Where there is asymmetric information between buyers and sellers, Multiple Choice product shortages will occur at the equilibrium price. product surpluses will occur at the equilibrium price. markets can produce inefficient outcomes. markets will fail due to the over-allocation of resources.

Answers

Answer 1

Answer:

markets can produce inefficient outcomes.

Explanation:

Asymmetric information is when one party to a transaction has more information than the other party. It could be the buyer or seller that has more information

For example, if a person wants to purchase health insurance, he might not disclose the full information about his health status to the insurer. This might lead to underestimation of costs.

Also, a seller might not reveal to the buyer than the item about to be purchased is faulty.

Asymmetric information leads to inefficient outcome inn the market


Related Questions

Suppose that unskilled workers find it worthwhile to acquire skills when the wage differential between skilled and unskilled workers reach a certain threshold. Explain the effects on the supply of unskilled workers, the supply of skilled workers, and the equilibrium wage for the two groups. In particular what is the equilibrium wage of skilled workers relative to unskilled workers after some unskilled workers receive training

Answers

Answer:

a. Short-run economic profit: $  40,000  per lease.

Long-run economic profit: $  0  per lease.

b. Landowners would gain $40,000 per plot each year due to higher rent for land

Explanation:

The short-run economic profit for a cotton farmer is:

Economic profit = Total revenue - Explicit costs - Implicit costs = $60,000 - $14,000 - $6,000 = $40,000 per lease.

Landowners would reap the long-term benefits of the scheme. Their income would rise by $40,000 per year per 120-acre plot because rent would rise from $10,000 to $50,000.

Unskilled labor is one of the most plentiful resources in emerging nations, and it is heavily utilized to support those nations' economic development. Therefore, the cost of this labor plays a significant role in the selection and layout of development projects.

What effects on the supply of unskilled workers?

Saving Money – Although skilled workers may initially be paid more than unskilled workers, competent people will ultimately cost less for your company. Unskilled workers are more likely to need more training, commit errors while working, and maybe your client relationships.

If the minimum wage levels are low in comparison to average salaries, increasing the minimum wage that employers must pay has minimal effects on total hours worked (i.e., total jobs times hours per job).

Therefore, Any decrease in the labor force available to a market will result in higher salaries and higher employer costs.

Learn more about  unskilled workers here:

https://brainly.com/question/17152716

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Shmenson Company uses the periodic inventory system. Sales for 2020 were $470,000 while operating expenses were $175,000. Beginning and ending inventories for 2020 were $70,000 and $60,000, respectively. Net purchases were $180,000 while freight in was $15,000. The net income or loss for 2020 was:

Answers

Answer:

The net income  for 2020 was $90,000

Explanation:

Shmenson Company

Income Statement for the year ended 2020

Sales                                                                             $470,000

Less Cost of Sales

Beginning Inventories                           $70,000

Add Net purchases                              $180,000

Add Freight In                                         $15,000

Less Ending Inventories                      ($60,000)     ($205,000)

Gross Profit                                                                  $265,000

Less Expenses

Operating expenses                                                   ($175,000)

Net Income                                                                    $90,000

Conclusion

Thus, the net income  for 2020 was $90,000.

The total factory overhead for Norton Company is budgeted for the year at $300,000, divided into three activities: assembly, $200,000; setup, $50,000; and materials handling, $150,000. Norton manufactures two products: Product A and Product B. The activity-based usage quantities for each product by each activity are estimated as follows:Assembly Setup Materials HandlingProduct A 5,000 dlh 60 setups 25 movesProduct B 15,000 dlh 110 setups 250 movesTotal activity-base usage 20,000 dlh 170 setups 275 movesWhat is the activity rate for the setup activity (round to the nearest dollar)?a.$166 per setupb.$294 per setupc.$1,764 per setupd.$118 per setup

Answers

Answer:

b. $294 per setup

Explanation:

Calculation for the activity rate for the setup activity

Using this formula

Activity rates = Budgeted activity cost / Total activity-base usage

Let plug in the formula

Activity rates = $50,000 / 170 setups

Activity rates = $294 per setup

Therefore the activity rate for the setup activity is $294 per setup

On July 15, Piper Co. sold $24,000 of merchandise (costing $12,000) for cash. The sales tax rate is 4%. On August 1, Piper sent the sales tax collected from the sale to the government. Record entries for the July 15 and August 1 transactions. On November 3, the Milwaukee Bucks sold a six game pack of advance tickets for $720 cash. On November 20, the Bucks played the first game of the six game pack (this represented one-sixth of the advance ticket sales). Record the entries for the November 3 and November 20 transactions.

