Answer:
Portfolio beta = 0.9
Explanation:
The portfolio beta is the weighted average of the two beta using tge amount invested as the weight.
Total amount invested = 30,000 + 30,000 = 60,000
Portfolio beta =
=(30,000/60,000)× 0.6 + (30,000/600000)× 1.2
Portfolio beta= 0.9
A plant asset was purchased on January 1st for $50,000 with an estimated salvage value of $10,000 at the end of its useful life. The current year's Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $20,000. The remaining useful life of the plant asset is ________ years.
Answer:
The remaining useful life of the plant asset is 4 years.
Explanation:
Under the straight line method of depreciation, the depreciation expense charged every year on the asset remains constant. The formula for depreciation expense per year under straight line method is,
Depreciation expense = (Cost - salvage value) / estimated useful life
Using the available figures, we calculate the estimated useful life of the plant asset o be,
5000 = (50000 - 10000) / estimated useful life
Estimated useful life = 40000 / 5000
Estimated useful life is = 8 years
The accumulated depreciation tells the total depreciation that has been charged on the asset.
The numbers of years for which depreciation has already been charged are = 20000 / 5000 = 4 years
The remaining useful life of the plant asset = 8 - 4 = 4 years
Structural unemployment Multiple Choice is also known as frictional unemployment. is the main component of cyclical unemployment. is said to occur when people are waiting to be called back to previous jobs. may involve a locational mismatch between unemployed workers and job openings.
Answer:
may involve a locational mismatch between unemployed workers and job openings
Explanation:
Structural unemployemt refers to unemployment resulting out of structural changes of the economy such as technological changes which change the dynamics of how work is performed.
This represents a mismatch between the kind of skills workers possess and the skills the economy demands and requires.
Such unemployment is also attributable to a situation wherein, in a particular region, jobs are available but the unemployed workers live too far away from such regions. This is referred to as locational mismatch, one of the causes behind structural unemployment.
There is no important area of human activity than management since its task is that of getting things done through people". Discuss.
Yes, there is no important area of human activity compare to management because it helps in getting things done through people.
Management can be regarded as the process of making use of available resources as well as controlling a group of people so that the goals of the organization can be achieved.
The general function of management entails ;
planningorganizingleading controlling.We can conclude that there is no important area of human activity compare to management because it encompass the process of getting things done.
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The concept of management is crucial as it involves organizing and guiding teams toward achieving objectives, a concept evident from historical bureaucracy to modern business structures. The evolution of management theory, from Taylor's economic efficiency drives to McGregor's leadership styles and Clifton's strengths-focused management, illustrates the ongoing development of techniques to maximize both organizational and employee potential.
Explanation:The significance of management in various areas of human activity is immense, as it involves the coordination and structuring of tasks and people to achieve desired goals. This can be understood through the history of bureaucracy which emerged as a means to manage large groups and achieve efficiency within political units, surpassing the limitations of managing through personal relationships alone.
Frederick Taylor's The Principles of Scientific Management expounded on the importance of increasing economic efficiency and productivity through the redesign of the workplace and utilization of time-motion studies. This form of management focused on maximizing employer profits and optimizing employee outcomes through specific training and development.
Further, management theories evolved with Douglas McGregor's Theory X and Theory Y, outlining differing perceptions of employee motivation and managerial styles. In contrast, Donald Clifton's strengths-based management emphasizes focusing on an individual's strengths to boost organizational performance, although this approach requires balancing against potential neglect of weaknesses.
Efficient management is also witnessed in modern businesses, such as restaurants, which compartmentalize tasks to various specialized roles, including culinary staff, servers, and business managers, to ensure smooth operations and financial oversight.
In July, one of the processing departments at Okamura Corporation had beginning work in process inventory of $23,000 and ending work in process inventory of $28,000. During the month, the cost of units transferred out from the department was $158,000. In the department's cost reconciliation report for July, the total cost to be accounted for under the weighted-average method would be:
Answer:
$186,000
Explanation:
Costs to be accounted for as follows:
Cost of ending work in process inventory $ 28,000
Add Cost of units transferred out $158,000
Total cost accounted for $186,000
Therefore the total cost to be accounted for under the weighted-average method would be: $186,000
A monopolist is able to maximize its profits by a. producing output where MR = MC and charging the price corresponding to that output level on the demand curve. b. setting output at MR = MC and setting price at the demand curve's highest point. c. producing maximum output where price is equal to its marginal cost. d. setting the price at the level that will maximize its per-unit profit.
Answer:
A) producing output where MR = MC and charging the price corresponding to that output level on the demand curve.
Explanation:
In order for a monopolist to maximize their accounting profit, they should produce and sell an output level where marginal revenue (MR) = marginal cost (MC). When MR = MC, output should be at the equilibrium point.
This profit maximizing rule applies to all businesses, including perfect competition markets and monopolistic competition.
For a monopolist to maximize its profits, it b. sets output at MR = MC and sets prices at the demand curve's highest point.
The monopolist's MR or Marginal Revenue and the MC (marginal cost) must be equal to maximize profits. However, if he sets the selling price at the highest point, he achieves maximum profits.
Characteristics of a MonopolistDominates and controls the market. There is a lack of competition.There is a lack of substitute goods or services.The monopolist can set high prices.It decides the quantity to produce.Thus, the monopolist can maximize its profits by choosing Option B.
Learn more about profit maximization for a monopolist here: https://brainly.com/question/7586794 and https://brainly.com/question/18721409
It is not uncommon for magazine publishers to run multiple print jobs of the same magazine, in which each job contains changes in advertising copy to suit the target market requirements of various advertisers. In trade terms, what is the publisher creating?
Answer:
The correct answer is letter "D": split runs.
Explanation:
Split runs are magazines, newspapers, or any form of print communication media that includes two different versions of the same edition each one with different advertisements to find out which of the two has greater results. It is a marketing approach that looks for discarding promotional strategies that bring no revenue to the advertisers.
Final answer:
Magazine publishers create 'regional' or 'demographic editions' of magazines with varied advertising copy to meet the specific needs of different advertisers and markets, maintaining print media relevance in a digital age.
