Answer:
Alternative 1:
Debit Revenue $5,000,000
Credit Equipment $5,000,000
Alternative 2:
Debit Revenue $5,000,000
Credit Deferred revenue $5,000,000
Explanation:
Preparation of the correcting journal entries required under the two alternative accounting treatments allowed under IFRS
Based on the information given if in the October 2021, the company received the amount of $5 million as government grant in which we were told that the grant represents 20% of the total cost of equipment which means that the correct journal entries required under the two alternative accounting treatments allowed under IFRS will be :
Alternative 1:
Debit Revenue $5,000,000
Credit Equipment $5,000,000
Alternative 2:
Debit Revenue $5,000,000
Credit Deferred revenue $5,000,000
g MM Proposition II with taxes: Group of answer choices reveals how utilizing the tax shield on debt causes an increase in the value of a firm. reaches the final conclusion that the capital structure decision is irrelevant to the value of a firm. supports the argument that the cost of equity decreases as the debt-equity ratio increases.
Answer:
reveals how utilizing the tax shield on debt causes an increase in the value of a firm.
Explanation:
According to the MM Proposition II with taxes, the value of a levered firm = Vu + tD
Where :
Vu = value of unlevered firm
tD = debt tax shield
In the presence of taxes, the value of a levered company is greater than that of the same company without debt with the same operating income.
Also, the WACC of a company with debt must be lower than that of an all equity company
Golden Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 22,300 hours. At the end of the year, actual direct labor-hours for the year were 21,100 hours, the actual manufacturing overhead for the year was $538,980, and manufacturing overhead for the year was underapplied by $24,140. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been
Answer:
$544,120
Explanation:
Calculation for what The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been
First step is to calculate the Applied manufacturing overhead
Applied manufacturing overhead = $538,980 - $24,140
Applied manufacturing overhead = $514,840
Second step is to calculate the Predetermined overhead rate using this formula
Predetermined overhead rate = Applied manufacturing overhead / Actual direct labor hours
Let plug in the formula
Predetermined overhead rate = $514,840 / 21,100
Predetermined overhead rate = $24.4
Now let calculate the Estimated total manufacturing overheads using this formula
Estimated total manufacturing overheads = Estimated direct labor hours * Predetermined overhead rate
Let plug in the formula
Estimated total manufacturing overheads= 22,300 *$24.4
Estimated total manufacturing overheads= $544,120
Therefore The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been $544,120
What is currency exchange?
O A. The assessment of the value of raw materials that have been
converted into manufactured items
O B. The conversion of money from one system to another system
O C. The printing of money that is easy to carry
O D. The purchase of stock in public corporations
Answer:
O B. The conversion of money from one system to another system
Explanation:
Currency exchange is converting the currency of a country into the currency of another country. It is the conversion of the country's A currency to the country's B currency. The rate of converting the currency of one country to another is the exchange rate.
Currency exchange takes place in the foreign currency exchange market. Demand and supply factors determine the exchange rate between currencies of two countries.
Loreal-American Corporation purchased several marketable securities during 2021. At December 31, 2021, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2020, and all are considered securities available-for-sale. Cost Fair Value Unrealized Holding Gain (Loss) Short term: Blair, Inc. $ 520,000 $ 385,000 $ (135,000 ) ANC Corporation 470,000 520,000 50,000 Totals $ 990,000 $ 905,000 $ (85,000 ) Long term: Drake Corporation $ 520,000 $ 580,000 $ 60,000 Aaron Industries 700,000 680,000 (20,000 ) Totals $ 1,220,000 $ 1,260,000 $ 40,000 Required: 1. Prepare appropriate adjusting entries at December 31, 2021. 2. What amount would be reported in the income statement at December 31, 2021, as a result of the adjusting entry
Answer and Explanation:
1. The adjusting entry is
Net unrealised holding gain or loss $45,000 ($85,000 - $40,000)
To Fair value adjustment $45,000
(being net unrealized holding gain or loss is recorded)
2. In the income statement, the amount that should be reported is zero as the net unrealized gain or loss would be reported as an other comprehensive income also it is a part of the stockholder equity
As the use of the Internet grows around the world, there must be as easy an exchange of ideas and information as possible between countries. One important issue is opt-in versus opt-out. In general, European websites have opt-in policies while U.S. websites have opt-out policies. Opt-in means customers must ask to be involved in data collection and marketing while opt-out companies automatically include customers in data collection unless the customer specifically asks not to be included. Europeans believe it is unethical to invade someone's privacy. Americans are not nearly as protective of their right to privacy. What ethical factor is illustrated by this example
Answer: Societal culture and norms
Explanation:
Based on the information given, the ethical factor that is illustrated by this example is "societal culture and norms".
