Answer:
The correct answer is C: 48000
Explanation:
The Expenditure Approach is a method of measuring GDP by calculating all spending throughout the economy including consumer consumption, investing, government spending, and net exports. This method calculates what a country produces, assuming that the finished goods and services of a country equals the amount spent in the country for that period.
The formula is:
GDP=C+I+G+/-NX
GDP: Gross Domestic Product
(C) consumer spending – this is the amount that all consumers spend on goods and services for personal use.
(I) investment – this is the amount that businesses or owners spend to invest in new equipment or expansions.
(G) government spending – this includes spending on new infrastructure like bridges and roads.
(NX) net exports – this includes spending on a country’s exports minus its spending on imports.
AddedGDP= 56000-8000
AddedGDP= 48000
Rand Corporation acquires Southern Company's assets and liabilities for $20,000,000 in cash. At the date of acquisition, Southern's balance sheet reported assets of $75,000,000 and liabilities of $65,000,000. Investigation reveals that Southern's reported plant assets are overvalued by $1,400,000. Rand reports how much goodwill on this acquisition?
Answer: $8,600,000
Explanation:
Acquire Southern Company's assets and liabilities in cash = $20,000,000
Southern's balance sheet reported,
Assets = $75,000,000
Liabilities = $65,000,000
plant assets are overvalued by $1,400,000
Actual Value of Southern's Assets = Total Fair Value - Overvaluation
= $75,000,000 - $1,400,000
= $73,600,000
Goodwill = Actual Value of Southern's Assets - Value of Liabilities
= $73,600,000 - $65,000,000
= $8,600,000
Final answer:
Goodwill is calculated by subtracting the fair value of the net assets of Southern Company from the purchase price paid by Rand Corporation. With the plant assets overvalued by $1,400,000, the adjusted net assets are $8,600,000 and the resulting goodwill is $11,400,000.
Explanation:
The student is asking how to calculate the goodwill resulting from Rand Corporation's acquisition of Southern Company. To determine goodwill, we subtract the fair value of the identifiable net assets acquired from the purchase price. First, we need to adjust the assets and liabilities reported on Southern's balance sheet to reflect their fair value. Southern's plant assets were overvalued by $1,400,000; thus, we subtract this from the reported assets value of $75,000,000 to get $73,600,000. Next, calculate the net assets by subtracting liabilities from assets ($73,600,000 - $65,000,000 = $8,600,000). Finally, we subtract this net assets figure from the cash paid by Rand Corporation ($20,000,000 - $8,600,000 = $11,400,000), which is the amount of goodwill to be reported.
The SRT partnership agreement specifies that partnership net income be allocated as follows:
Partner S Partner R Partner T
Salary allowance $20,000 $25,000 $15,000
Interest on average capital balance 10% 10% 10%
Remainder 30% 30% 40%
Average capital balances for the current year were $60,000 for S, $50,000 for R, and $40,000 for T.
Refer to the information given. Assuming a current year net income of $125,000, what amount should be allocated to each partner?
Partner S Partner R Partner T
A. $15,000 $15,000 $20,000
B. $37,500 $37,500 $50,000
C. $41,000 $45,000 $39,000
D. $42,000 $48,000 $35,000
Answer: Option (C) is correct.
Explanation:
Given that,
Partner S:
Salary allowance = $20,000
Interest on average capital balance = 10% of 60,000
= $6,000
Average capital balances for the current year = $60,000
Remainder = 30% of 50,000
= $15,000
Amount should be allocated = Salary allowance + Interest on average capital balance + Remainder
= $20,000 + $6,000 + $15,000
= $41,000
Partner R:
Salary allowance = $25,000
Interest on average capital balance = 10% of 50,000
= $5,000
Average capital balances for the current year = $50,000
Remainder = 30% of 50,000
= $15,000
Amount should be allocated = Salary allowance + Interest on average capital balance + Remainder
= $25,000 + $5,000 + $15,000
= $45,000
Partner T:
Salary allowance = $15,000
Interest on average capital balance = 10% of 40,000
= $4,000
Average capital balances for the current year = $40,000
Current year net income = $125,000
Remainder = 40% of 50,000
= $20,000
Amount should be allocated = Salary allowance + Interest on average capital balance + Remainder
= $15,000 + $4,000 + $20,000
= $39,000
Workings:
Salary allowed = $20,000 + $25,000 + $15,000
= $60,000
Interest on average capital balance = $6,000 + $5,000 + $4,000
= $15,000
Total = Salary allowed + Interest on average capital balance
= $60,000 + $15,000
= $75,000
Remainder = Current year net income - Total
= $125,000 - $75,000
= $50,000
Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $360,000, and direct labor costs to be $180,000. Actual overhead costs for the year totaled $387,000, and actual direct labor costs totaled $203,000. At year-end, the balance in the Factory Overhead account is a:
Answer:
Balance for the Factory Overhead account: 19,000 credit
Explanation:
We will first, calculate the overhead rate based on the predetermination overhead rate:
[tex]\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate[/tex]
The total manufacturing cost will be distributed over the cost driver. In this case, labor cost:
360,000/180,000 = 2 overhead rate
Then, we calculate the applied overhead 203,000 x 2 = 406,000
Now, the balance for factory overhead account:
Actual overhead: 387,000 debit
payable, accumulated depreicaiton and other 387,000 credit
WIP 406,000 debit
Applied Overhead 406,000 credit
Balance:
406,000 - 387,000 = 19,000 credit
The following data have been recorded for recently completed Job 450 on its job cost sheet. Direct materials cost was $2,057. A total of 32 direct labor-hours and 216 machine-hours were worked on the job. The direct labor wage rate is $21 per labor-hour. The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $29 per machine-hour. The total cost for the job on its job cost sheet would be:
Answer:
Total cost= $8993
Explanation:
Total manufacturing cost is the aggregate amount of cost incurred by a business to produce goods in a reporting period.