Explanation:
When magazine publishers run multiple print jobs of the same magazine with changes in advertising copy to suit the target market requirements of various advertisers, they are creating regional editions or demographic editions. This practice allows advertisers to tailor their messages to specific audiences, maximizing the impact and relevance of their advertising campaigns. In the context of a shifting media landscape where traditional print sources face challenges from new media, such as digital platforms, the ability to create targeted advertising through these editions helps to maintain the viability of print media in the competitive advertising market.
"Which of the following are advantages to being a shareholder: 1.The expected returns for equities are higher than debt securities. 2.Equities have prices listed on major exchanges and are marketable. 3.Equities typically earn their expected return. 4. Equities that do not pay a dividend are tax efficient."
Answer:
The answer is 1, 2 and 4
Explanation:
Because equity holders usually have long-term interest in the company and they are concerned about increasing the value of the company and that they are at the greatest risk when the company goes bankruptcy, the expected returns for equities for shareholders are higher than debt securities for bondholders or banks.
Equity securities, both current and non-current, are listed at the lower value of cost or market on stock exchange.
Some companies dont pay dividends and some do buy but the equity that do not pay a dividend are tax efficient.
Corporation sold laser pointers for $ 14 each in 2017. Its budgeted selling price was $ 13 per unit. Other information related to its performance is given below: Actual Budgeted Units made and sold 27,300 27,600 Variable costs $100,000 $5 per unit Fixed costs $52,000 $48,000 Calculate Zoar's static budget variance for (a) revenues, (b) variable costs, (c) fixed costs, and (d) operating income. Begin by determining all of the actual amounts, then the static budget amounts, and finally the static-budget variances. Label each variance as favorable (F) or unfavorable (U)
Answer:
Static budget variance
a. revenue variance = budgeted revenue - actual revenue
= ( $13*27,600 ) - ( $14*27,300)
= $358,800 - $382,200
= $23,400 F
b Variable cost variance = ($5* 27,600) - $100,000
= $138,000 - $100,000
= $38,000 F
c. fixed cost variance = $48,000 - $52,000
= $4,000 U
d. operating income = $23,400 F + $38,000 F + $4,000 U
= $57,400 F
Explanation:
Galaxy Co. distributes wireless routers to Internet service providers. Galaxy procures each router for $75 from its supplier and sells each router for $125. Monthly demand for the router is a normal random variable with a mean of 100 units and a standard deviation of 20 units. At the beginning of each month, Galaxy orders enough routers from its supplier to bring the inventory level up to 100 routers. If the monthly demand is less than 100, Galaxy pays $15 per router that remains in inventory at the end of the month. If the monthly demand exceeds 100, Galaxy sells only the 100 routers in stock. Galaxy assigns a shortage cost of $30 for each unit of demand that is unsatisfied to represent a loss-of-goodwill among its customers. Management would like to use a simulation model to analyze this situation.
a. What is the average monthly profit resulting from its policy of stocking 100 routers at the beginning of each month?
b. What percentage of total demand is satisfied?
Answer:
Simulation results:
- the average monthly profit resulting from its policy of stocking 100 routers at the beginning of each month is $4237.
- percentage of total demand is satisfied: 92%.
Explanation:
We have to consider three factors to calculate the profit:
Sales. Every unit sold adds (125-75)=$50 to the profit. We have to consider the condition that the maximum amount of units that can be sold is 100 units.The remains cost. If the monthly demand is under 100 units, the profit is reduced by $15 per each remaining unit.The shortage cost. For each unit demanded that exceeds the 100 units, the profit is reduced by $30.The equation can be expressed as:
[tex]Profit=50*Max(Q;100)-15*Max(100-Q;0)-30*Max(Q-100;0)[/tex]
A simulation with 10,000 trials is done, and the average monthly profit calculated for this policy is $4237.
The demand was calculated with the Excel function INT(NORMINV(RAND(),100,20)), to mimic a normal distribution with mean 100 and standard deviation 20.
b) The satisified demand is calculated for each trial as the minimum value between Q (quantity demanded) and 100, as if Q is bigger than 100, only 100 units of the demand are satisfied.
The percentage of total demand satisfied is:
[tex]\%Satisfied=\dfrac{Q_{satisf}}{Q}=\dfrac{918759}{997005}=0.9215=92\%[/tex]
Galaxy Co. distributes wireless routers to Internet service providers and stocks 100 routers at the beginning of each month. The average monthly profit and the percentage of total demand satisfied can be calculated based on the different scenarios. The profit and satisfaction percentage depend on the monthly demand, which is a normally distributed random variable with a mean of 100 units and a standard deviation of 20 units.
Explanation:Galaxy Co. distributes wireless routers to Internet service providers. Each router is procured for $75 and sold for $125. The monthly demand for the router is normally distributed, with a mean of 100 units and a standard deviation of 20 units. The company stocks 100 routers at the beginning of each month and incurs a cost of $15 for each router that remains in inventory at the end of the month if the demand is less than 100. If the demand exceeds 100, only the 100 routers in stock are sold. The shortage cost of $30 is assigned for each unit of unsatisfied demand.
a. The average monthly profit resulting from this policy can be calculated by considering the different scenarios:
If the monthly demand is 100 units or less, the profit is ($125 - $75) x 100 - $15 x (100 - demand);If the monthly demand is more than 100 units, the profit is ($125 - $75) x 100 - $15 x 0 - $30 x (demand - 100);If the demand is normally distributed, the average monthly profit can be calculated by considering the probabilities of different demand levels and corresponding profits. Using the mean and standard deviation of the demand, the average monthly profit can be determined.b. The percentage of total demand that is satisfied can be calculated by considering the different scenarios:
If the monthly demand is 100 units or less, the percentage of total demand satisfied is 100%;If the monthly demand is more than 100 units, the percentage of total demand satisfied is 100 / demand x 100; If the demand is normally distributed, the average percentage of total demand satisfied can be determined by considering the probabilities of different demand levels and corresponding percentages of total demand satisfied. Using the mean and standard deviation of the demand, the average percentage of total demand satisfied can be calculated.For each good listed below, discuss whether the good is likely to entail either an external cost or an external benefit. In addition, discuss whether the private market is likely to provide more or less than the socially optimal quantity of the good.a. Vaccinations b. cigarettesc. abtibiotics
Answer:
Vaccinations : external benefit - the invention of a vaccine benefits a lot of people. It helps to cure for diseases and reduces the death rate in the society.
