BUSINESS HIGH SCHOOL

On January 1, Year 1, Sam Co. entered into a contract with a customer to sell a machine for two annual payments of $144,049 starting at the end of Year 1. The customer obtains control of the machine at contract inception. The cash selling price of the machine is $250,000. Sam determined that (1) the contract includes a significant financing component and (2) the contract includes an implicit interest rate of 10%. What amounts of revenue and interest income from this contract, if any, were recognized by Sam in Year 2?

Answers

Answer 1
Answer:

Answer:

interest revenue 13,095.1

Explanation:

We will calcualte the loan interest:

first year

machine value x interest rate = interest revenue first year

250,000 x 10% = 25,000 interest revenue for the first year

cuota - interest = amortization

144,049 - 25,000 = 119.049‬ amortization

carrying value

250,000 - 119,049 = 130.951‬

second year

carrying value x interest

130,951 x 10% = 13,095.1 interest revenue for the second year

amortization

144,049 - 13,095.1 = 130.953,9

For the second year, the interest revenue will be of 13,095.1

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A company produces and sells 2,500 sets of silverware each year. Each production run has a fixed cost of $200 and an additional cost of $5 per set of silverware. To store a set for a full year costs $4. What is the optimal number of production runs the company should make each year

Answers

Answer:

500 runs

Explanation:

In this question, we are asked to calculate the optimal number of production runs the company should make each year.

Please check attachment for complete solution and step by step explanation

Final answer:

The optimal number of production runs per year for a company that manufactures silverware is determined by minimizing the total cost per year, taking into account the fixed cost per run, the cost per unit, and the cost of storing a unit for a full year. This is achieved when the incremental cost of producing and storing one more set of silverware equals the incremental revenue from selling one more set. The calculation involves differentiating the total cost function with respect to the quantity produced in a single run, and solving this derivative equal to zero.

Explanation:

This question is about determining the optimal number of product runs per year for a company that makes silverware. The optimal number of product runs should minimize the total cost which includes production costs and storage costs. To find this optimal number of product runs, we need to take into consideration, the fixed cost per run, the cost per unit of silverware, and the cost of storing a set for a full year.

Let's define Q as the quantity of silverware sets produced in a single run, C as the cost per run excluding the cost per unit of silverware, V as the variable cost per unit of silverware, and S as the storage cost per set of silverware for a full year. The total cost for a year can then be expressed as:

TC = C * 2500/Q + V + S * Q

Note that the first term of the equation, C * 2500/Q, represents the fixed costs per set of silverware, and the last term, S * Q, represents the total storage cost for the units produced in a single run. Given the values for C ($200), V ($5), and S ($4), the task is to find the value of Q that minimizes TC. You can accomplish this by taking the derivative of TC with respect to Q, setting it equal to zero, and solving for Q. This is a calculus operation beyond the scope of this response, but the concept is that the optimal number of production runs per year is achieved when the incremental cost of producing and storing one more set of silverware is equal to the incremental revenue from selling one more set.

Learn more about Optimal Production here:

brainly.com/question/6348653

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