Answer:
Violates unity of command
Explanation:
Willard will be in violation of unity of command because he has two reporting lines. To the the project manager and his quality department manager.
The conflict will become evident when there is a conflict between the two job roles. Willard is obligated to report to both managers and working with one of the manager's may conflict with his duties with the other one.
Joshua Industries is considering a new project with cash inflows of $478,000 for the indefinite future. Cash costs are 68 percent of the cash inflows. The initial cost of the investment is $685,000. The tax rate is 34 percent and the unlevered cost of equity is 14.2 percent. The firm is financing $200,000 of the project cost with debt. What is the adjusted present value of the project?
Answer:
$93,940.85
Explanation:
Adjusted present value is the sum of net present value of after tax cash flow and net present value of tax shield.
First compute after tax cash flow:
Cash inflow = $478,000
Cash cost = 68% of $478,000 = $325,040
Pre-tax profit = 478,000 - 325,040 = $152,960
Tax = 34 %
After tax cash flow = 152,960 (1 - 0.34) = $100,953.60
Net present value of after tax cash flow = [tex]\frac{After\ tax\ cash\ flow }{Cost\ of\ equity} -Intial\ investment\\[/tex]
= [tex]\frac{100,953.60}{0.142} - 685,000[/tex]
= $25,940.85
Present value of tax shield = Amount of debt × tax rate
= 200,000 × 0.34
= $68,000
Adjusted present value = 28,940.85 + 68,000
= $93,940.85
Lucas is planning to buy a house owned by Janet. He gives her an initial amount of $10,000 to hold the offer open for a 45-day period. Janet will deduct the $10,000 from the purchase price if Lucas purchases the property within those 45 days. If he does not, Janet can keep the $10,000 and offer the house to another party. Which of the following contracts does this scenario best illustrate?
A. Option contract
B. Void contract
C. Implied contract
D. Executed contract
Answer:
The correct answer is letter "A": Option contract.
Explanation:
An option contract gives a buyer the right but not the obligation to purchase an asset at a certain price -usually fixed- and date. The term is mostly used while talking about stocks. A buyer can profit both from the upward and downward movements of the stock price. If the price goes up, the investor could bet on call options while the decreasing price could allow investors to profit from put options.
Lucas's case reflects an option contract because he is planning to purchase a house from Janet at a price and date in the future but he agreed in not having the obligation to buy the house when that date arrives.
When the federal reserve decreases the federal funds target rate, it means that
Carly knows that according to ________, if she administers positive reinforcement or avoidance learning, her employees will tend to continue doing their jobs in the same way they are doing them now, and if she uses punishments or extinction, they will likely not repeat it.
Answer:
Law of effect
Explanation:
This law was developed by Edward Thorndike
When Responses are followed by satisfaction, it causes people to become more attached to a situation. This is likely going to cause these people to continue doing things as they are doing them now. This is why if Carly uses positive reinforcement, her employees will do their jobs same way they are doing it now.
Conversely, if the situation is followed by discomfort, that is she uses punishments or extinction, the
employers will disconnect themselves from doing their jobs the same way they have been doing it.
Answer:
Law of effect
Explanation:
The law of effect states that "responses that produce a satisfying effect in a particular situation become more likely to occur again in that situation, and responses that produce a discomforting effect become less likely to occur again in that situation". This was postulated by Edward Thorndike. According to him, he assumed that when there's a negative reaction to event, it is less likely that the event repeats itself. In this case, if Carly gives a negative reaction like punishment or extinction, the employees will improve in the way they are carrying out their job. He opine that if people are cool or satisfied with an event, it is more likely to repeat it self again.
The Economic Development Minister of a country has a list of things she thinks may explain her country's low growth of real GDP per person relative to other countries. She asks you to pick the one you think most likely explains her country's low growth. Which of the following contributes to low growth?A) tariffs and quotas. B) low population growth. C) encouraging foreign investment. D) strong private property rights.
