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Paraphin [41]
3 years ago
8

Pine Street Inc. makes unfinished bookcases that it sells for $59.37. Production costs are $37.59 variable and $9.54 fixed. Beca

use it has unused capacity, Pine Street is considering finishing the bookcases and selling them for $70.62. Variable finishing costs are expected to be $5.64 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases.
Business
1 answer:
Andreas93 [3]3 years ago
4 0

Answer:

Since profit per unit is more in Finished bookcase, book cases shall be finished and then sold.

Additional profit per unit on finished book cases in comparison to unfinished book cases = $17.85 - $12.24 = $5.61 per unit.

Explanation:

Provided, current profit per unit = Selling price - Total cost =  $59.37 - $37.59 - $9.54 = $12.24

This is calculated to know the current profit per unit, without furnishing the bookcase.

In case, the bookcase is furnished then the cost will increase by $5.64 per unit.

That is total cost per unit = $37.59 + $9.54 + $5.64 = $52.77

Revised selling price = $70.62 for each finished unit

Therefore profit pr unit on finished bookcase = $70.62 - $52.77 = $17.85

Since profit per unit is more in Finished bookcase, book cases shall be finished and then sold.

Additional profit per unit on finished book cases in comparison to unfinished book cases = $17.85 - $12.24 = $5.61 per unit.

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A machine costing $180,000 was purchased May 1. The machine should be obsolete after four years and, therefore, no longer useful
Anvisha [2.4K]

Answer:

Straight line depreciation expense

Year 1 = $27,500

Year 2, 3 ,4 = $41,250

Double declining method

Year 1: $60,000

Year 2: $60,000

Year 3: $30,000

Year 4: $15,000

Explanation:

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

( $180,000 - $15,000) / 4 = $41,250

Depreciation expense every year would be 41250 expect in year 1 when the machine was used for only 8 months.

To determine the deprecation expense in the 1st year, determine the monthly deprecation expense.

41250 / 12 = 3,437.50

Depreciation for 1 st year = 3,437.50 x 8 = $27,500

Depreciation expense using the double declining method = Depreciation factor x cost of the asset

Depreciation factor = 2 x (1/useful life)

2 / 4 = 0.5

Depreciation expense in year one = 0.5 x $180,000 = $90,000

The same procedure for determining depreciation expense in year 1 under straight line depreciation would also be used here.

90,000 / 12 = $7,500

$7,500 x 8 = $60,000

Book value at the beginning of year 2 = $180,000 - $60,000 = $120,000

Depreciation expense in year 2 = 0.5 x $120,000 = $60,000

Book value at the beginning of year 3 = $120,000 - $60,000 = $60,000

Depreciation expense in year 3 = 0.5 x $60,000 = $30,000

Book value at the beginning of year 4 =$60,000 - $30,000 = $30,000

Depreciation expense in year 4 = 0.5 x $30,000 = $15,000

I hope my answer helps you

3 0
3 years ago
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Answer:

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Explanation:

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Answer:

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The answer to this question would be: <span>A. $55,555
</span>In this question, the interest rate is 0.018% and you need to have $9.99 interest. That mean, you need to divide the target interest value with the current interest rate. The equation should be:

interest = bank account * interest rate
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If we assume that the $9.99 value is $9.99... then the answer would be $55,555
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