Answers

Answer:

July 15

Dr Cash $24,960

Cr Sales $24,000

Cr Sales Taxes Payable $960

Dr Cost of Goods Sold $12,000

Cr Merchandise Inventory $12,000

On August 1

Dr Sales Taxes Payable $960

Cr Cash $960

On November 3

Dr Cash $720

Cr Unearned Ticket Revenue $720

On November 20

Dr Unearned Ticket Revenue $120

Cr Ticket Revenue $120

Explanation:

Preparation of the journal entries

July 15

Dr Cash $24,960

($24,000+$960)

Cr Sales $24,000

Cr Sales Taxes Payable $960

($24,000*4%)

Dr Cost of Goods Sold $12,000

Cr Merchandise Inventory $12,000

On August 1

Dr Sales Taxes Payable $960

Cr Cash $960

($24,000*4%)

On November 3

Dr Cash $720

Cr Unearned Ticket Revenue $720

On November 20

Dr Unearned Ticket Revenue $120

Cr Ticket Revenue $120

(1/6*$720)

jazz Corporation owns 10 percent of the Mitchell Corporation stock. Mitchell distributed a $10,000 dividend to Jazz Corporation. Jazz Corporations taxable income (loss) before the dividend income was ($2,000). What is the amount of Jazz's dividends received deduction on the dividend it received from Mitchell Corporation

Answers

Answer: $2,000

Explanation:

When a corporation owns less than 20% of another corporation, only 50% of the dividend it receives can be used as a deduction.

In this case, Jazz owns less than 10% of Mitchell and so can use 50% of $10,000 as a deduction:

= 50% * 10,000

= $5,000

However, Jazz incurred a loss of $2,000 which means that they will only need to deduct that $2,000 from the allowable $5,000.

Blue Co. had the following first-year amounts related to its $12,000,000 construction contract: Actual costs incurred and paid $ 3,000,000 Estimated remaining costs to complete 6,000,000 Progress billings 3,500,000 Cash collected 3,100,000 Assuming the contract qualifies for revenue recognition over time, what total amount (excluding cash) should Blue Co. recognize as current assets at year end

Answers

Answer:

$900,000

Explanation:

The computation of the total amount excluding cash is shown below:

But before that following calculations need to be done

% completion during the year is

= $3,000,000 ÷ ($3,000,000 + $6,000,000)

= 33.3333%

Now Total revenue to be recognized for the year is

= $12,000,000 × 33.33333%

= $4,000,000

Profit for the year is

= $4,000,000 - $3,000,000

= $1,000,000

Now Accounts receivables at the end of year is

= Billings - Collection

= $3,500,000 - $3,100,000 = $400,000

Now Cost and profits in excess of billings

= ($3,000,000 + $1,000,000) - $3,500,000

= $500,000

And, finally Total amount of current assets to be recognize at year end is

= $400,000 + $500,000

= $900,000

The manager of a T-shirt company is considering investing in a new embroidery machine that costs $8,500, and the depreciation rate is 6.5% per year. The expected increase in next year’s revenue as a result of the investment is $1,500. For what values of the interest rate (r) should the company make this investment? Specify the answer to two places beyond the decimal point. Any r below %.

Answers

Answer:

The interest rate will be "11.147%".

Explanation:

The given values are:

Cost of machine,

= $8500

Depreciation rate,

= 6.5%

Increase in income,

= $1500

Now,

⇒ [tex]Increase \ in \ income=Cost \ of \ machine\times \frac{R}{100}+ Cost \ of \ machine\times \frac{Depreciation \ rate}{100}[/tex]

On substituting the values, we get

⇒ [tex]1500=8500\times \frac{R}{100}+8500\times \frac{6.5}{100}[/tex]

⇒ [tex]1500=85R+552.5[/tex]

On subtracting "552.5" from both sides, we get

⇒ [tex]1500-552.5=85R+552.5-552.5[/tex]  

⇒             [tex]947.5=85R[/tex]

⇒                  [tex]R=\frac{947.5}{85}[/tex]

⇒                  [tex]R=11.147[/tex]%

Bramble Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2020. The goods have a sales price of $569,900 (cost of $500,000). The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $9,900. Past history indicates that the cash discount will be taken. On January 28, 2020, Danone makes payment to Bramble for the full sales price.

