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2 years ago

Why are incidental costs sometimes ignored in inventory costing? Under what accounting constraint is this permitted?

1 answer:

defon2 years ago

4 0

Incidental costs sometimes are ignored in inventory costing because Incidental expenses are minor, non-budgeted expenses that are not directly related to primary service and do not arise during the normal course. Incidental cost which include the costs of transportation, meals, and lodging are common when an employee travels for business Inventory costs.

By calculating the most economic order quantity the firm attempts to determine the order size that will minimize the total inventory. Such practice of ignoring the incidental cost is permitted by materiality constraint because such cost will not affect the decisions of the business entity costs.

Materiality constraint means that transactions of little importance should not be recorded. A transaction may be recorded, but its importance and significance should be kept in mind. For example, a newly purchased pencil is an asset of the business. Whenever the pencil is used, a part of the asset is consumed.

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Truzan Creations, one of the leading names in the handicraft industry, recently launched a new artifact in the market. The compa

pentagon [3]

Answer:

A) Forecasting models

Explanation:

Forecasting models -

It is the method of making prediction of the future , based on the data of the present and the past , and by analyzing the trends .

For example , the estimation of some variable of interest at for some future date .

Uncertainty and risk are the center of the forecasting , it is a good practice , which indicates the degree of uncertainty to forecasts .

Hence , from the data of the question , the correct answer is Forecasting models .

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4 years ago

You have been hired as a consultant by Feludi Inc.'s CFO, who wants you to help her estimate the cost of capital. You have been

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Answer:

$CAPM=5.6\%$

Explanation:

as it is said we must apply the CAPM model, so we have:

$CAPM=r_{f}+\beta (E\(r_{m})-r_{f} )$

where $CAPM$ is the capital asset pricing model, $r_{f}$ is the risk free of the market, $\beta$ is the relation between the market benchmark and an asset return, and $E(r_{m})$ is the expected return of an asset

$CAPM=0.041+1.3(0.0525-0.041)$

$CAPM=5.6\%$

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3 years ago

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3 years ago

Kevin purchases 1,000 shares of Bluebird Corporation stock on October 3, 2020, for $115,000. On December 12, 2020, Kevin purchas

salantis [7]

Answer:a)$195,500 b) $10,735 c)$6,900

Explanation

a)adjusted basis of Kevin’s Bluebird stock on December 31, 2020?

1,000 shares was bought for $115,000

Therefore it was bought at $115 per share

Also

750 shares was bought at $80,500 and therefore bought at 107.33 per share

So in total of 1750 shares, He spent $195,500 ($115,000+ $80,500)

b.On December 12, 2020,he bought shares at 107.33 per share

500 shares would be 500 x $107.33=$53, 665

Therefore, Kevin’s recognized gain or loss from the’ sale of Bluebird stock on March 1, 2021 would be

$64,400- $53, 665 = $10,735

c.Assuming he cannot identify the shares sold, then we can say they are sold on a FIFO ( first in first out) basis. So we would consider the shares bought on October 3, 2020

so we have that

500 x $115=$57,500

$64,400 - $57,500 = $6,900

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3 years ago

Townson Company had gross wages of $200,000 during the week ended December 10. The amount of wages subject to social security ta

Lina20 [59]

Answer:

1. Dr Wages Expense200,000

Cr Social Security Tax Payable 10,800

Cr Medicare Tax Payable 3,000

Cr Employees Federal Income Tax Payable 32,000

Cr Wages Payable 154,200

2. Dr Payroll Tax Expense15,264

Cr Social Security Tax Payable10,800

Cr Medicare Tax Payable3,000

Cr State Unemployment Tax Payable 1,272

Cr Federal Unemployment Tax Payable 192

Explanation:

1. Preparation of Journal entry to record the payroll for the week of December 10.

Dr Wages Expense200,000

Cr Social Security Tax Payable 10,800

($180,000 x 6%)

Cr Medicare Tax Payable 3,000

($200,000 x 1.5%)

Cr Employees Federal Income Tax Payable 32,000

Cr Wages Payable 154,200

[200,000-(10,800+3,000+32,000)]

2) Preparation of the Journal entry to record the payroll tax expense incurred for the week of December 10.

Dr Payroll Tax Expense15,264

(10,800+3,000+1,272+192)

Cr Social Security Tax Payable10,800

Cr Medicare Tax Payable3,000

Cr State Unemployment Tax Payable 1,272

($24,000 x 5.3%)

Cr Federal Unemployment Tax Payable 192($24,000 x 0.8%)

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3 years ago