Answer:
Cost management is the process of estimating, allocating, and controlling project costs. The cost management process allows a business to predict future expenses to reduce the chances of budget overrun. Projected costs are calculated during the planning phase of a project and must be approved before work begins.
Explanation:
I know the answer by heart
Aspen Integrated Marketing used to have a strict hierarchical structure, with information given only to those who required it. The new chief executive officer, however, set up a flat organizational structure that eliminates barriers to information flow. Information that was previously available to managers alone is now given to employees as well. He also assigned mentors to new employees to help them in their jobs and enable them to perform better. At Aspen Integrated Marketing, information that was previously available to managers alone is now given to workers as well. This is an example of
Answer:
open-book management or it can also be called a boundaryless organization.
Explanation:
Open-book management
This is simply the act of sharing with employees at all levels of an organization some vital information that is somehow or previously meant for too management staff only. It also involves opening a company's financial statements to all employees and giving them the education that will enable them to understand how the company makes money and how their actions affect its success and bottom line.
Boundaryless organization
This is simply known as a form of organization structure in which there are no barriers to information flow. Boundaryless designs include barrier-free, modular and virtual organizations. An organization without barriers has permeable internal and external boundaries and requires higher level of trust and shared interests, a shift in philosophy from executive development to organizational development, greater use of teams etc.
Flagstaff Company has budgeted production units of 9,800 for July and 10,000 for August. The direct labor requirement per unit is 0.40 hours. Labor is paid at the rate of $20 per hour. The total cost of direct labor budgeted for the month of August is: Multiple Choice $78,400. $4,000. $80,000. $3,920. $158,400.
Answer: $80,000
Explanation:
There are 10,000 units budgeted for August.
The number of hours it takes to complete a single unit is 0.40 hours.
Each hour is going to cost $20.
Budgeted direct labor for August is:
= Units budgeted * Number of hours required per unit * Cost of labor
= 10,000 * 0.40 * 20
= $80,000
Wesley lives in a country with little protection under the law for conducting business or bringing his ideas about a revolutionary new car tire to the market with patent production. Because of the economic conditions what will Wesley most likely do
Answer:
B. Find a country where he can develop his tire idea and have it protected under strong patent laws.
Explanation:
Wesley is looking in a country that offers little protection for the business of bringing newer ideas to market. Due to the poor economic conditions of the nation, Wesley should try and look for another country that can support his ideas and provide him protection.Arndt, Inc. reported the following for 2021 and 2022 ($ in millions):
2021 2022
Revenues 888 980
Expenses 760 800
Pretax accounting income (income statement) 128 180
Taxable income (tax return) 116 200
Tax rate: 25%
a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2021 for $60 million. The cost is tax deductible in 2021.
b. Expenses include $2 million insurance premiums each year for life insurance on key executives.
c. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2021 and 2022 were $33 million and $35 million, respectively. Subscriptions included in 2021 and 2022 financial reporting revenues were $25 million ($10 million collected in 2020 but not recognized as revenue until 2021) and $33 million, respectively. Hint. View this as two temporary differences-one reversing in 2021; one originating in 2021.
d. 2021 expenses included a $14 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold and the loss realized in 2022.
e. During 2020, accounting income included an estimated loss of $6 million from having accrued a loss contingency. The loss was paid in 2021, at which time it is tax deductible.
f. At January 1, 2021, Arndt had a deferred tax asset of $4 million and no deferred tax liability.
Required:
1. Which of the five differences described in items a-e are temporary and which are permanent differences?
2. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2022.
3. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to be deducted should be indicated with a minus sign.
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Explanation:
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A sporting equipment store expects to purchase $8,200 of ski boots in October. The store had $2,800 of ski boots in merchandise inventory at the beginning of October, and expects to have $1,800 of ski boots in merchandise inventory at the end of October to cover part of anticipated November sales. What is the budgeted cost of goods sold for October?
a) $7,000.
b) $9,000.
c) $8,000.
d) $12,000.
e) $11,000.
