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3 years ago

What is a disadvantage of using credit?

Business

2 answers:

Rom4ik [11]3 years ago

5 0

Not being able to pay it off is a big one.

nataly862011 [7]3 years ago

4 0

Answer:

Incurring inflated interest charges over and above the principal amount

Explanation:

When items are purchased on credit, it essentially means that the buyer has taken a loan to finance their purchase. This loan incurs interest. Interest is the cost of using spending cash money to buy a good or a service in the current time period instead of saving and purchasing it at a later period. Credit providers tend to charge extremely high interest for the convenience of flexible purchasing power. These interest charges, accumulated over time, become a source of insolvency for the debtors who are unable to repay the interest, the principal amount or both.

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Mr. Eli Lilly is very excited because sales for his nursery and Plant Company are expected to double from $600,000 to $1,200,000

liq [111]

Answer:

The correct answer is Cash deficit = ($804,000) and incorrect.

Explanation:

According to the scenario, the calculation can be done as follows:

Cash Flow Statement

Beginning cash = $1,200,000

Now we less the asset buildup, then

Less: Assets buildup (1200000-600000)*50% = -$300,000

Now by adding the profit, then

Add: Profit (1200000*8%) = $96,000

Cash deficit = ($804,000)

As his earning seems unable to cover additional capital expenditure, his optimistic outlook for his cash position appear to be incorrect.

8 0

3 years ago

A physical count of merchandise inventory on November 30 reveals that there are 96 units on hand. Cost of goods sold (rounded) u

dedylja [7]

Answer: $1,712

Explanation:

If the company uses FIFO it means that they sell their earlier inventory first. If there are 96 units on hand, it means that these 96 units would be the latest inventory.

That means that these 96 units comprise of:

86 units purchased on November 25 at $6.30 each and,
10 units from the November 17 purchase of 58 units at $6.05 each which means 48 units were sold from this purchase.

The units sold were therefore:

= (29 * 5.80) + (115 * 6.20) + (48 * 6.05)

= 168.20 + 713 + 290.40

= $1,171.60

= $1,712

5 0

3 years ago

A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as p

Jet001 [13]

Answer:

Students believe that if the initiative does not happen, the funds for the initiative will not be spent elsewhere.

Explanation:

The visual appearance is both non rival and non excludable I.e. Pure public good

Benefit is 17*490=8.330

Benefit is greater than cost so college administrators should undertake the beautification initiative

7 0

3 years ago

Delaware Company incurred the following research and development costs during 2021: Salaries and wages for lab research $ 400,00

Temka [501]

Answer:

Total R&D Expense = 1040000 USD to be reported in 2021 income statement.

Explanation:

First of all, let me arrange this data in a quite presentable way to facilitate you.

1. Salaries and wages for lab research = 400,000 USD

2. Materials Used in R&D projects = 200,000 USD

3. Purchase of equipment = 900,000 USD

4. Fees paid to third parties for R&D projects = 320,000 USD

5. Patent filing and legal costs for a developed product = 65,000 USD

6. Salaries, wages, and supplies for R&D work performed for another company under a contract = 350,000 USD

Total Cost = 2,235,000 USD

Note: Depreciation for 2021 is 120,000 USD.

Now, we have to list out different costs included in Research and Development Expenses to be included in the income statement.

<em>For R&D expenses, we need to look for costs that are directly related to R&D and add up those costs to calculate the R&D Expense that Delaware should report in its 2021 income statement. </em>

Following cost components will be added together for the Research and Development Expenses:

1. Depreciation For 2021 = 120,000 USD

2. Materials Used in R&D projects = 200,000 USD

3. Fees paid to third parties for R&D projects = 320,000 USD

4. Salaries and wages for lab research = 400,000 USD

Total R&D Expense = 120,000 + 200,000 + 320,000 USD + 400,000 USD

Total R&D Expense = 1040000 USD to be reported in 2021 income statement.

7 0

3 years ago

Total and Unit Product Cost Martinez Manufacturing Inc. showed the following costs for last month: Direct materials $7,000 Direc

Sav [38]

Answer and Explanation:

1. The classification of estimated manufacturing overhead is shown below:-

Direct materials = Product cost

Direct labor = Product cost

Manufacturing overhead = Product cost

Selling expense = Period cost

2. The computation of total product cost for last month is shown below:-

= Direct materials + direct labors + manufacturing overhead

= $7,000 + $3,000 + $2,000

= $12,000

3. And, the unit product cost is

= Total product cost ÷ number of units

= $12,000 ÷ 4,000 units

= $3 per unit

5 0

3 years ago