Answer:
A. $5.00 per machine-hour
Explanation:
The computation of the manufacturing overhead application rate is shown below:
= Estimated manufacturing overhead ÷ expected machine-hours incurred
= $550,000 ÷ 110,000 machine hours
= $5.00 per machine hour
In order to determine the manufacturing overhead application rate, basically we divided the estimated manufacturing overhead by the expected machine hours
Answer:
Cash Flow from Operating Activities
Net Income $24,000
Adjustments for Non-Cash items :
Depreciation expense $12,000
Adjustments for Changes in Working Capital :
Increase in Accounts receivable ($10,000)
Decrease in Inventory $16,000
Increase in Salaries payable $1,000
Net Cash from Operating Activities $43,000
Explanation:
The Indirect method reconciles the Operating Profit to Operating Cash Flow by adjusting the Operating Cash flow with the following items :
- Non-cash items previously deducted or added to Operating Profit.
- Changes in Working Capital.
Answer:
True
Explanation:
The answer to this question is true. The recording of assets is usually done at cost. This is equivalent to the value that was exchanged when the asset was sold. In a country like the United States for example, if an asset such as a land or machine gets to appreciate in value after a period of time, it is not usually revalued. Therefore the answer to this question is true.
Answer:
Sam's producer surplus is $3
Explanation:
A producer surplus is the difference between the amount a producer is willing to sell a product for and the price of the product in the market that consumers are willing to pay if the consumer price is higher.
Mathematically, it is represented as; market price - willing price
= 18 - 15 = $3.
Answer:
b. it is appropriate to borrow if the return on the assets is greater than the cost of the financing.
Explanation:
A leverage can be defined as a process which typically involves the use of fixed-charged assets or items in a business with the intention of multiplying potential financial gains and returns.
In Financial accounting, the concept of leverage is that it is appropriate for a business firm to borrow an amount of money (debt), if the return on the assets (capital gain or income) is greater than the cost of the financing (debt or borrowed money).
Basically, financial leverage which is also known as trading on equity, is the utilization of debt (borrowed money) to acquire or purchase new assets with the intent and expectation that the income generated from these assets would exceed the cost incurred from borrowing. Thus, a business that engages in financial leveraging assumes that it would generate a higher income or capital gain from the amount of debt (borrowed money) used in its capital structure.
