Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company’s normal activity level of 86,400 units per year is: Direct materials $ 2.40 Direct labor $ 2.00 Variable manufacturing overhead $ 0.90 Fixed manufacturing overhead $ 3.75 Variable selling and administrative expenses $ 1.40 Fixed selling and administrative expenses $ 1.00 The normal selling price is $22.00 per unit. The company’s capacity is 106,800 units per year. An order has been received from a mail-order house for 1,700 units at a special price of $19.00 per unit. This order would not affect regular sales or the company’s total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company’s inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units?

Answer:

1. The financial advantage of accepting the special order is $20,910.

2. The relevant unit cost is the variable selling and administrative expenses of $1.40 per unit.

Explanation:

1. What is the financial advantage (disadvantage) of accepting the special order?

Since this order would not affect regular sales or the company's total fixed costs, it implies that only the variable costs will be considered to determine the financial advantage (disadvantage) of accepting the special order.

Therefore, we have:

Total variable cost per unit = Direct materials + Direct labor + Variable manufacturing overhead + Variable selling and administrative expenses = $2.40 + $2.00 + $0.90 + $1.40 = $6.70

Special order financial advantage (disadvantage) = (Special price per unit - Total variable cost per unit) * Units of special order = ($19.00 - $6.70) * 1,700 = $20,910

Therefore, the financial advantage of accepting the special order is $20,910.

2. As a separate matter from the special order, assume the company’s inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units?

Since these units are inferior to the current model and must be sold through regular channels at reduced prices, the unit cost that is relevant for establishing a minimum selling price for the inferior units is therefore the variable selling and administrative expenses of $1.40 per unit.

Morrison Company manufactures two products: digital cameras and video cameras. The company uses an activity-based costing system. The annual production and sales volume of digital cameras is 10,000 units and of video cameras is 8,000 units. Direct costs for the digital cameras are $122; for the video cameras, direct costs are $153.
For overhead costs, there are three activity cost pools with the following expected activities and estimated total costs:
Activity Cost Pool Estimated Cost Expected Activity Digital Cameras Expected Activity Video Cameras Total
Activity 1$30,000 100 500 600
Activity 2 $45,000 600 300 900
Activity 3 $96,600 400 2,000 2,400
Refer to Morrison Company. Using ABC, the total cost per digital camera is approximately:
Please show calculations!

Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred.

Sept. 6 Purchased calculators from Ivanhoe Co. at a total cost of $1,740, terms n/30.
9 Paid freight of $60 on calculators purchased from Ivanhoe Co.
10 Returned calculators to Ivanhoe Co. for $64 credit because they did not meet specifications.
12 Sold calculators costing $560 for $780 to Fryer Book Store, terms n/30.
14 Granted credit of $35 to Fryer Book Store for the return of one calculator that was not ordered. The calculator cost $24.
20 Sold calculators costing $530 for $770 to Heasley Card Shop, terms n/30.

Required:
Journalize the September transactions.

If the shadow price for a resource is 0 (the allowable increase is 1000) and 150 units of the resource are added what happens to the optimal solution

Wallace Publishers Inc. collects 50% of its sales on account in the month of the sale and 50% in the month following the sale. If sales on account are budgeted to be $380,000 for April and $334,000 for May, what are the budgeted cash receipts from sales on account for May

If a firm is privately owned, and its stock is not traded in public markets, then we cannot measure its beta for use in the CAPM model, we cannot observe its stock price for use in the dividend growth model, and we don't know what the risk premium is for use in the bond-yield-plus-risk-premium method. All this makes it especially difficult to estimate the cost of equity for a private company. True False

The records of Quality Cut Steak Company list the following selected accounts for the year ended April 30, 2020 after all adjusting entries have been recorded. Prepare a multiple-step income statement in good form for the company. (Please note only selected accounts are listed, do not try to balance the excerpted trial balance).
Interest revenue 500 Accounts Payable 16,900
Inventory 45,300 Accounts Receivable 38,000
Notes Payable,
Long-term 52,000 Accumulated Depreciation
- Equipment 36,800
Salaries Payable 2,400 Arnold, Capital 42,200
Sales Revenue 292,000 Arnold, Withdrawals 17,000
Salaries Expense
(Selling) 21,400 Cash 7,400
Office Supplies 6,300 Cost of Merchandise
Sold 160,600
Unearned Rent 13,200 Equipment 130,000
Interest Expense 1,700 Interest Payable 1,000
Depreciation Expense
- Equipment (Admin) 1,300 Rent Expense (Admin) 9,600
Utilities Expense
(Admin) 4,300 Utilities Expense
(Selling) 10,600
Delivery Expense
(Selling) 3,500