Culture simply refers to the way of life with regards to certain group of people. It has to do with the ideas, attitudes and the values that such people have in the group.
With culture, one can be able to make a distinction between rights from wrongs. Therefore, Europeans believing it is unethical to invade someone's privacy and Americans are not nearly as protective of their right to privacy has to do with societal culture and norms.
A total of $54,000 is borrowed and repaid with 48 monthly payments, with the first payment occurring one month after receipt of the $54,000. The stated interest rate is 8.50% compounded quarterly. What monthly payment is required
Answer: $1,329.40
Explanation:
First convert the annual interest rate which is compounded quarterly to an effective rate per period.
effective rate = (1 + annual rate/ no of compounding periods) ^ (number of compounding periods/ no. of periods) - 1
= (1 + 8.5%/4) ⁴ ⁺ ¹² - 1
= 0.703%
The monthly payments are constant so this is an Annuity.
Present value of Annuity = Annuity * (1 - ( 1 + r) ^ -n) / r
54,000 = Annuity * ( 1 - (1 + 0.703%)⁻⁴⁸) / 0.703%
54,000 = Annuity * 40.6205
Annuity = 54,000 / 40.62
Annuity = $1,329.40
The security market line (SML) is:__________
a) the line that represents the expected return-beta relationship.
b) All of the options.
c) also called the capital allocation line.
d) the line that describes the expected return-beta relationship for well-diversified portfolios only.
e) the line that is tangent to the efficient frontier of all risky assets.
Answer: a) the line that represents the expected return-beta relationship
Explanation:
The security market line simply refers to a line that is drawn on a chart and it is simply a representation of capital asset pricing model as it shows the expected return-beta relationship.
The graphical representation depicts the risk of the securities, against their expected return. Therefore, the correct option is A.
A company has3process options with the following costs:Process OptionsABCfixed cost ($)1,200,000220,000580,000variable cost/unit ($)31371)Find the range of forecasted volumes where process Cis optimal.2)The Point of Indifference between Process A and Process Boccurs at a total costof $________.3)The company has chosen process Aand expects to operate at a lossuntil 30,000 units have been sold.What is the price for each unit s
Answer: See explanation
Explanation:
a. First and foremost, we have to get the total cost equations which will be:
Total cost (A) = 1200000 + 3Q
Total Cost (B) = 220000 + 13Q
Total Cost (C) = 580000 + 7Q
To get the range of forecasted volumes where process C is optimal, we have to get the cross-over point between A, B and C which goes thus:
Between A and C will be:
= (1200000 - 580000)/(7 - 3)
= 620000/4
= 155,000
Between B and C will be:
= (220000 - 580000)/(7 - 13)
= 360,000 / 6
= 60,000
Therefore, the range of the forecasted volumes where process C is optimal will be [60000, 155000]
(b) The point of indifference between A and B will be the difference in their fixed cost divided by the difference in their variable cost which will be:
= (1200000 - 220000)/(13 - 3)
= 980,000 / 10
= 98,000
(c) The price for each unit will be:
30,000 = 1200,000 / (Selling price - 3)
Selling price - 3 = 1200,000 / 30,000
Selling price - 3 = 40
Selling price = 40 + 3
Selling price = $43
On December 30, 2005, Bart, Inc. purchased a machine from Fell Corp. in exchange for a non-interest bearing note requiring eight payments of $20,000. The first payment was made on December 30, 2005, and the others are due annually on December 30. At date of issuance, the prevailing rate of interest for this type of note was 11%. Present value factors are as follows:
Period Present value of ordinary annuity of 1 at 11% Present value of annuity in advance of 1 at 11%
7 4.712 5.231
8 5.146 5.712
On Bart's December 31, 2005 balance sheet, the note payable to Fell was:
a. $114,240
b. $104,620
c. $94,240
d. $102,920
Answer: c. $94,240
Explanation:
On December 31, 2005, one payment has already been made which would mean that only 7 payments are left. As the first of these remaining 7 will be paid the year after, this is an ordinary annuity.
