Answer:
A. 07.01.2021
Dr Investment in Bonds A/c 250
Dr Premium on Bond Investment A/c 40
Cr Cash 290
12.31.2021
Dr Cash 10
Cr Premium on Bonds 1.3
Cr Interest Revenue 8.7
B. $251.3
C. Jan-02
Dr Fair Value Adjustment 30
Cr Unrealised Gain or loss 30
Jan-02
Dr Cash 300
Cr Premium on Bonds A/c 38.7
Cr Gain On sale of Investment or Profit on sale of Investments 11.3
Cr Investment in Bonds A/c 250
Explanation:
a. Preparation of the journal entry to record Mills'investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective market) rate.
07.01.2021
Dr Investment in Bonds A/c 250
Dr Premium on Bond Investment A/c 40
(290-250)
Cr Cash 290
(Being To record investments in Bonds)
12.31.2021
Dr Cash 10
[(8%/2)* 250] semiannually
Cr Premium on Bonds 1.3
(10-8.7)
Cr Interest Revenue 8.7
[(6%/2)* 290] semiannually
(Being To record Interest)
b. Calculation for At what amount will Mills report its investment in the December 31, 2021, balance sheet
Book Value 290
Add:Premium on Bonds ( -40+1.3) -38.7
Amount to be reported 251.3
(290-38.7)
Therefore the Amount to be reported in Balance sheet will be Book Value of the amount of 251.3
c. Preparation of the journal entry to record the sale.
Jan-02
Dr Fair Value Adjustment 30
Cr Unrealised Gain or loss 30
(300-270)
Jan-02
Dr Cash 300
Cr Premium on Bonds A/c 38.7
(40-1.3)
Cr Gain On sale of Investment or Profit on sale of Investments 11.3
[300-(250+38.7)]
Cr Investment in Bonds A/c 250
(Being To record the sale)
This year Mary received a $200 refund of state income taxes that she deducted on her tax return last year. Mary included a total of $4,000 of state income taxes when she itemized deductions last year. What amount of the refund, if any, should Mary include in her gross income this year
Answer:
The amount of $200 that was added to the itemized deductions of $4,000 was above the standard deduction by the amount of $200
Explanation:
Any amount that was refunded will have to be added to the gross income only on one condition which is when the main deduction amount provided a tax benefit. Therefore based on the information given the amount of $4,000 of the deductions provided a tax benefit of the amount of $200 which means that the itemized deductions was above the standard deduction by the amount of $200.
How do you answer someones question i don't seem t obe able to do that
Answer:
You have to go to the question that wou want to answer and click the option that says "add answer" under the question. If that option isnt available it means that two people have already answered it. Therfore you are unable to add your response.
Hope this helped!! x
The law of comparative advantage suggests that Group of answer choices curtailing U.S. trade with other countries would make U.S. consumers better off. everyone would be better off if they were self-sufficient. countries will tend to import commodities that they can produce at a relatively low opportunity cost. countries will tend to import commodities that they can produce at a relatively high opport
Answer:
countries will tend to import commodities that they can produce at a relatively high opportunity cost
Explanation:
The Comparative advantage would be taken place at the time when the one country would generate the good or the service at a lesser opportunity cost as compared to other country, In the case when the importing country would have the high opportunity cost in generating the product so it is better to import from the other country so that the cost would be saved as much as more
Therefore the last option is correct
Unimart Precision Manufacturing:
Beginning inventory Merchandise $275,000
Finished goods $450,000
Cost of purchases $500,000
Cost of goods manufactured $900,000
Ending inventory Merchandise $115,000
Finished goods $375,000
Compute cost of goods sold for each of these two companies for the year ended December 31, 2015.
a. Merchandising Business:
b. Manufacturing Business:
Answer:
A. $660,000
B. $975,000
Explanation:
We know that ;
Cost of goods sold = Opening inventory + Purchases - Ending inventory
For Merchandising Business, it would be
= $275,000 + $500,000 - $115,000
= $660,000
For Manufacturing Business, it would be;
= $450,000 + $900,000 - $375,000
= $975,000
8.) Suppose investors can earn a return of 2% per 6 months on a Treasury note with 6 months remaining until maturity. What price would you expect a 6-month-maturity Treasury bill to sell for
Answer: $9,803.92
Explanation:
There is information missing here which is that: The face value of the T-bill is $10,000.
