Budgeted Purchases = Sales units + Closing inventory - Beginning Inventory
= 5,000 + (1,000 * 130%) - 1,000
= 5,300 units
Answer:
Correct answer is D. All future costs, both variable and fixed
Explanation:
In target costing, all future costs both variable and fixed costs are relevant. This is for us to clearly determine the desired profit that the company wants to attain. The process of costing is to determine all future costs that the company will possibly incur in the production and add it to the desired profit margin to know the unit sales price of the product.
Answer:
(C) Product X = $880; Product Y = $2,240
Explanation:
The applied overhead will be calculate by the product of the cost diver and the overhead rate:
<u>Cost driver for each product:</u>
Product X 3MH and 1LH
Product Y 4MH and 8LH
<u />
<u>Overhead rate: </u>
240 per machine hour
and 160 per labor hour
Product X 3MH x $240 + 1LH x $160 = 880
Product Y 4MH x $240 + 8LH x $160 = 2,240
Answer and Explanation:
Given that Bond A pays $4,000 in 14 years and Bond B pays $4,000 in 28 years, and that the interest rate is 5 percent, we see that Using the rule of 70, the value of Bond A is 70/5 = doubled after 14 years. Now if its value is 4000 in 14 years, its current value must be halved. Hence the value is 2000.
Sinilarly the value of Bond B is approximately one fourth now because it pays 4000 in 28 years. Hence its value is 4000/4 = 1000.
Now suppose the interest rate increases to 10 percent. Hence the doubling time is 70/10 = 7 years
Using the rule of 70, the value of Bond A is now approximately 1,000 and the value of Bond B is 250
Comparing each bond’s value at 5 percent versus 10 percent, Bond A’s value decreases by a smaller percentage than Bond B’s value.
The value of a bond falls when the interest rate increases, and bonds with a longer time to maturity are more sensitive to changes in the interest rate.