Answers
Answer:
currency
Explanation:
global companies still have access to trade with currency. its accepted whether the company is nonconvertible or convertible.
Related Questions
During a period, an RV company purchased three vehicles for $33,000, $46,000, and $24,000, and sold two of them for $125,000. Using the specific identification method of costing inventory, they identified the $46,000 vehicle as still in stock. Calculate the gross profit for the period.
Answers
Answer: $68,000
Explanation:
If the inventory that remains is the $46,000 then that means that the cars costing $33,000 and $24,000 have been sold.
With specific identification, the actual prices of the stock are used so the cost of goods sold is:
= 24,000 + 33,000
= $57,000
The gross profit is therefore:
= Sales - Cost of goods sold
= 125,000 - 57,000
= $68,000
(True) or (False)? The most common method companies use is double-declining balance, because it allows companies to recognize for depreciation expense up front.
Answers
Answer:
false
Explanation:
my teacher said it was false but she could be wrong
what is the meaning of want
Answers
Answer:
Want is to desire something or to yearn. (EX. I want an ice cream.) Want is showing that you would like something basically
Explanation:
Beginning inventory Merchandise $ 275,000 Finished goods $ 450,000 Cost of purchases 500,000 Cost of goods manufactured 900,000 Ending inventory Merchandise 115,000 Finished goods 375,000 Compute cost of goods sold for each of these two companies for the year.
Answers
Answer:
Results are below.
Explanation:
Giving the following information:
Company 1:
Beginning inventory Merchandise $ 275,000
Cost of purchases 500,000
Ending inventory Merchandise 115,000
Company 2:
Cost of goods manufactured 900,000
Ending Finished goods 375,000
Beginning Finished goods $ 450,000
To calculate the cost of goods sold, we need to use the following formula:
COGS= beginning finished inventory + cost of goods manufactured/purchased - ending finished inventory
Company 1:
COGS= 275,000 + 500,000 - 115,000
COGS= $660,000
Company 2:
COGS= 900,000 + 375,000 - 450,000
COGS= $825,000
U.S. real gross domestic product changed from $14.6 trillion in 2006 to $14.4 trillion in 2009. During that same time period, the share of manufactured goods (e.g., cars, appliances) of U.S. real gross domestic product was 12.8 percent in 2006 and 12.0 percent in 2009. What was the dollar value of manufactured output Instructions: Enter your responses rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. In 2006
Answers
Answer:
Missing word "b. In 2009"
a. Dollar value (2006) = Real GDP (2006) * Share of manufacturing goods (2006) / 100
Dollar value (2006) = 14.6 * 12.8 / 100
Dollar value (2006) = 186.88 / 100
Dollar value (2006) = $1.8688 trillion
Dollar value (2006) = $1.87 trillion
Thus, the dollar value of manufactured output in 2006 is $1.9 trillion
b. Dollar value (2009) = Real GDP (2009) * Share of manufacturing goods (2009) / 100
Dollar value (2009) = 14.4 * 12.0 / 100
Dollar value (2009) = 172.8 / 100
Dollar value (2009) = $1.728 trillion
Dollar value (2009) = $1.73 trillion
Thus, the dollar value of manufactured output in 2009 is $1.7 trillion
Grays Company has inventory of 25 units at a cost of $6 each on August 1. On August 3, it purchased 35 units at $11 each. 27 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 27 units that were sold?
Answers
Answer:
$174
Explanation:
Calculation to determine what amount will be reported as cost of goods sold for the 27 units that were sold
Cost of goods sold=(25 units*$6) + [(25 units -27units)*$12]
Cost of goods sold =$150+$24
Cost of goods sold=$174
Therefore the amount that will be reported as cost of goods sold for the 27 units that were sold is $174
Evaluate whether all of the following are considered to be investment (I) in calculating GDP.
a. The purchase of a new automobile for private, non-business use
b. The purchase of a new house
c. The purchase of corporate bonds
Answers
Answer:
only the purchase of a new house would be considered investment spending of the three options
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Consumption spending includes spending by households on goods and services. Consumption spending includes :
spending on durables - e.g. laptop
spending on nondurables - e.g. clothes, food
spending on services - e.g. payment of hospital bill
the purchase of a textbook by a student is an example of consumption spending on durable goods
Investment - It includes purchases of goods and services made by businesses in the production of goods and services
Government spending - It includes government consumption expenditure and gross investment. The purchase of a new limousine for the president is an example of consumption expenditure
The purchase of a new automobile for private, non-business use is an example of consumption spending on durables
The purchase of a new house is an example of investment spending
The purchase of corporate bonds is not included in the calculation of GDP
Use the starting balance sheet and the list of changes to create an updated balance sheet and to answer the question.
