Answer:
a. $3,000 favorable
Explanation:
Calculation to determine the direct materials price variance
Using this formula
Direct materials price variance=Actual costs(Standard costs per pound- Actual costs per pound)
Let plug in the formula
Direct materials price variance=5,000($5.10-$4.50)
Direct materials price variance=5,000($0.6)
Direct materials price variance=
$3,000 favorable
Therefore Direct materials price variance is $3,000 favorable
A stock has an expected return of 11.85 percent, its beta is 1.08, and the risk-free rate is 3.9 percent. What must the expected return on the market be
Answer:
11.26%
Explanation:
According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)
rm = expected return on the market
11.85 = 3.9 + 1.08(rm - 3.9)
11.85 - 3.9 = 1.08(rm - 3.9)
7.95 = 1.08(rm - 3.9)
7.95 / 1.08 = rm - 3.9
7.361 = rm - 3.9
rm = 11.26
Forner, Inc., manufactures and sells two products: Product Z1 and Product Z8. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Estimated Expected Activity
Activity Cost Pools Activity Measures Overhead Cost Product Z1 Product Z8 Total
Labor-related DLHs $ 112,190 600 2,000 2,600
Machine setups setups 40,440 500 700 1,200
Order size MHs 609,770 3,000 3,200 6,200
$ 762,400
The activity rate for the Machine Setups activity cost pool under activity-based costing is closest to:_______.
a. $203.26 per setup
b. $190.55 per setup
c. $122.97 per setup
d. $33.70 per setup
Answer:
Machine setups= $33.7 per setup
Explanation:
Giving the following information:
Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product Z1 Product Z8 Total
Machine setups setups 40,440 500 700 1,200
To calculate the activity rate, we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Machine setups= 40,440 / 1,200
Machine setups= $33.7 per setup
On June 1, 2019, Irene places in service a new automobile that cost $21,000. The car is used 70% for business and 30% for personal use. (Assume this percentage is maintained for the life of the car.) She does not take additional first-year depreciation. Determine the cost recovery deduction for 2020.
Answer:
the cost recovery deduction for 2020 is $4,704
Explanation:
The calculation of the cost recovery deduction is given below:
According to the MACRS depreciation table, the second year depreciation rate should be 32%
So, the cost recovery deduction should be
= 32% of 70% of $21,000
= $4,704
Hence, the cost recovery deduction for 2020 is $4,704
Therefore the same should be considered
Assume that inflation averages 3.50% over the next 20 years. If Carlos invests $25,000 in an exchange-traded fund within a tax-deferred account and that investment grows to $45,000 at the end of 20 years, will he have maintained his purchasing power
Answer: Yes, because the ETF is worth more than his original investment
Explanation:
From the information given in the question, the average inflation for next 20 years = 3.50%
Amount invested by John = $25,000
Then, the amount in 20 years after the adjustment of inflation will be:
= Amount invested (1+inflation rate)^n
= 25000(1+0.035)^20
= 25000(1.035)^20
= 25000 × 1.9898
= $49745
In this case, the answer is Yes due to the fact that the ETF is worth more than his original investment.
Exercise 9-4 Interest-bearing notes payable with year-end adjustments LO P1 Keesha Co. borrows $145,000 cash on December 1 of the current year by signing a 90-day, 9%, $145,000 note. 1. On what date does this note mature? 2. & 3. What is the amount of interest expense in the current year and the following year from this note? 4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest on December 31, and (c) payment of the note at maturity.
Answer:
Keesha Co.
1. The date on which this note matures is February 28.
2. Interest expense for the current year is:
= $1,108
3. Interest expense for the following year is:
= $2,109
4. Journal Entries:
December 1:
Debit Cash $145,000
Credit Notes Payable $145,000
a) To record the issuance of the 90-day, 9% notes payable.
December 31:
Debit Interest Expense $1,108
Credit Interest Payable $1,108
b) To accrue interest expense.
February 28:
Debit Notes Payable $145,000
Debit Interest Payable $1,108
Debit Interest Expense $2,109
Credit Cash $148,217
To record the payment of the note at maturity.
