Answer: d. The actual expected stock return indicates the stock is currently underpriced.
Explanation:
According to CAPM, the expected return is:
= Risk free rate + beta * (market return - risk free rate)
= 4.3% + 1.14 * (12.01% - 4.3%)
= 13.09%
The actual expected return is greater than the CAPM expected return.
This stock is underpriced because it is bringing in a higher return than CAPM predicted based on the market.
Machinery was purchased for $340,000. Freight charges amounted to $14,000 and there was a cost of $40,000 for building a foundation and installing the machinery. It is estimated that the machinery will have a $60,000 salvage value at the end of its 5-year useful life. Annual depreciation expense using the straight-line method will be a. $78,800. b. $57,200. c. $66,800. d. $56,000.
Answer:
$66,800
Explanation:
Depreciation is used in expensing the cost of an asset
Depreciation reduces the value of an asset
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
Cost = $340,000. + $14,000 + $40,000 = $394,000
($394,000 - $60,000) / 5 = $66,800
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%
bài tập thực hành kế toán tài chính 1
Answer:
wut is this
Explanation:
financial acc practice ex 1
*Gains and losses taxable when investments are sold. The total deferred tax asset and deferred tax liability amounts at January 1, 2021, were $166.25 million and $25 million, respectively. The enacted tax rate is 25% each year. Required: 1. Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2021. 2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2021. 3. Determine the income tax payable currently for the year ended December 31, 2021. 4. Prepare the journal entry to record income taxes for 2021.
Answer:
1. $160.75 million
$42 million
2. Decrease ($5.5 Million)
Increase $17 million
3. $35 million
4. Dr Tax expense $57.5 million
Cr Deferred tax asset $5.5 million
Cr Deferred tax liability $17 million
Cr Taxes payable $35 million
Explanation:
1. Calculation to determine the total deferred tax asset and deferred tax liability amounts at December 31, 2021.
Allowance for bad debt $1 million
($28 million-$32 million)* 25%
Add Subscription liability $6.25 million
($25million*25%)
Add Post retirement benefits obligation $153.5 million
($614 million*25%)
TOTAL DEFERRED TAX ASSET $160.75 million
Prepaid insurance $10 million
($40 million *25%)
Add Prepaid advertising $6 million
($24million * 25%)
Investments unrealized gain $6 million
$24million * 25%)
Add Buildings $20 million
[($380 million-$300 million) * 25%]
TOTAL DEFERRED TAX LIABILITY $42 million
Therefore the total deferred tax asset is $160.75 million and deferred tax liability amounts at December 31, 2021 is $42 million.
2. Calculation to determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2021
DEFERRED TAX ASSET
Ending balance $160.75 million
Less Beginning balance $166.25 million
Decrease ($5.5 Million)
DEFERRED TAX LIABILITY
Ending balance $42 million
Less Beginning balance $25 million
Increase $17 million
Therefore the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2021 is :
Deferred tax asset: Decrease ($5.5 Million)
Deferred tax liability:Increase $17 million
3. Calculation to determine the income tax payable currently for the year ended December 31, 2021
Income tax payable = $140 million *25%
Income tax payable=$35 million
Therefore the income tax payable currently for the year ended December 31, 2021 is $35 million
4. Preparation of the journal entry to record income taxes for 2021.
Journal entry
Dr Tax expense $57.5 million
($5.5 million+$17 million +$35 million)
Cr Deferred tax asset $5.5 million
Cr Deferred tax liability $17 million
Cr Taxes payable $35 million
(To record tax expense)
Last year, 7,980 units were produced and 7,680 units were sold. There was no beginning inventory. The carrying value on the balance sheet of the ending inventory of finished goods under variable costing would be: Multiple Choice the same as absorption costing.