Answer:
$9,200
Explanation:
Calculation to determine the budgeted cost of goods sold for October
Using this formula
Budgeted cost of goods sold for October =Cost of ski boots + Inventory at the beginning - Inventory at the end
Let plug in the formula
Budgeted cost of goods sold for October = $2800 + $8200 - $1800
Budgeted cost of goods sold for October= $9200
Therefore the budgeted cost of goods sold for October is $9,200
Stock Z is trading at $50 today. In one year, the value will go either up to $62.50 or down to $40. A call option on Z with exactly one year to expiration has a strike price of $55. Inflation is high, so the interest rate is 10% per year. Find the delta of the call option using binomial approach. a. 0.25 b. 0.67 c. 1.05 d. 0.33
Answer:
0.33
Explanation:
Delta = (Cu – Cd)/(Su – Sd)Cu
= 62.50 – 55 = 7.50
Cd = 0
Delta = (7.50 – 0)/(62.50 – 40)
= 0.33
A project is expected to generate annual revenues of $132,100, with variable costs of $80,200, and fixed costs of $20,700. The annual depreciation is $4,750 and the tax rate is 35 percent. What is the annual operating cash flow
Answer:
$21,943
Explanation:
Calculation to determine the annual operating cash flow
Using this formula
Operating Cash Flow =(Annual Revenue-Variable costs - Fixed costs)×(1-Tax rate)+( Annual depreciation×Tax rate )
Let plug in the formula
Operating Cash Flow =[ ($132,100 - $80,200 - $20,700) x (1 - 0.35)]+ ($4,750 x 0.35)
Operating Cash Flow =
Operating Cash Flow =($31,200×0.65)+$1,663
Operating Cash Flow =$20,280+$1,663
Operating Cash Flow =$21,943
Therefore the annual operating cash flow is $21,943
Because the statement of cash flows provides information about an organization's operating profitability and use of operating cash flow, analysis of the statement of cash flows can provide information about the financial viability of the organization.
a. True
b. False
Answer:
a. True
Explanation:
A statement of cash flows is also known as cash flow statement and it is a financial statement which is used to illustrate how changes in income and various account of the balance sheet affect cash and cash equivalents.
The statement of cash flows is also used by financial experts or accountants to breakdown the cash-flow analysis into;
1. Cash-flow from operating activities: it represents cash-flow and transactions from operational business activities such as employee salary, sales of goods etc.
2. Cash-flow from investing activities: it represents the cash flow from investment such as proceeds from the sale of plant, equipments etc.
3. Cash-flow from financing activities: it represents the cash flow from debt or equity. Typically, it's the costs used in a financing a business.
In Financial accounting, the purposes of the statement of cash flows are to;
A. Predict the future cash flows of a business.
B. Evaluate management decisions.
C. Determine the ability of a business firm to pay debts and dividends.
Basically, the statement of cash flows provides financial information about an organization's operating profitability and how it use its operating cash flow. Thus, an analysis of the statement of cash flows can provide relevant informations about how financially viable an organization is.
Payback comparisons Colorado Cleaning has a 5-year maximum acceptable payback period. The firm is considering the purchase of a new washing machine and must choose between two alternative ones. The first machine requires an initial investment of $25,000 and generates annual after-tax cash inflows of $6,500 for each of the next 8 years. The second machine requires an initial investment of $75,000 and provides an annual cash inflow after taxes of $9,500 for 15 years.
a. Determine the payback period for each machine.
b. Comment on the acceptability of the machines, assuming that they are independent projects.
c. Which machine should the firm accept? Why?
d. Do the machines in this problem illustrate any of the weaknesses of using payback? Discuss.
Answer:
determine The pay back period for eachmachine
HRH Collection Agency keeps a collection fee of 25% of any amounts collected. How much did the agency collect on a bad debt if the agency forwarded $2490 to a client?
Answer:
The agency collected $ 622.5.
Explanation:
Since HRH Collection Agency keeps a collection fee of 25% of any amounts collected, to determine how much did the agency collect on a bad debt if the agency forwarded $ 2490 to a client, the following calculation must be performed:
2490 x 0.25 = X
622.5 = X
Therefore, the agency collected $ 622.5.
The Avengers movie, produced by a subsidiary of Disney Studios, sold seven billion yuan worth of tickets in China in its first month of distribution. In terms of the National Income and Product Accounts, this represents:
A. An import of Chinese capital.
B. A demand for yuan on the foreign exchange markets
C. Lost employment for U.S. movie theaters.
D. An export of U.S. services.
Answer:
D. An export of U.S. services.
Explanation:
Since the avengers movie generated the subsidiary of Disney Studios that sold the 7 billion yuan worth tickets in china at the time of first month
so here the national income and the accounts related to the product shows the export of the united states services as the services are provided from one country to another due to this they sold 7 billion yuan tickets
Therefore the option d is correct
Beasley, Inc., reports the following amounts in its December 31, 2021, income statement.