Explanation:
a) Data and Calculations:
Notes Payable on December 1 = $145,000
Interest rate on the note = 9%
Duration of note = 90 days
December 1
Plus 90 days
= February 28
Interest expense for the current year = $1,108 ($145,000 * 9% * 31/365)
Interest expense for the following year = $2,109 ($145,000 * 9% * 59/365)
Analysis:
December 1:
Cash $145,000
Notes Payable $145,000
December 31:
Interest Expense $1,108
Interest Payable $1,108
February 28:
Notes Payable $145,000
Interest Payable $1,108
Interest Expense $2,109
Cash $148,217
The three key pieces of information that are stated on a bond certificate are the: A. stated interest rate, the face value of the bond, and the maturity date. B. market interest rate, the price of the bond, and the maturity date. C. interest payment, the face value of the bond, and the credit rating of the company. D. interest payment, the issue price of the bond, and the credit rating of the company.
A bond certificate should contain stated interest rate, the face value of the bond, and the maturity date.
A bond certificate simply refers to a certificate of debt which is usually issued either by the government or a corporation. The main idea behind the issuing of a bond certificate is to raise money.
The bond certificate states the bond details e.g. the bond par value, interest rate, maturity date etc.
In conclusion, the correct option is A.
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An individual taxpayer reports the following items for the current year: Ordinary income from Partnership A, operating a movie theater in which the taxpayer materially participates $70,000 Net loss from Partnership B, operating an equipment rental business in which the taxpayer does not materially participate (9,000) Rental income from building rented to a third party 7,000 Short-term capital gain from sale of stock 4,000 What is the taxpayer’s adjusted gross income for the year?
Answer:
$74,000
Explanation:
Calculation to determine the taxpayer’s adjusted gross income for the year
Taxpayer’s adjusted gross income=Net loss from Partnership B+Capital gain from sale of stock
Let plug in the formula
Taxpayer’s adjusted gross income=$70,000+ $4,000
Taxpayer’s adjusted gross income=$74,000
Therefore the taxpayer’s adjusted gross income for the year is $74,000
Yello Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2019, at a cost of $148,000. Over its 4-year useful life, the bus is expected to be driven 100,000 miles. Salvage value is expected to be $8,000.
Required:
a. Compute the depreciable cost per unit.
b. Prepare a depreciation schedule.
O'Reilly Corporation uses direct labor-hours to calculate its annual plantwide predetermined overhead. For the current period's estimated level of production, O'Reilly Corporation estimated that 39,000 direct labor-hours would be required. Estimated fixed manufacturing overhead cost is $599,000 for the current period and variable manufacturing overhead cost of $3.00 per direct labor-hour. O'Reilly Corporation's actual manufacturing overhead cost for the period was $788,379 and its actual total direct labor was 39,500 hours.
Required: Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Predetermined overhead $ ________.
Answer:
Predetermined manufacturing overhead rate= $18.36 per direct labor hour
Explanation:
Giving the following information:
Estimated overhead cost for the period= $599,000
Variable overhead rate= $3 per DLH
Number of estimated direct labor hours= 39,000
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (599,000 / 39,000) + 3
Predetermined manufacturing overhead rate= $18.36 per direct labor hour
OR:
Fixed overhead rate= 599,000/39,000= $15.36 per DLH
Variable overhead rate= $3 per DLH
Plantwide overhead rate= $18.36 per direct labor hour
Suppose a farmer wants to borrow $176,590.00 to buy a tract of land. The BCS bank will make a 22-year loan fully amortized at 6.19% (annual payments). A $443.00 loan fee and stock purchase is required. The borrower stock requirement is the lesser of $1,000 or 3.00% of loan amount.
(i) Calculate the loan principal.
a. $181,521.05 b. $178,089.12
c. $182,508.25 d. $178,033.00
Enter Response Here:
(ii) Calculate the required stock purchase.
a. $5,340.99 b. $1,000.00
c. $5,274.64 d. $1,760.24
Enter Response Here:
(iii) Calculate the annual loan payments.