Note payable value = Present value of seven $20,000 payments
= 20,000 * Present value of ordinary annuity of 1 at 11% for 7 years.
= 20,000 * 4.712
= $94,240
The cost of lighting and maintaining the tallest smokestack in the US (at a shuttered ASARCO refinery) is $90,000 per year. At an interest rate of 10% per year, the present worth of maintaining the smokestack for 10 years is closest to: a. $1,015,000 GE 311 Financial Decisions in Engineering Skill Development Assignment
Answer:
$553,000
Explanation:
Calculation for the present worth of maintaining the smokestack for 10 years
Present worth=$90,000(P/A,10%,10)
Present worth= $90,000(6.144567)
Present worth= $553,011.04
Present worth=$553,000 (Approximately)
Therefore the present worth of maintaining the smokestack for 10 years is closest to:$553,000
volume_upclosed_captiondescriptionfullscreen Leaders at Cold Stone Creamery say they launched stores in Japan because Japanese consumers have Western brand awareness that enables them to comprehend the American ice cream experience. The leaders are making a case that:
Answer:
d.Japanese consumers have schemas and prototypes against which they can positively evaluate and comprehend Cold Stone Creamery.
Explanation:
Japanese consumers have schemas and prototypes against which they can positively evaluate and comprehend Cold Stone Creamery.The prototype is regarded as mental frameworks which is been utilized in assignment of things into categories based on quality.
g Tirri Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 7.30 Direct labor $ 3.45 Variable manufacturing overhead $ 1.35 Fixed manufacturing overhead $ 24,000 Sales commissions $ 1.10 Variable administrative expense $ 0.65 Fixed selling and administrative expense $ 8,400 If the selling price is $27.70 per unit, the contribution margin per unit sold is closest to: Multiple Choice $13.85 $16.95 $10.40 $6.55
Answer:
$13.85
Explanation:
Calculation for what the contribution margin per unit sold is closest to:
Selling price $27.70 per unit,
Less Direct materials ($ 7.30)
Less Direct labor ($ 3.45)
Less Variable manufacturing overhead ($ 1.35 )
Less Sales commissions ($ 1.10)
Less Variable administrative expense ($ 0.65)
Contribution margin per unit sold $13.85
Therefore the contribution margin per unit sold is closest to: $13.85
Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. During the year, net credit sales totaled $600,000, and the estimated bad debt percentage is 2%. The allowance for uncollectible accounts had a credit balance of $5,600 at the beginning of the year and $4,700, after adjusting entries, at the end of the year. What is the amount of accounts receivable written off during the year
Answer:
$12,900
Explanation:
Calculation for the amount of accounts receivable written off during the year
Beginning Balance $5,600
Add Bad debt expense $12,000
(2% x $600,000)
Less End-of-year balance ($4,700)
Accounts receivable written off $12,900
($5,600+$12,000+$4,700)
Therefore the amount of accounts receivable written off during the year will be $12,900
Navistar Electric issued 1000 debenture bonds 2 years ago with a face value of $5,000 each and a bond interest rate of 15% per year payable semiannually. The bonds have a maturity date of 20 years from the date they were issued. If the interest rate in the market place is 10% per year compounded semiannually, determine the present worth today of one bond.
Answer:
$7,081.25
Explanation:
Face value = 5000
Coupon = 15% paid annually. Semi annual payment = 750/2 = 375
Time to maturity = 18 years
Interest rate = 10% compounded semi-annually
P = 375(P|A, 5%, 36) + 5000(P|F, 5%, 36)
P = 375(16.58131488) + 5000(0.17265193)
P = 6217.99308 + 863.25965
P = 7081.25273
P = $7,081.25
So, the present worth of one bond today is $7,081.25
Explain the relationship between a firm’s short-run production function and its short-run cost function. Focus on the marginal product of an input and the marginal cost of production.
Answer:
Short-run Production Function and Short-run Cost Function
In the short-run, some costs are fixed while others are variable. This is not the case in the long-run because, in the long-run, all costs become variable.
Therefore, the relationship between a firm’s short-run production function and its short-run cost function is depicted by the variability of the cost and the quantity of production in the short-run, when some costs are variable while other costs are fixed.