Answer: Tariffs and quotas
Explanation:
Tariffs and quotas are firms of trade protectionism that are used to control the amount of goods brought into a country. While quotas are taxes on imports, quotas are limitation on the number of goods imported.
Tariffs and quotas will affect economic growth because when there's limitation to the amount of imports, will affect the gross domestic product negatively.
Lacey Abrams is the sales representative for the Brook Park Zoo. She sells events, such as wedding receptions, corporate dinners, and fundraisers that are held on zoo grounds. She has just finished negotiating all the details of Anne Mason's upcoming wedding reception and is preparing to close the sale. Which of the following is a signal that Anne is ready to sign the contract to book the reception?
A) She looks at her watch.B) She checks her phone for messages.C) She asks, "How much do I need to put down now to reserve the date?"D) She asks, "Why don't you offer pre-set desserts?"E) She says, "The country club offers a chocolate fountain at no extra cost."
Answer:
C) She asks, "How much do I need to put down now to reserve the date?"
Explanation:
Anne asking "How much do I need to put down now to reserve the date?" is a signal that she is ready to sign the contract to book the reception.
Obviously, Anne Mason would only ask how much is required to put down to reserve a date at the Brook Park Zoo because they had just finished negotiating all the details of her upcoming wedding reception and she's satisfied with the service.
Final answer:
Anne Mason's clear signal of readiness to finalize the wedding reception contract with Lacey Abrams at Brook Park Zoo is when she asks about the deposit required to reserve the date, showing her intention to secure the venue.
Explanation:
A signal that a client is ready to move forward with a purchase or agreement, such as booking a venue for a wedding reception, typically comes in the form of a clear indicator of commitment or preparation to take the next step. In the context of Lacey Abrams, a sales representative for Brook Park Zoo, handling Anne Mason's wedding reception booking, the signal that Anne is ready to sign the contract would likely be an action or a question that directly relates to the finalization of the agreement. Among the options provided, the clear signal of readiness to close the sale is C) where Anne asks, "How much do I need to put down now to reserve the date?" This shows her intention to secure the venue by understanding the financial commitment required at this stage.
Other options, such as checking the phone or inquiring about offerings like pre-set desserts or what competitors offer, are signals that could indicate hesitancy or a need for further clarification, rather than a readiness to conclude the transaction.
The economic freedom of the world measure indicates that the united states
Strategic leaders are responsible for large organizations and influence several thousand to hundreds of thousands of people. They establish force structure, allocate resources, communicate strategic vision, and prepare their commands and the Army for future roles. Which leader would perform these responsibilities?
Answer:
The army chief of staff.
Explanation:
The army chief of staff performs these responsibilities.
His responsibilities include:
1. reporting directly to the Secretary of the Army for army matters and providing assistance to the secretary.
2. He presents and enforces the policies, plans, and projections of the military, while preparing their commands and the military for roles in the future.
Answer:
The Army Chief of Staff.
Explanation:
The Chief of Staff usually reports directly to the Secretary of the Army for army matters and assists in the Secretary's external affairs functions, including presenting and enforcing army policies, plans, and projections. The Chief of Staff of the Army is usually nominated by the President of the country and must be confirmed by the Senate.
The Army Chief of Staff presents and enforces the policies, plans, and projections of the military, while preparing their commands and the military for roles in the future.
hich one of the following refers to the ability of shareholders to undo a company's dividend policy and create an alternative dividend policy by reinvesting dividends or selling shares of stock? Multiple Choice Homemade dividend Personalization Offsetting leverage Recapitalization Perfect foresight model
Answer:
Homemade Dividend Policy
Explanation:
Homemade dividends can be defined as a concept in which liquid markets an investor can restructure a company's dividend policy to equate his own cash flow objectives. In a case where an investor receives a dividend when he does not want any cash inflow, he has the option of reinvesting the amount back into the company's stock.