The value of the Treasury bill is the face value discounted to the current period.
If it is to earn 2% every 6 months, this would represent one single period and the present value would be:
= 10,000 / ( 1 + 2%)
= $9,803.92
Sheridan Industries produces and sells a cell phone-operated home security control. Information regarding the costs and sales of security controls during May 2020 are provided below.
Unit selling price of security control $45
Unit variable costs $22
Total monthly fixed costs $120,000
Units sold 8,000
Required:
Prepare a CVP income statement for Cedar Grove Industries for the month of May. Provide per unit values and total values.
Answer and Explanation:
The preparation of the CVP income statement for Cedar Grove Industries for the month of May is presented below;
Particulars Units Amount
net sales $45 $360,000 (8,000 units × $45)
Less:
Variable expense $22 -$176,000 (8,000 units × $22)
Contribution margin $23 $184,000
Less:
Fixed cost -$120,000
Net income $64,000
Which of the following is the basis for research surveys?
O trial and error
O problem-solving strategy
O scientific method
Please help me
Answer:
A
Explanation:
Answer:
Actually, the answer is scientific method.
Explanation:
I took the stem test on edgenuiity and got it right.
SCENARIO 9.7: Julio borrowed $80,000 from his great aunt to open a coffee stand at a local flea market. He agrees to pay his great aunt a 5% yearly return on the money she lent him. His other yearly fixed costs equal $16,000. His variable costs equal $60,000. He sold 50,000 cups of coffee during the year at a price of $3.00 per cup. 93) Refer to Scenario 9.7. Julio's total fixed costs equal A) $4,000. B) $16,000. C) $20,000. D) $80,000. 94) Refer to Scenario 9.7. Julio's total costs equal A) $20,000. B) $40,000. C) $60,000. D) $80,000.
Answer:
$20,000
$80,000
Explanation:
Fixed cost is the cost that does not vary with output.
Fixed costs = cost of interest + other yearly fixed cost
(0.05 x $80,000) + $16,000= $20,000
Total cost is the sum of fixed and variable cost.
Variable cost is the cost that varies with output. If output is zero, variable cost would be zero.
Total cost = fixed cost + variable cost
= $20,000 + $60,000 = $80,000
Which of the following is a violation of a property managers fiduciary obligations to an owner? a) disclosing information about a property physical defects b) providing booklets about lead based paint to tenants c) hesitating to verify a tenants income d) accepting a signed lease on the owners behalf
Answer:
The answer is "Option c".
Explanation:
The hesitation to verify the earnings of its tenant is a violation of the owner's fiduciary duties of a management company. The contractual responsibility would be to behave throughout the national interest of somebody else. In broad terms, a reliable obligation is a fidelity duty as well as a correctional duty. It implies that perhaps the trustee should only behave throughout the national interest of the customer or beneficiaries.
Target is examining their online sales data during the pandemic to understand what happened. Which kind of analytical technique are they using?
Answer:
Descriptive analytics.
Explanation:
Environmental scanning is a management strategy that focuses on systematically acquiring informations about occasions, trends, events or patterns through surveys and analysis of these information in an organisation's external and internal environment. The informations acquired through environmental scanning is then used by the executive management in strategically planning the organisation's future and exploitation of available opportunities for the success of the organization.
The internal environmental scanning offers an organization strength and weakness while the external environmental scanning provides information about opportunities and threats.
Generally, the external environmental scanning gives an overview of the opportunities in the market as well as potential threats to an organization.
Descriptive analytics can be defined as a branch of statistical analysis which typically involves the gathering of data for effective use.
In this scenario, Target is examining their online sales data during the pandemic to understand what happened.
Hence, the kind of analytical technique they are using is descriptive analytics.
Are you personally liable for this bill, or is it only the corporation that is liable since you are a CEO and the incident happened during a business trip for the corporation
Complete Question:
Suppose you are the CEO of a corporation. After attending a business conference in Hawaii, you and some other CEOs you met at the conference decide to relax and unwind with a few drinks at the hotel bar. The hotel bar closes, so you and the other CEOs decide to go back to your room and continue the party. You proceed to raid the large whiskey collection in your minibar. Your memory becomes hazy at this point, but you wake up the next morning and find the hotel room is completely trashed. The hotel sends you a $50,000 bill for the damages. Are you personally liable for this bill, or is it only the corporation that is liable since you are a CEO and the incident happened during a business trip for the corporation?
