Answer:
The $500 is the opportunity cost.
Explanation:
The sunk cost can be defined as a cost that has already been incurred. Such as cost can no longer be recovered. A sunk cost is considered to be irrelevant and is excluded from decision making.
If an individual decided to take an accounting course and paid the tuition fee of $500 and gets a job offer later. If he/she decides to take up the job the tuition fee paid will be the sunk cost which cannot be recovered anymore.
Answer: The predetermined overhead rate increased because the total direct labor-hours dropped
Explanation:
The predetermined overhead rate refers to an allocation rate which is used in applying the estimated manufacturing overhead cost to the cost objects for a particular reporting period.
When there's reduction in the direct labor-hour requirement from 5 hours to 2 hours, the predetermined overhead rate increased because the total direct labor-hours dropped
The predetermined overhead rate is calculated as the total overhead cost divided by the machine hour. Therefore, if there's reduction in the direct labor hour rate, then there will be a rise in the predetermined overhead rate.
Answer:
$39,160
Explanation:
Awtis corporation has a margin of safety percentage of 25%
= 25/100
= 0.25
The break even point is $213,600
The variable expenses is 45%
= 45/100
= 0.45
The first step is to calculate the contribution margin ratio
Contribution margin ratio= 1-variable expenses
= 1-0.45
= 0.55
The fixed expenses can be calculated as follows
Fixed expenses= break even sales × contribution margin ratio
= $213,600×0.55
= 117,480
The total actual sales can be calculated as follows
= Break even sales/(1-margin of safety)
= $213,600/(1-0.25)
= $213,600/0.75
= $284,800
Therefore, the actual profit can be calculated as follows
Actual profit= Contribution margin ratio×sales - fixed expenses
= 0.55×284,800-$117,480
= $156,640-$117,480
= $39,160
Hence the actual profit is $39,160
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