The private market is likely to produce less than the socially optimal quantity. This is because the cost associated with producing vaccinations are high and the private market would be unwilling to produce it as the aim of the private market would be to maximise profit.
cigarettes : external cost
Smoking cigarettes produces smoke which is harmful to other people apart from the smoker. Those around the person smoking can inhale the smoke and this can adversely affect their health. This is known as second hand smoking.
The private market is likely to provide more than social optimal Quanitity. This is because there's little or no cost associated with smoking.
antibiotics :
External benefit - antibiotics creates external benefit. It helps to cure for diseases and reduces the death rate in the society. It also reduces the rate at which others can be infected.
The private market is likely to produce less than the socially optimal quantity. This is because the cost associated with producing antibiotics are high and the private market would be unwilling to produce it as the aim of the private market would be to maximise profit.
Explanation:
Postive externality is when the benefits of economic activities to third parties exceeds the costs.
Activities that generate positive externality are usually under produced in the economy. The government can encourage production of goods and services that generate positive externality by giving subsidies. This would reduce cost of production.
When the cost of economic activities to third parties is greater than the benefits. Activities that generate negative externality are over produced in the economy. The government can discourage activities that generates negative externality by taxation. Imposing tax increases cost and discourages such activities.
I hope my answer helps you
Final answer:
Vaccinations create a positive externality leading to under-provision in the absence of government intervention, while cigarettes and antibiotics create negative externalities, often resulting in over-provision. Subsidies for vaccines and regulations or taxes for cigarettes and antibiotics can help correct these market failures and reach social optimization.
Explanation:
When discussing goods like vaccinations, cigarettes, and antibiotics, it is important to consider the externalities they may entail. Vaccinations tend to involve a positive externality, as they not only protect the individual but also reduce the potential of transmission to others, leading to a healthier society overall. In the absence of government intervention, the private market is likely to provide less than the socially optimal quantity of vaccinations because individuals do not account for the benefits their vaccination provides to others.
Cigarettes, on the other hand, have a negative externality through secondhand smoke and health-related costs that affect society. Consequently, the private market may provide more than the socially optimal quantity of cigarettes because the market price does not include these external costs borne by others. Similarly, antibiotics have a complex externality issue. The overuse leads to antibiotic resistance, which is a negative externality resulting in future treatments being less effective for others. Hence, without government regulation, the market might also over-supply antibiotics.
Government interventions such as subsidies for vaccinations can help reach a socially optimal level, reflecting the marginal social benefit. This does not only apply to flu shots but to vaccinations in general. Conversely, imposing taxes or restrictions on cigarettes and antibiotic prescriptions can help to address the negative externalities and bring the market closer to the socially optimal quantity of these goods.
Huffington Company uses a plantwide overhead rate to apply overhead. The predetermined overhead rate is based on machine hours. At the beginning of the year, the company made the following estimates: direct labor hours of 16,000, direct labor cost of $200,000, machine hours of 5,000, and total overhead costs of $25,000. On a per machine hour basis, the company's plantwide overhead rate is:__________
Answer:
The company's plantwide overhead rate on a per machine hour basis is $5 per hour.
Explanation:
Acording to the data, we have the following:
Direct Labour Cost=$200,000
Direct Labour Hours= 16,000
Total Overhead Cost= $25,000
Machine Hours= 5,000
Therefore, to calcuate the company's plantwide overhead rate on a per machine hour basis, we use the following formula:
Company's plantwide overhead rate= Total Overhead/ Machine hours
= $ 25,000 / 5000 hours
=$5 per hour
Final answer:
The company's plantwide overhead rate is calculated as $25,000 divided by 5,000 machine hours, resulting in $5 per machine hour.
Explanation:
To calculate the plantwide overhead rate based on machine hours, we use the formula:
Plantwide Overhead Rate = Total Overhead Costs / Total Machine HoursGiven that the total overhead costs are $25,000 and the total machine hours are 5,000, we can calculate the rate as follows:
Plantwide Overhead Rate = $25,000 / 5,000 = $5 per machine hour.Example Calculation:
If a job requires 100 machine hours, the overhead applied to the job would be 100 hours * $5/machine hour = $500.What are equivalent units of production (EUP) for conversion costs? Hint: There are several questions about the process cost summary. Prepare the process cost summary in its entirety before attempting to answer the questions. Beginning work in process inventory (50 units): Units are 100% complete for materials and 60% complete for conversion Direct materials Conversion costs Total cost in beginning inventory $ 50 150 $ 200 Costs added this period: Direct materials (for 250 units started) Conversion costs Total costs added this period $850 1,920 $2,770
Answer:
Equivalent units of production for conversion cost is 180
Explanation:
An equivalent unit of production is an expression of the amount of work done by a manufacturer on units of output that are partially completed at the end of an accounting period. Equivalent units of production are the units in production multiplied by the percentage of those units that are complete (100 percent) or those that are in process.
Beginning work in progress (units) = 50
Units added this period = 250
Here we assume that all units are completed and transferred as there is no information on ending work in progress.
Direct material cost in the beginning inventory = $50
Direct material cost added this period = $850
Total direct material cost = 50 + 850 = $900
Conversion cost is given by direct labour plus overhead.
Conversion cost in the beginning inventory = $150 + $1920 = $2070
Conversion cost added this period = $200 + $2770
Total conversion cost = $5040
Equivalent units for direct materials = 300 (100% of 300)
Equivalent units for conversion cost = 60% of 300 = 180
Cost per equivalent unit :
Direct materials = 900/300 = $3
Conversion cost = 5040/180 = $28
) Suppose that monetary policymakers employ the Taylor rule to set the fed funds rate. Assume that the weights on both the inflation and output gaps are 0.5, the equilibrium real fed funds rate is 2%, the inflation rate target is 2%, and the output gap is 1%. Suppose half of Fed economists forecast inflation to be 3%, and half of Fed economists forecast inflation to be 5%. If the Fed uses the average of these two forecasts as its measure of inflation, then at what target should the fed funds rate be set according to the Taylor rule
Answer:
Case 1. Federal funds rate target is 9%
Case 2. Federal funds rate target is 9%
Explanation:
As we know that:
Federal funds rate target = Inflation rate + Equation real fed funds rate +
1/2 * Inflation Gap + 1/2 * (Output Gap)
Here
Equation real fed funds rate is 2%
Output Gap is 1%
Case 1. Inflation rate target is 3%
So
Inflation Gap = 3% - 2% = 1%
So by putting values, we have:
Federal funds rate target = 3% + 2% + 1/2 * (1%) + 1/2 * (1%)
= 6%
Case 2. Inflation rate target is 5%
So
Inflation Gap = 5% - 2% = 3%
So by putting values, we have:
Federal funds rate target = 5% + 2% + 1/2 * (3%) + 1/2 * (1%)
= 9%
Answer:
The Federal Reserve seeks to control inflation by influencing interest rates. When inflation is too high, the Federal Reserve typically raises interest rates to slow the economy and bring inflation down.
