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Lisa [10]
3 years ago
9

Andrews Company has five employees participating in its defined benefit pension plan. Expected years of future service for these

employees at the beginning of 2014 are as follows. On January 1, 2014, the company amended its pension plan, increasing its projected benefit obligation by $72,000.
Compute the amount of prior service cost amortization for the years 2014 through 2019 using the years-of-service method, setting up appropriate schedules.

Business
1 answer:
MrMuchimi3 years ago
7 0

Answer and Explanation:

Computation of service years

Year  Jim  Paul  Nancy  Dave  Kathy Total × Cost  Amortization

2014   1       1         1             1          1      5    × 3,000 $15,000

2015   1      1         1              1          1      5     ×  3,000 $15,000

2016   1       1         1             1          1      5    ×   3,000 $15,000

2017            1        1              1          1    4     ×   3,000   $12,000

2018                     1              1          1     3     ×   3,000   $9,000

2019                                   1          1      2    ×   3,000   $6,000

Total                                                                             $72,000

Future years of service

Jim         3

Paul       4

Nancy    5

Dave      6

Kathy     6

Total      24

Working note:-

Cost per service year = Benefit obligation ÷ Total

= $72,000 ÷ 24

= $3,000

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Cranford Company completed and transferred out 2,700 units in May 2016. There were 300 units in the Work-in-Process Inventory on
Lynna [10]

Answer:

The cost of the work transferred-out during May is $18,630

Explanation:

For computing the cost of work transferred, first we have to compute the conversion cost per unit and material cost per unit

The conversion cost per uni = Conversion cost ÷ (transferred units + work in progress)

= $11,160 ÷ (2,700 + 300 × 30%)

= $11,160 ÷ (2,700 + 90)

= $11,160 ÷ 2,790

= $4 per unit

Now, material cost per unit = Material cost ÷ (transferred units + work in progress)

= $8,700 ÷ (2,700+300)

= $8700 ÷ 3,000

= $2.9 per unit

So, total cost of the work transferred is equals to

= Transferred units × conversion cost per unit + transferred units × material cost per unit

= 2,700 × $4 + 2,700 × $2.9

= $10,800 + $7,830

= $18,630

Hence, the cost of the work transferred-out during May is $18,630

6 0
3 years ago
TB MC Qu. 08-152 Minor Company installs a machine... Minor Company installs a machine in its factory at the beginning of the yea
Neko [114]

Answer:

The correct answer is "$54000".

Explanation:

According to the question,

Annual depreciation rate will be:

= \frac{100 \ percent}{5}

= 20 (%)

hence,

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By putting the values, we get

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5 0
3 years ago
A machine would cost $100,000, and would generate revenues of $21,000 per year. However, O&M costs would be $7,000 per year.
fgiga [73]

Answer:

(a) What is the net present value of this potential investment?

Net present value of Investment is $(3,903)

(b) Should you invest in this machine?

We should not invest in this investment because Net present value of this investment is negative by discounting Minimum acceptable rate of return.

Explanation:

Present Values:

Revenue                    $144,146

O&M Cost                  ($48,049)

Initial Investment      <u>$(100,000)</u>

Net Present value     $(3,903)

Working :

Present Value Calculation = P x ( (1- ( 1 + r )^-10) / r

Revenue = $21,000 x ( (1- ( 1 + 0.075 )^-10) / 0.075 = 144,146

O&M Costs = $7,000 x ( (1- ( 1 + 0.075 )^-10) / 0.075 = 48,049

8 0
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Anton [14]
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