE) x retention rate)/1 - Return on equity(ROE) x retention rate
Retention rate = 1 - payout ratio.
So, retention rate = 1 - 0.24
= 0. 76
Return on equity(ROE)= 0.16
(0.16 x 0.76) / 1 - ( 0.16 x 0.76)
= 0.1216 / 1 - 0.1216
0.1216/0.8784
=0.1384
Expressed as a percentage:
13.84percent
Ashley is an attorney who specializes in family law. She uses the cash method of accounting and is a calendar-year taxpayer. Last year, she represented a client in a lawsuit and billed the client $5,000 for her services. Although she made repeated attempts, Ashley was unable to collect the outstanding receivable. Finally, in November of the current year, she finds out that the individual has moved without leaving any forwarding address. Ashley’s attempts to locate the individual are futile. What is the amount, if any, of the deduction that she may claim in connection with this bad debt?
Answer:
The Answer is explained below
Explanation:
Ashley is unable to collect the outstanding receivable after repeated attempts. In order to claim any deduction in connection with this bad debt Ashley has to record the income first but Ashley is using the cash method of accounting here. Therefore she can only claim any deduction when she receives any payment.
A system of rewarding managers by linking bonuses to income computed under absorption costing may result in:
Answer:
excess inventory buildup
Explanation:
The absorption costing is the costing which covers full costing i.e direct costing and indirect costing
Here directing costing could be in terms of direct material, direct labor
While the indirect costing could be in terms of manufacturing overhead or indirect cost
In the given case since the managers who are rewarding in order to link bonus to income so it would be results in building excess inventory and the same is to be considered
Your portfolio has a beta of 1.39. The portfolio consists of 14 percent U.S. Treasury bills, 23 percent Stock A, and 63 percent Stock B. Stock A has a risk level equivalent to that of the overall market. What is the beta of Stock B
Answer:
Beta of B = 1.84
Explanation:
A beta is a measure of systematic risk. A risk free rate has zero risk thus its beta is zero. As, the T bills are risk free, so their beta is also zero. While the beta of the market is always 1. So, the beta of stock A is 1.
The portfolio beta is a function of the weighted average of the individual stocks betas that form up the portfolio. The formula for portfolio beta is,
Portfolio beta = wA * Beta A + wB * Beta B + ... + wN * Beta N
Where,
w represents the weight of each stock in the portfolio based on the investment in that stock1.39 = 0.14 * 0 + 0.23 * 1 + 0.63 * Beta of B
1.39 = 0 + 0.23 + 0.63 * Beta of B
1.39 - 0.23 = 0.63 * Beta of B
1.16 / 0.63 = Beta of B
Beta of B = 1.84
Your portfolio consists of 100 shares of CSH and 50 shares of EJH, which you just bought at $20 and $30 per share, respectively.What fraction of your portfolio is invested in CSH? In EJH?If CSH increases to $23 and EJH decreases to $29, what is the return on your portfolio?
Answer:
7.14%
Explanation:
Investment in CSH= $ 100*20 = $ 2000
Investment in EJH=$ 50*30 =$ 1500
Total Investment=$ 2000+$ 1500=$3500
fraction of your portfolio in CSH= $ 2000/$3500 = 0.5714
fraction of your portfolio in EJH= $ 1500/$3500 = 0.4286
If CSH increases to $23 and EJH decreases to $29,
new value of portfolio
= $23*100+$29*50
=$2300+$1450
= $3750
return in portfolio=(new value of portfolio/Total Investment)-1
return in portfolio=($3750/$3500)-1
return in portfolio=1.0714 - 1
return in portfolio=.0714=7.14%
The fraction in CSH is 0.5714.
The fraction of EJH is 0.4286.
The return on the portfolio is 7.14%.
The calculation is as follows:Investment made in CSH= $ 100 × $20 = $2,000
Investment in EJH = $50 × 30 = $1,500
So,
Total Investment is
= $2,000 + $1,500
= $3,500
Now
Fraction of the portfolio in CSH is
= $2,000 ÷ $3,500
= 0.5714
Fraction of the portfolio in EJH is
= $1,500 ÷ $3,500
= 0.4286
Now
If CSH increases to $23 and EJH decreases to $29.
