Answer:
degree of operating leverage 6.04
Income if sales increase by 10%: 72,180
Explanation:
degree of operating leverage:
contribution per ticket
60 sales price - 24 variable cost = 36 dollars
36 x 7,550 = 271,800 total contribution
fixed cost (226,800)
profit 45,000
degree of operating leverage: 6.04
the sales have a multiplier effect of 6.04
a 10 percent increase on sales translates to 60.4 percent in the net operating income:
income with a 10% sales:
45,000 x ( 1 + 60.4%) = 72.180
In terms of establishing an account receivable billing policy
and procedure includes the determining or knowing the number the days that has
been done between billings because this is essential to know if the policy is
upheld and proper procedures is being done.
Balance Sheet
Assets
Current Assets
Cash 37200
Accounts Receivable 36300
Less: Allowance for Doubtful Accounts (5000) [Computation: 36300-31300)
Supplies 3600
Total Current Assets 72100
Property, Plant, and Equipment
Land 17600
Building 75100
Equipment 47200
Total Property, Plant, and Equipment 139900
Total Assets $212000
Liabilities
Long term Liabilities
Mortagage Payable 19900
Owner's Equity
Terry, Capital 55200
Nick, Capital 72800
Frank, Capital 64100
Total Owner's Equity 192100
Total Liabilities and Owner's Equity $212000
Answer:
The correct answers are:
A) Purchase cost of a patent from a competitor. (Capitalized)
B) Research and development costs. (Expensed)
C) Organizational costs. (Expensed)
D) Costs incurred internally to create goodwill. (Expensed)
Explanation:
Basically, for accounting purposes, the difference between capitalization and expenditure relies on the period the assets will be used. When assets are acquired to be used more than in a single period, they are capitalized. When those assets are purchased to be used within part of the current period, they are expensed. Thus:
A) <em>Purchase cost of a patent from a competitor</em>. (Capitalized)
B) <em>Research and development costs</em>. (Expensed)
C) <em>Organizational costs</em>. (Expensed)
D) <em>Costs incurred internally to create goodwill</em>. (Expensed)