Explanation:
The records of Norton, Inc. show the following for July: Standard labor-hours allowed per unit of output 2.0 Standard variable overhead rate per standard direct labor-hour $ 35 Good units produced 60,000 Actual direct labor-hours worked 121,000 Actual total direct labor $ 5,551,000 Direct labor efficiency variance $ 45,000 U Actual variable overhead $ 4,041,000 Required: Compute the direct labor and variable overhead price and efficiency variances.
Answer:
(a) $106,000 Unfavorable
(b) $194,000 Favorable
(c) $35,000 Unfavorable
Explanation:
Given that,
Standard labor-hours allowed per unit of output = 2.0
Standard variable overhead rate per standard direct labor-hour = $ 35
Good units produced = 60,000
Actual direct labor-hours worked = 121,000
Actual total direct labor = $ 5,551,000
Direct labor efficiency variance = $45,000 U
Actual variable overhead = $4,041,000
Firstly, we need to calculate the standard rate. It is calculated by using the formula for Direct labor efficiency variance:
Direct labor efficiency variance = (Standard hour - Actual hour) × Standard rate
-$45,000 = (Standard hour* - Actual hour) × Standard rate
-$45,000 = (120,000 - 121,000) × Standard rate
($45,000 ÷ 1,000) = Standard rate
$45 = Standard rate
*Standard hours:
= Standard labor-hours allowed per unit of output × No. of units produced
= 2 × 60,000
= 120,000
(a) The direct labor rate variance is calculated by the following formula:
= (Standard rate × Actual direct labor-hours worked) - Actual total direct labor
= ($45 × 121,000) - $ 5,551,000
= $5,445,000 - $5,551,000
= $106,000 Unfavorable
(b) The variable overhead rate variance is calculated by the formula below:
= (Standard variable overhead rate per standard direct labor-hour × Actual direct labor-hours worked) - Actual variable overhead
= ($35 × 121,000) - $4,041,000
= $4,235,000 - $4,041,000
= $194,000 Favorable
(c) The Variable overhead efficiency variance is calculated by the following formula:
= (Standard hours - Actual direct labor-hours worked) × Standard Variable Overhead rate per hour
= (120,000 - 121,000) × $35
= $35,000 Unfavorable
In 2018, preferred shareholders elected to convert 4.58 million shares of preferred stock ($39 million book value) into common stock. Rather than issue new shares, the company granted 4.58 million shares held in treasury stock to the preferred shareholders, with a total cost of $33 million.
a. Prepare a journal entry to illustrate how this transaction would have been recorded.
Answer:
The answer is given below;
Explanation:
Preferred Stock Dr.$39,000,000
Common Stock Cr.$33,000,000
Paid in capital in excess of par-Common stock (39,000,000-33,000,000) Cr.$6,000,000
As the book value of preferred stock is greater than the price paid at the time of conversion into common stock,therefore excess amount is paid in capital in excess of par for common stocks.As the preferred stock is reduced by their book value,therefore it is debited and common stock is credited with its cost.
Final answer:
Preferred shareholders converted their stock into common stock, using treasury shares for the transaction. The necessary journal entry debits Preferred Stock for $39 million, credits Common Stock for $33 million, and credits Additional Paid-in Capital for $6 million.
Explanation:
In 2018, the company's preferred shareholders elected to convert preferred stock into common stock. Given that the book value of the preferred stock being converted was $39 million and that treasury shares totaling $33 million were used for the conversion, the journal entry would be as follows:
This entry removes the preferred stock at its book value and recognizes the issuance of common stock at its carry amount, with any excess recorded in additional paid-in capital.
A local farm market buys fresh fruits and vegetables from local farmers. It buys peaches from one farmer at a cost of $1.00 per pound and sells them for $2.00 per pound. The demand for peaches during the season is normally distributed with a mean of 40 pounds per day and a daily standard deviation of 6 pounds. At the end of each business day, any unsold peaches are purchased by local restaurants for $0.40 per pound (in U.S. dollars): Enter your answers to one decimal place. Determine the service level. The service level is Number %. What is the optimal stocking level for the service level deterimined in (a)
Answer:
1. The service level is 63%
2. 42 pounds
Explanation:
1. Cost Price of Peaches = $1.00 per pound
Selling Price of Peaches = $2.00 per pound
Cost of shortage = Selling Price of Peaches - Cost Price of Peaches = $2 - $1 = $1
Cost of overage = Cost Price of Peaches - salvage value = $1 - $0.4 = $0.6
Service level = Cost of shortage /(Cost of shortage + Cost of overage)
= $1/($1 + $0.6) = $1/$1.6 =0.625 = 62.5% ≈ 63%
The service level is 63%
2. The z value for this service level = 0.332
Mean = 40 pounds
Standard deviation = 6 pounds
Optimum stocking level = (Mean + z value x Standard deviation)
= 40 + 6 × 0.332 = 41.992 ≈ 42 pounds
The optimal stocking level for the service level deterimined in (a) is 42 pounds
In order to encourage employee ownership of the company’s $1 par common shares, Washington Distribution permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokerage fees and shares can be purchased at a 14% discount. During March, employees purchased 95,000 shares at a time when the market price of the shares on the New York Stock Exchange was $40 per share.
Required:
Prepare the appropriate journal entry to record the March purchases of shares under the employee share purchase plan.