Complete Question:
The Southern Corporation manufactures a single product and has the following cost structure: Variable costs per unit: Production $ 35 Selling and administrative $ 14 Fixed costs per year: Production $ 175,560 Selling and administrative $ 140,450 Last year, 7,980 units were produced and 7,680 units were sold. There was no beginning inventory. The carrying value on the balance sheet of the ending inventory of finished goods under variable costing would be:
Multiple Choice
$6,600 less than under absorption costing.
$7,680 less than under absorption costing.
the same as absorption costing.
$7,680 greater than under absorption costing.
Answer:
The Southern Corporation
The carrying value on the balance sheet of the ending inventory of finished goods under variable costing would be:
$6,600 less than under absorption costing.
Explanation:
a) Data and Calculations:
Variable costs per unit:
Production $ 35
Selling and administrative $ 14
Fixed costs per year:
Production $ 175,560
Selling and administrative $ 140,450
Production units last year = 7,980 units
Sales units last year = 7,680 units
Ending inventory = 300 (7,980 - 7,680) units
Value of Ending inventory:
1. Variable Costing:
Production $ 35 * 300 = $10,500
2. Absorption Costing:
Variable Production $ 35 * 7,980 = $279,300
Fixed Production overhead $ 175,560
Total production costs = $454,860
Units produced = 7,980
Unit cost = $57
Ending inventory = $17,100 ($57 * 300)
Difference = $6,600 ($17,100 - $10,500)
Precision Construction entered into the following transactions during a recent year.
January 2 Purchased a bulldozer for $250,000 by paying $20,000 cash and signing a $230,000 note due in five years.
January 3 Replaced the steel tracks on the bulldozer at a cost of $20,000, purchased on account. The new steel tracks increase the bulldozer's operating efficiency.
January 30 Wrote a check for the amount owed on account for the work completed on
February 1 Replaced the seat on the bulldozer and wrote a check for the full $800 cost.
March 1 Paid $3,600 cash for the licensing rights to use computer software for a two-year period.
Required:
Prepare the journal entries for each of the above transactions.
Answer:
Jan-02
Dr Bulldozer $ 250,000
Cr Cash $ 20,000
Cr Note Payable $ 230,000
Jan-03
Dr Bulldozer $ 20,000
Cr Accounts Payable $ 20,000
Jan-30
Dr Accounts Payable $ 20,000
Cr Cash $ 20,000
Feb-01
Dr Repair and Maintenance Expense $ 800
Cr Cash $ 800
Mar-01
Dr Computer Software $ 3,600
Cr Cash $ 3,600
Explanation:
Preparation of the journal entries for each of the above transactions.
Jan-02
Dr Bulldozer $ 250,000
Cr Cash $ 20,000
Cr Note Payable $ 230,000
(Purchased bulldozer)
Jan-03
Dr Bulldozer $ 20,000
Cr Accounts Payable $ 20,000
(Replaced tracks on bulldozer)
Jan-30
Dr Accounts Payable $ 20,000
Cr Cash $ 20,000
(Paid cash)
Feb-01
Dr Repair and Maintenance Expense $ 800
Cr Cash $ 800
(Repaired seat of bulldozer)
Mar-01
Dr Computer Software $ 3,600
Cr Cash $ 3,600
(Purchase computer software)
Jefferson uses the percent of sales method of estimating uncollectible receivables. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?
a. Allowance for Doubtful Accounts will be credited.
b. Cash will be debited.
c. Accounts Receivable will be debited.
d. Bad Debt Expense will be credited.
Answer:
a. Allowance for Doubtful Accounts will be credited.
Explanation:
Since 2% of credit sales are expected to be UNCOLLECTIBLE in which the Sales amount for the current year are $5,550,000 which therefore means that $111,000 calculated as (.02 x $5,550,000) will be Allowance for Doubtful Accounts amount that will be credited.
Therefore ALLOWANCE FOR DOUBTFUL ACCOUNTS can be defined as the amount that tend to reduce Accout Receivable amount shown on a company or organization balance sheet.