Valley Technology Balance Sheet As of December 31, 2020 (amounts in thousands)
Cash 2,200 Liabilities 3,600
Other Assets 2,800 Equity 1,400
Total Assets 5,000 Total Liabilities 5,000
Between January 1 and March 31, 2021:
1. Cash decreases by $200,000
2. Liabilities decrease by $100,000
3. Equity increases by $400,000
What is the value for Other Assets on March 31, 2021?
Answers
Answer: $3,300,000
Explanation:
Accounting formula:
Assets = Equity + Liabilities
Total equity and liabilities on March 31 is:
= Beginning balance - decrease in liabilities + Increase in Equity
= 5,000,000 - 100,000 + 400,000
= $5,300,000
Assets therefore has to be $5,300,000 on the same date.
Assets = New cash balance + Other assets
5,300,000 = (2,200,000 - 200,000) + Other assets
Other assets = 5,300,000 - 2,000,000
= $3,300,000
Suppose that a competitive firm's marginal cost of producing output q (MC) is given by MC (q )equals6plus2 q. Assume that the market price (P) of the firm's product is $18 . What level of output (q) will the firm produce? The firm will produce nothing units of output. (Enter your response rounded to two decimal places.)
Answers
Answer:
The firm will produce 6.00 units of output.
Explanation:
From the question, we have:
MC(q) = 6 + 2q ……………… (1)
P = $18 ………………………. (2)
For any firm, profit is maximized when MC = P. To determine the level of output (q) the firm will produce, we therefore equate equations (1) and (2) and solve for q as follows:
6 + 2q = 18
2q = 18 - 6
2q = 12
q = 12 / 2
q = 6.00
Therefore, the firm will produce 6.00 units of output.
When you retire, you wish to have $3 million in your retirement account. You decided to add $2,000 every quarter to your retirement account and invest to generate annualized return of 8% from your investment, how many years do you think it will take to have $3 million in the account
Answers
Answer:
43.35 years
Explanation:
Use the following formula to determine the number of years
Future Value of Annuity = Periodic Annuity x ( 1 + Periodic Interest rate )^numbers of periods ) - 1 / Periodic Interest rate
Where
Future Value of Annuity = $3 million = $3,000,000
Periodic Annuity = $2,000 per quarter
Periodic Interest rate = Interest rate x Quarterly fraction = 8% x 3/12 = 2%
Numbers of periods = n = ?
Placing values in the formula
$3,000,000 = $2,000 x ( 1 + 2% )^n ) - 1 / 2%
$3,000,000 / $2,000 = ( 1 + 2% )^n ) - 1 / 2%
1,500 = ( 1.02 )^n ) - 1 / 2%
1,500 x 2% = ( 1.02 )^n ) - 1
30 = ( 1.02 )^n ) - 1
30 + 1 = 1.02^n
31 = 1.02^n
Log 31 = n log 1.02
n = Log 31 / Log1.02
n = 173.41
Now calculat ethe nUmbers of years as follow
Numbers of years = n x 3/12
Numbers of years = 173.41 x 3/12
Numbers of years = 43.35 years
Tri-County G&T sells 145,000 MWh per year of electrical power to Boulder at $ per MWh, has fixed costs of $ million per year, and has variable costs of $ per MWh. If Tri-County has MWh of demand from its customers (other than Boulder), what will Tri-County have to charge to break even?
Answers
Answer:
$105.85
Explanation:
Given that :
Fixed cost = $83.1 million
Variable cost = $30 / MWh
Number of demand, $1,000,000 MWh
Variable cost to other customers =[(1,000,000 + 145000) * $30) = $34350000
To break even :
Total Cost = Total revenue
(fixed Cost + variable cost) = total revenue
Let amount per MWh required to break even = x (amount sold to other customers)
(83100000 + 34350000) = (145000*80 + 1000000x)
117450000 = 11600000 + 1000000x
117450000 - 11600000 = 1000000x
105850000 = 1000000x
x = 105850000 / 1000000
x = $105.85
Personal communication systems such as personal networks and grapevines: Spread information hierarchically throughout the organization, from boss to employee and from employee to boss, for example. Contain less accurate information than other organizational communication systems. Contain only a small amount of organizational communications. Spread more information across organizations than formal communication channels such as downward communications.