Answer:
Dr Cash $3,268,000.00
Dr Compensation expense $532,000.00
Cr Common stock equity($1*95,000) $95,000
Cr paid-in capital in excess of par($40-$1)*95,000 $3,705,000
Explanation:
The cash received from employees as a result of the options is computed thus:
cash proceeds from options=$40*(1-14%)*95,000
=$40*(1-0.14)*95,000
=$40*0.86*95,000
=$3,268,000.00
The 14% discount on share price is to be treated as compensation expense as shown thus:
discount (compensation expense)=14%*$40*95,000
=$532,000.00
The appropriate entries would to debit cash with $3,268,000.00 as the increase in cash flows and debit of $532,000 to compensation expense.
The credit would be shown in common stock equity and paid-in capital in excess of par
A worker is assigned three tasks, A, B, and C, each having a duration of 10 days. One approach to completing these tasks would be to focus on one at a time, complete it, and then move to the second, followed by the third. One multitasking approach would call for dividing each task in half and rotating from one to the other so that the first halves of A, B, and C are completed before the second halves of A, B, and C are completed (always in this order). What is the difference in the average completion times for the multitasked activities when compared to the one at a time approach
Answer:
There is no difference in the average completion times for the multitasked activities when compared to the one at a time approach
Explanation:
Let's consider the first approach, which involves focusing on one task at a time, complete it, and then move to the second, followed by the third. It will the worker 10 days to complete task A, another 10 days for task B and thereafter 10 days for C. So total number of days required to complete all three tasks using first approach is 10 days + 10 days + 10 days = 30 days
Let's consider the second approach which is the multitasking approach. The first task, one half of A takes 10 days/2 = 5 days, 5 days is spent next on Task B and then another 5 days on Task C. Therefore, during first 15 days one half of each task (A, B, and C) is completed. The next 15 days, following the same order of work the remaining half of each task is completed.
Total number of days to complete each tasks = Duration of completion of first half of each task + Duration of completion of the remaining second half of each task
Total number of days to complete each tasks = 15 days + 15 days = 30 days.
Therefore, the first approach and multitasking approach require the same number of days to complete each task. Therefore, there is no difference in the average completion times for the multitasked activities when compared to the one at a time approach
Final answer:
The difference in average completion times between the multitasking approach and focusing tasks one at a time is 5 days, with the multitasking approach leading to a longer average completion time of 25 days compared to 20 days for the sequential completion.
Explanation:
The scenario involves a worker assigned three tasks, A, B, and C, each with a duration of 10 days. To determine the difference in the average completion times when multitasking and focusing on tasks one at a time, we perform a simple calculation. Under the one-at-a-time approach, each task is completed sequentially, resulting in completion times of 10, 20, and 30 days for A, B, and C, respectively.
For the multitasking approach, the tasks are split in half and worked on in rotation. Thus, the first halves of A, B, and C would take 5, 10, and 15 days respectively, and the second halves would take an additional 5 days each, resulting in completion times of 20, 25, and 30 days for the full tasks of A, B, and C respectively.
To find the average completion time, you sum the completion times and divide by the number of tasks. The one-at-a-time approach has an average completion time of (10 + 20 + 30) / 3 = 20 days, while for multitasking it’s (20 + 25 + 30) / 3 = 25 days. Therefore, the difference in average completion time is 5 days, with multitasking taking longer.
Flapjack Corporation had 7,680 actual direct labor hours at an actual rate of $12.45 per hour. Original production had been budgeted for 1,100 units, but only 960 units were actually produced. Labor standards were 7.2 hours per completed unit at a standard rate of $13.00 per hour. Round your answer to the nearest cent. The direct labor time variance is $4,208.64 unfavorable $4,208.64 favorable $9,984.00 unfavorable $9,984.00 favorable
Final answer:
To calculate the direct labor time variance, subtract the standard cost from the actual cost. The actual cost of $95,616 exceeds the standard cost of $89,856, resulting in an unfavorable labor time variance of $5,760.
Explanation:
The student's question refers to calculating the direct labor time variance in a manufacturing setting. This variance measures the difference between the actual labor hours worked at the actual rate and the standard labor hours expected to be worked at the standard rate for the number of units produced. To find out whether the variance is favorable or unfavorable, we'll start by computing the standard hours for actual production, which is 960 units multiplied by the standard rate of 7.2 hours per unit, resulting in 6912 standard hours. We'll then multiply these standard hours by the standard rate of $13.00 per hour to get the standard cost, which is $89,856.
The actual cost is the actual hours worked multiplied by the actual rate per hour. Therefore, 7680 actual hours at $12.45 per hour result in an actual cost of $95,616. The labor time variance is found by subtracting the standard cost from the actual cost. Since the actual cost is higher, the variance is unfavorable. Calculating the difference ($95,616 - $89,856) yields $5,760 as the unfavorable labor time variance.
Final answer:
The direct labor time variance for Flapjack Corporation is $5,760 unfavorable. This was calculated by comparing the standard labor cost for actual production, which was $89,856, against the actual labor cost incurred, totaling $95,616.
Explanation:
To calculate the direct labor time variance, we need to compare the standard labor cost for actual production to the actual labor cost incurred. The standard labor cost is determined based on the labor standards set for the production of units. In this case, Flapjack Corporation had a labor standard of 7.2 hours per unit at a standard rate of $13.00 per hour. The actual production was 960 units.
Step 1: Calculate standard labor hours for actual production.
Standard hours = Actual units produced × Standard hours per unit
Standard hours = 960 units × 7.2 hours/unit = 6,912 hours
Step 2: Calculate standard labor cost for actual production.
Standard cost = Standard hours × Standard rate per hour
Standard cost = 6,912 hours × $13.00/hour = $89,856
Step 3: Calculate actual labor cost incurred.
Actual cost = Actual hours × Actual rate per hour
Actual cost = 7,680 hours × $12.45/hour = $95,616
Step 4: Calculate direct labor time variance.
Labor time variance = Actual cost - Standard cost
Labor time variance = $95,616 - $89,856 = $5,760
The direct labor time variance is $5,760 unfavorable because the actual labor cost exceeded the standard labor cost.
In producing a product, a firm has both fixed costs and variable costs. Fixed costs are costs that must be paid regardless of how many units are produced and sold. Variable costs, on the other hand, fluctuate directly with sales volume. The more you produce, the higher your variable costs. Let's try this out. Using your client’s crystal soap business, indicate which costs are fixed and which are variable by dragging them onto the correct side of the ledger.