Required:
Prepare the Journal entry(ies) to record the sale and related cost of goods sold for Jupiter Company on January 2, 2020.

Answers

Answer:

Because past history has shown that Danone will take the cash discount, it will be removed from the journal entry:

= Notes payable - discount

= 569,900 - 9,900

= $560,000

Date                Account Title                                      Debit                 Credit

Jan. 2, 2020   Notes Receivable                           $560,000

                        Sales Revenue                                                        $560,000

                       Cost of Goods sold                       $500,000

                        Inventory                                                              $500,000

You and another project manager disagree over whether a team member should work on your team or on her team. You decide that the team member can work for the other project manager in the afternoon and the other project manager says it is OK for the team member to work for you in the morning. The truth is you both wanted this person fulltime. The conflict resolution approach you have both used is:

Answers

Answer:

A. Smoothing

Explanation:

The smoothing approach is a conflict resolution technique that occurs when the project manager seeks to resolve the conflict by seeking an agreement that is beneficial to everyone, that is, seeking to reach consensus on a certain situation to mitigate divergences and thus focus back to work and not conflict.

This technique is a quick solution for the resolution of conflicts that is generally effective in the short term, because the conflict, even if it exists, is left aside while there is a viable solution, such as what happened in the question, that despite the two managers want the team member working for him full time, each of the managers gave in to have the employee working part time for each one.

Required information Skip to question Information for Pueblo Company follows: Product A Product B Sales Revenue $ 59,000 $ 51,000 Less: Total Variable Cost $ 11,400 $ 31,500 Contribution Margin $ 47,600 $ 19,500 Determine its break-even sales dollars if total fixed costs are $42,000. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answers

Answer:

$68,852.46

Explanation:

The computation of the break even sales dollars is shown below:

Product Sales variable cost Contribution

A        $59,000    $11,400         $47,600

B             $51,000      $31,500       $19,500

Total       $110,000                         $67,100

Now the break even sales dollars is

= $42,000 ÷ $67,100 ÷ $110,000

= $42,000 ÷ 0.61

= $68,852.46

During the meeting, Carlos has been emphasizing the importance of the change, and trying to persuade employees to accept the transition. He also thinks losing employees may be acceptable if they cannot accept the change. According to Lewin’s force field analysis model, Carlos behaviors reflect his effort to facilitate the ______ process.

Answers

Answer:

During the meeting, Carlos has been emphasizing the importance of the change and trying to persuade employees to accept the transition. He also thinks losing employees may be acceptable if they cannot accept the change. According to Lewin’s force field analysis model, Carlos's behaviors reflect his effort to facilitate the change process.

Explanation:  

Lewin's Force Field Theory has a three-stage theory, the Unfreezing, Change, and the Refreezing stages. This theory talks about how organizations are pushed toward change by driving forces.

This desired change starts by unfreezing the behaviors that are not wanted, in other words, Carlos would make employees see the need to embrace change for the company to move forward. While the Change theory talks about the transition to that desired behavior and the actual change is implemented. Finally, the Refreezing theory aims to make the change permanent as people tend to easily go back to behaviors they have been used to because employees may resist change due to their desire to remain in their comfort zones. Behaviors of employees could point to the driving and restraining forces in an organization.

What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500? a. Small automobiles become more fashionable: No change . b. The price of large automobiles rises (with the price of small autos remaining the same): (Click to select) . c. Income declines and small autos are an inferior good: (Click to select) . d. Consumers anticipate that the price of small autos will greatly come down in the near future: (Click to select) . e. The price of gasoline substantially drops: (Click to select) .

Answers

Answer:

a. Small automobiles become more fashionable:  

demand curve will shift to the right, increasing total quantity demanded and prices

b. The price of large automobiles rises (with the price of small autos remaining the same):

demand curve will shift to the right, increasing total quantity demanded and prices

c. Income declines and small autos are an inferior good:

demand curve will shift to the right, increasing total quantity demanded and prices

d. Consumers anticipate that the price of small autos will greatly come down in the near future:

demand curve will shift to the left, decreasing total quantity demanded and prices

e. The price of gasoline substantially drops:

demand curve will shift to the left, decreasing total quantity demanded and prices