Sales revenue $ 310,000
Income tax expense $ 39,000
Interest expense 12,000
Cost of goods sold 125,000
Salaries expense 36,000
Advertising expense 23,000
Utilities expense 42,000
Prepare a multiple-step income statement.
Answer:
$33,000
Explanation:
Preparation of a multiple-step income statement.
Beasley, Inc. Multiple-step Income Statement For the Year Ended December 31, 2021
Sales Revenue$310,000
Less Cost of goods sold ($125,000)
Gross Profit $185,000
($310,000-$125,000)
Salaries expense $36,000
Advertising expense $23,000
Utilities expense $42,000
Less Total Operating Expenses ($101,000)
($36,000+$23,000+$42,000)
Operating Income $84,000
($185,000-$101,000)
Less Interest Expense ($12,000)
Income Before Income Taxes $72,000
($84,000-$12,000)
Less Income Tax Expense ($39,000)
Net Income $33,000
($72,000-$39,000)
Therefore multiple-step income statement is $33,000
Required information
[The following information applies to the questions displayed below.]
Hudson Co. reports the contribution margin income statement for 2019.
HUDSON CO.
Contribution Margin Income Statement
For Year Ended December 31, 2019
Sales (9,600 units at $225 each) $ 2,160,000
Variable costs (9,600 units at $180 each) 1,728,000
Contribution margin 432,000
Fixed costs 324,000
Pretax income $ 108,000
1. Assume Hudson Co. has a target pretax income of $162,000 for 2020. What amount of sales in dollars) is needed to produce this target income?
2. If Hudson achieves its target pretax income for 2020, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.)
1. Amount of sales
2. Margin of safety
1. Compute Hudson Co.'s contribution margin per unit.
2. Compute Hudson Co.'s contribution margin ratio.
3. Compute Hudson Co.'s break-even point in units.
4. Compute Hudson Co.'s break-even point in sales dollars. per unit
1. Contribution margin
2. Contribution margin ratio
3. Break-even point
4. Break-even sales dollars units
The marketing manager believes that increasing advertising costs by $81,000 in 2020 will increase the company's sales volume to 11,000 units. Prepare a forecasted contribution margin income statement for 2020 assuming the company incurs the additional advertising costs. HUDSON CO. Forecasted Contribution Margin Income Statement For Year Ended December 31, 2020 Sales Variable costs Contribution margin Fixed costs Income (pretaxy Loss Should the company incur the additional advertising costs?
Answer:
Hudson Co.
1. Amount of sales dollars
= $2,430,000
2. Margin of safety (in percent)
= 33%
3-1) Contribution margin per unit = $45
2) Contribution margin ratio = 20%
3) Break-even point in units = 7,200 units
4) Break-even point in sales dollars = $1,620,000 $255
Explanation:
a) Data and Calculations:
HUDSON CO.
Contribution Margin Income Statement
For Year Ended December 31, 2019
Sales (9,600 units at $225 each) $ 2,160,000
Variable costs (9,600 units at $180 each) 1,728,000
Contribution margin 432,000
Fixed costs 324,000
Pretax income $ 108,000
Contribution margin per unit = $45 ($432,000/9,600)
Contribution margin ratio = 20% ($45/$225 * 100)
Break-even point in units = 7,200 ($324,000/$45)
Break-even point in sales dollars = $1,620,000 ($324,000/0.20) $255
1. With target pretax income of $162,000:
Amount of sales dollars = (Fixed cost + Target profit)/Contribution margin ratio
= $2,430,000 ($324,000 + $162,000)/0.20
2. Margin of safety (in percent)
1. Amount of sales = $2,430,000
2. Margin of safety = $810,000 ($2,430,000 - $1,620,000)
Margin of safety in percentage = 33% ($810,000/$2,430,000 * 100)
If you want to increase your purchasing power by investing in a bond, then: _____________
a. you must purchase that bond at a discount.
b. the nominal rate of return on that bond must be less than the inflation rate.
c. you should purchase a premium bond.
d. the nominal rate of return must equal or exceed the rate of inflation.
e. you must earn a positive real rate of return on that bond.
