BUSINESS COLLEGE

Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. Product G Product B
Selling price per unit $120 $160
Variable costs per unit 40 90
Contribution margin per unit $80 $70
Machine hours to produce 1 unit 0.4 hours 1.0 hours
Maximum unit sales per month 600 units 200 units

The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $15,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)

Required:
a. Determine the contribution margin per machine hour that each product generates.
b. How many units of Product G and Product B should the company produce if it continues to operate with only one shift" How much total contribution margin does this mix produce each month?
c. If the company adds another shift, how many units of Product G and Product B should it produce? How much total contribution margin would this mix produce each month?
d.Suppose that the company determines that it can increase Product GIs maximum sales to 700 units per month by spending S 12,000 per month in marketing efforts. Should the company pursue this strategy and the double shift?

Answers

Answer 1

Answer:

Answer and Explanation:

a. The computation of total contribution margin is shown below:-

Product G Product B

Contribution margin per unit a 80 70

Machine hours per unit b 0.4 1

Contribution margin per

machine hour a × b 200 70

b. The computation of total contribution margin is shown below:-

Product G Product B Total

Maximum number of units

to be sold 600 200

Hours required to produce

maximum units 240 200 440

c. The computation of units of Product G and Product B and total contribution margin is shown below:-

Product G Product B Total

Hours dedicated to the

production of each product 240 112 352

Units produced for most

profitable sales mix a 600 112

Contribution margin per unit b $80 $70

Total contribution

margin-two shifts a × b $48,000 $7,840 $55,840

Hours dedicated to the

production of each product 35,200

Difference $20,640

Change in fixed costs $15,000

Change in operating income(loss) $5,640

Therefore, the company add another shifts. So, Yes it will add another shift of the company because it it income.

4. The computation of company pursue this strategy and the double shift is shown below:-

Product G Product B Total

Hours dedicated to the

production of each product 280 72 352

Units produced for

most profitable sales mix 700 72

Contribution margin per unit 80 70

Total contribution margin 56,000 5,040 61,040

Contribution margin - two shifts

without marketing campaign 55,840

Change in contribution margin 5,200

Additional marketing costs $12,000

Change in fixed costs 15,000

Change in operating income(loss) -$21,800

The company pursue the marketing campaign, So, No because the change in operating income is in loss.

Answer 2

Answer:

Final answer:

a. The contribution margin per machine hour for Product G is $200 per hour and for Product B is $70 per hour. b. If the company continues to operate with only one shift, it should produce 600 units of Product G and 200 units of Product B, generating a total contribution margin of $62,000 per month. c. If the company adds another shift, it should produce 440 units of Product G and 176 units of Product B, generating a total contribution margin of $100,400 per month.

Explanation:

a. The contribution margin per machine hour for Product G can be calculated by dividing the contribution margin per unit by the machine hours required to produce 1 unit. For Product G, the contribution margin per machine hour is $80 / 0.4 hours = $200 per hour. Similarly, the contribution margin per machine hour for Product B is $70 / 1.0 hours = $70 per hour.

b. If the company continues to operate with only one shift, it should produce as many units of Product G and Product B as possible within the maximum unit sales per month. From the given information, the company can produce and sell 600 units of Product G and 200 units of Product B. The total contribution margin for this mix would be (600 units x $80) + (200 units x $70) = $62,000 per month.

c. If the company adds another shift, they should produce as many units of Product G and Product B as possible within the new machine hours available. With the extra 8 hours per day for 22 days per month, the company will have an additional 8 hours x 22 days = 176 machine hours. Using this additional time and the machine hours required to produce 1 unit, the company can produce (176 hours / 0.4 hours) = 440 units of Product G and (176 hours / 1.0 hour) = 176 units of Product B. The total contribution margin for this mix would be (440 units x $200) + (176 units x $70) = $100,400 per month.