Use the following information to answer this question. Windswept, Inc. 2017 Income Statement ($ in millions) Net sales $ 10,000 Cost of goods sold 7,950 Depreciation 410 Earnings before interest and taxes $ 1,640 Interest paid 100 Taxable income $ 1,540 Taxes 539 Net income $ 1,001 Windswept, Inc. 2016 and 2017 Balance Sheets ($ in millions) 2016 2017 2016 2017 Cash $ 270 $ 300 Accounts payable $ 1,630 $ 1,812 Accounts rec. 1,110 1,010 Long-term debt 1,070 1,383 Inventory 1,780 1,755 Common stock 3,360 3,030 Total $ 3,160 $ 3,065 Retained earnings 650 900 Net fixed assets 3,550 4,060 Total assets $ 6,710 $ 7,125 Total liab. & equity $ 6,710 $ 7,125
What is the cash coverage ratio for 2017?

Answers

Answer:

20.50 times

Explanation:

Cash coverage ratio = (EBIT + Depreciation) / Interest paid

Cash coverage ratio = ($1,640+$410) / $100

Cash coverage ratio = $2,050 / $100

Cash coverage ratio = 20.50 times

So, the cash coverage ratio for 2017 is 20.50 times

Sally agrees to roof a house for Bob.After doing his research,Bob chooses Sally based on her great reputation for being conscientious and doing good work.Bob knows little about roofing and stays away from all the noise involved.Sally provides her own tools for herself and other workers,sets her own schedule,and charges a flat rate of $10,000 to be paid when the job is completed.Sally hires Trudy,Glen,and Fred to help with the roofing.She pays them an hourly rate,supervises their work,provides them with tools and materials,and sets their schedules.Curious about what is going on there,Bob's friend Spencer walks by the house while the roofing is being done.Glen absentmindedly throws some old shingles off the roof and hits Spencer in the head,resulting in him going to the local emergency room and receiving a couple of stitches in his scalp.Spencer decides to sue all the roofers,Bob,and Sally for his hospital expenses and for pain and suffering.Which of the following is the most likely characterization of Trudy,Glen,and Fred in relation to Sally?
A) They are both employees and independent contractors.
B) They are employees.
C) They are independent contractors.
D) They are undisclosed principals.
E) They are both employees and disclosed principals.

Answers

Answer:

B) They are employees.

Explanation:

They work for Sally. Sally hired Truly, Glen and Fred and pays them an hourly wage, and provides the tools that they use to perform their work. She also supervises and directs their job. They are not independent contractors due to the direct relation that exists between them and the fact that they obey Sally's orders.

Max, Inc., has two divisions, South Division and North Division. South Division's sales, contribution margin ratio, and traceable fixed expenses are $500,000, 60%, and $100,000, respectively. What is the segment margin for the South Division

Answers

Answer:

$200,000

Explanation:

Segment Margin is Profit wholly controlled by a specific division. Now, this excludes shared costs from the central Head Office.

The segment margin for the South Division is calculated as follows :

Sales                                                             $500,000

Less Variable Costs (40% x $500,000)    ($200,000)

Contribution (60% x $500,000)                 $300,000

Less Traceable Fixed Expenses                ($100,000)

Segment Margin                                          $200,000

Conclusion

The segment margin for the South Division is $200,000

A 10,000 par value bond with coupons at 8%, convertible semiannually, is being sold three years and four months before the bond matures. The purchase will yield 6%convertible semiannually to the buyer. The price at the most recent coupon date, immediately after the coupon payment, was 5,640.Calculate the market (quoted) price of the bond.

Answers

Answer:

$9,124.94

Explanation:

the clean price of the bond two months ago was $5,640.

Currently, interest rate have changed and the price of the bond has changed:

the semiannual yield is 4%, that means that the bimonthly yield = 1.04 = (1 + r)³

1 + r = 1.0132

r = 0.0132

the current price of the bond:

PV of face value = $10,000 / (1 + 0.0132)²⁰ = $7,693.01

PV of coupon payments = ($300 x {[1 - (1 + 0.04)⁻⁶] / 0.04}) / (1 + 0.0132)² = $1,572.64 / (1 + 0.0132)² = $1,531.93

minus accrued interests (dirty price) = $300 x 1/3 = $100

Market value of bond = $9,124.94

What is the largest concern regarding the
'educate' and 'support' steps in the
process of implementing change?
A. Time
B. Expense
C. Difficulty