A production manager at a pottery factory has noticed that about 70 percent of defects result from impurities in raw materials, 15 percent result from human error 10 percent from machine malfunctions, and 5 percent from a variety of other causes. This manager is most likely using: a.A quality loss function. b.A scatter diagram. c.A Pareto chart. d.A flowchart. A cause-and-effect diagram.
A Pareto Chart are often used to identify the areas to focus on first in process improvement. This manager is most likely using (C) A Pareto Chart to identify the defects.
A Pareto Chart is a graph that indicates the frequency of defects, as well as their cumulative impact, and is useful to find the defects to prioritize in order to observe the greatest overall improvement.
A Pareto chart is a type of chart that contains both bars and a line graph, where individual values are represented in descending order by bars, and the cumulative total is represented by the line. It helps to identify the most significant factors that contribute to a particular problem or situation.
In this case, the production manager is likely using a Pareto chart to analyse the defects in the pottery factory.
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One of the long-run effects of higher government budget deficits is growth in the economy's private sector at the same time the government sector shrinks. a redistribution of real Gross Domestic Product (GDP) away from government-provided goods and toward more privately provided goods. a fall in the equilibrium price level. an increase in the government's share of the nation's economic activity.
Complete Question:
One of the long-run effects of higher government budget deficits:
A. is growth in the economy's private sector at the same time the government sector shrinks.
B. a redistribution of real Gross Domestic Product (GDP) away from government-provided goods and toward more privately provided goods. C. a fall in the equilibrium price level.
D. an increase in the government's share of the nation's economic activity.
Answer:
D. an increase in the government's share of the nation's economic activity.
Explanation:
One of the long-run effects of higher government budget deficits is an increase in the government's share of the nation's economic activity because it would be mainly responsible for funding of the economy, thereby causing higher real Gross Domestic Product (GDP).
A government budget deficit arises when government expenses exceed it's revenue.
It usually expresses the financial health of a nation over a period of time.
Cost estimates on a long-term contract may indicate that a loss will result on completion of the entire contract. In this case, the entire expected loss should be:__________.
A) recognized in the current period, regardless of whether the percentage-of-completion or completed-
contract method is employed.
B) recognized in the current period under the percentage-of-completion method, but the completed-contract
method defers recognition of the loss to the time when the contract is completed.
C) recognized in the current period under the completed-contract method, but the percentage-of-
completion method defers the loss until the contract is completed.
D) deferred and recognized when the contract is completed, regardless of whether the percentage-of-
completion or completed-contract method is employed.
Answer:
The answer is A.) Recognized in the current period, regardless of whether the percentage-of-completion or completed contract method is employed.
Explanation:
The long -run cost function can be estimated using either time-series cost-output data collected on a plant (or firm) whose size has been variable over time, or cross-sectional cost-output dasta collected on a sample of plants,(firms) of different sizes at a particular point on time.
Answer:
The correct answer here is A)
Here is why.
Explanation:
If it is not recognized in the current period, it may be misleading. A forecast is indicative that a budget has already taken place and that resources have been released.
So even though cost estimates at the end of the incumbent period may indicate that a loss will result once the contract is completed, under the Zero-Profit, Completed- contract and percentage-of-completion methods, the entire loss that is expected on the contract must be recognized in the current period.
Cost estimation in project management speaks to identifying taking cognizance of the cost and other resources needed to finish a project whose purview or extent is properly defined.
A good cost estimate must include a detailed Basis of Estimate (BOE) report that describes the assumptions, exclusions, inclusions, accuracy and other aspects that are needed to interpret the total project cost.
Cheers!
Hype Mobile Phones wants to learn how consumers decide which mobile phones to purchase, so it places researchers in mobile phone stores and has them pose as sales people. In this example, researchers are ________. a) third-party observers b) actors c) participant-observers d) active researchers e) imitators
Answer:
c) participant-observers
Explanation:
-Third-party observer is an additional person that is involved in the assesment.
