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Suppose you've just inherited $10,000 from a relative. You're trying to decide whether to put the $10,000 in a non-interest-bear

ch4aika [34]

Answer:

a. $800

b. $1,000

Explanation:

In this case, the opportunity cost of holding the money instead of buying a U.S. Treasury bond is determined as the yearly interest payed by the bond.

a. interest rate = 8%

The opportunity cost of keeping the $10,000 is:

$C = \$10,000*0.08 = \$800$

b. interest rate = 10%

The opportunity cost of keeping the $10,000 is:

$C = \$10,000*0.10 = \$1,000$

8 0

3 years ago

The purchasing agent of an organization acquired some raw materials at a bargain price, even though she knew that their quality

pshichka [43]

Answer:

So a favorable material price variance might be more than offset by an adverse usage variance

Explanation:

Material price variance

A material price variance occurs where materials are purchased at a price either lower or higher than the standard price. A favourable variance is recorded where the actual total cost of materials of a given quantity is lower that the standard cost. While an adverse variance implies the opposite

Material usage variance

A material usage variance occurs when the standard quantity required to active a particular level of production is higher or lower than than the actual actual quantity used. A favorable variance would mean than less quantity of materials were used than the standard to achieve a given output level. And an adverse variance would mean the opposite

Relationship between Usage variance and Price variance

Where savings are made from purchase of cheap and inferior quality materials these might lead to an adverse usage variance by a greater value .This is so because workers might need to use a larger quantity ( more than the standard required) of a low-quality materials to achieve production.

So a favourable material price variance might be more than offset by an adverse usage variance

5 0

3 years ago

Read 2 more answers

Interdepartment Services: Step Method

Stells [14]

Answer:

O'Brian's Department Stores

a) Determination of the percentage of total personnel department services that was provided to the Payroll department

Since allocation of the personnel department services is based on the number of employees, we can use this to calculate the percentage. The personnel employees are not included in this calculation.

= 4/32 x 100 = 12.5%

b) Percentage of total payroll department services provided to the personnel department. Since the basis is the gross payroll, we can use this to calculate the percentage. The gross payroll of the Payroll department is not included in the calculation.

= $6,000/$42,100 x 100 = 14.3%

c) Personnel Payroll House- Clothing Furniture Total

Ware

Direct department

cost $ 7,800 $ 3,200 $ 12,200 $ 20,000 $ 16,750 $59,950

Number of

employees 5 4 8 16 4 37

Gross payroll $ 6,000 $ 3,300 $ 10,600 $ 17,400 $ 8,100 $45,400

Total cost $13,800 $6,500 $22,800 $37,400 $24,850 $105,350

Allocation of service departments costs, using the step method:

Personnel -13,800 1,725 3,450 6,900 1,725 13,800

Payroll 0 -8,225 2,415 3,965 1,845 8,225

Total allocated 0 0 $28,665 $48,265 $28,420 $105,350

Explanation:

a) Data:

Personnel Payroll House- Clothing Furniture Total

Ware

Direct department

cost $ 7,800 $ 3,200 $ 12,200 $ 20,000 $ 16,750 $59,950

Number of

employees 5 4 8 16 4 37

Gross payroll $ 6,000 $ 3,300 $ 10,600 $ 17,400 $ 8,100 $45,400

b) Cost allocation & Calculations:

Personnel (based on the number of employees)

Rate = $13,800/32 = $431.25 per employee

Payroll (based on gross payroll)

Rate = Payroll cost = Payroll cost divided by the total gross payroll in the other departments, excluding personnel and payroll departments

= $8,225/$36,100 = $0.2278 per gross payroll

c) Allocation of service departments' costs is a method of apportioning costs incurred by service departments to the production departments in order to include all the costs in the product costs. Three methods exist for allocating service departments' costs to the production departments. The first, which is the simplest, is the direct method. With this method, the costs of service departments are allocated directly to each production department based on the consumption of the service department's services. They are not allocated to other service departments.

The second method is the step method. Here, the costs of one service department with the highest cost are allocated to all other departments first, including production and other service departments following a step. The costs of the next service department with the highest costs are allocated to the remaining departments. This step is continued until all the service departments' costs have been allocated. Once the costs of a service department have been completely allocated, that department would not be allocated any other cost.

The Reciprocal method, which is the last method, is the most accurate and complicated method. This method first establishes the relationship among the service departments in equation form and uses the established equations to allocate the costs of service departments. We may not discuss it further than this.

3 0

3 years ago

OFFERING 20 POINTS Whitney's proposal to build 10,000 guns relied on what two important elements found in the modern manufacturi

strojnjashka [21]

Answer:

interchangeable parts and assembly lines

Explanation:

8 0

3 years ago

The Quorum Company has a prospective 6-year project that requires initial fixed assets costing $962,000, annual fixed costs of $

diamong [38]

Answer:

5375

Explanation:

Given that:

Initial Fixed assets costing = $962000

Annual fixed costs = $403400

Variable cost per unit = $123.60

Sales price per unit = $249.00

Discount rate = 14%

Tax rate = 21%

The contribution per unit = Sales price - Variable cost

= $(249.00 - 123.60)

= $125.40

The present value break-even point(BEP) is the region of sales level where the net present value (NPV) equals zero.

Assuming that the sales level = p

i.e.

NPV = PV(of inflows - of outflows)

Inflows = (p * contribution per unit - annual fixed cost)( 1- tax rate) + depreciation * tax rate

= (p * 125.4 - 403400) ( 1 - 0.21) + depreciation * tax rate

where;

depreciation = initial fixed assest cost/ lifetime of the project

= (125.4p - 403400)*0.79 + (962000/6)*0.21

= (125.4p - 403400)*0.79 + (160333.33)*0.21

= (125.4p - 403400)*0.79 + 33670

Now, the PV of the inflows =PV factor(6 years, 14%) * inflows

$= inflows * \dfrac{( 1-(1.14)^{-6})}{0.14}$

$= inflows * 3.8887$

Replacing the value for inflows, we have:

$=((125.4p - 403400)*0.79 + 33670)* 3.8887$

The PV of the outflows = Initial Fixed asset cost = $962000

∴

Equating both together using:

PV(of inflows - of outflows) = 0

((125.4p - 403400)*0.79 + 33670)* 3.8887 - 962000 = 0

((125.4p - 403400)*0.79 + 33670)* 3.8887 = 962000

(99.066p - 318686 + 33670) * 3.8887 = 962000

(99.066p - 285016) * 3.8887 = 962000

385.24p - 1108341.72 = 962000

385.24p= 962000 + 1108341.72

385.24p= 2070341.72

p = 2070341.72 / 385.24

p ≅ 5375

6 0

2 years ago