a. $15,032.59 b. $15,037.33
c. $15,410.47 d. $15,327.12
Answer:
A Farmer
i) Loan principal = $178,033 ($176,590 + $443 + $1,000)
ii) Required stock purchase = $1,000
iii) Annual loan payment (fully amortized at 6.19%) is:
= a. $15,032.59
Explanation:
a) Data and Calculations:
Required loan amount = $176,590.00
Period of loan = 22 years
Interest rate = 6.19%
Loan fee = $443.00
Stock purchase = lesser of $1,000 or 3.00% of loan amount
= lesser of $1,000 or $5,297.70 ($176,590 * 3%)
i) Loan principal = $178,033 ($176,590 + $443 + $1,000)
ii) Required stock purchase = $1,000
iii) Annual loan payment (fully amortized at 6.19%) = $15,030 approximately :
(# of periods) 22
I/Y (Interest per year) 6.19
PV (Present Value) 178033
FV (Future Value) 0
PMT = $15,030.02
Sum of all periodic payments $330,660.34
Total Interest $152,627.34
Barton Corporation acquires a coal mine at a cost of $1,800,000. Intangible development costs total $360,000. After extraction has occurred, Barton must restore the property (estimated fair value of the obligation is $180,000). Barton estimates that 6,000 tons of coal can be extracted. What is the amount of depletion per ton
Answer: $390 per ton
Explanation:
The depletion per ton is:
= Total cost of acquiring the coal mine / Number of tons that can be extracted
= (Acquisition cost + intangible development cost + Fair value of restoration) / Number of tons that can be extracted
= (1,800,000 + 360,000 + 180,000) / 6,000
= $390 per ton
Ratchet Manufacturing anticipates total sales for August, September, and October of $200,000, $210,000, and $220,500 respectively. Cash sales are normally 25% of total sales and the remaining sales are on credit. All credit sales are collected in the first month after the sale. Compute the amount of accounts receivable to be reported on the company's budgeted balance sheet for August. Multiple Choice $50,000. $157,500. $150,000. $52,500. $200,000.
Answer:
$150,000
Explanation:
Computation for the amount of accounts receivable to be reported on the company's budgeted balance sheet for August.
First step
Total sales of August = 0.25 × $200,000
Total cash sales = $50,000
Last step
Total credit sales for the month of August = Total sales in August - Total cash sales in August
Total credit sales for the month of August= $200,000 - $50,000
Total credit sales for the month of August= $150,000
Therefore the amount of accounts receivable to be reported on the company's budgeted balance sheet for August is $150,000
Waterway Industries was organized on January 1, 2021. During its first year, the corporation issued 2,400 shares of $50 par value preferred stock and 150,000 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2021, $5,800; 2022, $13,100; and 2023, $28,800.
Required:
Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 5% and noncumulative.
Answer:
Preferred dividend is noncumulative which means that it will not accrue if company was unable to pay in any period.
Dividends in 2021
Preferred dividends:
= Number of preferred shares * par value * dividend percentage
= 2,400 * 50 * 5%
= $6,000
Dividends of $5,800 were declared which is not enough to cover even preferred shares so preferred shares will take all the dividends.
Preferred share dividends = $5,800
Common share dividends = $0
Dividends in 2022:
Preferred dividends = $6,000
Common dividends:
= Declared dividends - Preferred dividends
= 13,100 - 6,000
= $7,100
Dividends in 2023:
Preferred dividends = $6,000
Common dividends:
= Declared dividends - Preferred dividends
= 28,800 - 6,000
= $22,800
Consumer Price Index (CPI) is an
A. economic condition in which there is a decline in the price of
goods and services
B. economic measurement that helps determine changes in the
purchasing power of a dollar
c. economic condition in which money loses its purchasing power
and prices rise
D. amount of goods that can be purchased with a unit of currency
Answer:
B
Explanation:
The Consumer Price Index (CPI) measures monthly changes in prices for a range of consumer products
For Oriole Company, sales is $1500000, fixed expenses are $330000, and the contribution margin per unit is $60. What is the break-even point?
Answer:
5500
Explanation:
Breakeven quantity are the number of units produced and sold at which net income is zero.
Breakeven is the ratio of fixed cost to profit per unit of output sold.
Breakeven quantity = fixed cost / price – variable cost per unit
= fixed price / contribution margin per unit
Fixed costs are costs that do not vary with output. e,g, rent, mortgage payments
Variable costs are costs that vary with production
If a producer decides not to produce any output, there would be no need to hire labour and thus no need to pay hourly wages.
$330,000 / $60 = 5500
A woman arrives at the clinic for a pregnancy test. The first day of her last menstrual period (LMP) was February 14, 2013. Her expected date of birth (EDB) would be: _________
a) November 21, 2013.
b) October 17, 2013
c) December 9, 2013
d) November 7, 2013
Answer:
a) November 21, 2013
Explanation:
The expected date of birth (EDB) would be calculated using Naegele's Rule and it is based on a normal 28 days menstrual cycle. The steps are as follows:
First, we need to identify the first day of the last menstrual period (LMP). Then we would count it back to three calendar months from that date. Finally, we would add 1 year and 7 days to that date.