-Actors refer to people tha perform a character.
-Participant-observer is when researchers are allowed to learn about what is being studied by participating in the activities that are part of the research.
-Active researchers refers to practitioners that are part of a company that perform the research in their area to help fix a problem.
-Imitators refer to people that copy other people's actions.
According to this, the answer is that in this example, researchers are participant-observers are researchers are placed in the stores s sales people.
Infinite Coffee Inc. owns coffee plantations in Brazil. The company trades its coffee produce directly with coffee merchants in foreign markets who later resell and distribute it throughout their country. In this scenario, Infinite Coffee's activities best illustrate___________.
Answer:
Exporting
Explanation:
Exporting refers to the sale of goods and services to a country different from the one in which they were produced. According to this, the answer is that in this scenario, Infinite Coffee's activities best illustrate exporting because the company sells the coffee to merchants in foreign markets.
Other things the same, an increase in the foreign price level Group of answer choices reduces the real exchange rate. This reduction could be offset by a decrease in the domestic price level. reduces the real exchange rate. This reduction could be offset by an increase in the domestic price level. increases the real exchange rate. This increase could be offset by a decrease in the domestic price level. increases the real exchange rate. This increase could be offset by an increase in the domestic price level.
Answer:
reduces the real exchange rate. This reduction could be offset by an increase in the domestic price level.
Explanation:
An increase in the foreign price level will result in an increase of the real exchange rate, or an appreciation of the value of the domestic currency. Following the law of one price, if the price of a foreign good increases, two things might happen: the foreign currency will depreciate reducing the real price of the good or the domestic price of the good will increase to match the foreign price.
Louise Fulkerson is president of the Student Marketing Association at Baylor University. Louise and the other officers want to conduct a short survey to determine the type of programming they should offer for the upcoming year. Their population is defined as "students in the College of Business." One of the officers suggests that each of them go into their classes, mostly seniors, and conduct the survey. "We can do it easily and fast, and our professors will be glad to help the association out by giving us a few minutes to conduct the survey," says one of the officers. But Louise is worried about the sample. "Most of us are marketing majors and we are all seniors taking senior classes. I would prefer to ask the Department Chairperson if we can survey students taking Fundamentals of Marketing because all majors have to take this course, and most of the future members of the Association will be coming from these Fundamentals classes." Louise is suggesting which one of the following sampling methods?A) quota sampleB) purposive sampleC) stratified sampleD) representative sampleE) systematic sample
Answer:
The correct answer is letter "B": purposive sample.
Explanation:
A purposive sample is a research approach by which the individuals in charge of the study select determined subjects of the population because of a specific reason. This is typically in an attempt to have better results at the moment of analyzing the output of the research. It is believed that the individuals selected may represent better the overall population, therefore, the study could be more accurate.
Milo Co. had 800,000 shares of common stock outstanding on January 1, issued 126,000 shares on May 1, purchased 63,000 shares of treasury stock on September 1, and issued 54,000 shares on November 1. The weighted average shares outstanding for the year isA. 851,000B. 872,000C. 893,000D. 914,000
Answer:
The answer is 872,000
Explanation:
The shares are bought on different dates, so we need to factor this in.
From January 1 to December 31:
800,000 shares(A full year)
From May 1 to December 31:
8/12 x 126,000 shares
=84,000 shares
From September 1 to December 31:
4/12 x 63,000 shares
= 21,000 shares
And from November to December 31;
2/12 x 54,000 shares
9,000 shares.
Therefore, the weighted average shares outstanding for the year is:
800,000 + 84,000 - 21,000 + 9,000 shares
= 872,000
The reason why 21,000 shares was substracted from the rest was because the 63,000 shares was a treasury stock i.e shares buy back and treasury stock reduces number of outstanding shares
Final answer:
To calculate the weighted average shares outstanding for the year for Milo Co., consider the shares issued and repurchased at different times throughout the year.