This implies that the quantity that the firm can produce in the short-run is determined by the variable (marginal) cost of production input. Similarly, the total variable cost of a product is a function of the quantity and the marginal cost per unit.
Explanation:
The short-run production function shows the different volumes of output that a firm can produce, where some costs are fixed and some are variable. This function is expressed as Q = f (L, K), where Q = quantity of production, L = labor input, and K = capital input. Here, the firm assumes that labor input is variable while capital input is fixed. This implies that the marginal cost of the product is equal to the labor cost. Therefore, if the firm employs one more unit of labor, it results in a marginal increase in the units of production. The marginal cost of production is expressed as a function of the change in the total cost divided by the change in the quantity.
The relationship between the Firm's short-run production and cost function is that they help a firm to make suitable adjustments in its production approach to achieve the cost efficiency.
In short-run of production, some costs are fixed while others are variable. However, in long-run of production, all costs become variable.
In the short-run production function, the firm employs two inputs which is labor and capital
Since the firm is operating in a short-run production period, the relationship can be seen through the production function and cost function assuming that the firm uses a certain level of technology.
in the short-run production function, it is assumed that firm utilize state-of-the-art technology in the production process.
In conclusion, the relationship between the Firm's short-run production and cost function is that they help a firm to make suitable adjustments in its production approach to achieve the cost efficiency.
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Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, Year 1: Purchase price $ 71,000 Delivery cost $ 3,000 Installation charge $ 2,000 Estimated life 5 years Estimated units 146,000 Salvage estimate $ 3,000 During Year 1, the machine produced 42,000 units and during Year 2, it produced 44,000 units. Required Determine the amount of depreciation expense for Year 1 and Year 2 using each of the following methods:
Answer: See Explanation
Explanation:
You didn't give the methods to use but let me use 2 main methods.
First, let's use the Straight line Depreciation. This will be:
= ($71000 + $3000 + $2000 - $3000) / 5
= $73000/5
= $14600
Year 1 Depreciation = $14600
Year 2 depreciation = $14600
Secondly, let's use the double declining method of Depreciation will be:
= 1/5 × 2
= 0.2 × 2
= 0.4
= 40%
Year 1 depreciation will be:
= 76000 × 40%
= 76000 × 0.4
= $30400
Year 2 Depreciation will be:
= ($76000 - $30400) × 40%
= $45600 × 40/100
= $45600 × 0.4
= $18240
use a large percentage of their checkable deposits for the purpose of __________.
A.
paying interest
B.
giving loans
C.
employee salaries
D.
maintaining reserves
the answer is D
Answer:
B. giving loans
Explanation:
Banks use a large proposition of their deposits to create loans for other customers. The federal reserve requires commercial banks to hold a small percentage of deposits as reserves. The reserve requirement is one of the monetary policy tools of the Federal Reserve.
In most cases, the reserve requirement is around 10 percent or below of the total deposits. As a fraction, 10 Percent is a tenth (1/10), which is a small proportion of the total deposits. The bigger percentage, 90 percent, is used to create loans to other customers.
As an investor, what is the risk involved when investing in companies on the stock
exchange?
a. Investors can lose their existing shares if the value of the stock does not
increase within 90 days of purchase
b. Once they purchase a share, investors cannot sell them at a higher price
The price of stocks can decrease; for example, when the company
receives bad press
d. Investors are only at risk if the purchase a share when the stock price has
fallen
C.
Answer:d
Explanation:
The investor are only at risk if the purchase of a share when the stoc price has fallen
On April 1 of the current year, Morgan Jones established a business to manage rental property. She completed the following transactions during April: Opened a business bank account with a deposit of $60,000 in exchange for common stock. Purchased office supplies on account, $1,800. Received cash from fees earned for managing rental property, $22,300. Paid rent on office and equipment for the month, $7,000. Paid creditors on account, $1,100. Billed customers for fees earned for managing rental property, $3,600. Paid automobile expenses for month, $750, and miscellaneous expenses, $1,000. Paid office salaries, $4,000. Determined that the cost of supplies on hand was $250; therefore, the cost of supplies used was $1,550. Paid dividends, $5,000. Required: 1. Indicate the effect of each transaction and the balances after each transaction: For those boxes in which no entry is required, leave the box blank. For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)
Answer:
I used an Excel spreadsheet, see the attached file
Explanation:
The classic supply chain approach has been based on
forecasting which of the following parts of future
inventory using statistical trending?