In which case, the first day of LMP is February 14, 2013. Going back three months the date would be November 14, 2012. Finally, when we add 1 year and 7 days it would bring you to November 28, 2013, as the estimated due date.
On January 2, 20X1, Ziegler Company issues a four-year note in exchange for a license agreement requiring four annual payments of $27,956. The market value of the four-year agreement is $100,000. The first payment is due on the day the agreement is signed. The effective interest rate is 8%. The second payment includes interest of:
Answer:
$5,763.52
Explanation:
1st payment is due on the day the agreement is signed.
The 2nd payment interest is computed as bellow:
=> ($100,000 - First payment) * 8%
=> ($100,000 - $27,956) * 8%
=> $72,044 * 8%
=> $5,763.52
So, the second payment includes interest of $5,763.52.
Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $3,500 from sales $201,000, variable costs $175,000, and fixed costs $29,500. If the Big Bart line is eliminated, $20,000 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated.
Answer:
Net Income Analysis
Continue Eliminate Increase/Decrease
Sales 201,000 0 201,000
Less: Variable cost 175,000 0 175,000
Contribution margin 26,000 0 26,000
Less: Fixed expenses 29,500 20,000 9,500
Net Income -3,500 20,000 -16,500
Therefore, the Big Bart line should not be continued.
The fixed costs of the division were $193,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be:
Answer:
decrease in the operating income of $132,100
Explanation:
The computation of the impact on the operating income should be given below:
Sales $1,050,000
less: variable cost -$860,000
contribution margin $190,000
Less fixed cost (30% of $193,000) -$57,900
Impact on operating income $132,100
So there is a decrease in the operating income of $132,100
McGill and Smyth have capital balances on January 1 of $42,000 and $38,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $16,000 for McGill and $10,000 for Smyth, (2) interest at 11% on beginning capital balances, and (3) remaining income or loss to be shared 70% by McGill and 30% by Smyth.
(a) Prepare a schedule showing the distribution of net income assuming net income is (1)$50,000 and (2) $ 36,000.
(b) Journalize the allocation of net income in each of the situation above .
Answer:
McGill and Smyth Partnership
a - 1) Allocation of Net Income of $50,000
McGill Smyth Total
Capital balances, Jan. 1 $42,000 $38,000 $80,000
Income-sharing: $50,000
Annual salaries $18,000 $10,000 ($28,000)
Interest on capital balances 4,620 4,180 (8,800)
Remaining income/loss 9,240 3,960 (13,200)
Total appropriations $31,860 $18,140 $50,000
Capital balances, Dec. 31 $73,860 $56,140 $130,000
a -2) Allocation of net income of $36,000:
McGill Smyth Total
Capital balances, Jan. 1 $42,000 $38,000 $80,000
Income-sharing: $36,000
Annual salaries $18,000 $10,000 ($28,000)
Interest on capital balances 4,620 4,180 (8,800)
Remaining income/loss (560) (240) 800
Total appropriations $22,060 $13,940 $36,000
Capital balances, Dec. 31 $64,060 $51,940 $116,000
b -1) Allocation of net income of $50,000:
Debit Annual salaries $28,000
Credit Capital, McGill $18,000
Credit Capital, Smyth $10,000
To record the allocation of annual salaries to the partners.
Debit Interest on Capital $8,800
Credit Capital, McGill $4,620
Credit Capital, Smyth $4,180
To record the allocation of interest on capital.
Debit Income and Loss $13,200
Credit Capital, McGill $9,240
Credit Capital, Smyth $3,960
To record the allocation of remaining income.
b - 2) Allocation of net income of $36,000:
Debit Annual salaries $28,000
Credit Capital, McGill $18,000
Credit Capital, Smyth $10,000
To record the allocation of annual salaries to the partners.
Debit Interest on Capital $8,800
Credit Capital, McGill $4,620
Credit Capital, Smyth $4,180
To record the allocation of interest on capital.
Debit Capital, McGill $560
Debit Capital, Smyth $240
Credit Income and Loss $800
To record the allocation of remaining income.