Explanation:
Milo Co. had 800,000 shares of common stock outstanding on January 1, issued 126,000 shares on May 1, purchased 63,000 shares of treasury stock on September 1, and issued 54,000 shares on November 1. To calculate the weighted average shares outstanding for the year, you have to take into account the time period each set of shares was outstanding.
The weighted average shares outstanding can be calculated as: [800,000 shares * 12 months + 926,000 shares * 8 months + 863,000 shares * 4 months + 917,000 shares * 1 month] / 12 months = 872,000 shares.
Tracy offers Liam a job as a store manager at a liquor store, which she plans to open in a small property owned by her husband. The property is located near a school. Before Liam accepts the offer, the state passes a rule that liquor stores cannot be located within a five-mile radius of a school. In this scenario, the employment offer terminates due to:_____________
Answer:
Subsequent illegality of the subject matter.
Explanation:
In this case the subject matter of the agreement is related to an illegality.
Tracy has offered Liam a job but before Liam accepts there is a change in The state law. Since the specific subject matter of the offer is destroyed before the offer is accepted by Liam, there is an automatic termination of the offer. Such that Liam cannot perform his duties because the terms of the agreement are illegal. Due to a change in law, the performance of the job becomes illegal
A static budget is one that __________,a. Is based on the actual sales volume achieved during the period. b. Is developed for a single level of expected output. c. Is one component of the operating budget. d. Is always used to compare with the actual results.
Answer:
b. Is developed for a single level of expected output.
Explanation:
The static budget means the fixed budget i.e fixed in nature. The amount does not changed moreover there is no significant changes occurred in this type of budget. If there is any business fluctuations or any other kind of fluctuations it does not impact at all
In addition, it is developed for a single level of expected output i.e developed for a single activity by considering its expected outcome or results
Potential advantages to initiating, continuing, or expanding international operations is that foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a wider number of markets.
Answer:
True:)
Explanation:
The given statement is very TRUE.
Yes, as we know that in international operations the companies are given the freedom to find new consumers for their goods and as well as products. And foreign operations have the power to absorb as the demand is less than the stock, and also reduces the unit cost as their is no more production because of the less demand.
Imagine that a researcher is studying a population of nerve cells known as the neural crest. In mice, when these cells fail to form or migrate properly during development, the cranial ganglia and their associated nerves appear small. As a result, these mice do not respond to strong odors, loud noises, and bitter-tasting food. The neural crest likely forms:
Please choose the correct answer from the following choices, and then select the submit answer button.
neurons of the central nervous system.
interneurons of the peripheral nervous system.
glia of the central nervous system.
neurons and glia of the peripheral nervous system
Answer:
neurons and glia of the peripheral nervous system.
Explanation:
Neural crest cells is been define as cells which are grouped and are unique to vertebrates that sprout from the embryonic ectoderm germ layer, and later becomes or gives rise to a different cell lineage —including which are cartilage and bone , melanocytes, craniofacial , smooth muscle, peripheral and enteric neurons and glia. As seen in the definition, neutral crest is likely to form neurons and glia of the peripheral nervous system
Suppose Jane has chosen a combination of two goods, A and B, such that MU/P of good A is 10 (MUA/PA = 10), and the MU/P of good B is 10 (MUB/PB = 10). To increase utility with the same amount of money, Jane should:________.
a) increase the number of B consumed.
b) increase the number of A consumed.
c) increase the number of A and B consumed.
d) do nothing; she cannot increase utility with the same amount of money.
Answer:
Option D.
Explanation:
A rule for maximizing utility is that if an individual wants to maximize total utility, for every dollar that is spent, he/she should spend it on the commodity that yields the greatest marginal utility per dollar of expenditure.
In the scenario presented above, we can see that the marginal utilities per dollar for both commodities that Jane consumes are equal, therefore she can neither increase or decrease spending on any particular commodity in order to increase or decrease its marginal utility, this is because she gets an equal amount of marginal utility from both commodities.