So,
The new value of the portfolio is
= $23 × 100 + $29 × 50
= $2,300 + $1,450
= $3,750
Now
Return in portfolio is
= (New value of portfolio ÷ Total Investment) - 1
= ($3,750 ÷ $3,500) - 1
= 1.0714 - 1
=.0714
=7.14%
Therefore we can conclude that
The fraction in CSH is 0.5714.
The fraction of EJH is 0.4286.
The return on the portfolio is 7.14%.
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The equal total payments pattern for installment notes consists of changing amounts of interest but constant amounts of principal over the life of the note.
A. True
B. False
Answer:
B. False
Explanation:
The equal total payments pattern for installment notes is when the regular payments on an installment note are always for the same amount. However, the amounts of interest and principal change over the life of the note because at the begining, most of the payment amount goes toward the interest and as you make payments your principal starts to decrease making the amount that goes toward the interest to decrease and the money that goes towards the principal to increase. According to that, the statement is false.
Assume that the number of people affected by these external costs is large. If the government wishes to establish an optimal allocation of resources in this market, it should
Answer:
tax producers so that the market supply shift leftward (upward)
Explanation:
Since S is the market supply curve, and S1 is the supply curve composed of all the other costs of production even external costs.
We recognize that external costs are the expenses involved when such goods and services are generated by third parties (who were not a part of the transaction).
A company's output imposes higher external costs on the people and hence the people most affected by such external costs is large.
Therefore, if the government needs to launch an appropriate resource allocation wherein resources are efficiently allocated at least contribute, the producers should be taxed.
The costs of production rise whenever the producers are taxed, which reduces the quantity given.
This will upward shift the supply curve from S to S1 to the left.
Amos Rubber company manufactures tires. They reported the following information from their operations last period: Cost of Direct Materials used in production: $35,000 Cost of Direct Labor wages: $40,000 Variable Manufacturing Overhead: $30,000 Fixed Manufacturing Overhead: $75,000 Total units produced and sold: 50,000 Under absorption costing, the per-unit cost is greater than the variable per-unit cost by how much?
Answer:
The per-unit cost under absorption costing is greater than the variable per-unit cost by $1.50.
Explanation:
Units costs under variable costing include only the variable manufacturing costs.
Manufacturing Costs - Variable Costing
Direct Materials used in production: $35,000
Cost of Direct Labor wages: $40,000
Variable Manufacturing Overhead: $30,000
Total Costs $105,000
Unit Cost = $105,000/ 50,000
= $2.10
Units costs under absorption costing include both the variable manufacturing costs and fixed manufacturing costs.
Manufacturing Costs - Absorption Costing
Direct Materials used in production: $35,000
Cost of Direct Labor wages: $40,000
Variable Manufacturing Overhead: $30,000
Fixed Manufacturing Overhead: $75,000
Total Costs $180,000
Unit Cost = $180,000/ 50,000
= $3.60
Difference :
Unit Cost - Absorption Costing $3.60
Less Unit Cost - Variable Costing $2.10
Difference $1.50
Conclusion :
The per-unit cost under absorption costing is greater than the variable per-unit cost by $1.50.
The per-unit cost under absorption costing is greater than the variable per-unit cost by $1.50.
Calculation of per-unit as follows:Units costs under variable costing involved only the variable manufacturing costs.
So,
Manufacturing Costs - Variable Costing
Direct Materials used in production: $35,000
Cost of Direct Labor wages: $40,000
Variable Manufacturing Overhead: $30,000
Total Costs $105,000
Now
Unit Cost = $105,000/ 50,000
= $2.10
Unit costs under absorption costing involve both the variable manufacturing costs and fixed manufacturing costs.
So,
Manufacturing Costs - Absorption Costing
Direct Materials used in production: $35,000
Cost of Direct Labor wages: $40,000
Variable Manufacturing Overhead: $30,000
Fixed Manufacturing Overhead: $75,000
Total Costs $180,000
Unit Cost = $180,000/ 50,000
= $3.60
Now the difference is
Unit Cost - Absorption Costing $3.60
Less Unit Cost - Variable Costing $2.10
Difference $1.50
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if a firm's total revenue is equal to $800 and its total costs are equal to $472, what are its profits?