Answers
Answer:
Spread more information across organizations than formal communication channels such as downward communications.
Explanation:
When there is a the personal communication system like the personal networks, and complains so here the more information should be spreaded across the organization as compared to the formal communication like downward communication
So as per the given situation, the last option is correct
write a few sentences describing a situation where you (or someone you know) has used their problem solving skill or agility skill to increase their human capital in order to get a better job or earn more income.
Answers
Answer:
Increase human capital
Explanation:
In order to increase my own worth, I provide a perspective that others are apprehensive to commit to. This perspective is that of complete honesty, 100% of the time. I own my mistakes, I celebrate my successes and I am humble to the lessons of others and my own.
The capacity to identify, evaluate, comprehend, and effectively solve an issue. It is a set of abilities that includes listening, creativity, innovation, and analytical prowess, among other things. It is a very valuable and difficult skill in the business world.
When employers discuss problem-solving abilities, they frequently refer to the capacity to manage challenging or unforeseen circumstances at work as well as intricate commercial difficulties. Organizations depend on individuals who can objectively evaluate both types of events and calmly pinpoint solutions. These are qualities that give you the ability to achieve it.
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QS 5-6 Perpetual: Inventory costing with weighted average LO P1 A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 350 units. Ending inventory at January 31 totals 150 units. Units Unit Cost Beginning inventory on January 1 320 $ 3.00 Purchase on January 9 80 3.20 Purchase on January 25 100 3.34 Required: Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Round your per unit costs to 2 decimal places.)
Answers
Answer:
Perpetual Inventory Company
The cost assigned to ending inventory based on the weighted average method is:
= $465 ($3.10 * 150)
Explanation:
a) Data and Calculations:
Units Unit Cost Total Cost
Beginning inventory on January 1 320 $ 3.00 $960
Purchase on January 9 80 3.20 256
Purchase on January 25 100 3.34 334
Total available for sale 500 3.10 $1,550
Sale on January 26 (350) 3.10 1,085
Ending inventory on January 31 150 3.10 465
Wildhorse Games Inc. adjusts its accounts annually. The following information is available for the year ended December 31, 2022.
1. Purchased a 1-year insurance policy on June 1 for $2,220 cash.
2. Paid $7,020 on August 31 for 5 months’ rent in advance.
3. On September 4, received $3,960 cash in advance from a corporation to sponsor a game each month for a total of 9 months for the most improved students at a local school.
4. Signed a contract for cleaning services starting December 1 for $1,080 per month. Paid for the first 2 months on November 30. (Hint: Use the account Prepaid Cleaning to record prepayments.)
5. On December 5, received $1,620 in advance from a gaming club. Determined that on December 31, $515 of these games had not yet been played.
Answers
Question Completion:
Prepare the necessary journal entries.
Answer:
Wildhorse Games Inc.
1. June 1: Debit Prepaid Insurance $2,220
Credit Cash $2,220
To record the payment for 1-year insurance policy.
2. August 31: Debit Prepaid Rent $7,020
Credit Cash $7,020
To record the payment for 5 months’ rent in advance.
3. September 4: Debit Cash $3,960
Credit Unearned Game Revenue $3,960
To record cash received in advance to sponsor a game each month for a total of 9 months.
4. November 30: Debit Prepaid Cleaning $2,16
Credit Cash $2,160
To record the payment for cleaning services for two months.
5. December 5: Debit Cash $1,620
Credit Unearned Games Revenue $1,620
Adjustments on December 31:
1. Debit Insurance Expense $1,295
Credit Prepaid Insurance $1,295
To record insurance expense for the period ($2,220 * 7/12).
2. Debit Rent Expense $5,616
Credit Prepaid Rent $5,616
To record rent expense for the period ($7,020 * 4/5).
3. Debit Unearned Games Revenue $1,760
Credit Earned Games Revenue $1,760
To record earned revenue ($3,960 * 4/9).
4. Debit Cleaning Expense $1,080
Credit Prepaid Cleaning $1,080
To record cleaning expense for the period.
5. Debit Unearned Games Revenue $1,105
Credit Earned Games Revenue $1,105
To record earned revenue.