Explanation:
a) Data and Calculations:
McGill Smyth Total
Capital balances, Jan. 1 $42,000 $38,000 $80,000
Income-sharing: $50,000
Annual salaries $18,000 $10,000 ($28,000)
Interest on capital balances 4,620 4,180 (8,800)
Remaining income/loss sharing 70% 30%
Panther Co. had a quality-assurance warranty liability of $340,000 at the beginning of 2021 and $318,000 at the end of 2021. Warranty expense is based on 5% of sales, which were $50 million for the year. What amount of warranty costs were paid during
Answer: $2,522,000
Explanation:
Warranty costs paid during 2021 = Opening warranty liability + Warranty expense for the year - Closing warranty liability
Warranty expense for the year:
= 50,000,000 * 5% warranty expense
= $2,500,000
Warranty costs paid during 2021 = 340,000 + 2,500,000 - 318,000
= $2,522,000
Stephani Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of May. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $53,000 and the total of the credits to the account was $69,000. Which of the following statements is true?
a. Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $75,000.
b. Actual manufacturing overhead incurred during the month was $56,000.
c. Manufacturing overhead applied to Work in Process for the month was $75,000.
d. Manufacturing overhead for the month was underapplied by $19,000.
Answer:
the manufacturing overhead for the month should be overapplied by $16,000
Explanation:
Given that
The debit to the manufacturing overhead is $53,000
And, the credit balance is $69,000
So, it should be overapplied by the
= $53,000 - $69,000
= $16,000
Therefore the manufacturing overhead for the month should be overapplied by $16,000
This is the answer but the same is not provided in the given options
Calculate the current price of a $1,000 par value bond that has a coupon rate of 6 percent, pays coupon interest annually, has 27 years remaining to maturity, and has a current yield to maturity (discount rate) of 15 percent. (Round your answer to 2 decimal places and record without dollar sig
Answer: $413.81
Explanation:
Price of a bond = Present value of coupon payments + Present value of face value
Coupon is a constant payment so is an annuity.
Coupon = 6% * 1,000 = $60
Price of bond = Present value of annuity + Present value of face value
= (Coupon * Present value interest factor of annuity (PVIFA), 27 periods, 15%) + (Face value / (1 + rate) ^ number of periods)
= (60 * 6.514) + (1,000 / (1 + 15%)²⁷
= $413.81
Calculate the total Social Security and Medicare tax burden on a sole proprietorship earning 2020 profit of $300,000, assuming a single sole proprietor with no other earned income.
Answer: $25,802.70
Explanation:
Social security
Social security rates in 2020 for a single sole proprietor is 12.40% on the first $137,700:
= 12.40% * 300,000
= $17,074.80
Medicare Tax
First you need to remove a deduction of 7.65% from the income:
= 300,000 * (1 - 7.65%)
= $277,050
Medicare tax is 2.90% of this adjusted amount in addition to 0.9% for any amount above $200,000:
= (2.90% * 277,050) + (0.9% * (277,050 - 200,000))
= 8,034.45 + 693.45
= $8,727.90
Total Social security and Medicare:
= 17,074.80 + 8,727.9
= $25,802.70
Suppose that the equilibrium price and quantity for 1 bedroom apartments in Orange County is $2,000 and 250,000 respectively. What is the most likely outcome from the Orange County Board of Supervisors' implementation of a price ceiling at $2,500 for a 1 bedroom apartment
Answer: c. No effect
Explanation:
This is a non-binding price ceiling. A none-binding price ceiling is a price ceiling that is higher than the equilibrium price for a commodity in the market. As a result, there will be no effect on the market.
The reason being that a price ceiling is a price that companies and people are not meant to exceed. If this price is already higher than the equilibrium price, there would be no need to exceed or go below it it so there would be no effect.
Inventory records for Dunbar Incorporated revealed the following: Date Transaction Number of Units Unit Cost Apr. 1 Beginning inventory 510 $ 2.44 Apr. 20 Purchase 380 2.72 Dunbar sold 590 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimal places and final answer to the nearest dollar amount.) Multiple Choice $747. $768. $838. $774.
Answer:
$768
Explanation:
The computation of the ending inventory using weighted average cost is shown below:
But before that average cost per unit is
= (510 × $2.44 + 380 × $2.72) ÷ ($510 + $380)
= ($1,244.40 + $1,033.60) ÷ (890)
= $2.56
Now the ending inventory is
= (890 - 590) × $2.56
= $768
The ending inventory using weighted average cost is $768. option (b) is correct.