Generally accepted accounting principles require that the cost of goods sold shall consist of:
the cost of direct materials
the cost of direct labor
the cost of manufacturing overhead
In this exercise:
direct materials= $2057
direct labor= 32hours*$21=$672
manufacturing overhead= 216hours*$29= $6264
Total cost= 2057 + 672 + 6264= $8993
Grand-cola spends $3 on direct materials, direct labor, and variable manufacturing overhead for every unit (12-pack of soda) it produces. Fixed manufacturing overhead costs
$3million per year. The plant, which is currently operating at only 80 %
of capacity, produced 15 million units this year. Management plans to operate closer to full capacity next year, producing 25
million units. Management doesn't anticipate any changes in the prices it pays for materials, labor, and manufacturing overhead.
1.
What is the current total product cost (for the 15 million units), including fixed and variable costs?
2.
What is the current average product cost per unit?
3.
What is the current fixed cost per unit?
4.
What is the forecasted total product cost next year (for the25 million units), including fixed and variable costs?
5.
What is the forecasted average product cost next year?
6.
What is the forecasted fixed cost per unit?
7.
Why does the average product cost decrease as production increases?
Answer:
Instructions are listed below
Explanation:
Giving the following information:
Q=15 million
Q*=25 million
Unitary variable cost= $3
Fixed manufacturing overhead costs $3million per year
A) For Q:
Total cost= 3000000+15000000*3= $63000000
B) Average cost per unit=63000000/15000000=$4.2
C) Fixed cost per unit= 3000000/15000000= $0.2
D) Q*=25000000
Total cost= 30000000+25000000*3=$78000000
E) Fixed cost per unit= 3000000/25000000= $0.12
D) It decreases because the fixed costs are distributed by more units.
The current total product cost is $45 million, the current average product cost per unit is $3, the current fixed cost per unit is $0.20. The forecasted total product cost next year is $75 million, the forecasted average product cost next year is $3, and the forecasted fixed cost per unit is $0.12. The average product cost decreases as production increases due to the spreading of fixed costs over a larger number of units.
Explanation:1. The current total product cost, including fixed and variable costs, can be calculated by multiplying the number of units (15 million) by the total cost per unit ($3). So the current total product cost is $45 million.
2. The current average product cost per unit can be calculated by dividing the current total product cost ($45 million) by the number of units (15 million). So the current average product cost per unit is $3.
3. The current fixed cost per unit is calculated by dividing the fixed manufacturing overhead costs ($3 million) by the number of units (15 million). So the current fixed cost per unit is $0.20.
4. The forecasted total product cost next year, including fixed and variable costs, can be calculated by multiplying the number of units (25 million) by the total cost per unit ($3). So the forecasted total product cost next year is $75 million.
5. The forecasted average product cost next year can be calculated by dividing the forecasted total product cost next year ($75 million) by the number of units (25 million). So the forecasted average product cost next year is $3.
6. The forecasted fixed cost per unit is calculated by dividing the fixed manufacturing overhead costs ($3 million) by the number of units (25 million). So the forecasted fixed cost per unit is $0.12.
7. The average product cost decreases as production increases because the fixed costs are spread over a larger number of units. This means that the fixed cost per unit decreases as more units are produced, resulting in a lower average product cost.