Explanation:
a) Data and Analysis:
1. June 1: Prepaid Insurance $2,220 Cash $2,220 1-year insurance policy
2. August 31: Prepaid Rent $7,020 Cash $7,020 for 5 months’ rent in advance.
3. September 4: Cash $3,960 Unearned Game Revenue $3,960 to sponsor a game each month for a total of 9 months
4. November 30: Prepaid Cleaning $2,160 Cash $2,160
$1,080 per month. Paid for the first 2 months on November 30.
5. December 5: Cash $1,620 Unearned Games Revenue $1,620
Adjustments on December 31:
1. Insurance Expense $1,295 Prepaid Insurance $1,295 ($2,220 * 7/12)
2. Rent Expense $5,616 Prepaid Rent $5,616 ($7,020 * 4/5)
3. Unearned Games Revenue $1,760 Earned Games Revenue $1,760 ($3,960 * 4/9)
4. Cleaning Expense $1,080 Prepaid Cleaning $1,080
5. Unearned Games Revenue $1,105 Earned Games Revenue $1,105
During its fiscal year, a Pension Trust Fund buys 1,000 shares of stock, for which it pays $33,000. At year end, the stock has a fair value of $28,000. How should this fact be reported in the Trust Fund's financial statements?a. the investment should be reported at a value of $33,000.
b. the investment should be reported at a value of $33,000, and the loss in market value should be reported in a footnote.
c. the investment should be reported at a value of $30,500.
d. the investment should be reported at a value of $28,000.
Answers
Answer: d. the investment should be reported at a value of $28,000.
Explanation:
Investments should be recorded at their fair value in the financial statements. If a loss is made but the company is still holding on to the investment then the loss is unrealized which is the case here.
When there is an unrealized loss, it is to be debited to the Unrealized loss account and credited to the investment account to show that it is reducing. This will then leave the balance of the investment account at the fair value which in this case is $28,000.
Suppose you buy some stock in the Alpha Corporation at a price of $45.95 per share. 410 days later you sell the stock for $48.27. During this period you received a per share dividend of $1.20. What is your annualized return on this investment
Answers
Answer: 6.79%
Explanation:
The holding period return is:
= (Current price - Cost price + Dividend) / Cost price
= (48.27 - 45.95 + 1.20) / 45.95
= 7.66%
The annualized return is:
= ( ( 1 + holding period return) ^ number of days in a year/ number of days stock was held - 1)
= ( ( 1 + 7.66%) ³⁶⁵ / ⁴¹⁰ - 1)
= 6.79%
Suppose you borrow $9,875 and then repay the loan by making 12 monthly payments of $863.58 each. What is the effective annual rate (EAR) you are paying
Answers
Answer:
9.38%
Explanation:
PV = $9,875
PMT = $863.58
NPER = 12
Using the MS Rate Function to derive the Periodic rate
Periodic rate = Rate(NPER, -PMT, PV)
Periodic rate = Rate(12, -863.58, 9,875)
Periodic rate = 0.0075
Periodic rate = 0.75%
Nominal rate = Periodic rate * NPER
Nominal rate = 0.75% * 12
Nominal rate = 9%
Using the MS Effect Function to derive the effective annual rate (EAR)
Nominal rate = 9%
NPER = 12
Effective annual rate (EAR) = Effect(Nominal rate, NPER)
Effective annual rate (EAR) = Effect(9%, 12)
Effective annual rate (EAR) = 0.0938
Effective annual rate (EAR) = 9.38%
So, the the effective annual rate (EAR) you are paying is 9.38%.
Warehouse operations have shut down at SHXCX Manufacturing suddenly due to a power outage. Warehouse managers are still able to communicate with their home office and their data servers, but unfortunately have no prepared solution to restoring operations. Which of the following controls would be best suited to combat this problem?
a. Validity test
b. Business Continuity Plan (BCP)
c. Disaster Recovery Plan (DRP)
d. Both B and C
Answers
Answer:
d. Both B and C
Explanation:
Business continuity planning and disaster recovery planning main goal is the keeping of a business running in the advent or event of an emergency or interruptions.
Business continuity plan (BCP)
This simply shows the important and essential processes, procedures, and personnel that is to be protected in case of an emergency. It uses the business impact analysis (BIA) to evaluate risks to the organization.