Answer:
b. the nominal rate of return on that bond must be less than the inflation rate
K. Decker, S. Rosen, and E. Toso are forming a partnership. Decker is transferring $50,000 of personal cash to the partnership. Rosen owns land worth $15,000 and a small building worth $80,000, which she transfers to the partnership. Toso transfers to the partnership cash of $9,000, accounts receivable of $32,000 and equipment worth $39,000. The partnership expects to collect $29,000 of the accounts receivable.
Account Titles and Explanation: Debit Credit
(To record invstment of Decker)
(To record investment of Rosen)
(To record investment of Toso.)
What amount would be reported as total owners?
Answer:
the total owners amount should be $222,000
Explanation:
The computation of the amount that should be reported as the total owners is given below:
= K decker + rosen + tosa
= $50,000 + $80,000 + $15,000 + $9,000 + $32,000 + $39,000 - ($32,000 - $29,000)
= $50,000 + $95,000 + $77,000
= $222,000
Hence, the total owners amount should be $222,000
You were asked to read U.S. Statistics in 1912 and in your writing journal, you reflected upon how different your life would be had you lived 100 years ago. The learning objective of this assignment was:__________
Explanation:
Hi, you've asked an incomplete question. However, based on inference, after consult relevant academic material, the learning objective on this particular assignment is stated below;
"To think about things like your education, career goals, romantic relationships, how you get around, and your physical health, write at least one paragraph explaining how such aspects of your life would have changed had you lived in the early 1900s."
At the beginning of the year, Shinedown, Corp., had a long-term debt balance of $46,880. During the year, the company repaid a long-term loan in the amount of $12,805. The company paid $4,890 in interest during the year, and opened a new long-term loan for $11,290. How much is the ending long-term debt account on the company's balance sheet
Answer:
Shinedown, Corp.
The ending long-term debt account on the company's balance sheet is:
= $45,365.
Explanation:
a) Data and Calculations:
Beginning long-term debt balance = $46,880
Repayment of a long-term loan = (12,805)
New long-term loan opened = 11,290
Ending balance of long-term debt = $45,365
Interest payment during the year = $4,890
b) The long-term debt account does not include the interest payment during the year. If any interest is not paid, the amount will be taken as a current liability and not a long-term debt.
Break-Even Sales and Sales to Realize Income from Operations
For the current year ended October 31, Yentling Company expects fixed costs of $14,000,000, a unit variable cost of $200, and a unit selling price of $300.
a. Compute the anticipated break-even sales (units).
units
b. Compute the sales (units) required to realize income from operations of $1,400,000.
units
Answer and Explanation:
The computation is shown below:
a.
Contribution per unit
= Selling price per unit - Variable costs per unit
= $300 - $200
= $100 per unit
Now
Break even point (units)
= Fixed costs ÷ Contribution margin per unit
= $14,000,000 ÷ $100
= 140,000 units
And,
b)
Sales units required for a target profit of $1,400,000
So,
= (Fixed costs + Target profits) ÷ Contribution margin per unit
= ($14,000,000 + $1,400,000) ÷ $100
= 154,000 units
American Corp. is currently an all-equity firm that has 22,000 shares of stock outstanding with a market price of $27 a share. The current cost of equity is 12 percent and the tax rate is 35 percent. The firm is considering adding $225,000 of debt with a coupon rate of 6.25 percent to its capital structure. The debt will sell at par. What will be the levered value of the equity
Answer: $447,750
Explanation:
The value of a levered firm is calculated as:
= (Number of shares outstanding * Market price) + (Debt * tax rate)
= (22,000 * 27) + (225,000 * 35%)
= $672,750
Equity = Value of levered firm - Debt
= 672,750 - 225,000
= $447,750
Slavery, as a business practice protected by state laws, provided unfair advantage against those employers not using slaves, and thus the economic incentives supported and sustained slavery within its sealed environment.