A TV manufacturer offers warranties on its new TV sales. During December 2004, TV sales totaled $205,000. Past experience shows that warranty expense averages about 3% of the annual sales. What adjusting journal entry should be recorded on December 31, 2004 to account for the warranty expense
Answer:
Date Account Title Debit Credit
Dec 31, 2004 Warranty expense $6,150
Warranty Liability $6,150
Explanation:
First calculate the warranty expense:
= TV sales total * Warranty expense averages
= 205,000 * 3%
= $6,150
This will be credited to the Warranty liability account to reflect that the company potentially owes $6,150 in warranty expenses to people who purchased TVs.
Entries for Notes Payable A business issued a 60-day, 10% note for $96,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. Assume a 360-day year. If an amount box does not require an entry, leave it blank. If required, round yours answers to whole dollar.
Answer:
Business A
Journal Entries:
Debit Accounts Payable $96,000
Credit 10% Notes Payable $96,000
To record the issuance of a 60-day, 10% note to a creditor on account.
Debit 10% Notes Payable $96,000
Debit Interest Expense $1,600
Credit Cash $97,600
To record the payment of the note at maturing, including interest.
Explanation:
a) Data and Analysis:
Accounts Payable $96,000
10% Notes Payable $96,000
10% Notes Payable $96,000
Interest Expense $1,600
Cash $97,600
The short-run average total cost (ATC) curve of a firm will tend to be U-shaped because Group of answer choices larger firms always have lower per-unit costs than smaller firms. at low levels of output, AFC will be high, while at high levels of output, MC will be high as the result of diminishing returns. diminishing returns will be present when output is small, and high AFC will push per-unit cost to high levels when output is large. diseconomies of scale will be present at both small and large output rates.
Answer:
at low levels of output, AFC will be high, while at high levels of output, MC will be high as the result of diminishing returns.
Explanation:
In Economics, the law of diminishing marginal utility states that as the unit of a good or service consumed by an individual increases, the additional satisfaction he or she derives from consuming additional units would start decreasing or diminishing as the units of good or service consumed increases.
The short-run average total cost (ATC) curve of a firm will tend to be U-shaped because at low levels of output, average fixed cost (AFC) will be high, while at high levels of output, marginal cost (MC) will be high as the result of diminishing returns.
This ultimately implies that, the average fixed cost (AFC) will be high at small (low-level) output rates while marginal cost (MC) will be high at large (high-level) output rates due to diminishing marginal returns.
As a result of the law of diminishing marginal returns, a business firm would experience some rising per unit costs in the short-run.
In conclusion, an increase in the level of output for a business firm will eventually lead to an increase in average total cost (ATC) and marginal cost (MC) due to the law of diminishing marginal returns.
In 2019, pastured eggs sold for more than twice the price of cage-free eggs and almost 5 times the price of conventional eggs, making pastured eggs more profitable than the other eggs. Over time, this high price for pastured eggs will likely __________ as more farmers decide to _____________- the perfectly competitive pastured egg market.
a. rise; enter
b. fall; enter
c. rise; exit
d. fall; exit
Over time the price for the pastured egg is likely to fall as more farmers decide to enter.
What do you mean by perfectly competitive market?The perfect competitive market is a type of market structure which allows multiple companies to sell the same product or service. Example: agricultural product.
As more farmers decide to enter the market, there will be more products sold in the market, so the supply of pastured eggs will become higher, and thus, the prices will fall.
Thus, Option B is the right answer.
To learn more, perfectly competitive market refer: https://brainly.com/question/1748396
#SPJ2
Measuring and reporting quality costs does not solve quality problems. Decreases in quality costs generally occur as soon as improvement programs are implemented. Quality cost information helps managers identify the relative importance of quality problems. The impact of customer ill will is generally not found on quality control reports.
a. True
b. False
Answer:
True statements:
Measuring and reporting quality costs does not solve quality problems.
Quality cost information helps managers identify the relative importance of quality problems.