Disaster recovery plan (DRP)
This is simply defined as the known steps and procedures personnel in key departments of an organization must follow in any disaster case within the organization.
Business Continuity Planning has its main focus on sustaining operations and protecting the viability of the business following a disaster and it is a long termed focused. While the Disaster Recovery Planning main goal is to minimize the effects of a disaster and to take the necessary steps to ensure that the resources, personnel and business processes are able to resume operations in a timely manner. Its focus is on immediate aftermath of the disaster and it is a Short Term focused.
Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case.
(a) Credit balance of $300 in Allowance for Doubtful Accounts just prior to adjustment. Analysis of Accounts Receivable indicates uncollectible receivables of $8,500.
(b) Credit balance of $500 in Allowance for Doubtful Accounts just prior to adjustment. Uncollectible receivables are estimated at 2% of credit sales, which totaled $1,000,000 for the year.
Answers
Answer:
a. Credit balance in the Allowance for Doubtful Accounts and already balance in Allowance account = $300
Estimated Doubtful accounts and balance maintained with Allowance for Doubtful Accounts= $8,500
Amount added to the Allowance for Doubtful Accounts = $8,500 - $300
Amount added to the Allowance for Doubtful Accounts = $8,200
Ending balance maintained with Allowance for Doubtful Accounts = $8,500
b. Credit balance in the Allowance for Doubtful Accounts and already balance in Allowance account = $500
Estimated Doubtful accounts and balance maintained with Allowance for Doubtful Accounts = $1,000,000 * 2% = $20,000
Ending balance maintained with Allowance for Doubtful Accounts = $20,000 + $500 = $20,500
Trident Manufacturing Company's treasurer identified the following cash flows during this year as significant. It had repaid existing debt to the tune of $425,110, while raising additional debt capital of $750,000. It also repurchased stock in the open markets for a total of $63,250. It paid $233,144 in dividends to its shareholders. What is the net cash provided (used) by financing activities?
Answers
Answer:
$28,496
Explanation:
Calculation to determine the net cash provided (used) by financing activities
Cash inflows from financing activities $750,000
Less Cash outflows from financing activities ($721,504)
($425,110 + $63,250 + $233,144)
Net cash flows from financing activities $28,496
($750,000 – $721,504)
Therefore the net cash provided (used) by financing activities is $28,496
Question 3
Rank the following assets of a commercial bank in order of decreasing liquidity.
(a) Market loans
(b) Reserves with the Bank of Ghana
(c) Cash
(d) Personal loans
(e) Sale and repurchase agreements (repos)
(f) Mortgages
(g) Government bonds (of from one to five years to maturity)
Answers
Answer:
Reserves with the Bank of Ghana
Explanation:
I could be wrong let me know if its correct or incorrect
If Marjorie makes an investment of principal, and leaves the full amount, both principal and interest in the account to some time in the future when she withdraws all funds, she is earning what type of interest
Answers
Answer: Compounding
Explanation:
Based on the information given, we can infer that Marjorie earns a compounding interest. The compound interest is the interest on a loan that is calculated based on the initial principal as well as the interest that is accumulated from the previous periods. In compounding interest, the interest is earned on the principal and the interest amount. The compounding interest is also referred to as the interest on interest.
Soft Lumber has bonds, preferred stock and common stock as its capital components. _____________ is the right most apt to be granted to its preferred shareholders.
Answers
Answer: right to share in company profits prior to other shareholders
Explanation:
The preferred shareholders are paid their dividends before dividends are paid to other common shareholders. The preferred stock also gives no voting rights to the shareholders.
Preferred shareholders are known to have priority over the income of a company right to share in company profits prior to other shareholders.
how success and failure in practice of management affect organization?
Answers
Explanation:
One of the most remarkable aspects of organizational change efforts is their low success rate. There is substantial evidence that some 70% of all change initiatives fail. This article explores the argument that a potentially significant reason for this is a lack of alignment between the value system of the change intervention and of those members of an organization undergoing the change. In order to test this assertion, the article begins by reviewing the change literature with regard to the impact of values on success and failure. It then examines Graves' Emergent Cyclical Levels of Existence Theory and uses this as the basis of a method for identifying and aligning value systems. The article then presents the results from case studies of two change initiatives in different organizations. These support both the method and the assertion that value system alignment may be an important factor in the success of organizational change initiatives. The article concludes with recommendations for further research.
