Answer:
The answer is given below;
Explanation:
Inventory Dr.$5,240
Accounts Payable-Ivanhole Cr.$5,240
Accounts Payable-Ivanhole Dr.$640
Inventory Cr.$640
The scrap value given is irrelevant as the metlock will set off the account payable of ivanhole as the goods are returned to him.
Executive Solutions is a strategy consulting firm. Other than the senior leadership (who manage the firm, but do not actively consult), the managers and staff are billed to clients on an hourly basis. The workload varies quite a bit from month to month requiring careful planning. Managers are billed to clients at a rate of $970 per hour and staff at a rate of $485 per hour. Managers are paid $295 per hour worked (including nonbillable time) and staff are paid $160 per hour. The current plan calls for managers to bill 1,270 hours in May and 820 hours in June. Staff are expected to bill 6,540 hours in May and 4,640 hours in June. Managers will work a total of 2,540 hours in both months and staff will work a total of 9,740 hours in both months. Other monthly costs (all fixed) are $553,500 SG&A, $228,500 in depreciation, and $353,500 in marketing. Required: Prepare a budgeted income statement for Executive Solutions for May and June (separately).
Answer:
Income(Loss) $960,600;($397,400)
Explanation:
EXECUTIVE SOLUTIONS
Budgeted Income Statement
May June
Revenues:
Managers$1,231,900 $795,400
Staff $3,171,900 $2,250,400
Total revenue (i)$4,403,800 $3,045,800
Expenses:
Manager
compensation$749,300 $749,300
Staff compensation$1,558,400 $1,558,400
Total
compensation (ii)$2,307,700 $2,307,700
SG&A $553,500 $553,500
Depreciation $228,500 $228,500
Marketing $353,500 $353,50
Total
expenses (iii)$1,135,500 $1,135,500
Income(Loss)
(i)-(ii)-(iii) $960,600 ($397,400)
BMay June
Revenues:
Managers
[1,270 hours x $ 970] $1,231,900
[820 hours x $970] $795,400
Staff
[ 6,540hours x $485] $3,171,900
[4,640 hours x $485] $2,250,400
Expenses:
Manager compensation$749,300 $749,300
[2,540 hours x $295]
Staff compensation $1,558,400 $1,558,400
[9,740 hours x $160]
"A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $6 a bushel, the wage rate is $30, the farmer employs eight workers and the marginal product of the eighth worker is 4 bushels. What would you advise this farmer to do?"
Answer:
Reduce employment because the wage paid is more than the marginal revenue product.
Explanation:
If the wage rate is $30, then the marginal cost for the eight worker is $30.
The marginal revenue product of the eight worker is given by the marginal product multiplied by the price per bushel:
[tex]MR = 4\ bushels*\frac{\$6}{bushel}\\MR=\$24[/tex]
Since the marginal revenue product of the eight worker is less than the marginal cost (MR < MC), the farmer should reduce employment.
To advise the soybean farmer, we need to determine the value of the marginal product (VMP) of labor.
The farmer should reduce the number of workers employed because the value of the marginal product of the eighth worker ($24) is less than the wage rate ($30).
The VMP is calculated by multiplying the marginal product of labor by the market price of the output. In this case, the marginal product of the eighth worker is 4 bushels and the market price is $6 per bushel.
VMP = Marginal Product of Labor x Market Price
VMP = 4 bushels x $6/bushel
VMP = $24
The wage rate is $30, meaning the cost of hiring the eighth worker exceeds the revenue they generate ($24). Therefore, the farmer should reduce the number of workers employed to avoid a loss. A profit-maximizing farmer should hire workers up to the point where the VMP equals the wage rate.
Leh Inc. recently borrowed $275,000 from its bank at a simple interest rate of 9 percent. The loan is for nine months and, according to the loan agreement, the interest should be added to the amount borrowed and the total amount to be repaid in monthly installments. Each monthly payment toward the loan amounts to:
Answer:
Monthly payment =$32,618.05
Explanation:
To arrive at the monthly installment, we would calculate the total interest due on the loan for nine months, add it to the principal and then divided the sum by 9 months
The monthly installment
= (Principal + total interest for 9 months)/ number of months
Interest for 9 months
= 9%× 9/12 × 275,000
= $18,562.5
Monthly installment
= (275,000 + $18,562.5)/9
=32,618.05 per month
Factory Overhead Cost Budget Sweet Tooth Candy Company budgeted the following costs for anticipated production for August: Advertising expenses $232,000 Manufacturing supplies 14,000 Power and light 48,000 Sales commissions 298,000 Factory insurance 30,000 Production supervisor wages 135,000 Production control wages 32,000 Executive officer salaries 310,000 Materials management wages 39,000 Factory depreciation 22,000 Prepare a factory overhead cost budget, separating variable and fixed costs. Assume that factory insurance and depreciation are the only fixed factory costs. Sweet Tooth Candy Company Factory Overhead Cost Budget For the Month Ending August 31 Variable factory overhead costs: $ Total variable factory overhead costs $ Fixed factory overhead costs: $ Total fixed factory overhead costs Total factory overhead costs
Answer:
Total factory overhead costs $ 281,000
Variable factory overhead costs: $ 229,000
Fixed factory overhead costs: $ 52,000
Explanation:
Sweet Tooth Candy Company
Factory Overhead Cost Budget
For the Month Ending August 31
Variable factory overhead costs: $ 229,000
Manufacturing supplies 14,000
Power and light 48,000
Production supervisor wages 135,000
Production control wages 32,000
Total variable factory overhead costs $ 229,000
Fixed factory overhead costs: $ 52,000
Factory insurance 30,000
Factory depreciation 22,000
Total fixed factory overhead costs $ 52,000
Total factory overhead costs $ 281,000
1)The following are not included in the factory Overheads as they are related to the Administration and Sales Department.
Advertising expenses $232,000
Sales commissions 298,000
Executive officer salaries 310,000
2) The following is Direct labor and is not included in the factory overhead costs.
Materials management wages 39,000
The government of Granita is thinking about imposing a very small tax on one or more of the following goods: anvils, books, and cardigans. Anvils and books are both produced in competitive markets with constant marginal costs, while cardigans are produced by a monopoly with constant marginal costs. The elasticities of demand for the three goods are −3, −1.5, and −1.2, respectively. What good or goods should the government put the very small tax on if it wants to minimize the deadweight burden?
Answer:
The government should tax Anvils and books but not cardigans
Explanation:
A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply.
A monopoly is when there is only one firm operating in an industry. The firm sets the market price for its good and services. The firm earns economic profit in the short and long run.
When the absolute value of elasticity is greater than 1, it means that demand is price elastic.
Elastic demand means a small change in price leads to a greater change in quantity demanded.
Deadweight loss refers to the loss in efficiency as a result of tax.
A competitive market produces as the social optimum, so the effect of tax would be very small but because the monopoly operates below social optimum, the cost of tax would be high.
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