The impact of customer ill will is generally not found on quality control reports.
Explanation:
When the quality cost is determined and reported so the same should not solve the problem of the quality also the information related to the quality cost helps the managers to identify the significance of the quality issue
The effect of the customer could not found on the reports made for quality control
But if there is a decrease in the quality cost so the improvement programs could not be implemented soon
Heath loves candy bars and gummy bears. After using his entire $30 budget at the local supermarket he finds that the marginal utility from the last candy bar he consumed was 30 and the last bag of gummy bears was 60. Assuming he has maximized his utility, what could be true about the prices of gummy bears and candy bars?
Answer:
Bag of gummy bears must cost twice as that of candy bar.
Explanation:
The cost of candy bar should be less than gummy bear because marginal utility of candy bar is lower than gummy bear. The candy bar will be consumed more therefore its price should be lower. When the price of good will be lower, it will be consumed more.
Omega Enterprises budgeted the following sales in units: January 40,000 February 30,000 March 50,000 Omega's policy is to have 30% of the following month's sales in inventory. On January 1, inventory equaled 8,000 units. February production in units is: a.36,000. b.40,000. c.20,000. d.28,000. e.26,500.
Answer:
a. 36,000
Explanation:
Calculation to determine what February production in units is:
Sales for the month 30,000
Add Ending inventory 15,000
(50,000*0.3)
Less Beginning inventory (9,000)
(30,000*0.3)
February production in units 36,000 units
Therefore February production in units is: 36,000 units
An important assumption that is made when constructing a supply schedule is only price and quantity matter in determining supply. supply is too important to be left to the marketplace. demand has a positive slope. firms always want to sell a certain amount of a product. all other determinants of supply are held constant.
Answer:
only price and quantity matter in determining supply
all other determinants of supply are held constant
Explanation:
At the time of constructing the supply schedule, only price and quantity should be considered and other factors should remain the same because the factors that impacts the supply other than the price so it shifted the supply curve but when only the price changed so there should be the movement also law of supply represent the direct relationship between tfhe price and the supply
Which of the following statements accurately describe the effect of the increase in government borrowing?
a. National saving decreases by less than $20 billion.
b. Investment increases by less than $20 billion.
c. Public saving decreases by exactly $20 billion.
d. Private saving increases by less than $20 billion.
Answer:
d. Private saving increases by less than $20 billion.
Explanation:
Because the interest rate has increased, investment and national saving decline and private saving increases. The increase in government borrowing reduces public saving. From the figure you can see that total loanable funds (and thus both investment and national saving) decline by less than $20 billion, while public saving declines by $20 billion and private saving rises by less than $20 billion.
quizlet
khái niệm giao tiếp trong tổ chức
Answer:
bu kin jhu
Explanation:
John jvghh bugs HHH jhu UV juggle
A manager spent 5 hours of his day in meetings. If he said that he spent 70% of his day, how many total hours did he work?
Answer:
The total hours the manager worked
= 7.14 hours
Explanation:
a) Data and Calculations:
Time spent by a manager in meetings per day = 5 hours
Percentage of time spent in meetings = 70%
Total hours the manager worked per day = 5/70% = 7.14 hours
b) The total hours that the manager worked per day = 7.14 hours or 7 hours 9 minutes (approximately). This is obtained by dividing the hours spent in meetings by the equivalent proportion that meetings consumed per day.
International Data Systems' information on revenue and costs is relevant only up to a sales volume of 121,000 units. After 121,000 units, the market becomes saturated and the price per unit falls from $10.00 to $6.80. Also, there are cost overruns at a production volume of over 121,000 units, and variable cost per unit goes up from $5.00 to $5.25. Fixed costs remain the same at $71,000.
Required:
a. Compute operating income at 121,000 units.
b. Compute operating income at 221,000 units.