Answers

B thank me later :) give me hearts

During the course of your examination of the financial statements of Trojan Corporation for the year ended December 31, 2018, you come across several items needing further consideration. Currently, net income is $87,000.
a. An insurance policy covering 12 months was purchased on October 1, 2018, for $16,200. The entire amount was debited to Prepaid Insurance and no adjusting entry was made for this item in 2018.
b. During 2018, the company received a $2,700 cash advance from a customer for services to be performed in 2019. The $2,700 was incorrectly credited to Service Revenue.
c. There were no supplies listed in the balance sheet under assets. However, you discover that supplies costing $2,100 were on hand at December 31, 2018.
d. Trojan borrowed $57,000 from a local bank on September 1, 2018. Principal and interest at 9% will be paid on August 31, 2019. No accrual was made for interest in 2018.

Answers

Answer:

$76,440

Explanation:

Calculation to determine the proper amount of net income as of December 31, 2018

Net income $87,000

Less Adjusted for insurance ($4,050)

($16,200*3/12)

Less Adjusted for deferred income ($2,700)

Less Adjusted for supplies ($2,100)

Less Adjusted for interest ($1,710)

($57,000*9%*4/12)

Net income (Adjusted) $76,440

Therefore The the proper amount of net income as of December 31, 2018 will be $76,440

Hamlet, a calendar year taxpayer, owns 1,000 shares of Vanity Corporation common stock, which he purchased 2 years ago for $4,000. Hamlet sells all his shares on December 29, 2020, for $2,500. On January 23, 2021, he purchases 600 shares of Vanity Corporation common stock. How much loss can Hamlet recognize in 2020

Answers

Answer:

Hamlet

Hamlet can recognize a loss of $1,500 in 2020.

Explanation:

a) Data and Calculations:

Number of shares in Vanity Corporation = 1,000 common stock

Period of stockholding = 2 years

Cost of investment = $4,000

Sales proceeds from shares = $2,500

Capital loss = $1,500

b) Hamlet can use the capital loss deduction of $1,500 to reduce his other capital gains of the similar term in the first instance.  Note that the capital loss is a long-term capital loss since the investment was held for two years.

An encyclopedia is an example of a periodical.
O True
O False

Answers

True I also believe it’s true

Use the information below for questions 1 through 3. Dallas Cowboys Pro Shop produce two types of jerseys for their fan-base to purchase: elite game jersey and limited player jersey. Cowboys Pro Shop determined 20% of the fans do not buy either jersey, 55% buy the elite game jersey, and 25% buy both jerseys, and these percentages are relatively constant from one year to another. There are (hypothetically) 100 fans each year. Q1. How many jerseys should the Pro Shop expect to sell to in a year

Answers

Answer:

Number of jerseys= 105 jerseys

Limited= 25

Elite= 80

Explanation:

Giving the following information:

Cowboys Pro Shop determined:

20% of the fans do not buy either jersey

55% buy the elite game jersey

25% buy both jerseys

Number of fans= 100

To calculate the number of jerseys sold, we need to use the following formula:

Number of jerseys= 100*0.55 + (100*0.25)*2

Number of jerseys= 105 jerseys

Limited= 25

Elite= 80

Given the following production plan, use a chase production strategy to compute the monthly production, ending inventory/(backlog), net requirements and required workforce levels. A worker can produce 100 units per month. Assume that the beginning inventory in January is 2200 units, and the firm desires to have 1000 units of inventory at the end of December. Month Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Demand 15,400 13,250 9,000 9,700 14,650 16,000 22,400 23,100 19,050 17,400 14,000 12,300 What month requires the most workers

Answers

Answer:

The month with the higher of workers required is August.

Explanation:

To calculate the number of workers required, we need to use the following formula:

Number of workers= (production + desired ending inventory - beginning inventory) / 100

Jan= (15,400 + 1,000 - 2,200) / 100= 142

Feb= (13,250 + 1,000 - 1,000) / 100= 133

Mar= 9,000 / 100= 90

Apr= 9,700 / 100= 97

May= 14,650 / 100= 147

June= 16,000 / 100= 160

July= 22,400 / 100= 224

August= 23,100 / 100= 231

Sept= 19,050 / 100= 191

Oct= 17,400 / 100= 174

Nov= 14,000 / 100= 140

Dic= 12,300 / 100= 123

The month with the higher of workers required is August.