Therefore, with the same amount of money, Jane cannot increase utility.
The Financial Stability Oversight Council was created by Question 29 options: President Roosevelt in 1939 to reduce unemployment and increase public-sector job opportunities. President Obama and Congress in 2010 to identify system-wide risks to the financial sector. Congress in 1965 to counter the influence of the growing influence of the Office of Management and Budget. President Reagan in 1980 to study the causes of inflation and make policy recommendations to reduce it.
Answer:
President Obama and Congress in 2010 to identify system-wide risks to the financial sector.
Explanation:
The Financial Stability Oversight Council was created by President Obama and Congress in 2010 to identify system-wide risks to the financial sector.
Answer:
B. President Obama and Congress on 2010 to identify system-wide risks to the financial sector.
Explanation:
The Financial Stability Oversight Council was approved by congress and signed into law by President Barack Obama on July 21, 2010. This council was mainly formed to monitor the ability of financial organizations in the United States to overcome factors that could make them fall.
When those factors are identified, the council addresses those factors. They also ensure that rules are followed in the course of business so that organization do not believe that the government would save them in the event that they do not meet up.
The Office of Financial Research supports the council.
The statement, "All used-car dealers take advantage of customers" is: a. defamation so long as there was publication. b. defamation because it meets the requirement that the statement reflect on the honesty of the business. c. defamation because the businesses are sufficiently identified. d. not defamation.
Answer:
D. Not defamation
Explanation:
Defamation is a situation whereby someone's words ends up causing damages to another's reputation or livelihood. It can be an oral or a written form of statement which is false about an individual that unjustly damages their reputation or form of livelihood. Libel is a written form of defamation and slander is an oral or spoken form of defamation. Statements are only considered defamatory if they are false. True statements don't account for defamatory. Also, statements of opinions like in this case are not considered defamatory due to the fact that it is subjective to the speaker in question.
Answer:
D. Not Defamation.
Explanation:
This is said to be not defamatory because most of them posses low truth and honesty in such a business. This could be because of the risks involved.
Defamation action: you can prima facie be sued for defamation if you have published something about the car dealer as a company (only one that employs less than ten employees) or the owners or employees as individuals that detrimentally affects their reputation.
When Palm, Inc. acquired its 100% investment in Star Co., a foreign entity, the excess of cost over book value was 10,000 FC. This excess was traceable to a 10-year patent. Assume the foreign entity's local currency is its functional currency.
The elimination entry to amortize the excess will include a(n):
A. debit to Patent for 10,000FC multiplied by the current exchange rate.
B. debit to Patent for 10,000FC multiplied by the historical exchange rate.
C. credit to Investment in Star for 10,000FC multiplied by the average exchange rate.
D. credit to Cumulative Translation Adjustment for 10,000FC multiplied by the historical exchange rate.
Answer:
A. debit to Patent for 10,000FC multiplied by the current exchange rate.
Explanation:
Since the excess of cost over book value was 10,000FC and this excess was traceable to a 10-year patent.
The elimination entry to amortize the excess will include a debit to Patent for 10,000FC multiplied by the current exchange rate assuming the foreign entity's local currency is its functional currency.
Ormand Company uses variable costing for internal decision-making purposes and has the following information for June: Sales $900,000 Variable cost of goods sold 440,000 Fixed manufacturing costs 160,000 Variable selling and administrative expenses 100,000 Fixed selling and administrative expenses 70,000 Determine the income from operations for June.
Answer:
$130000
Explanation:
Given: Sales revenue= $900000.
Variable cost of goods sold= $440000.
Fixed manufacturing cost= $160000
Variable selling and administration expense= $100000.
Fixed selling and administrative expense= $70000.
Now, finding the income from operation for June.
