Answer:
$26.50
Explanation:
The computation of the predetermined overhead rate is shown below:
= Variable overhead rate + fixed overhead rate
where,
Variable overhead rate is $8.30
And, the fixed overhead rate is
= $145,600 ÷ 8,000 direct labor hours
= $18.2
So, the predetermined overhead rate is
= $8.30+ $18.2
= $26.50
We simply added the available overhead rate and the fixed overhead rate so that the predetermined overhead rate could arrive
Answer:
An adjustment to retained earnings is necessary when when there is a change from LIFO to FIFO.
Calculating the effect on retained earnings:
- In the year 1 company followed LIFO and recorded ending inventory at $177500. Had it followed FIFO it would have recorded at $195000. So there would be increase in income of $17500 (195000 - 177500).
- In year 2 it followed LIFO and recorded opening inventory at $177500 and closing inventory at $355000 and thereby recording Net closing stock of $177500 (355000 - 177500). Had it followed FIFO it would have recorded a net stock of $195000.(390000-195000). So there would be increase in income by of $17500 (195000 - 177500).
So in total of 2 years there would be an increase of $35000 Net income i.e., Retained earnings and increase in stock value of $35000.
The journal entry is:
Inventory A/c Dr $35,000
To Retained earnings A/c $35,000
Explanation:
The vehicles worth at the end of its lease.
Answer:
c. cease production immediately, because it is incurring a loss.
Explanation:
When a business engages in production it looks to make profit. That is for the production price to be higher than cost incurred in producing the good.
However when the price is lower than the average variable cost as is indicated in the scenario then the firm needs to shut down production in the short term.
Factors that will adversely affect a firm in the short term are price, average total cost, and average variable cost.
Once price is less than average total cost or average variable cost it is better to stop production.
As they are incurring an economic loss
Answer:
the opportunity cost of going to work on saturday is $32
Explanation:
The opportunity cost of going to work on saturday is as follows:
= Income earned on saturday - psychic cost
= 4 hours × $11 - ($2 × 4 hours)
= $44 - $8
= $32
hence, the opportunity cost of going to work on saturday is $32