A. True
B. False
Davidson was recently promoted to the position of Manager of the IT Department of his company. Because of Davidson's lack of prior experience in a management role, the management of the company appointed a consultant to help Davidson improve his interpersonal skills and to provide effective decision-making strategies that Davidson could use to resolve conflicts within his team. In this scenario, Davidson's consultant can be best described as an:_________
a. expatriate
b. arbitrator
c. leadership coach
d. boomerang employee
Answer:
c. leadership coach
Explanation:
It is correct to say that in this scenario, Davidson's consultant can best be described as a leadership coach, who is a professional hired by a company to help managers develop their skills in order to exercise effective leadership in the company.
A leadership coach will help to improve a manager's abilities to know how to communicate assertively, to motivate, train and help his subordinates so that organizational goals and objectives are achieved as planned and so that there is an organizational culture based on cooperation, productivity and development.
MC Qu. 59 A company's flexible budget for... A company's flexible budget for 16,000 units of production showed sales, $96,000; variable costs, $56,000; and fixed costs, $20,000. The sales expected if the company produces and sells 20,000 units is (Do not round intermediate calculations):
Answer: $120,000
Explanation:
First find the selling price of the units.
= Sales / Number of units produced
= 96,000 / 16,000
= $6 per unit
If 20,000 units are sold, the sales would be:
= Number of units sold * selling price
= 20,000 * 6
= $120,000
Fixed expenses are $17,000 per month. The company is currently selling 800 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $5 per unit. In exchange, the sales staff would accept a decrease in their salaries of $6,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 200 units. What should be the overall effect on the company's monthly net operating income of this change?
Answer:
There is a cost-saving of $1,000 per month as a result of the change. This cost-saving increases the monthly net operating income by $1,000.
Explanation:
a) Data and Calculations:
Fixed monthly expenses = $17,000
Current sales units per month = 800
Proposed sales commission per unit = $5
Decrease in salaries per month = $6,000
Increase in sales units per month = 200
Change
Before After Difference
Fixed monthly expenses $17,000 $11,000 $6,000
Variable cost per month 0 5,000 -5,000
Total cost per month $17,000 $16,000 $1,000
Sales units per month 800 1,000 200 units
b) The effect on the company's monthly net operating income is a reduction in the total cost per month by $1,000. There is also an increase in the units sold per month by 200 units. If the selling price is determined, the net operating income will also increase by the product of the contribution margin per unit and 200.
Kylie Co. owns 67% of Jayzee Inc. On their 12/31/2017 pre-consolidation trial balances, Kylie reports $739,972 Liabilities and Jayzee reports $1,601,119 Liabilities. Jayzee owes Kylie $207,709 on this date. What amount should be reported for Liabilities in Kylie's consolidated financial statements
Answer:
the amount that should be reported for Liabilities in Kylie's consolidated financial statements is $2,187,382
Explanation:
The computation of the amount that should be reported for Liabilities in Kylie's consolidated financial statements is shown below:
= $793,972 + $1,601,119 - $207,709
= $2,187,382
Hence, the amount that should be reported for Liabilities in Kylie's consolidated financial statements is $2,187,382
The same should be considered
Hernandez Company had the following transactions during 2020, its first year in business:
January 2 Issued 42,000 shares of $15 par common stock for $36 per share.
April 3 Issued 8,000 shares of $70 par preferred stock for $97 per share.
October 6 Purchased 2,000 shares of treasury stock for $29 per share.
December 9 Reissued 110 shares of treasury stock for $35 per share.
Question Completion:
Prepare Journal Entries.
Answer:
Hernandez Company
Journal Entries:
January 2 Debit Cash $1,512,000
Credit Common stock $630,000
Credit Additional Paid-in Capital-Common stock $882,000
To record the issuance of 42,000 shares of $15 par common stock for $36 per share.
April 3 Debit Cash $ 776,000
Credit Preferred stock $560,000
Credit Additional Paid-in Capital-Preferred stock $216,000
To record the issuance of 8,000 shares of $70 par preferred stock for $97 per share.
October 6 Debit Treasury Stock $30,000
Debit Additional Paid-in Capital-Common stock $28,000
Credit Cash $58,000
To record the repurchase of 2,000 shares of treasury stock for $29 per share.
December 9 Debit Cash $3,850
Credit Treasury stock $1,650
Credit Additional Paid-in Capital-Common stock $2,200
To record the reissuance of 110 shares of treasury stock for $35 per share.
Explanation:
a) Data and Analysis:
January 2 Cash $1,512,000 Common stock $630,000 Additional Paid-in Capital-Common stock $882,000
issuance of 42,000 shares of $15 par common stock for $36 per share.