The cost are as follows:
rent, raw materials, production, utilities, shipping, insurance,
Answer:
Fixed cost> rent, insurance, utilities
Variable cost> raw materials, production cost, shipping cost
Explanation:
Remember, it was mentioned that Fixed costs are costs that must be paid regardless of how many units are produced and sold; which implies that they do not change so frequently.
Thus, we would expect rent paid by Crystal soap to be fixed overtime, her insurance payments as well as utilities she pays for like power etc would also fall under fixed cost.
Variable costs, on the other hand, fluctuate directly with sales volume. Therefore, Crystal soap business would incur varying cost amount for raw materials, production cost, and their shipping cost.
Grouper Corporation’s management wants to maintain a minimum monthly cash balance of $9,120. At the beginning of September, the cash balance is $13,988, expected cash receipts for September are $110,808, and cash disbursements are expected to be $131,100. How much cash, if any, must Grouper borrow to maintain the desired minimum monthly balance? Determine your answer by using the basic form of the cash budget. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Answer:
The answer is attached;
Explanation:
The loan will be required.
Berry Co. produces a variety of scissors and other cutting instruments at its Rome manufacturing plant. The plant is highly automated and uses an activity-based costing system to allocate overhead costs to its various product lines. The company expects to produce 24,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below:
ACTIVITIES: UNIT BATCH PRODUCT FACILITY
LEVEL LEVEL LEVEL LEVEL
Cost $70,000 ? $23,000 $240,000
Cost Driver 5,000 labor hrs 120 set ups % of use 30,000 units
Production of 2,000 units of a pipe-cutting tool required 600 labor hours, 16 setups, and consumed 35 % of the product sustaining activities and resulted in an overhead allocation of $34,850. What amount of batch-level overhead costs was expected during the period? (Do not round intermediate calculations.)
a. $2,400
b. $18,000
c. $32,450
d. None of these answers is correct.
Answer:
Explanation:
the solution to the problem is shown in the file attached below
The amount of batch-level overhead costs expected by Berry Co is $138,000.
Data and Calculations:
Expected production output = 24,000 units
ACTIVITIES: UNIT BATCH PRODUCT FACILITY
LEVEL LEVEL LEVEL LEVEL
Cost $70,000 ? $23,000 $240,000
Cost Driver 5,000 labor hrs 120 set ups % of use 30,000 units
Usage for 2,000 units
Actual use 600 labor hrs 16 setups 35% 2,000 units
Total overhead allocated for 2,000 units = $34,850
Overhead for 2,000 units:
Unit level overhead = $8,400 ($70,000/5,000 x 600)
Product-level overhead = $8,050 ($23,000 x 35%)
Total overhead allocated = $34,850
Batch-level overhead for 2,000 units = $18,400 ($34,850 - $8,400 - $8,050)
Thus, the amount of batch-level overhead costs expected by Berry Co is $138,000 ($18,400/16 x 120).
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Onslow Co. purchases a used machine for $144,000 cash on January 2 and readies it for use the next day at a $8,000 cost. On January 3, it is installed on a required operating platform costing $1,600, and it is further readied for operations. The company predicts the machine will be used for six years and have a $17,280 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.
1.) Prepare journal entries to record the machine's purchase and the costs to ready and install it. Cash is paid for all costs incurred.
2.) Prepare journal entries to record depreciation of the machine at December 31.
(a) Its first year in operations.
(b) The year of its disposal.
3.) Prepare journal entries to record the machine's disposal under each of the following separate assumptions:
(a) It is sold for $20,500 cash.
(b) It is sold for $82,000 cash.
(c) It is destroyed in a fire and the insurance company pays $31,000 cash to settle the loss claim.
Answer:
Requirement 1
January 2
Machine $152,000 (debit)
Cash $152,000 (credit)
January 3
Machine $1,600 (debit)
Cash $1,600 (debit)
Requirement 2
(a) Its first year in operations.
Depreciation Charge =$22,720
(b) The year of its disposal.
Depreciation Charge =$22,720
Requirement 3(a)
Cash $20,500 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Sale of Machine $ 19,500 (debit)
Machine 153,600 (credit)
Requirement 3(b)
Cash $82,000 (debit)
Accumulated Depreciation $113,600 (debit)
Profit on Sale of Machine $ 42,000 (credit)
Machine 153,600 (credit)
Requirement 3(a)
Cash - Insurance Compensation $31,000 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Compensation $ 9,000 (debit)
Machine 153,600 (credit)
Explanation:
Requirement 1
January 2
Machine $152,000 (debit)
Cash $152,000 (credit)
January 3
Machine $1,600 (debit)
Cash $1,600 (debit)
Requirement 2
Depreciation Charge = (Cost - Salvage Value)/Useful Life
=(($152,000+$1,600)-$17,280)/6
=$22,720
(a) Its first year in operations.
Depreciation Charge =$22,720
(b) The year of its disposal.
Depreciation Charge =$22,720
Requirement 3(a)
Cash $20,500 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Sale of Machine $ 19,500 (debit)
Machine 153,600 (credit)
Requirement 3(b)
Cash $82,000 (debit)
Accumulated Depreciation $113,600 (debit)
Profit on Sale of Machine $ 42,000 (credit)
Machine 153,600 (credit)
Requirement 3(a)
Cash - Insurance Compensation $31,000 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Compensation $ 9,000 (debit)
Machine 153,600 (credit)
The initial cost of the machine was $153,600, with an annual depreciation of $22,720. In the event of a sale or a loss, there are different entries for each outcome; being sold for $20,500 or $82,000, and if it's destroyed with insurance reimbursing $31,000.
Explanation:The total initial cost of the machine for Onslow Co. can be calculated by summing up the purchase price, the cost to prepare it for use, and the cost of its installation platform. That will be $144,000 + $8,000 + $1,600 = $153,600.