Answer:
Gross profit= $328
Explanation:
Giving the following information:
Sales revenue= $800
Total costs= $472
To calculate the total profit of this company, all we have to do is deduct from earnings all the cost components. I will assume that total costs include both fixed and variable costs.
Gross profi= 800 - 472
Gross profit= $328
The ____ the existing spot price relative to the strike price, the ____ valuable the call options will be.
Answer:
The Higher the existing spot price relative to the strike price the more valuable the call options will be.
Explanation:
Spot price simply refers to how much a particular stock is trading in the market (that is, Market Price of the Stock).
Strike Price, also known as exercise price, is the price at which a person (corporate or individual) can purchase security.
Call options refers to the option to purchase an asset at an agreed price prior to/or at a particular day.
If for instance an employee is presented with Stock Options at a particular price, it will be more attractive for him or her if the price at which it is being offered is lower than it's actual market value. That way, he or she has already made a profit.
For example, if the spot price for the stock of Google is $2000/Unit and it is offered to an employee at $1450, if he elects to buy it at that time, he stands a chance to make $550 on each unit that if he sells whilst the spot price is still reasonable.
Cheers!
Answer:
The higher the existing spot price relative to the strike price, the less valuable the call options will be.
Explanation:
Call options refer to financial contracts in which the buyer of the option has the right, but not obligation, to buy asset or instrument at an already agreed price on or before a particular date. The particular date is also known as the expiration date.
The strike price is refers to the price at which a put or call option can be exercised on or before a particular date.
The spot price refers the current market price at which an instrument or asset is bought or sold now for immediate payment and delivery.
The relationship between the strike price and the spot price is that a call option is most valuable when the strike price is higher than the spot price. At this point, the call option is said to be in the money (ITM). On the other hand, a call option is least valuable when the strike price is lower than the spot price. At this point, the call option is said to be out of the money (OTM).
Based on the explantion above, therefore, the higher the existing spot price relative to the strike price, the less valuable the call options will be.
Virginia owns an interior design company and hires freelance decorators to help with large jobs. In this way, she is able to keep costs low by only employing staff when they are needed. However, over time Virginia has added full‐time staff members as the company grows. How would you classify Virginia’s company? Group of answer choices As an investment center As a profit center As a cost center but not a profit center As both a cost center and a profit center, but not an investment center
Answer: As an investment centre
Explanation:
Based on the question, we are told that Virginia owns an interior design company and hires freelance decorators to help with large jobs and that by doing this, she is able to keep costs low by only employing staff when they are needed. Virginia's company is an investment centre.
An investment center is a business unit that is within an entity that is responsible for its own assets, revenue, and expenses and its financial results will be based on these factors. An investment center focuses on how it will minimize costs.
Swifty Corporation purchased from its stockholders 5,500 shares of its own previously issued stock for $275,000. It later resold 1,700 shares for $53 per share, then 1,700 more shares for $48 per share, and finally 2,100 shares for $42 per share. Prepare journal entries for the purchase of the treasury stock and the three sales of treasury stock.
Answer: The answer is given below
Explanation:
A journal is a book that is used in accounting to record the transactions that takes place in a company.
It should be noted that in the attached file, the amount that was paid in capital from the treasury stock was calculated as:
= 5,100 - 3,400
= 1,700
The retained earnings was also calculated as:
= 105,000 - 88,200 - 1,700
= 15,100
Check the attached file for further information.