Formula; Income from operation= [tex]Revenue- cost\ of\ goods\ sold- administrative\ expense[/tex]
⇒ Income from operation= [tex]\$ 900000- \$ 440000-\$ 160000- (\$ 100000+\$ 70000)[/tex]
⇒ Income from operation= [tex]\$ 900000- \$ 600000- \$ 170000[/tex]
⇒ Income from operation= [tex]\$ 900000 - \$ 770000[/tex]
∴ Income from operation= [tex]\$ 130000[/tex]
Hence, $130000 is the income from operation for June.
Which behavior would most offices consider inethical
Answer:
Gross misconduct over public or office fund.
A company total marketing communications mox consists of a specific blend of advertising, sales promotion, public relations personal selling and direct marketing tools that the company was to communicate customer value and build customer relationships. Which of the following terms best describes this set of communications tools?
A) the product mix
B) product line filling
C) the promotion mix
Answer:
C
Explanation:
The promotion mix.
A promotion mix is The Promotion Mix consists of a blend of Advertising, Personal Selling, Sales Promotion, Public Relations and Direct Marketing. These mix are chosen by marketers to help a business reach it's goals and objectives.
It is a promotion mix because it made up of of public relations, advertising, sales promotion and personal selling.
Answer:
C. the promotion mix
Explanation:
Promotion mix is a strategy employed by business to increase and maintain the demand for its goods and services through many means of promotions like advertising, sales promotion, direct marketing, personal spellings and public relation. Promotion mix is aimed at promoting immediate sales.
Elements of the promotion mix are :
- Sales promotion which consist of all activities aimed at promoting immediate sale
-Advertising ; is a paid form by a sponsor aimed at promoting goods and services
-Personal selling: Physical interaction between sellers and buyers aimed at promoting sales
-Public relation; Here, image of the product is being built in the market place by marketers.
There are 4 P's of marketing mix, which are price, place, promotion and people.
Which of the following could cause an appreciation of the real exchange rate in a small open economy? A decrease in the domestic interest rate. The expiration of an investment tax-credit provision. An increase in government spending. An increase in taxes.
Answer: An increase in government spending
Explanation:
Currency appreciation is an increase in the worth of one currency against the value of another currency. Due to the appreciation of a currency, imports get cheaper.
In a small open economy, the appreciation of the real exchange rate can be caused by an increase in government spending as this puts pressure on domestic currency to appreciate, which leads to current account deterioration.
Adam Plastics, Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production.
Data for February 2012 are:Work in process, beginning inventory, 200 units.Units started during February 600 unitsWork in process, ending inventory, 100 units30% complete as to conversion costs100% complete as to materialsCosts:Work in process, beginning inventory:Direct materials $200,000Conversion costs $200,000Direct materials costs added during February $2,000,000Conversion costs added during February $2,500,000What is the cost assigned to Ending WIP (Ending Inventory) in February?a. $393,162.50b. $4,900,000c. $385,958.90d. None of the above
Answer:
c. $385,958.90
Explanation:
Step 1 Determine the Total Cost Incurred for Both materials and Conversion
Raw Materials
Opening Work In Process $200,000
Add Cost Added during the year $2,000,000
Total $2,200,000
Conversion
Opening Work In Process $200,000
Add Cost Added during the year $2,500,000
Total $2,700,000
Step 2 Determine the total equivalent units for materials and conversion
Materials
Closing work in process 100 × 100% = 100
Completed and Transferred (600+200-100)×100% =700
Total =800
Conversion
Closing work in process 100 × 30% = 30
Completed and Transferred (600+200-100)×100% =700
Total =730
Step 3 Determine equivalent cost per unit of materials and conversion costs
Materials = $2,200,000/800 = $2,750
Conversion = $2,700,000/730 = $3,699
Step 4 Determine the cost assigned to Ending WIP
Materials ($2,750×100) = $275,000
Conversion Cost ($3,699×30) = $110,970
Total =$385970