Transfer
Demand
olololo
Lifecycle
Safety stock
Answer:
Demand
Explanation:
The classic supply chain approach statistics refers to data regarding past suppliers or sales through the distribution channels. A business can use this information to analyze sales trends. Once the sale trends are determined, future demand for products can be estimated. The business uses historical data from its supply chain to predict future sales and demand.
Luis has an obligation to pay a sum of $3,000 in four years from now and a sum of $5,000 in six years from now. His creditor permits him to discharge these debts by paying $X in two years from now, $1000 in three years from now, and a final payment of $2X in nine years from now. Assuming an annual effective rate of interest of 8%, find X
Answer:
The value of X is 2455.77
Explanation:
Given the data in the question;
annual effective rate of interest of 8%, = 0.08
Now, we discount all the ash flows to present value, so we get;
3000×[tex]\frac{1}{(1 + 0.08)^{4} }[/tex] + 5000×[tex]\frac{1}{(1 + 0.08)^{6} }[/tex] = X×[tex]\frac{1}{(1 + 0.08)^{2} }[/tex] + 1000×[tex]\frac{1}{(1 + 0.08)^{3} }[/tex] + 2X×[tex]\frac{1}{(1 + 0.08)^{9} }[/tex]
2,205.089 + 3,150.84 = 793.83 + X( [tex]\frac{1}{(1 + 0.08)^{2} }[/tex] + [tex]\frac{1}{(1 + 0.08)^{9} }[/tex] )
5355.929 - 793.83 = X( 0.8573 + 1.0004 )
4,562.099 = X( 1.8577 )
X = 4,562.099 / 1.8577
X = 2455.77
Therefore; value of X is 2455.77
An unacceptable treatment for the presentation of current liabilities is: A : Listing current liabilities according to amount. B : Showing current liabilities immediately below current assets to obtain a presentation of working capital. C : Offsetting current liabilities against assets that are to be applied to their liquidation. D : Listing current liabilities in order of maturity.
Answer:
The answer is c!
Explanation:
These are true or false!! Please help!!
1. A need is something that you desire to have because someone else has one.
2. Food, clothing, and shelter are examples of basic wants.
3. One of the problems in economics is that wants are unlimited.
4. Goods and services are produced through the use of economic resources.
5. There are only two kinds of economic resources: human and capital.
6. Labor is another name for human resources.
7. Some resources, such as clean air and water, are limited.
8. Scarcity is a problem that is faced by individuals and businesses but not by government
9. Economic decision making is important to businesses and governments but not to
individuals.
10. Economic decision making is a process requiring four important steps.
Answer:
I'm just going to write T-True n F)-False
1 F-
2 T
3 T
4 T
5 F-
6 T
7 T
8 T
9 F-
10 I'm sorry i don't know about this
A "direct response" social media advertisement offers a 50% discount at your restaurant for one of two people dining
together as a couple on Valentine's Day. The discount will apply to the lower priced
meal. One meal will cost $24.77 and the other costs
$22.56. What will the total cost of the check be with the discount?
a) $24.77
b) $34.95
c) $36.05
d) $47.33
Answer:
36.05
Explanation:
$22.56/2=11.28
$11.28+24.77=$36.05
the federal government has Group of answer choices separate capital and operating budgets only a capital budget an operating budget only a single budget that includes both operating expenses and capital spending
Answer:
A single budget that includes both operating expenses and capital spending.
Explanation:
A budget can be defined as a financial plan used for the estimation of revenue and expenditures of an individual, organization or government for a specified period of time, often one year. Budgets are usually compiled, analyzed and re-evaluated on periodic basis.
In the preparation of a budget, a list of each type of income and expense with respect to the budget is generally considered to be the first step. Also, the final step is making necessary adjustments to the budget by the top executive.
The federal government has a single budget that includes both operating expenses and capital spending on a cash basis.
Additionally, the benefits of having a budget is that it aids in setting goals, earmarking revenues and resources, measuring outcomes and planning against contingencies.
What are 2 ways to add a customer to QuickBooks Online?