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The net income reported on the income statement of Whispering Winds Corp. for the current year was $1251000. Depreciation recorded on plant assets was $236000. Accounts receivable and inventories increased by $66000 and $44000, respectively. Prepaid expenses and accounts payable decreased by $6000 and $61000, respectively. How much cash was provided by operating activities during the year

Answers

Answer:

$1,454,000

Explanation:

Calculation to determine How much cash was provided by operating activities during the year

Using this formula

Operating activities=Net income+Depreciation+ Increased in Accounts receivable -Increased in inventories + Decreased in Prepaid expenses - Decreased in accounts payable

Let plug in the formula

Operating activities=$1251000 + $236000 -$66000 - $44000 +$6000 - $61000

Operating activities=$1,454,000

Therefore the amount of cash was provided by operating activities during the year is $1,454,000

Sales to customers who use bank credit cards such as mastercard and visa are usually recorded by:a. Debit to Cash and a credit to Sales b. Debit to Cash, credit to Credit Card Expense, and a credit to Sales c. Debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales d. Debit to Sales, debit to Credit Card Expense, and a credit to Cash

Answers

Answer:

c. Debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales

Explanation:

The journal entry is shown below:

Bank credit card sales A/c Dr XXXXX

Credit card expense A/c Dr XXXXX

To Sales A/c XXXXX

(Being the sales is recorded via bank credit cards)

As the credit card has some expense so we debited the credit card expense along with the bank credit card sales and credited the sales as it is revenue which is to be credited

Megan and Susan are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Megan takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Susan takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza.Megan's opportunity cost of making a pizza is ?
a. 2/3 gallon
b. 5/7 gallon
c. 1 1/2 gallons
d. 1 2/5 gallons
of root beer, and Susan's opportunity cost of making a pizza is ?
a. 2/3 gallon
b. 5/7 gallon
c. 1 1/2 gallons
d. 1 2/5 gallons
of root beer.
Who has an absolute advantage in making pizza, and who has a comparative advantage in making pizza?

Answers

Answer:

a. 2/3 gallon
b. 5/7 gallon

Explanation:

1. Megan takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza.

If she makes a pizza therefore, that is 2 hours that could have been used to make a gallon of root beer. However, it takes 3 hours to make a complete gallon so in those 2 hours only;

= 2/3 gallons would have been made

2. Susan takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza.

Like Megan above, the 5 hours that would be used for Pizza would have gone towards making a gallon of beer. If it takes 7 hours to make a gallon then those 5 hours would have made;

= 5/7 gallons of root beer.

3. Absolute Advantage: Megan

The person with the absolute advantage is the person that can produce more goods with the same amount of costs. Megan can make more pizza in a smaller amount of time than Susan so she has Absolute advantage.

Comparative Advantage: Megan

The person with a Comparative advantage is the one that has the lowest opportunity cost when producing a good. Megan again has a lower opportunity cost with an opportunity cost of 2/3 gallons.

Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $210,000 in cash. The book value of Kinman’s net assets on that date was $400,000, although one of the company’s buildings, with a $60,000 carrying amount, was actually worth $100,000. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $85,000. Kinman sold inventory with an original cost of $60,000 to Harper during 2017 at a price of $90,000. Harper still held $15,000 (transfer price) of this amount in inventory as of December 31, 2017. These goods are to be sold to outside parties during 2018. Kinman reported a $40,000 net loss and a $20,000 other comprehensive loss for 2017. The company still manages to declare and pay a $10,000 cash dividend during the year. During 2018, Kinman reported a $40,000 net income and declared and paid a cash dividend of $12,000. It made additional inventory sales of $80,000 to Harper during the period. The original cost of the merchandise was $50,000. All but 30 percent of this inventory had been resold to outside parties by the end of the 2018 fiscal year. Prepare all journal entries for Harper for 2017 and 2018 in connection with this investment. Assume that the equity method is applied.