Determine whether each of the following goods is a private good, a public good, a common resource, or a club good. Private Good Public Good Common Resource Club Good A stationary bike in a fitness room that is open to the public A large, beautiful clock in a town square A new drum set for you to play in your friend's band

Razor Corporation's cost of preferred stock is 8%. The company's stock sells for $100 a share with selling costs are $5. What is the annual dividend to the preferred stock

When 30-year-old Lindsay was in a coma for 3 months, her friend Corey had the legal authority to handle her personal, financial, and medical affairs. Why did Corey have the legal right to do this? A. Corey was her life insurance agent. B. She had chosen Corey as her executor. C. Corey was named as her guardian. D. Corey had designated power of attorney.

FILL IN THE BLANK Please add the appropriate word or words to complete the sentences. 1. Price ceilings are governmental price that are set the market equilibrium price. 2. This kind of policy typically creates a(n) because the quantity demanded the quantity supplied. 3. Price floors are governmental price that are imposed the market equilibrium price. 4. This kind of policy usually generates a(n) in the market because the quantity exceeds the quantity . 5. Shortages and surpluses are reflected in inventories. Inventory is the raw material to goods or the stocks of finished goods that are ready to be sold. g

Plastic and Co manufactures industrial plastic containers. As petroleum prices fall, the price of plastic materials also falls. As a result,

a: Plastic and Co’s marginal cost curve will shift.
b: The market price for the plastic containers will rise, other things equal.
c: The fixed cost curve for Plastic and Co would shift downward.
d: Average cost curve of plastic containers will shift upward.

When ________, a competitive firm will produce and earn economic profits.

a: marginal revenue is rising
b: marginal costs are decreasing
c: marginal revenue is above average costs
d: marginal revenue = average total cost = marginal costs

On January 1, 2012, Fei Corp. issued a 3-year, 5% coupon, $100,000 face value bond. The bond was priced at an effective interest rate of 8%, yielding proceeds of $92,137. This is the first and only bond that Fei has ever issued.
Fei’s Statement of Cash Flows for fiscal year 2012 had the following line items:
2012 2011
Net Income $11,500 $10,350
Depreciation $25,478 $23,675
Amortization of Bond Discount $2,418 $0
What was Fei’s Interest Expense on the bond during fiscal year 2012?
a. $2,418
b. $7,371
c. $7,418
d. $8,000
e. $5,000

Strong, Inc., bundles two kinds of service activities into a single $6,000 fixed-price contract, yielding two distinct performance obligations, A and B. Each activity has a stand-alone selling price of $3,200. Obligation A is satisfied immediately upon contract signing. Obligation B is satisfied evenly over an eight-month period. After the date of contract signing and the satisfaction of obligation A, two months have passed. Cumulatively, how much revenue should Strong, Inc., recognize by the end of the second month

Perpetual Life Corp. has issued consol bonds with coupon payments of $50. (Consols pay interest forever and never mature. They are perpetuities.)a. If the required rate of return on these bonds at the time they were issued was 5.0%, at what price were they sold to the public

For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, (2) identify the normal balance of the account, and (3) select debit (Dr.) or credit (Cr.) to identify the kind of entry that would increase the account balance
Account Type of Account Normal Balance Increase (Dr. or Cr.)
a. Fees Earned
b. Equipment
c. Notes Payable
d. Owner Capital
e. Cash
f. Legal Expense
g. Prepaid Insurance
h. Land
i. Accounts Receivable
j. Owner Withdrawals
k. License Fee Revenue
l. Unearned Revenue

g What is the after-tax yield on a one-year corporate bond with a 7 percent yield if your marginal federal income tax rate is 40% 2.8% 4.2% 5% 5.3% 6.2%

Married taxpayers Otto and Ruth are both self-employed and file a joint return. Otto earns $435,200 of self-employment income and Ruth has a self-employment loss of $23,100. How much 0.9 percent Medicare tax for high-income taxpayers will Otto and Ruth have to pay with their 2020 income tax return?

Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period.
P0 Q0 P1 Q1 P2 Q2
A 99 100 104 100 104 100
B 59 200 54 200 54 200
C 118 20 128 200 64 400
Calculate the first-period rates of return on the following indexes of the three stocks:
a. A market value–weighted index
b. An equally weighted index.

Payment of an above-market wage reduces shirking by employees and reduces worker turnover because it multiple choice 2 decreases worker productivity. raises the opportunity cost of losing a job. lowers the opportunity cost of losing a job. creates more supervisory positions.

A restaurant is considering buying a new coffee making machine, which will be replaced over and over with a new one when an old one dies. Each coffee making machine costs $143,000, and is expected to die after exactly 6-years. Each machine will costs $10,200 per year to operate. The discount rate that the restaurant assigns to this coffee making machine project is 11 percent per year. The straight-line depreciation method would be used when calculating the machine's loss of value for tax purposes. Each coffee making machine will be fully depreciated all the way to zero at the end of its life. Also, each coffee making machine will have a before-tax salvage value of $10,500 at the end of its life. The restaurant's tax rate is 25 percent. As always, assume that all cash flows occur at year end. If the restaurant buys a coffee making machine over and over in perpetuity, as soon as one dies, what would be the average, or the equivalent, annual cost (EAC) of the machine?

Wright Machinery Corporation manufactures automobile engines for major automobile producers. The engines sell for $940 per engine. In addition, customers have the option to purchase a service-type warranty for $70 per engine that protects against any defects for a period of 5 years. During 2019, Wright sold 7,000 engines to National Motors. National Motors purchased warranties on all of the engines purchased. During 2019, Wright repaired defective motors at a cost of $93,400. Prepare the necessary journal entries to record:
1. the sale of engines and service warranty on account during 2016 (one entry).
2. the warranty costs paid during 2016
3. the warranty revenue earned in 2016.
Additional Instructions
Model your entries after the Service-Type Warranties example in your textbook.
For grading purposes, use December 31 to record a summary transaction for entries that would have been made during the year.

What is result driven

Blue Co. recorded a right-of-use asset of $210,000 in a 10-year operating lease. Payments of $37,167 are made annually at the end of each year. The interest rate charged by the lessor was 12% and was known by Blue. The balance in the right-of-use asset after two years will be:

Tanouye Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below: Hours Wait time 24.9 Process time 2.6 Inspection time 0.5 Move time 2.2 Queue time 11.5 The throughput time was:

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,000 models, and transferred them to the Distribution Department. The company ended the month with 1,500 models in ending inventory. There were 2,500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs.

Required:
What were the equivalent units for conversion costs during October?

When the economy is in a recession, expansionary fiscal policy can be used to stimulate and encourage economic growth. Which of the following scenarios represent expansionary fiscal policies from both a supply and demand perspective at the same time? When choosing the answer, please look if it meets three description, expansionary, fiscal policies, and involving both the supply side and the demand side. (There could be more than one answer).
A. The government lowers tax rates and undertakes a replacement of old bridges and roads.
B.The government lowers tax rates and issues a partial refund of taxes that have already been paid.
C. The government raises tax rates and reduces unemployment insurance payments.
D. The Federal Reserve increases the money supply and lowers the interest rate while the government simultaneously reduces future taxes.

Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $20,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is Group of answer choices $40,000 $50,000 $70,000 $60,000

Is it true that in a short-run production process, the marginal cost curve eventually slopes upward because firms have to pay workers a higher wage rate as they produce more output? Explain your answer.

Equestrain Roads sold $120,000 of goods and accepted the customer's $120,000 10%, 1-year note in exchange. Assuming 10% approximates the market rate of return, how much interest revenue would be recorded for the year ending December 31 if the sale was made on June 30

Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 40,000 units and sold 32,000 units at a price of $110 per unit. Manufacturing costs Direct materials per unit $ 42 Direct labor per unit $ 16 Variable overhead per unit $ 5 Fixed overhead for the year $ 360,000 Selling and administrative costs Variable selling and administrative cost per unit $ 10 Fixed selling and administrative cost per year $ 115,000 1a. Assume the company uses absorption costing. Determine its product cost per unit.