Taking into account the time value of money and assuming that 100 percent of a customer segment will have experienced attrition once the net present value of annual profits per customer falls below ¥100, what is the lifetime value to MBC of the following customers? A Little Leaguer A Summer Slugger An Elite Ballplayer if MBC places the ad in the local baseball enthusiasts magazine An Elite Ballplayer if MBC purchases the list and invites all target customers to the gala event An Entertainment Seeker

Answers

Answer:

hello your question is incomplete attached below is the missing information

a) 8848.32 yen

b) 1732.95 yen

c) 13487.95 yen

d) 22578.86 yen

e) 248 yen

Explanation:

a) Determine for A little leaguer

At year 15 the NPV annual profit for each customer will fall below 100. hence the lifetime value for each customer will be calculated as :

= ( 9733 / ( 1 + 0.1 ) 15 ) - 10000 = 8848.32 yen

b)Determine for A summer slugger

At year 7 the NPV annual profit for each customer will fall below 100. hence The lifetime value for each customer will be calculated as

=  ( 1906 / ( 1 + 0.1 ) 7 ) - 10000 = 1732.95 yen

c) calculate  for An elite Ballplayer ( when MBC places ad )

At  year 12 the NPV annual profit for each customer will fall below 100. Hence the lifetime value for each customer will be calculated as

 =( 13547.31 / ( 1 + 0.1 ) 12 ) - 60000  =  13487.95 yen

d) calculate for An Elite Ballplayer ( when MBC purchases the list )

At year 12 the NPV annual profit for each customer will fall below 100. Hence the lifetime value for each customer will be calculated as

=  ( 22638.22 / ( 1 + 0.1 ) 12 ) - 50000 = 22578.86 yen

e) Calculate for An entertainment seeker

At year 4 the NPV annual profit for each customer will fall below 100, Hence the lifetime value for each customer can be calculated as  

 = ( 273 / ( 1 + 0.1 ) 4 ) - 2000    = 248 yen

WHOEVER CAN GUESS MY PATRONUS IN HARRY POTTER AND WHAT HOUSE I AM IN FIRST WILL GET BRAINLIEST AND 30 POINTS

Answers

she/they and Slytherin sometimes ravenclaw

Susie buys two goods: rounds of golf and massages.Suppose that the price of a round of golf is $20 and the price of a massage is $30.In a typical week,Susie will play two rounds of golf,getting 20 units of satisfaction from the second round.She normally buys three massages each week,with the third giving her 30 units of satisfaction.If she were to buy a fourth massage in a week,it would give her 20 units of satisfaction.If the price of massages is reduced to $15,which of the following outcomes might we expect to occur?
A) Susie would leave her consumption choices unchanged because of diminishing marginal utility in the consumption of massages.
B) Susie would buy more massages and fewer rounds of golf,as predicted by the income effect.
C) Susie would buy more massages and more rounds of golf,as predicted by the substitution effect.
D) Susie would buy more massages and fewer rounds of golf,as predicted by the substitution effect.

Answers

Answer:

D) Susie would buy more massages and fewer rounds of golf,as predicted by the substitution effect.

Explanation:

Let's check the utility that Susie gets from consuming these products.

The second round of golf gives her 20 units of satisfaction at $20 = 20/20 = 1

The third massage gives her 30 units of satisfaction at $30 = 30/30 = 1

But now the price the price for massage has come down to $15. The ratio of their prices would be

20/15 = 1.333

1.3 is greater than 1

So she should substitute golf for massages

In its first year of operations, Ivanhoe Company recognized $29,800 in service revenue, $7,000 of which was on account and still outstanding at year-end. The remaining $22,800 was received in cash from customers. The company incurred operating expenses of $19,000. Of these expenses, $13,140 were paid in cash; $5,860 was still owed on account at year-end. In addition, Ivanhoe prepaid $3,150 for insurance coverage that would not be used until the second year of operations.

(a) Calculate the first year’s net earnings under the cash basis of accounting, and the first year’s net earnings under the accrual basis of accounting.

Answers

Answer:

See below

Explanation:

1. Income statement (using cash basis)

Cash basis is recognized base on the cash collection or disbursement

Revenues (only cash receipts)

$22,800

Less:

Expenses paid in cash

($13,140)

Insurance paid

($3,150)

Net income

$6,510

2. Income statement (using accrual basis)

Revenues (earned)

($22,800 + $7,000)

$29,800

Less:

Expenses(incurred, insurance for next year not included

($19,000)

Net income

$10,800

Answer:

Explanation:

Accural Basis (2nd Answer)

On April 1, 2015, the City of Southern Ponds issued $3,500,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $3,490,000 was used to construct the police station, which was completed before December 31, 2015, the end of the fiscal year. The
remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2015, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $175,000 is due April 1, 2016.
What amount would be reported as debt service expenditures for 2015?
A) $ -0-
B) $ 70,000.
C) $140,000.
D) $245,000.