Answer:
Based on the given scenario, the CEO is personally liable for the incident and the bill of $50,000 claimed as damages by the hotel.
Explanation:
The damages resulted from the CEO's indiscretion. When properly checked, the accident happened as a result of the personal decision by the CEO to relax and unwind with other CEOs and to extend their partying outside the hotel bar. This incident occurred after the main business for the business trip had been completed. It is also an incident that should not have happened if caution was not thrown to the wind by the CEO. Therefore, the CEO should personally bear the liability.
Amy is a stay-at-home parent who lives in Dallas and does some consulting work for extra cash. At a wage of $50 per hour, she is willing to work 7 hours per week. At $65 per hour, she is willing to work 10 hours per week.
Required:
Calculate the price elasticity of supply.
8. A company manufactures two products X and Y. Each product has to be processed in three departments: welding, assembly and painting. Each unit of X spends 2 hours in the welding department, 3 hours in assembly and 1 hour in painting. The corresponding times for a unit of Y are 3, 2 and 1 respectively. The man-hours available in a month are 1500 for the welding department, 1500 in assembly and 550 in painting. The contribution to profits are $100 for product X and $120 for product Y.
A. Formulate the appropriate linear programming problem
B. Solve it graphically to obtain the optimal solution for the maximum contribution
100x+120y = z, z= $ 63000 is the appropriate linear programming problem.
What is Linear Programming?A mathematical formalism whose requirements are expressed by linear connections can be optimized using a technique known as linear programming. A particular type of mathematical programming is linear programming.
By applying different constraints, a linear function is maximized or reduced in linear programming, a mathematical modeling technique. In commercial planning, industrial engineering, and—to a lesser extent—the social and physical sciences, this method has proven helpful for directing quantitative decisions.
We obtain the equations of lines as 4x + y = 40 but also 2x + 3y = 90 by summing the constraints. Z has a minimum value of 127, hence, B (3, 28) provides the best option.
It is composed of linear functions that are subject to equations or inequalities. Combinatorial optimization makes heavy use of the linear programming technique, which consists of a linear inequality as well as a linear function. It is referred to as linear programming for these reasons.
Learn more about Linear Programming here:
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You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin patties, frizzles, and mookies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin patties decreases by 5%, the quantity of frizzles sold increases by 4% and the quantity of mookies sold decreases by 5%. Your job is to use the cross-price elasticity between penguin patties and the other goods to determine which goods your marketing firm should advertise together.
Complete the first column of the following table by computing the cross-price elasticity between penguin patties and raskels, and then between penguin patties and kipples. In the second column, determine if penguin patties are a complement to or a substitute for each of the goods listed. Finally, complete the final column by indicating which good you should recommend marketing with penguin patties.
Relative to Splishy Splashies
Cross-Price Elasticity of Demand Complement or Substitute Recommend Marketing with Splishy Splashies
Flopsicles
Kipples
Answer:
Explanation:
a) Data and Calculations:
Decrease in the price of penguin patties = 5%
Quantity of frizzles sold increase by 4%
Quantity of mookies sold decrease by 5%
Cross-price elasticity of frizzles relative to penguin patties = 4%/-5% = -0.8
Cross-price elasticity of mookies relative to penguin patties = -5%/-5% = 1
Relative to Frizzles Cross-Price Complement Recommend
and Mookie's Elasticity of Demand or Substitute Marketing
Frizzles -0.8 (4%/-5%) Complement with patties
Mookie's 1 (-5%/-5%) Substitute without patties
b) The cross-price elasticity measurements for penguin patties and frizzles and Mookie’s are calculated by taking the percentage changes in the quantity demanded of frizzles and Mookie’s and dividing them by the percentage change in the price of the penguin patties. Complementary goods have a negative cross- price elasticity because as the price of penguin patties decreases by 5%, the demand for the frizzles increases by 4%. Substitute goods have a positive cross-price elasticity because as the price of penguin patties decreases by 5%, the demand for the other good decreases by 5%.
Which of the following statements regarding financial statement analysis is incorrect? A. The profit margin can be viewed as a measure of expense control. B. The two most popular measures of company size are net sales revenue and total assets. C. A profitability ratio provides a comparison of an income measure and a size measure. D. In DuPont analysis we break return on assets down into two other ratios that can be compared to their own industry average benchmarks. E. The current ratio measures a company’s effectiveness in using fixed assets to support sales.