1. Journal entries for machine's purchase, and costs to ready and install:
Debit: Machinery $153,600 Credit: Cash $153,600
Annually, the depreciation expense for the machine would be calculated by subtracting the salvage value from the total initial cost, and then dividing it by the useful life in years, which would be ($153,600-$17,280)/6 = $22,720
2. Journal entries for machine's depreciation on December 31:
Debit: Depreciation Expense $22,720 Credit: Accumulated Depreciation $22,720
For the fifth year, the accumulated depreciation would be $22,720 * 5 years = $113,600
3. Journal entries for machine's disposal under each assumption:
(a) Debit: Cash $20,500, Accumulated Depreciation $113,600, Loss on Disposal $19,500; Credit: Machinery $153,600 (b) Debit: Cash $82,000, Accumulated Depreciation $113,600, Gain on Disposal $41,400; Credit: Machinery $153,600 (c) Debit: Cash $31,000, Accumulated Depreciation $113,600, Loss on Disposal $9,000; Credit: Machinery $153,600 Learn more about Entries here:
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Each visor requires a total of $4.50 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $1.50 each. Shadee wants to have 32 closures on hand on May 1, 22 closures on May 31, and 28 closures on June 30 and variable manufacturing overhead is $2.00 per unit produced. Suppose that each visor takes 0.80 direct labor hours to produce and Shadee pays its workers $10 per hour.
Bugeted Production in Units: May 585, June 410
Required:
1. Determine Shadee’s budgeted manufacturing cost per visor. (Note: Assume that fixed overhead per unit is $1.90.) (Round your answer to 2 decimal places.)
2. Compute the Shadee’s budgeted cost of goods sold for May and June.
The budgeted manufacturing cost per visor is $16.40, calculated by summing direct materials, direct labor, variable overhead, and fixed overhead. The budgeted cost of goods sold for May is $9,594.00, and for June, it is $6,724.00.
Budgeted Manufacturing Cost Per Visor
To calculate the budgeted manufacturing cost per visor, we need to add together the direct materials, direct labor, and both variable and fixed manufacturing overhead costs per unit. Direct materials cost $4.50 per visor, including the cost of closures. Direct labor is calculated by multiplying the labor hours per visor by the hourly wage, which in this case is 0.80 hours multiplied by $10, equaling $8.00. The variable manufacturing overhead is given as $2.00 per unit. The fixed overhead per unit is indicated as $1.90.
To determine the total cost per visor, we sum these amounts:
Direct Materials: $4.50Direct Labor: $8.00 (0.80 hours x $10/hour)Variable Manufacturing Overhead: $2.00Fixed Manufacturing Overhead: $1.90Total cost per visor = $4.50(materials) + $8.00(labor) + $2.00(variable overhead) + $1.90(fixed overhead) = $16.40.
Budgeted Cost of Goods Sold (COGS) for May and June
To compute the budgeted cost of goods sold (COGS) for May and June, we multiply the total cost per visor by the number of units produced in each month:
For May (585 units): COGS = 585 units x $16.40/unit = $9,594.00For June (410 units): COGS = 410 units x $16.40/unit = $6,724.00
John owns a corporate bond with a coupon rate of 8% that matures in 10 years. Bill owns a corporate bond with a coupon rate of 12% that matures in 25 years. If interest rates go down, then:
A.the value of John's bond will decrease and the value of Bill's bond will increase.
B.the value of both bonds will increase.
C.the value of Bill's bond will decrease more than the value of John's bond due to the longer time to maturity.
D.the value of both bonds will remain the same because they were both purchased in an earlier time period before the interest rate changed.
Answer:
B.the value of both bonds will increase.
Explanation:
Bonds are known to be a financial security that shows or holds a promise to repay a fixed amount of funds.
There is an oppose relationship in terms of bond and an increase in thet interest rates, will lead to drop in the value of bonds and whenor if interest rates drops, there will be a corresponding increase in the bonds value. since both the bonds owned by John, he would still receive fixed interest payments which will be higher than the interest amount available on new bonds which are issued at lower interest rates and the value of both of these bonds would increase automatically
Final answer:
Option B. The value of both John's and Bill's bonds will increase when interest rates fall, with Bill's bond increasing more due to its longer time to maturity and higher coupon rate.
Explanation:
When interest rates go down, the value of existing bonds with fixed coupon rates quite often increase. This is because the fixed interest payments of the bond become more attractive compared to the new bonds being issued at the now lower interest rates. Thus, the correct answer is B: the value of both bonds will increase.
The bond that Bill owns, with a higher coupon rate and longer time to maturity, will be affected even more due to its longer duration. This longer duration means the bond's payments are locked in for a greater period of time at a higher rate than what's currently available, making it even more valuable if interest rates drop.
It should be noted that the value of a bond is inversely related to interest rates. However, once the bond is in the investor's hands, the actual dollar amounts paid by these bonds do not change. Therefore, the change in market value does not affect existing bondholders unless they intend to sell the bond before maturity.
(b) The following expenditures relating to plant assets were made by Prather Company during the first 2 months of 2020. Opposite each of the following transactions indicate the account title to which each expenditure should be debited. No. Expenditures Plant Assets 1. Paid $5,000 of accrued taxes at time plant site was acquired. select an account title 2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit. select an account title 3. Paid $850 sales taxes on new delivery truck. select an account title 4. Paid $17,500 for parking lots and driveways on new plant site. select an account title 5. Paid $250 to have company name and advertising slogan painted on new delivery truck. select an account title 6. Paid $8,000 for installation of new factory machinery. select an account title 7. Paid $900 for one-year accident insurance policy on new delivery truck. select an account title 8. Paid $75 motor vehicle license fee on the new truck.
Answer:
Please see explanation below
Explanation:
1. Paid $5,000 of accrued taxes at time plant site was acquired. - Debit accrued taxes account $5000, credit cash expenses account $5000.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit. - Debit freight and insurance in transit $200, credit cash expenses $200.
3. Paid $850 sales taxes on new delivery truck. - Debit sales tax $850, credit expenses $850.
4. Paid $17,500 for parking lots and driveways on new plant site. - Debit land improvements $17,500, credit cash expenses $17,500.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck. - Debit advertisement $250, credit cash expenses $250.
6. Paid $8,000 for installation of new factory machinery. - debit installation costs (under plants and machinery $8000.
7. Paid $900 for one-year accident insurance policy on new delivery truck. - Debit insurance $900, credit cash expenses $900.