a)What are the expected returns and standard deviations of a portfolio consisting of:1.100 percent in stock A
Answers
Answer:
12%
1.00
Explanation:
Note that the expected return on stock A which is 12% is missing from the question as well as the standard deviation of A which is 1.00
The expected return from stock A with 100% of funds(total amount of investment) invested in stock A is the percentage invested in A multiplied by the expected return of stock A shown thus:
expected return=100%*12%
portfolio expected return=12%
portfolio standard deviation(if 100% invested in A)=1.00*100%
Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month’s budget appear below: Selling price per unit $ 24 Variable expense per unit $ 18 Fixed expense per month $ 4,800 Unit sales per month 950 Required: 1. What is the company’s margin of safety? (Do not round intermediate calculations.) 2. What is the company’s margin of safety as a percentage of its sales?
Answers
Answer:
1.150 units
2. 15.79%
Explanation:
Margin of safety is the difference between the current level of profitability and the break-even level. In other words, it is excess of the current level of sales and the break-even sales computed using the formula below:
the margin of safety in units=current level of sales-breakeven sales
break-even sales=fixed expense/contribution margin
fixed expense=$4,800
contribution margin per unit=selling price-variable cost
contribution margin per unit=$24-$18
contribution margin per unit=$6
break-even sales=$4,800/$6
break-even sales units=800 units
the margin of safety in units=950-800
the margin of safety in units=150 units
the margin of safety as a percentage of its sales=150/950
the margin of safety as a percentage of its sales=15.79%
A state's lottery winner is promised $200,000 a year for twenty years (starting at the end of the first year). How much must the state invest now to guarantee the prize if the state can earn annually 7 percent on its funds? How much must the state invest if the annual payments were made at the beginning of the year?
Answers
Answer and Explanation:
The computation is shown below:
The amount that should be invested in the case when it earns 7% on its funds is
Investment = pv(7%,20,200000,0,0)
= $2,118,802.85
ANd, the amount that should be invested at the starting of the year is
= pv(7%,20,200000,0,1)
= $2,267,119.05
The same should be considered
Rank the following three stocks by their total risk level, highest to lowest. Night Ryder has an average return of 9 percent and standard deviation of 40 percent. The average return and standard deviation of WholeMart are 10 percent and 22 percent; and of Fruit Fly are 15 percent and 45 percent.
a. Fruit Fly, Night Ryder, WholeMart
b. Night Ryder, WholeMart, Fruit Fly
c. Night Ryder, Fruit Fly, WholeMart
d. WholeMart, Fruit Fly, Night Ryder
Answers
Fruit Fly, Night Ryder, WholeMart is the three stocks by their total risk level, highest to lowest. Night Ryder has an average return of 9 percent. Hence, option A is correct.
What is standard deviation?The term "standard deviation" (or "") refers to a measurement of the data's dispersion from the mean. A low standard deviation implies that the data are grouped around the mean, whereas a large standard deviation shows that the data are more dispersed.
Example: How many people had scores on a recent test that were lower than yours, which was 0.5 standard deviations above the mean? 19.1% falls between 0 and 0.5. 50% is less than zero.
A low standard deviation indicates that the data are tightly grouped around the mean, while a high standard deviation indicates that the data are widely dispersed (less dependable) (more reliable).
Thus, option A is correct.
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Somerset Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $62 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 45% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows:
Direct materials $8.00
Direct labor 12.00
Factory overhead (40% of direct labor) 4.80
Total cost per unit $24.80
If Somerset Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 25% of the direct labor costs.
Required:
Prepare a differential analysis dated April 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case.
Answers
Answer:
Somerset Computer Company
Differential Analysis dated April 30:
Make Buy
Alternative 1 Alternative 2 Difference
Variable cost per unit $23.00 $62.00 $39.00
Explanation:
a) Data and Calculations:
Purchase price per portable computer carrying case = $62
Unit cost of production:
Direct materials $8.00
Direct labor 12.00
Factory overhead (40% of direct labor) 4.80
Total cost per unit $24.80
Unit cost of production, with overhead broken into fixed and variable:
Direct materials $8.00
Direct labor 12.00
Factory overhead
Fixed overhead 1.80
Variable overhead 3.00
Total cost per unit $24.80
b) With a net gain of $39 per unit, the company should make the unit (Alternative 1) instead of buying it (Alternative 2).