Answer: The current ratio measures a company’s effectiveness in using fixed assets to support sales.
Explanation:
The statement regarding a financial statement analysis that is incorrect is option E "the current ratio measures a company’s effectiveness in using fixed assets to support sales".
The current ratio is used by a company to know if there are enough resources that are available in order to meet the short term obligations of the company.
This is done through the comparison of the current assets of the company to the current liabilities of the company.
Bloom Company management predicts that it will incur fixed costs of $269,000 and earn pretax income of $337,900 in the next period. Its expected contribution margin ratio is 51%.
Required:
1. Compute the amount of total dollar sales.
2. Compute the amount of total variable costs
Answer:
1. $1,190,000
2. $583,100
Explanation:
1. Total dollar sales
First, we will get the value for contribution margin
Contribution margin - Fixed cost = Operating income
Contribution margin = Operating income + Fixed cost
Contribution margin = $337,900 + $269,000
Contribution margin = $606,900
The next step is to use contribution margin ratio to determine the sales
Contribution margin / Sales = Contribution margin ratio
606,900 / Sales = 0.51
Sales = 606,900 / 0.51
Sales = $1,190,000
2. Total variable cost
We will use the contribution margin to solve total variable cost
Sales - Variable cost = Contribution margin
$1,190,000 - Variable cost = $606,900
Variable cost = $1,190,000 - $606,900
Variable cost = $583,100
Sandhill Industries produces and sells a cell phone-operated home security control. Information regarding the costs and sales of security controls during May 2020 are provided below. Unit selling price of security control $45 Unit variable costs $22 Total monthly fixed costs $124,000 Units sold 8,400 Prepare a CVP income statement for Sandhill Industries for the month of May. Provide per unit values and total values.
Answer and Explanation:
The presentation of the CVP income statement for Cedar Grove Industries for the month of May is shown below;
Particulars Units Amount
Net sales $45 $378,000 (8,400 units × $45)
Less:
Variable expense $22 -$184,800 (8,400 units × $22)
Contribution margin $23 $193,200
Less:
Fixed cost -$124,000
Net income $69,200
Describe three factors that impact cost or revenue within your organization. How might these variables impact your DPI Project deliverables systematic review
Incomplete question. I provided three factors that can impact cost or revenue within an organization.
Explanation:
1. Production capacity: Theoretically, the greater the production capacity, the higher the opportunity for added revenue since more of the goods or services can be rendered.
2. The market segment: A good market segment can result in profitability for the business.
3. Type of labor employed: Many modern-day industrialists believe that organizations that switch to an automated labor force can achieve lower operational cost; thereby leading to more revenue.
Why do overhead costs often shift from high-volume products to low-volume products when a company switches from a conventional costing method to activity-based costing
Answer:
When a company is using conventional costing methods, the costs are allocated based on volume so those products with a high volume will get a higher share of the costs.
When Activity-based costing is used however, costs are assigned more accurately which will lead to the actual products that are causing the costs incurring them instead of those high-volume products so it will appear as though overhead costs have shifted from high-volume products to low-volume products.
Mary O. Andrettey wants to purchase an expensive sports car. She needs to borrow money to purchase the car, and has loan proposals from three different sources. The cash flows for each proposal are:
Answer: Proposal C
Explanation:
The way to solve this is to calculate the Present Values of all these payments. The smallest present value is the best.
Proposal A.
Periodic payment of $2,000 makes this an annuity.
Present value of Annuity = Annuity * ( 1 - ( 1 + r ) ^ -n)/r
= 2,000 * (1 - (1 + 0.5%)⁻⁶⁰) / 0.5%
= $103,451.12
Proposal B
Present value = Down payment + present value of annuity
= 10,000 + [2,200 * ( 1 - ( 1 + 0.5%)⁻⁴⁸) / 0.5%]
= 10,000 + 93,676.70
= $103,676.70
Proposal C
Present value = Present value of annuity + Present value of future payment
= [500 * (1 - (1 + 0.5%)⁻³⁶) / 0.5%] + [116,000 / (1 + 0.5%)⁶⁰]
= 16,435.51 + 85,999.17
= $102,434.68
Proposal C has the lowest present value and so is best.