8. Paid $75 motor vehicle license fee on the new truck. - Debit licensing fees $75, credit cash expenses $75.
Answer:
Refer to the attached file for the detailed breakdown:
Exercise 19-9 Income statement under absorption costing and variable costing LO P1, P2 IThe following information applies to the questions displayed below.J Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 44,000 units and sold 36.000 units at a price of $140 per unit. Manufacturing costs 60 Direct materials per unit Direct labor per unit 22 Variable overhead per unit $528,000 Fixed overhead for the year Selling and administrative cost Variable selling and administrative cost per unit 105,000 Fixed selling and administrative cost per year
Answer:
When you are calculating variable costing, COGS only includes variable costs. All fixed costs are included as period costs at the end. Fixed costs are not carried forward either.
Income Statement (variable costing) - J Cool Sky
total sales $140 x 36,000 units sold = $5,040,000
variable COGS ($3,240,000)
variable direct costs ($60 + $22) x 36,000 = ($2,952,000)
variable overhead ($8 x 36,000) ($288,000)
manufacturing margin $1,800,000
variable administrative and selling costs ($11 x 36,000) = ($396,000)
contribution margin $1,404,000
fixed costs ($633,000)
fixed overhead = ($528,000)
administrative and selling = ($105,000)
net income $771,000
In order to prepare the income statement using absorption costing, we must first determine COGS = [(total variable manufacturing costs + total fixed manufacturing costs) / total output] x units actually sold
COGS = {[($60 + $22 + $8) x 44,000] + $528,000} / 44,000] x 36,000 = [($3,960,000 + $528,000) / 44,000] x 36,000 = $102 x 36,000 = $3,672,000
Income Statement (absorption costing) - J Cool Sky
total sales $140 x 36,000 units sold = $5,040,000
COGS ($3,672,000)
gross profit $1,368,000
variable administrative and selling costs $11 x 36,000 = ($396,000)
fixed administrative and selling costs ($105,000)
net income $867,000
The difference between both accounting methods is that variable costing includes all fixed manufacturing costs during the period and the ending inventory is carried forward only at a lower cost since it only includes variable costs. Absorption costing calculates ending inventory using the total fixed costs, that is why COGS is lower.
PB10-1 Determining Financial Effects of Transactions Affecting Current Liabilities with Evaluation of Effects on the Debt-to-Assets Ratio [LO 10-2, LO 10-5] Tiger Company completed the following transactions. The annual accounting period ends December 31. Jan. 3 Purchased merchandise on account at a cost of $24,000. (Assume a perpetual inventory system.) Jan. 27 Paid for the January 3 purchase. Apr. 1 Received $80,000 from Atlantic Bank after signing a 12-month, 5 percent promissory note. June 13 Purchased merchandise on account at a cost of $8,000. July 25 Paid for the June 13 purchase. July 31 Rented out a small office in a building owned by Tiger Company and collected eight months’ rent in advance amounting to $8,000. Dec. 31 Determined wages of $12,000 were earned but not yet paid on December 31 (Ignore payroll taxes). Dec. 31 Adjusted the accounts at year-end, relating to interest. Dec. 31 Adjusted the accounts at year-end, relating to rent. Required: For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation. For each item, indicate whether the debt-to-assets ratio is increased or decreased or there is no change. (Assume Tiger Company’s debt-to-assets ratio is less than 1.0.)
Answer:
TIGER COMPANY
Jan 3 : Liabilities( Creditors) increase by $24,000
Asset( Inventory ) Increase by $24,000
debt - to asset ratio not affected
Jan 27: Asset (Cash ) will decrease by $24,000
Liabilities ( Creditors ) will decrease by $24,000
debt - to asset ratio not affected
April 1 : Liabilities will increasec by $80,000
Asset ( Cash) will increase by $80,000
debt - to asset ratio not be affected
June 13 : Liabilities ( Creditors) will increase by $8,000
Asset(Inventory) will increase by $8,000
debt - to asset ratio not be affected
July 25: Assee(Cash) will decrease by $8,000
Liabilities( Creditors) will decrease by $8,000
debt - to asset ratio not be affected
July 31: Cash( Asset) increase by $8,000
Liabilities( Deferred income ) will increase by $8,000
debt - to= asset ratio not be affected
Dec 31: Income will decrease by $12,000
Liabilities will decrease by $12,000
debt-to-asset ratio will be increased
Explanation:
Stefan Ceramics is in the business of selling ceramic vases. It has two departments, molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 720 kgs of tungsten carbide at $280 per kg. It started manufacture of 4,200 vases and completed and transferred 3,800 vases during the month. It has 400 vases in the process at the end of the month. It incurred direct labor charges of $1,500 and other manufacturing costs of $1,300, which included electricity costs of $300. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 50% complete in respect of conversion costs. Which of the following journal entry would record the tungsten carbide purchased and used in production during July?
Answer:
The following entries would be made.
Stefan Ceramics
Sr. No Particulars Debit credit
1 Merchandise Inventory 291600
Accounts Payable/ Cash 291600
For purchase of 720 kgs of tungsten carbide at $280 per kg (720*280=291600)
Accounts Payable or cash depending on whether material was purchased for cash or through accounts payable( creditors).
2 Work In Process 291600 Dr
Merchandise Inventory 291600 Cr
For use of 720 kgs of tungsten carbide . As there is no ending inventory the whole of the material is charged to production.
Perine Company has 2,392 pounds of raw materials in its December 31, 2019, ending inventory. Required production for January and February of 2020 are 4,600 and 6,000 units, respectively. 2 pounds of raw materials are needed for each unit, and the estimated cost per pound is $9. Management desires an ending inventory equal to 26% of next month’s materials requirements.
Prepare the direct materials budget for January.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Beginning inventory= 2,392 pounds
Production:
January= 4,600 units
February= 6,000 units
2 pounds of raw materials are needed for each unit
The estimated cost per pound= $9.
Management desires an ending inventory equal to 26% of next month’s materials requirements.
To calculate the purchases for January, we need to use the following formula:
Purchases= sales + desired ending inventory - beginning inventory
First, we will determine the pounds needed for January.
Budgeted Direct material:
Production= 4,600*2= 9,200 pounds
Ending inventory= (6,000*2)*0.26= 3,120 punds
Beginning inventory= (2,392) pounds
Total= 9,928 pounds
Total direct material cost= 9,928*9= $89,352