Answers

Answer:

Harper investment 160,000

building over fair value 16,000

royalty over fair value 34,000

cash 200,000

----

2017 entries:

loss on Harper Investment 32,000

Harper investment 32,000

---

Cash 4,000

Harper investment 4,000

----

Unrealized gain 2,000

Harper Investment 2,000

---

royalty over fair value 1,700

bulding over fair value 1,600

harper investment 3,300

---

2018 entries:

Harper Investment 16,000

Gain on Harper Investent 16,000

----

Cash 4800

Harper investment 4800

----

Unrealized gain 1,600

Harper Investment 1,600

---

royalty over fair value 1,700

bulding over fair value 1,600

harper investment 3,300

Explanation:

400,000 x 40% = 160,000

40,000 increase infair value of building x 40% = 16,000

royalty 85,000 x 40% = 34,000

total equity value 200,000

payment of 200,000

no goodwill.

amortization:

building: 16,000 / 10 = 1,600

royalty: 34,000 / 20 = 1,700

2017

loss: 60,000 x 40% = (32,000)

dividends 10,000 x 40% = (4,000)

unrealized gain: it kept 15,000/90,000 = 0.1667 = 16.67%

90,000 - 30,000 = 30,000 gain x 16.67% = 5,000 unrealized gain

5,000 x 40% = 2,000

2018

income 40,000 x 40% = 16,000

dividends 12,000 x 40% = (4,800)

unrealized gain kept 30%

80,000 - 50,000 = 30,000 x 30% = 9,000

the company has 40% so 9,000 x 40% = 3,600 unrealized

as we recognize 2,000 before we adjust for the difference of 1,600

The Sherman Anti-Trust Act does not prohibit: Group of answer choices a manufacturer from having a natural monopoly over its own product a seller to dominate a market because of superior product or business a manufacturer to sell only through a particular distributor all of the above

Answers

Answer: All of the above

Explanation:

The Sherman Antitrust Act outlawed trusts. These are the groups of businesses that fine together to form a monopoly so that they can dictate price.

The purpose of the Act's was firctgr promotion of economic fairness and competitiveness. The Sherman Anti-Trust Act does not prohibit a manufacturer from having a natural monopoly over its own product.

Also, it doesn't prohibit a seller to dominate a market because of superior product or business a manufacturer to sell only through a particular distributor.

Therefore, the correct option is "All of the above".

Barnett Industries, Inc., issued $600,000 of 8% bonds on January 1, 2019. The bonds pay interest semiannually on July 1 and January 1. The maturity date on these bonds is December 31, 2028. The firm uses the effective interest method of amortizing discounts and premiums. The bonds were sold to yield an effective interest rate of 9%. Barnett incurred legal and investment banking fees of $22,000 in issuing the bonds and amortizes these costs annually on a straight-line basis.Required:

1. Calculate the selling price of the bonds.
2. Prepare journal entry for the issuance of the bonds and bond issue costs.
3. Assume that Barnett uses IFRS. Prepare the journal entry for the issuance of the bonds.

Answers

Answer:

1. The selling price of the bonds is $590.976.46

2 .The journal entry for the issuance of the bonds and bond issue costs would be as follows:

Debit Credit

Cash $538,976.26

Discount on bonds payable $39,023.74

Unamortized bonds issue costs $22,000

Bonds Payable $600,000

3. Assuming that Barnett uses IFRS, the journal entry for the issuance of the bonds would be as follows:

Debit Credit

Cash $600,000

Bonds Payable $600,000

Explanation:

In order to calculate the selling price of the bonds we would have to calculate first the present value of particular and present value of interest, hence:

present value of particular=($600,000×0.414643)=$248,785.80

present value of interest=$600,000×4%13.007936=$312,190.46

Therefore, selling price of the bonds=present value of particular+present value of interest

1. Selling price of the bonds=$248,785.80+$312,190.46=$590.976.46

2. The journal entry for the issuance of the bonds and bond issue costs would be as follows:

Debit Credit

Cash $538,976.26

Discount on bonds payable $39,023.74

Unamortized bonds issue costs $22,000

Bonds Payable $600,000

3. Assuming that Barnett uses IFRS, the journal entry for the issuance of the bonds would be as follows:

Debit Credit