Assume that price level in the ABC Islands, a U.S. trading partner, increases signalling inflation in the economy. Using aggregate demand aggregate supply analysis, explain the impact of the increased price level on the United States economy. If the Federal Reserve wants to repair the effects on the U.S. economy noted above, identify a policy action it might undertake.Explain the impact of the Fed action on each of the following: output price level the international value of the U.S. dollar.
Answer:
The effects of inflation in the U.S. trading partner, will pass through the U.S. economy in the form of exports: since the U.S. imports goods from ABC islands, the higher prices in the ABC islands will make imports from there more expensive, contributing to a small raise in inflation in the overall U.S. economy.
However, exports from ABC Islands are likely to be a small component of U.S. Aggregate demand, so the effect in overall inflation is likely to be small.
Despite this, the fed can step in and raise interest rates by contracting the money supply. This is contractionary monetary policy, and it is used when inflation is rising. It lowers the value of the U.S. dollar in international markets, but it increases output price level.
One of the advantages of owning a small business is: Group of answer choices interest-free loans all of the above flexibility guaranteed profit no taxes g
Answer:
flexibility
Explanation:
A small business can be described as a privately owned corporation, partnership, or sole proprietorship. Its staff, profits and scale of operation is smaller than that of larger sized corporations.
Due to the fact that small businesses are less monitored and less bureaucratic, they tend to be more flexible and they quickly adjust to trends in the economy
102M in preferred stock, $85M in book value of common stock, and $120M in debt selling at 96.7%. The common stock has a market to book ratio of 1.75, a yield to maturity on its debt of 5.4%, and a return on its preferred stock of 9.45%. The company is sitting in the 18% tax bracket, has a beta of 1.25 on its common stock, the market return is 15% and the risk free rate is 3.24%. What is the Cost of Preferred Stock
Answer:
9.45%
Explanation:
the cost of preferred stock is given by the question.
the formula that we can use to calculate the cost of preferred stock = preferred dividends / market price per preferred stock
remember that preferred dividends are paid with after tax earnings, so they do not reduce taxes
Cost Reductions and Local Responsiveness
Choosing the most appropriate strategy for a firm in international business involves two essential dimensions. The firm must examine ways to reduce costs, which can be done in a number of ways. Standardization of products and components plays a very important part. Customers, however, don't always want standardized products, even if it means they will pay more.
The balance a firm seeks between the pressures for cost reduction and local responsiveness is one of the most essential determinants of the firm's strategy.
Pressures for local responsiveness imply that it may not be possible for a firm to realize the full benefits from economies of scale, learning effects, and location economies. The need to customize a product offering may work against a strategy of producing a standardized product made in a single, low-cost location. Customization may bring benefits but it limits the ability of a firm to realize significant scale and location economies. In addition, pressures for local responsiveness imply that it may not be possible to leverage skills and products associated with a firm's core competencies from country to country without additional changes.
The appropriateness of the four main strategic postures-global standardization, localization, translational with the extent of the pressures for cost reductions and local responsiveness .
As the balance between cost reduction and local responsiveness affects strategy you must know each thoroughly.
Read the points below and determine if it represents a pressure for cost reductions or local responsiveness
1. Differences in Infrastructure
2. Differences in Preferences
3. Outsourcing
4. Universal Needs
5. Distribution Channels
6. Optimal Location
7. Host Government Demands
8. Experience Curve
Pressure for cost reductions Pressure for local responsiveness
Answer:
Determination of points that represent pressure for cost reduction and those that represent pressure for local responsiveness:
A. Pressure for cost reductions:
3. Outsourcing
4. Universal Needs
6. Optimal Location
8. Experience Curve
B. Pressure for local responsiveness:
1. Differences in Infrastructure
2. Differences in Preferences
5. Distribution Channels
7. Host Government Demands
Explanation:
Local responsiveness to international strategies arises from differences in customer preferences, differences in traditional practices and infrastructure, differences in distribution channels, and from host government demands. The rest, including the need for outsourcing, meeting universal needs, finding optimal locations, and gaining from experience curves, originate from the entity's efforts to reduce costs of products and services for market competitiveness.