The weighted average cost of capital (WACC), which includes common stock, preferred stock, bonds, and other types of debt, is the average after-tax cost of capital for a company. The WACC is the typical interest rate that a business anticipates paying to finance its assets.
The computation of the ending inventory using weighted average cost is:
But before that average cost per unit is
= (510 × $2.44 + 380 × $2.72) ÷ ($510 + $380)
= ($1,244.40 + $1,033.60) ÷ (890)
= $2.56
Now the ending inventory is
= (890 - 590) × $2.56
= $768
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At December 31, Hawke Company reports the following results for its calendar year.
Cash sales $1,432,910
Credit sales $3,376,000
In addition, its unadjusted trial balance includes the following items.
Accounts receivable $1,022,928 debit
Allowance for doubtful accounts $11,560 debit
Required:
Prepare the adjusting entry for this company to recognize bad debts
The adjusting entries for acknowledging the bad debts would be:
a). Bad Debts Expense $50 640
Allowance for Doubtful Accounts $50 640
b). Bad Debts Expense $48089.1
Allowance for Doubtful Accounts $48089.1
Bad debts:
Bad debts are described as debts that are unable to be recovered from their respective debtors.The key reasons for this could be:
The debtor is bankrupt and cannot pay the amount.The debtor flees away and thus, can't be compelled to pay.The given amounts are obtained as follows:
a). Given that,
Bad debts is 1.5% of credit sales.
Credit Sales = $3,376,000
Bad debts = 1.5% of $3,376,000
∵ Bad debts = 1.5/100 * $3,376,000
= $50 640
b). Given that,
Bad debts = 1 % of total sales.
Total Sales = Credit sale + Cash sale
= $3,376,000 + $1,432,910
= $4808910
Bad debts = 1% of 4808910
∵ Bad debts = 1/100 * $4808910
= $48089.1
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Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 44,800 machine-hours. The estimated variable manufacturing overhead was $4.65 per machine-hour and the estimated total fixed manufacturing overhead was $1,239,616. The predetermined overhead rate for the recently completed year was closest to:
Answer: $32.32
Explanation:
From the information given, the predetermined overhead rate for the recently completed year will be calculated thus:
= Total manufacturing overhead / Estimated machine hours
= $1,447,936 / 44,800
= $32.32 per machine hour
Total manufacturing overhead was calculated as:
Estimated fixed overhead = $1,239,616
Estimated variable overhead = 44,800 × $4.65 = $208320
Total manufacturing overhead = $1,447,936
MC Qu. 74 Differential Chemical produced... Differential Chemical produced 12,000 gallons of Preon and 16,000 gallons of Preon. Joint costs incurred in producing the two products totaled $8,500. At the split-off point, Preon has a market value of $6.00 per gallon and Preon $3.00 per gallon. Compute the portion of the joint costs to be allocated to Preon if the value basis is used.
Answer:
$5,100
Explanation:
The calculation of the portion of the joint cost for Preon allocation is shown below:
= Total joint cost for two products × (Preon cost ÷ Total cost)
Here,
Total joint cost = $8,500
Preon cost = 12,000 gallons × $6 per gallon = $72,000
And, the total cost is
= 12,000 gallons × $6 per gallon + 16,000 gallons × $3 per gallon
= $72,000 + $48,000
= $120,000
So, the allocated cost should be
= $8,500 × ($72,000 ÷ $120,000)
= $5,100
= $4,500
Allocative efficiency occurs:
a. Anywhere inside or on the production possibilities frontier.
b. When the total cost of production is minimized
c. At all points on the production possibilities frontier.
d. At only one point on the production possibilities frontier.
e. At the points where the production possibilities frontier crosses the horizontal or vertical axis.
Answer:
a. Anywhere inside or on the production possibilities frontier.
Explanation:
In an economy, the allocative efficiency may be defined as the economic state where the production of various goods or services is aligned with the preferences with the consumers.
The allocative efficiency always materializes at the intersection of the supply curves and the demand curves.
On the [tex]\text{equilibrium point,}[/tex] the price for a supply [tex]\text{exactly matches}[/tex] with the demand for the product [tex]\text{for that supply}[/tex] at that price, and thus all the products are sold.
It occurs anywhere on the production possibilities frontier or on the inside of the frontier.
Therefore, the correct option is (a).