Answer:
-go to sales
-select the cutomers tab
Explanation:
kapoy explain iparok ka ron
Daley Company prepared the following aging of receivables analysis at December 31. Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 630,000 $ 408,000 $ 102,000 $ 48,000 $ 30,000 $ 42,000 Percent uncollectible 1 % 2 % 5 % 7 % 10 % Exercise 7-9 Percent of receivables method LO P3 a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 6% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method. b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $13,200 credit. c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $2,200 debit.
Answer:
A. $14,820
B. Dr Bad Debt Expense $1,620
Cr Allowance for Doubtful Accounts $1,620
C. Dr Bad Debt Expense $17,020
Cr Allowance for Doubtful Accounts $17,020
Explanation:
a. Calculation to Estimate the balance of the Allowance for Doubtful Accounts
Using this formula
Balance of the Allowance for Doubtful Accounts=Account Receivable *Percentage Uncollectible
Let plug in the formula
Account Receivable* Percentage Uncollectible = Balance of the Allowance for Doubtful Accounts
Not due $408,000*1%=$4,080
1 to 30 $102,000*2%=$2,040
31 to 60 $48,000*5%=$2,400
61 to 90 $30,000*7%=$2,100
Over 90 $42,000*10%=$4,200
Balance of the Allowance for Doubtful Accounts $14,820
($4,080+$2,040+$2,400+$2,100+$4,200)
b. Preparation of the adjusting entry to record Bad Debts Expense
Dr Bad Debt Expense $1,620
($14,820-$13,200)
Cr Allowance for Doubtful Accounts $1,620
(Being to record Bad Debts Expense)
c. Preparation of the adjusting entry to record bad debts expense
Dr Bad Debt Expense $17,020
($14,820+$2,200)
Cr Allowance for Doubtful Accounts $17,020
(Being to record Bad Debts Expense)
On January 1, 2019, the balance in Kubera Co.'s Allowance for Bad Debts account was $1,150. During the year, a total of $3,655 of delinquent accounts receivable was written off as bad debts. The unadjusted balance in the Allowance for Bad Debts account at December 31, 2019, was $1,450. Required: a. What was the total amount of bad debts expense recognized during the year
Answer:
$3,955
Explanation:
Bad debts are debts owned to a business whose likelihood of collection is not guaranteed.
Debit
Particulars Amount
Debtors. $3,655
Balance c/f. $1,450
Total $5,105
Credit
Particulars. amounts
Balance b/f $1,150
Bad debts. $3,955
Total. $5,105
Therefore, the amount of bad debts recognized during the year is $3,955
On June 30, Joanna Fabrics has the following data pertaining to the retail inventory method. Goods available for sale: at cost $38,000; at retail $50,000; net sales $40,000; and ending inventory at retail $10,000. Compute the estimated cost of the ending inventory using the retail inventory method. The estimated cost of the ending inventory
Answer: 7600
Explanation:
The estimated cost of the ending inventory would be calculated as thus'
First, we have to calculate the cost to retail percentage which will be:
= cost/retail price
= 38000/50000
= 0.76
The cost of sales would be:
= net sales × cost to retail percentage
= 40000 × 0.76
= 30400
Then, the ending inventory would then be:
= 38000-30400
= 7600
The estimated cost of the ending inventory is $7,600.
First step
Cost to retail percentage= Cost/Retail price
Cost to retail percentage = 38000/50000
Cost to retail percentage = 0.76
Second step
Cost of sales= Net sales × Cost to retail percentage
Cost of sales= 40000 × 0.76
Cost of sales= 30400
Third step
Estimated cost of ending inventory=38,000-30,400
Estimated cost of ending inventory= 7,600
Inconclusion the estimated cost of the ending inventory is $7,600.
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Discuss what happens to overhead rates that are based on direct labor when automated equipment replaces direct labor. Would manufacturing overhead increase or decrease
Answer:
Manufacturing overhead rates based on direct labor will increase and the total overhead itself will increase as a result of the increased use of equipment instead of direct labor.
Explanation:
When overhead rates are based on direct labor and automated equipment replaces direct labor, the number of direct labor hours will decrease. This will cause an increase in the predetermined overhead rates since fewer direct labor hours will now divide the same or even an increased level of overhead. Even the overhead costs will increase from the replacement of direct labor with equipment.