Output Total Cost 0 $24 1 33 2 41 3 48 4 54 5 61 6 69 Refer to the above data. The average fixed cost of producing 3 units of output is: Hint: Look at the fixed cost of producing 0 units of output
Answer:
$8
Explanation:
Fixed cost is the cost that does not vary with output. It is the cost incurred even if output it zero - if no unit of output is produced.
fixed cost = average fixed cost x output
The fixed cost is $24. this is the cost incurred when output is zero
Average fixed cost = $24/3 = $8
A taxpayer who claims a bad debt in the year the debt becomes worthless has how lomg to file an amended return
Answer: You must deduct a bad debt in the year it becomes worthless. If you realize you could have reported and taken a deduction for an unpaid debt years ago but didn't, you generally have only three years to amend your return in order to claim it on your tax return.
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Sophie Company is considering closing one of its product lines. Current data on the product line are as follows. Sales revenue $25,000 Variable costs 19,000 Direct avoidable fixed costs* 7,000 Indirect allocated fixed costs** 5,000 Net Income (Loss) on the product line ($6,000) *The direct avoidable fixed costs will be eliminated if the product line is closed. **The indirect allocated fixed costs will remain the same whether the product line is continued or closed. IN ADDITION, if Sophie closes the product line, Sophie can sublease its production facility to another company and earn sublease revenue of $1,500 per year. Assume that Sophie decides to discontinue this product line. By how much will overall company net income change
Answer:
Company's net income will increase by $2500 if the product line is discontinued.
Explanation:
From the data given:
Sales 25000
variable cost (less) 19000
contribution margin 6000
Fixed costs
directed fixed costs 7000
allocated fixed costs 5000
net income -6000
Fixed cost savings 7000
rental revenue 1500
total savings if discontinued 8500
contribution margin (less) 6000
net income increased by 2500
True or False: It's always better to take a loan from a private bank to pay for your college tuition.
Answer:
False
Explanation:
Generally, government student loans are much cheaper than loans given from private banks. Government student loans usually carry a very low interest rate, lower than the rates used by private banks. Also, the government might provide additional assistance during special times, like the current health crisis where payments were frozen.
The following selected data are taken from the comparative financial statements of Superior Curling Club. The club prepares its financial statements using the accrual basis of accounting.
September 30 2012 2011
Accounts receivable for member dues $19,470 $10,440
Unearned sales revenue 19,810 27,810
Service revenue (from member dues) 147,500 $131,300
Dues are billed to members based upon their use of the club’s facilities. Unearned sales revenues arise from the sale of tickets to events, such as the Skins Game.
(Hint: You will find it helpful to use T accounts to analyze the following data. You must analyze these data sequentially, as missing information must first be deduced before moving on. Post your journal entries as you progress, rather than waiting until the end.)
1. Prepare journal entries for each of the following events that took place during 2012. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
2. Determine the amount of cash received by the Club from the above transactions during the year ended September 30,
Answer and Explanation:
1. The journal entries are as follows;
a. Cash $10,440
To Accounts receivable $10,440
(being cash received is recorded)
b. Unearned sales revenue $27,810
To Sales revenue $27,810
(Being unearned sales revenue is recorded)
c. Cash $38,070
To Unearned sales revenue $38,070
(Being cash received is recorded)
Unearned sales revenue $18,260
Sales revenue $18,260
(Being unearned sales revenue is recorded)
d, Accounts receivable $147,500
To Service revenue $147,500
(being service revenue is recorded)
e. Cash $128,030
To Accounts receivable $128,030
(Being cash received is recorded)
2. Now the amount received is
= $10,440 + $38,070 + $128,030
= $176,540
Tarazzz Company manufactures computers. The following cost information for the manufacture of one computer has been compiled. Direct materials $48 Direct labor 64 Variable manufacturing overhead 40 *Fixed manufacturing overhead 48 Total cost per unit $200 *The $48 amount reflects the amount of indirect cost allocated to each unit. However, as indicated, the total of these indirect costs is fixed. Tarazzz has received a special order for 1,000 computers at a price of $150 per unit. By how much will overall company net income change if the order is accepted
Answer:
Company net income will DECREASE by $2,000 if the order is accepted.
Explanation:
Company net income will DECREASE by $2,000 if the order is accepted.
Additional order will produce additional sales revenue of $150 per unit
The marginal cost for this order = Variable costs (Direct material + Direct labour + variable cost) =$152 per unit
Since the marginal cost ($152) is more than the revenue ($150)per unit, there will be a loss of $2 per unit.
So the net income of the company will DECREASE by $2000 ($2x 1000)