April 3 Cash $ 776,000 Preferred stock $560,000 Additional Paid-in Capital-Preferred stock $216,000
issuance of 8,000 shares of $70 par preferred stock for $97 per share.
October 6 Treasury Stock $30,000 Additional Paid-in Capital-Common stock $28,000 Cash $58,000
repurchase of 2,000 shares of treasury stock for $29 per share.
December 9 Cash $3,850 Treasury stock $1,650 Additional Paid-in Capital-Common stock $2,200
re-issue of 110 shares of treasury stock for $35 per share.
Music class is often seen as a fun extracurricular activity. Generally, individuals that study music achieve more exceptional scores in subjects such as math and language arts. However, music programs in schools are often underfunded or are given less attention than the typical academic subjects. Which of the following is an underlying assumption of the argument above?
a. Music needs to be introduced at an early age for the benefits to be fully realized.
b. Learning to play an instrument can be fun but expensive.
c. Individuals who study music tend to be more intelligent.
Answer: c. Individuals who study music tend to be more intelligent.
Explanation:
The underlying assumption of the argument above is that the individuals who study music tend to be more intelligent.
This can be infered in the statement that "Generally, individuals that study music achieve more exceptional scores in subjects such as math and language arts". In this case, a connection was emphasized between academics and music.
Reynolds Manufacturers Inc. has estimated total factory overhead costs of $136,400 and expected direct labor hours of 12,400 for the current fiscal year. If Job 117 incurs 1,110 direct labor hours, Work in Process will be debited and Factory Overhead will be credited for a.$12,210 b.$136,400 c.$68,200 d.$1,110
Nichols Company uses the percentage of receivables method for recording bad debts expense. The month-end accounts receivable balance is $250,000 and credit sales during the month were $1,000,000. Management estimates that 4% of accounts receivable will be uncollectible. The Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment. The adjusting entry that Nichols must make includes: a. a credit to the allowance for $7,500. b. a credit to the allowance for $30,000. c. a debit to bad debt expense for $10,000. d. a debit to bad debt expense for $40,000.
Answer: a. a credit to the allowance for $7,500
Explanation:
Estimated Bad Debt = Balance on Account receivable x bad Debt loss rate = $250,000 x 4% = $10,000
Allowance for doubtful accounts with a credit balance of $2,500
Allowance for Bad debts expense =Estimated Bad Debt - Credit balance Allowance for doubtful accounts = $10,000 - $2,500 = $7,500
Account titles and explanation Debit Credit
Bad Debt Expense $7,500
Allowance for Doubtful Accounts $7,500
Your company has a cost of capital equal to 10%. If the following projects are mutually exclusive, and you only have the information that is provided, which should you accept?
A B C E
Payback (years) 1 5 2 5
IRR 18% 20% 20% 12%
NPV (Millions) $40 $75 $35 $100
a. A
b. B
c. C
d. B and C
e. E
Answer:
The project to accept is:
e. E
Explanation:
a) Data and Calculations:
Cost of capital = 10%
Mutually Exclusive Projects:
A B C E
Payback (years) 1 5 2 5
IRR 18% 20% 20% 12%
NPV (Millions) $40 $75 $35 $100
b) Project E should be preferred over all the other projects. It has the highest net present value (NPV) and its internal rate of return (IRR) is above the company's cost of capital. It surpasses projects A, B, and C in financial performance terms using time-value of money analysis.
MC Qu. 47 Chang Industries has... Chang Industries has 2,800 defective units of product that have already cost $14.80 each to produce. A salvage company will purchase the defective units as they are for $5.80 each. Chang's production manager reports that the defects can be corrected for $5.20 per unit, enabling them to be sold at their regular market price of $22.60. The incremental income or loss on reworking the units is:
Answer:
$32,480
Explanation:
Calculation to determine what The incremental income or loss on reworking the units is:
First step is calculate the Net benefit per unit to rework
Incremental revenue from reworking $16.80
($22.60 - $5.80)
Less Incremental cost to rework ($5.20)
Net benefit per unit to rework $11.60
Now let calculate the Incremental income from reworking
Incremental income from reworking= ($11.60 * 2,800 units)
Incremental income from reworking=$32,480
Therefore The incremental income or loss on reworking the units is:$32,480