Answer:
a. $534,000
b. $271,550
Explanation:
a. Compute operating income at 121,000 units
Using this formula
Operating Income = (Price per unit - Variable cost per unit)*Units - Fixed costs
Let plug in the formula
Operating Income = ($10.00 - $5.00)*121,000 - $71,000
Operating Income = ($5.00)*121,000 - $71,000
Operating Income =$605,000-$71,000
Operating Income = $534,000
Therefore operating income at 121,000 units is $534,000
b. Compute operating income at 221,000 units
Using this formula
Operating Income = (Price per unit - Variable cost per unit)*Units - Fixed costs
Let plug in the formula
Operating Income = ($6.80 - $5.25)*221,000 - $71,000
Operating Income = $1.55*221,000-$71,000
Operating Income = $342,550-$71,000
Operating Income = $271,550
Therefore operating income at 121,000 units at 221,000 units is $271,550
Historical demand for a product is: DEMAND January 13 February 12 March 16 April 13 May 17 June 16 a. Using a weighted moving average with weights of 0.50 (June), 0.30 (May), and 0.20 (April), find the July forecast
Answer: 15.7 units
Explanation:
July forecast = (Weight of June * Demand in June) + (Weight of May * Demand in May) + (Weight of April * Demand in April)
= (0.5 * 16) + (0.3 * 17) + (0.2 * 13)
= 8 + 5.1 + 2.6
= 15.7 units
Planet Company purchased goods worth $50,000 in July and expects to purchase goods worth $70,000 in August. Planet typically pays for 35% of purchases in the month of purchase and 65% in the following month. What are Planet Company's total expected cash disbursements for purchases in the month of August?
a. $40,000.
b. $57,000.
c. $65,000.
d. $60,000.
e. $100,000.
Answer:
57,000
Explanation:
Planet company purchases goods worth $50,000July and also expect to purchase goods worth $70,000 in August
They pay 35% of tbs purchase in the month and 75% in the following month
Therefore the total expected cash disbursement can be calculated as follows
= (70,000×35/100)+(50,000+65/100)
= {70,000×0.35) + (50,000+0.65)
= 24,500+32,500
= 57,000
advantages of profit maximization
Answer:
Improved ratios will enhance investor's confidence and therefore share price.
Access to a wider range of finance because of a better image to creditors.
Long-term profits will improve liquidity and cash flows, which can be used for future investments, dividends, loan payments or retained.
Question 8
Critics of advertising argue that in some markets advertising may
A attract products of lower quality into the market.
B attract less informed buyers into the market.
C decrease elasticity of demand allowing firms to charge a larger markup over marginal cost.
D enhance competition in markets to an unnecessary degree.
Question 9
Answer:
C decrease elasticity of demand allowing firms to charge a larger markup over marginal cost.
Explanation:
Cost-volume-profit analysis includes all of the following assumptions except:_________.
a. all units produced are sold.
b. changes in activity are the only factors that affect costs.
c. the behavior of costs is curvilinear throughout the relevant range.
d. costs can be classified accurately as either variable or fixed.
Answer:
a. all units produced are sold.
Explanation:
Cost-volume-profit analysis is also known as breakeven analysis. It is an analysis that review the point or number of units a company must sell for the revenue or sales to equate the total cost. In other words, the point the company neither makes a profit nor a loss.. The assumptions of this analysis are;
(i) The total costs are recognized as fixed and variable. Where as in reality, some costs may be semi-variable cost.
(ii) It assumes a linear relationship between costs and sales.
(iii) The selling price per unit of the product is constant.
When preparing a production budget, the required production equals:________
a. budgeted sales beginning inventory desired ending inventory.
b. budgeted sales - beginning inventory desired ending inventory.
c. budgeted sales - beginning inventory - desired ending inventory.
d. budgeted sales beginning inventory - desired ending inventory.
Answer: B. budgeted sales - beginning inventory + desired ending inventory.