Answer with its Explanation:
1. The repurchase of 5,500 shares from the sharesholders will be recorded as under:
Dr Treasury Stock $275,000
Cr Cash $275,000
2. The sale of 1,700 shares at $53 per share would be recorded as under:
Dr Cash ( 1,700 shares * $53 ) $90,100
Cr Treasury Stock ( 1,700 shares * $50 ) $85,000
Cr Paid in capital ( 1,700 shares * $3 ) $5,100
3. The Selling of the 1,700 shares at $48 each will be recorded as under:
Dr Cash ( 1,700 Shares * $48) $81,600
Dr Paid in capital ( 1,700 shares * $2) $3,400
Cr Treasury Stock ( 1,700 shares * $ 50 ) $85,000
4. The selling of 2,100 shares at $42 will be recorded as under:
Dr Cash ( 2,100 shares * $ 42 ) $88,200
Dr Paid in capital from treasury stock $1,700 ........ Step 1
Dr Retained Earnings $15,100 ...... Balancing Figure
Cr Treasury Stock ( 2,100 shares * $ 50 ) $105,000
Step 1. Paid in capital from Treasury Stock
Paid in capital from Treasury Stock = 5,100 - 3,400 = $1,700 Paid In capital
Retained Earnings will be Balancing Figure = 105,000 - 88,200 - 1,700 Paid In capital = $15,100
"Clauss Company transfers out 14,000 units and has 2,000 units of ending work in process that are 25% complete. Materials are entered at the beginning of the process and there is no beginning work in process. Assuming unit materials costs of $3 and unit conversion costs of $5, what are the costs to be assigned to units (a) transferred out and (b) in ending work in process
Answer:
a. $112,000
b. $7,500
Explanation:
(a) transferred out
Units transferred out are 100% complete for both materials and conversion costs, thus multiply the Total Cost per Equivalent units with the number of units transferred.
Cost of units transferred out = $8 × 14,000 units
= $112,000
(b) in ending work in process
Units of ending work in process are 100% complete in terms of materials ( since materials are entered at the beginning of the process) whilst 25% complete in terms on conversion cost (applied uniformly during production).
Cost of ending work in process
Materials ($3 × 2,000 units) = $6,000
Conversion ($3 × (2,000 units × 25%)) = $1,500
Total Cost = $7,500
When a customer deposit is recorded using the Make Deposits window, behind the screen QuickBooks converts the transactions into a journal entry that:
Answer: Debits checking account, Credits undeposited funds
Explanation:
QuickBooks is a very popular Accounting Software that is mostly used by Small to Medium Enterprises to keep their books in order.
When a customer makes a payment from a customer, QuickBooks sends this to the Undeposited Funds account and debits it. When you then use the Make Deposits window to record the deposit, the corresponding amount is taken from the Undeposited Funds account by way of a credit. It is then debited to your Checking Account (Bank account).
Which of the following is an incorrect statement? a If individual audit risk remains the same, detection risk bears an inverse relationship to inherent and control risk. b The greater the inherent and control risk the auditor believes exist the less detection risk that can be accepted. c The auditor might make separate or combined assessments of inherent risk and control risk. d Detection risk cannot be changed at the auditor’s discretion.
Answer:
d Detection risk cannot be changed at the auditor’s discretion.
Explanation:
Audit risk can be defined as the risk that financial reports issued by an auditor are materially incorrect due to fraud or errors, despite the fact that the inappropriate audit opinion states that the financial reports are void of any material misstatements. There are two (2) main components of an audit risk, these are;
1. Detection risk: this deals with the fact that procedures used by the auditor will not detect any material misstatement as a result of errors.
2. Risk of material misstatement: this deals with the material misstatements of financial statements before auditing. There are two main types namely, inherent and control risks.
The following statements are true and correct;
A. If individual audit risk remains the same, detection risk bears an inverse relationship to inherent and control risk.
B.The greater the inherent and control risk the auditor believes exist the less detection risk that can be accepted.
C. The auditor might make separate or combined assessments of inherent risk and control risk.
However, saying that detection risk cannot be changed at the auditor’s discretion is false. Since it is arises as a result of error, if the auditor conducts a proper sampling procedure it can be detected and eventually changed.
In the manufacture of 10,000 units of a product, direct materials cost incurred was $135,700, direct labor cost incurred was $82,000, and applied factory overhead was $37,500. What is the total conversion cost
Answer:
The total conversion cost is $119,500.
Explanation:
Conversion cost refers to all the costs of converting or turning raw materials into finished goods. Conversion cost can therefore be obtained by deducting the cost of raw materials from the cost of production. This implies that conversion cost is the the addition of direct labor costs and manufacturing costs.
Based on the above explanation, total conversion cost for this question can therefore be calculated as follows:
Total conversion cost = Direct labor cost + Applied factory overhead = $82,000 + $37,500 = $119,500
Therefore, the total conversion cost is $119,500.