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NeTakaya
3 years ago
14

) Saffron Foods sells jars of special spices used in Spanish cooking. The variable cost is $2 per unit. Fixed costs are $9,000,0

00 per year. It has $40,000,000 of average assets, and the desired profit is a 5% return on assets. Saffron Foods sells 5,000,000 units per year. The company uses cost-plus pricing because it is the only company that produces this kind of product. Using cost-plus pricing methodology, determine the sales price per unit. (Round your answer to the nearest cent.) A) $3.80 B) $2.40 C) $4.20 D) $2.00
Business
1 answer:
olga nikolaevna [1]3 years ago
6 0

Answer:

C. $4.20

Explanation:

The computation is shown below:

Before that we need to do following calculations

Total costs to be incurred  is

= ($2 × 5,000,000 units) + $9,000,000

= $19,000,000

Now

Required return is

= $40,000,000 ×  5%

= $2,000,000

So,

Sales price per unit is

= (Total cost incurred + required return) ÷ number of unit sold

= ($19,000,000 + 2,000,000) ÷ 5,000,000 units  

= $4.20

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Ten years ago, Cary Company issued $1,500,000 of 7 percent, 10-year bonds at a price of 95. On the maturity date of January 2, a
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Answer:

Debit Bonds Payable for $1,500,000

Credit Cash for $1,500,000.

Explanation:

Although this bonds were issued at a discount, but the Discount on Bonds Payable account will have zero balance on the day of maturity because of the entry that has been made on each interest payment date.

Therefore, the necessary journal entry for January 2, 2019 to complete is as follows:

Debit Bonds Payable for $1,500,000

Credit Cash for $1,500,000

This entry will appear as follows:

<u>Date                  Name of Account               DR ($)               CR ($)       </u>

02 Jan '19         Bond payable                1,500,000

                            Cash                                                       1,500,000

<u><em>                          (To record retirement of 10-year bonds at maturity.)    </em></u>

6 0
3 years ago
Smith &amp; Jones, Accountants, agrees to perform an audit for Brick &amp; Mortar Stores, Inc.
makvit [3.9K]

Answer:

a. want to avoid potential disputes.

Explanation:

The auditors are liable to report all the acts of the company, whether are in confirmation of law or not. This is because it is their duty to put a review on the balance sheet, and provide the users of such balance sheet the trust on the information presented.

Even if the agreement do not provide for complete details making it a valid contract this is sure that they need to act properly so that any moral dispute do not occur and that, all the work is done according to the responsibilities.

3 0
3 years ago
King Company issued bonds with a face amount of $1,600,000 in 2015. As of January 1, 2020, the balance in Discount on Bonds Paya
zimovet [89]

Answer:

January 1, 2020

Bonds Payable                                          1600000 Dr

Loss on Redemption of bonds                 36800 Cr

     Discount on Bonds Payable                        4800 Cr

     Cash                                                              1632000 Cr

Explanation:

The redemption of bonds before the maturity usually requires a payment for redemption which is a certain percentage of its face value. It is usually higher than the face value. The above bonds are redeemed at 102 which means at 102% of the face value of the bonds. Thus, the cash paid to redeem the bonds is,

Cash = 1600000 * 102%  =  1632000

The bonds have a carrying value, which is the face value less discount or add premium, of,

Carrying value = 1600000 - 4800  =  $1595200

If they are redeemed for an amount in excess of the carrying value, they are redeemed at a loss.

The loss on redemption is,

Loss = 1595200 - 1632000 = $36800

5 0
3 years ago
Irene invested $27,000 in a twelve-year CD bearing 8.0% interest, but needed to withdraw $6,000 after three years. If the CD’s p
stepladder [879]

$5,040 since Irene earned nearly earned about $4,800 less than what she would be making if she did not make her early withdrawal.

8 0
3 years ago
Read 2 more answers
Consider the closed (no exports or imports) Latverian economy in which the consumption function is C = 300 + 0.75DI (where DI =
777dan777 [17]

Answer:

0.66

Explanation:

Marginal propensity to consume is the proportion of disposable income that is spent on consumption

Marginal propensity to consume = change in consumption / change in income = C / Y

Gross domestic product (Y) is the sum of all final goods and services produced in an economy within a given period which is usually a year.

In a closed economy, GDP = Consumption + Investment spending + Government Spending

Y = 300 + 0.75(Y - $1,200) + $900 + $1,300

Y = 300 + 0.75Y - $900 + $900 + $1,300

Collect like terms

Y - 0.75Y = $1600

0.25Y = $1600

Y = $6400

Substitute for Y in the consumption function : 300 + 0.75(Y - $1,200)

300 + 0.75($6400 - $1,200)

300 + 0.75($5,200) = $4,200

C = $4200

Marginal propensity to consume = $4,200 / $6400 = 0.66

4 0
3 years ago
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