Explanation:
The production budget is also referred to as the manufacturing budget and it is the budget that is used in determining the quantity of the product of the firm which needs to be produced during a particular budgetary period.
The production budget lists the number of units that a firm will manufacture during a period. When preparing a production budget, the required production will be gotten as the budgeted sales - beginning inventory + desired ending inventory.
Therefore, the correct option is B.
Malouka participates in a research project for a large consumer behavior research firm. Each time she purchases items in a grocery store, she scans the barcodes of her products into an app, which sends her purchase data to the firm for analysis. Malouka is working with an example of automation known as __________.
Malouka is working with an automation example that we called the importing/exporting data.
The following information should be considered for the given situation:
Since she scans the barcodes of that product she purchased even all products are associated with the barcodes via using the mobile app.Also, she offered the research firm having more information like time, location, quantity, gender,etc.Therefore we can conclude that Malouka is working with an automation example that we called the importing/exporting data.
Learn more about the automation here: brainly.com/question/3147939
How does the price range affect the elasticity of demand for a product?
Demand for all goods is elastic if the price is low enough.
Price range has little or no effect on elasticity of demand for a good.
Demand for a good can be inelastic at a low price, but elastic at a high price.
Demand for a good can be elastic at a low price but inelastic at a high price.
Answer:
How does the price range affect the elasticity of demand for a product?
Demand for all goods is elastic if the price is low enough.
Price range has little or no effect on elasticity of demand for a good.
Demand for a good can be inelastic at a low price, but elastic at a high price.
Demand for a good can be elastic at a low price but inelastic at a high price.
Explanation:
How does the price range affect the elasticity of demand for a product?
Demand for all goods is elastic if the price is low enough.
Price range has little or no effect on elasticity of demand for a good.
Demand for a good can be inelastic at a low price, but elastic at a high price.
Demand for a good can be elastic at a low price but inelastic at a high price.
Answer:
the answer is demand for a good can be inelastic at a low price, but elastic at a high price.
Explanation:
The Public Company Accounting Oversight Board (PCAOB) has authority to establish which of the following relating to public companies?
Attestation Standards Independence Standards
A. Yes Yes
B. Yes No
C. No Yes
D. No No
a. Option A
b. Option B
c. Option C
d. Option D
Answer: a. Option A
Explanation:
The Public Company Accounting Oversight Board (PCAOB) was formed by the Sarbanes-Oxley Act in the aftermath of the disastrous accounting policies of companies like WorldCom and Enron in the early 2000s to protect investors from such happening again.
The PCAOB monitors companies to ensure that they are complying by the provisions of the Sarbanes-Oxley Act and do so by coming up with both attestation and independence standards that these companies are to adhere to.
A _____________ strategy entails an organization developing a product and/or service that offers unique attributes that are valued by customers and that the customer perceives to be distinct from competitor offerings.
Answer: differentiation strategy
Explanation:
The differentiation strategy refers to the marketing strategy that is designed in order to distinguish the product and services of a company from other companies.
Product differentiation helps in the development of a strong value proposition which ensures that the product is attractive to the audience. The differentiation strategy ensures that the product is unique from others and this creates a competitive advantage.
Flapjack Corporation had 7,736 actual direct labor hours at an actual rate of $12.10 per hour. Original production had been budgeted for 1,100 units, but only 961 units were actually produced. Labor standards were 7.8 hours per completed unit at a standard rate of $13.21 per hour. The direct labor rate variance is:______.
Answer: $8,586.96 Favorable
Explanation:
Direct Labor Rate Variance = Actual Cost - Standard Cost of Actual Hours
Actual cost = Actual direct labor hours * Actual rate
= 7,736 * 12.10
= $93,605.60
Standard cost of actual hours = Actual hours * Standard cost
= 7,736 * 13.21
= $102,192.56
Direct labor rate variance:
= 93,605.60 - 102,192.56
= $8,586.96 Favorable
Favorable because actual cost was less than the budgeted standard cost.