Answers

Answer:

B) $ 70,000.

Explanation:

Debt service expense

Debt service expense is the interest expense incurred to avail the debt services from another entity.

Debt service expense can be calculated using the following formula

Debt service expense = Face value of Bonds x Interest rate x Semiannual fraction

Where

Face value of bonds = $3,500,000

Interest rate  = 4%

Semiannual fraction = 6 / 12 = 1/ 2

placing values in the formula

Debt service expense = $3,500,000 x 4% x 1/2

Debt service expense = $70,000

High-Low Method The manufacturing costs of Ackerman Industries for the first three months of the year follow: Total Costs Units Produced January $1,900,000 20,000 units February 2,250,000 27,000 March 2,400,000 30,000 Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost. a. Variable cost per unit $fill in the blank 1 b. Total fixed cost $fill in the blank 2

Answers

Answer:

A. $50 per unit

B. $900,000

Explanation:

(a) Computation for the variable cost per unit using this formula

Variable cost per unit=(Total cost at highest level-Total cost at lowest level)/(Highest level-Lowest level)

Let plug in the formula

Variable cost per unit=(2,400,000-1,900,000)/(30,000-20,000)

Variable cost per unit=500,000/10,000

Variable cost per unit=$50 per unit

Therefore The Variable cost per unit will be $50 per unit

B. Computation to determine the Total fixed cost

Total fixed cost=2,400,0000-(50*30,000)

Total fixed cost=2,400,0000-1,500,000

Total fixed cost=$900,000

Therefore The Total fixed cost will be $900,000

Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Standard Quantity Standard Price or Rate Standard Cost Direct materials 2.50 ounces $ 28.00 per ounce $ 70.00 Direct labor 0.50 hours $ 13.00 per hour 6.50 Variable manufacturing overhead 0.50 hours $ 3.60 per hour 1.80 $ 78.30 During November, the following activity was recorded relative to production of Fludex: a. Materials purchased, 13,500 ounces at a cost of $361,800. b. There was no beginning inventory of materials; however, at the end of the month, 2,900 ounces of material remained in ending inventory. c. The company employs 21 lab technicians to work on the production of Fludex. During November, they worked an average of 140 hours at an average rate of $11.50 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $4,400. e. During November, 4,200 good units of Fludex were produced . Required: For direct materials: a. Compute the price and quantity variances. (Round your "price per ounce" answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract?

Answers

Answer:

A. Materials price variance 16,200 F

Materials quantity variance 2,800 U

B. Yes

Explanation:

A. Computation for the price and quantity variances For direct materials

Calculation for Materials price variance

Materials price variance=361,800-(13,500*28)

Materials price variance=361,800-378,000

Materials price variance=16,200 FAVOURABLE

Calculation for Materials quantity variance

First step is to calculate Actual materials used

Actual materials used=13,500-2,900

Actual materials used=10,600

Now let compute the Materials quantity variance

Materials quantity variance=28*(10,600-4,200*2.5)

Materials quantity variance=2,800

UNFAVORABLE

Therefore the price will be 16,200 FAVOURABLE and quantity variances will be 2,800 UNFAVORABLE For direct materials

B. Based on the above calculation I Would recommend that the company sign the contract because Materials variance is Favorable

Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 46,000 units and sold 38,000 units at a price of $130 per unit.

Manufacturing costs

Direct materials per unit $54
Direct labor per unit $20
Variable overhead per unit $6
Fixed overhead for the year $506,000
Selling and administrative costs
Variable selling and administrative cost per unit $12
Fixed selling and administrative cost per year $115,000

Required:
Assume the company uses absorption costing. Determine its product cost per unit.

Answers

Answer:

Unitary costs= $91

Explanation:

Giving the following information:

Direct materials per unit $54

Direct labor per unit $20

Variable overhead per unit $6

Fixed overhead for the year $506,000

The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

Unitary costs= (506,000 / 46,000) + 54 + 20 + 6

Unitary costs= $91

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