BUSINESS COLLEGE

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.a. True
b. False

Answers

Answer 1
Answer:

Answer: a. True

Explanation:

Marginal Cost as well known is the cost of producing an extra unit of a good. Average Cost on the other hand is the cost of producing all the goods divided by the number of units that are produced.

It therefore stands to reason that if goods are getting more expensive to produce, the Average Cost will rise.

For example, take 2 scenarios.

Scenario 1.

Cost of producing units 1 to 5 is $2 each.

Average Cost = (2 + 2 + 2 + 2 + 2) / 5

= 10/5

Average Cost = $2

Scenario 2

Cost of Producing Units 1 to 5 are;

Unit 1 - $2

Unit 2 - $2

Unit 3 - $2

Unit 4 - $2

Unit 5 - $4

Average cost at unit 5 = (2 + 2 + 2 + 2 + 4)/5

= 12/5

= $2.40

Average Cost has increased by $0.40

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Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:Total machine-hours 30,400Total fixed manufacturing overhead cost $425,600Variable manufacturing overhead per machine-hour $5Recently, Job T687 was completed with the following characteristics:Number of units in the job 10Total machine-hours 20Direct materials $590Direct labor cost $1,180The unit product cost for is closest to:a. $415b. $218c. $118d. $109
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Sunset Products manufactures skateboards. The following transactions occurred in March:1. Purchased $20,500 of materials on account.2. Issued $1,050 of supplies from the materials inventory.3. Purchased $25,100 of materials on account.4. Paid for the materials purchased in the transaction (1) using cash.5. Issued $30,100 in direct materials to the production department.6. Incurred direct labor costs of $25,500, which were credited to Wages Payable.7. Paid $21,600 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing shop.8. Applied overhead on the basis of 110 percent of direct labor costs.9. Recognized depreciation on manufacturing property, plant, and equipment of $5,100.The following balances appeared in the accounts of SunsetProducts for March:Beginning EndingMaterials Inventory $9,150 _____Work-in-Process Inventory $16,600 _____Finished Goods Inventory $65,100 $36,600cost of goods sold $73,100Prepare T-Accounts to show the flow of costs during the period from materials inventory through the cost of goods sold.
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Find the duration of a 6% coupon bond making annual coupon payments if it has four years to maturity and a yield to maturity of 5%. (assuming a face value of $1,000)

Answers

Answer:

3.703716

Explanation:

The duration can be calculated by dividing the present value of cash flow over time by the present value of cashflow.

Time             Cash flow         PV of CF              PV of CF X t  

1                        60                   $59.41                     $59.41  

2                       60                   $58.82                    $117.64  

3                       60                   $58.24                    $174.71

4                     1060                 $1,018.64                 $4,074.56  

Total                                        $1,195.10                  $4,426.30  

Duration = 4426.30/1195.1

Duration = 3.703716

The following cost data relate to the manufacturing activities of Chang Company during the just completed year: Manufacturing overhead costs incurred: Indirect materials $ 17,000 Indirect labor 150,000 Property taxes, factory 10,000 Utilities, factory 90,000 Depreciation, factory 147,000 Insurance, factory 12,000 Total actual manufacturing overhead costs incurred $ 426,000 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 420,000 Direct labor cost $ 80,000 Inventories: Raw materials, beginning $ 22,000 Raw materials, ending $ 32,000 Work in process, beginning $ 42,000 Work in process, ending $ 72,000 The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 21,700 machine-hours were used during the year. Required: 1. Compute the amount of underapplied or overapplied overhead cost for the year. 2. Prepare a schedule of cost of goods manufactured for the year.

Answers

Answer:

Part 1

under-applied overheads = $8,000

Part 2

Schedule of cost of goods manufactured for the year.

Opening Work in process                                            $ 42,000

Add Direct Materials                                                   $393,000

Add Direct Labor                                                          $ 80,000

Add Applied Overheads                                             $434,000

Less Ending Work In Process                                    ( $ 72,000)

Cost of Goods Manufactured                                     $877,000

Explanation:

The amount of underapplied or overapplied overhead cost for the year.

Applied Overheads = Predetermined overheads rate x Actual machine hours

                                 = $20 x 21,700 machine-hours

                                 = $434,000

Since,

actual manufacturing overhead costs = $ 426,000

and

applied manufacturing overhead = $434,000

then

under-applied overheads = $8,000 ($434,000 - $ 426,000)

Schedule of cost of goods manufactured for the year.

Opening Work in process                                            $ 42,000

Add Direct Materials ($ 22 + $ 420 - $ 32 - $ 17)      $393,000

Add Direct Labor                                                          $ 80,000

Add Applied Overheads                                             $434,000

Less Ending Work In Process                                    ( $ 72,000)

Cost of Goods Manufactured                                     $877,000

Companies that achieve Value Innovation a. pursue differentiation and low cost simultaneously b. pursue differentiation or low cost c. pursue differentiation or low price d. None of the above

Answers

Answer: a. pursue differentiation and low cost simultaneously

Explanation:

Value Innovation as a strategy is highly sought after in many industries as it represents an opportunity to acquire more market share whist keeping costs low. This is because with Value innovation, a company invests in technology that will achieve both low costs and differentiation simultaneously.

This is great news for both consumers and the company because consumers get to buy more differentiated products at lower prices and for the company, they will get more customers buying from their brand.

Which one of the following statements is correct? a. Book values should always be given precedence over market values.
b. Financial statements are frequently the basis used for performance evaluations.
c. Historical information has no value when predicting the future.
d. Potential lenders place little value on financial statement information.
e. Reviewing financial information over time has very limited value.

Answers

Answer:

b. Financial statements are frequently the basis used for performance evaluations.

Explanation:

The financial statements are the accounting reports of an organization, through these documents it is possible to analyze what is the financial situation of a company in the internal and external environment, what are its greatest strengths and weaknesses.

They are instruments for evaluating organizational performance because they provide essential information about the general accounting situation of a company, which ensures greater reliability for a manager to make a decision directed to correct a problem or strategic implementation to achieve a certain result. It also allows stakeholders to analyze essential data and information when deciding to invest or do business with a particular company.

Alpha Company sold goods to customers who used Under-the-Hill bank credit cards. Credit card sales on July 8, 2016 amounted to $12,000 and were subject to a 2.5% bank fee. Use this information to prepare the General Journal entry (without explanation) for July 8, 2016.

Answers

Answer:

Explanation:

The journal entry for July 8, 2016 is shown below:

Bank A/c Dr                       $11,700

Commission fee A/c $300 ($12,000 × 2.5%)

        To Sales A/c                    $12,000

Since the sales is recorded at $12,000 which includes commission fee of $300 ($12,000 × 2.5%) , the remaining balance i.e $11,700 ($12,000 - $300) would be debited to the bank account.

El Tapatio purchased restaurant furniture on September 1, 2018, for $31,000. Residual value at the end of an estimated 10-year service life is expected to be $4,600. Calculate depreciation expense for 2018 and 2019, using the straight-line method, and assuming a December 31 year-end.

Answers

Answer:

Depreciation expense for 2018 was $880

Depreciation expense for 2019 was $2,640

Explanation:

The company uses straight-line depreciation method, Depreciation Expense each year is calculated by following formula:  

Annual Depreciation Expense = (Cost of furniture − Residual Value )/Useful Life = ($31,000-$4,600)/10 = $2,640

Depreciation Expense per month = $2,640/12 = $220

Depreciation Expense for 2018 (from September 1, 2018 to December 31, 2018) = $220 x 4 = $880

Depreciation Expense for 2019 = $2,640
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