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vlada-n [284]
3 years ago
8

AlphaBrona Industries manufactures 50,000 components per year. The manufacturing cost of the components was determined as follow

s:
Direct materials $ 80,000
Direct labor 100,000
Variable overhead 30,000
Fixed overhead 60,000
Total $270,000

An outside supplier has offered to sell the component for $10. Fixed costs will remain the same if the component is purchased from an outside supplier. What is the effect on income if AlphaBrona Industries purchases the component from the outside supplier?

a.$290,000 decrease
b.$45,000 decrease
c.$290,000 increase
d.$45,000 increase
Business
1 answer:
sashaice [31]3 years ago
8 0

Answer:

Option (a) is correct.

Explanation:

Manufacturing cost:

= Direct materials + Direct labor + Variable overhead + Fixed overhead

= $80,000 + $100,000 + $30,000 + $60,000

= $270,000

Purchase from outside:

= Fixed overhead + Purchase price

= $60,000 + (50,000 × $10)

= $60,000 + $500,000

= $560,000

Effect on income = Purchase from outside - Manufacturing cost

                            = $560,000 - $270,000

                            = $290,000

Therefore, the above calculations shows that income will decrease by $290,000.

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5 0
2 years ago
On April 1, 2016, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $57,200, ha
Harman [31]

Answer:

2016 Depreciation

Dr depreciation expense $5720

Cr Accumulated depreciation               $5720

2017 Depreciation

Dr depreciation expense $5720

Cr Accumulated depreciation               $5720

Journal entries for 2018 expenditure

Dr repairs and maintenance   $2900

Dr Equipment account             $11850

Cr Cash account                                          $14750

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Cr Accumulated depreciation                     $4800.83

Explanation:

There are two policies for depreciating non-current asset  especially when it is acquired part-way through the year like we have here, namely full year depreciation in the year of purchase and none in the year of disposal or proportional depreciation throughout the useful life,I am adopting the former in this question.

Formula for depreciation=cost-residual value/useful life

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However,after two years the book value is calculated thus:

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5 0
3 years ago
Read 2 more answers
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Answer:

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Compounded quarterly:

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x = 24820/1.26824 = $19570

Explanation:

I hope you can understand better and no need for further explanation.

8 0
3 years ago
Question 9 of 10
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I’ll say the answer is B
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