Which of these components does a business exclude from its net income under operating surplus

Companies operating in a highly automated environment that produce many different products with varying levels of production sho

PSYCHO15rus [73]

Answer:

Activity based costing says that we must not absorb the Overhead cost on the basis of one absorption basis as this overhead is not generated as a result of this absorption basis(Machine hrs or labor hours). This use of one absorption basis is inappropriate (not fair allocation). We must find a fair basis that drives this cost. Upon investigation the management found that the total overhead cost suppose which is $1,050,000 can be divided into three cost pools (parts) and each part has a cost driver(a basis of allocation) which can be used to allocate this cost.The costs in the ABC system are allocated to unit product on more fair basis than the tradition absorption costing which only assume one fair basis for allocation of overhead costs. ABC criticizes traditional costing technique for using only one basis for absorption of Overheads.

Now following example will help you in understanding the difference between Absorptiion Costing and Activity based costing.

Suppose both Mr. A and Mr. B drank 5 glasses of juices. Each glass of juice costs $4. According to the Traditional absorption costing technique each individual must pay:

(5 Juices/2)*$4=$10

But ABC says its unfair, use a more appropriate basis for cost allocation. So upon investigating we came to know that Mr. A drank 3 glasses of juice and Mr. B drank 2 glasses of juice. So Mr. A must pay $12(3*$4) and Mr. B must pay $8(2*$4). This is more appropriate or fair basis of absorbing the overhead cost to each individual and is Activity Based Costing.

6 0

2 years ago

20 points

Leto [7]

Answer:

The answer is Communication

7 0

2 years ago

Jackson Tires reported net sales of $80 million and total operating costs (including depreciation) of $52 million. Jackson Tires

Roman55 [17]

Answer:

d. 8.18 million

MVA is $380 million

Explanation:

Net residual Income is the value of the firm. All the preferred and required / agreed return on any the funding availed is deducted from the net earning after profit to make the value for the firm. The income purely associated to the firm is considered as the value of the firm.

Earning Before Interest and tax = Net Sales - Operating costs = $80 million - $52 million = $28 million

Net Operating profit after tax = $28 x ( 1 - 40% ) = $16.8 million

Return on investor-supplied capital = $115 million x 7.5% = $8.625 million

Value created for the firm = Net operating profit after tax - Return on investor-supplied capital = $16.8 - $8.625 = $8.175 million = $8.18 million

MVA is the net of market capitalization and stockholders equity of the firm. It is the difference of market value and book value of equity of a firm.

MVA = ( Outstanding shares x Market value of shares ) - Book value od the equity = ( 20 million shares x $25 per share ) - $120 million = $500 million - $120 million = $380 million

6 0

3 years ago

Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department had 2,900 liters in beginnin

zimovet [89]

Answer: 61,390 liters

Explanation:

If materials were added at the beginning, they will be 100% accounted for at the end of the process.

Equivalent Units = Units started and completed + Ending inventory

= Units completed - Beginning WIP + Ending inventory

= 59,110 - 2,900 + 5,180

= 61,390 liters

6 0

2 years ago

Explain the teams and conflict in organization

zzz [600]

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<h2>arise when there are disagreements over their goals, methods or needs of the team. </h2>

So when the conflicts are in between the team members they arise, addressing these disagreements and coming to a mutual understanding it allows everyone to collaborate harmoniously and productively.

<h2>hope it helps</h2>

7 0

2 years ago