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Serggg [28]
3 years ago
8

The owner of a bicycle repair shop forecasts revenues of $212,000 a year. Variable costs will be $63,000, and rental costs for t

he shop are $43,000 a year. Depreciation on the repair tools will be $23,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.
Business
1 answer:
Nataly [62]3 years ago
7 0

Answer:

Sales Revenue            212,000

Variable Cost               (63,000)

Rent Expense               (43,000)

Depreciation Expense (23,000)

Income before taxes     83,000

Income tax expense <u>    (16,600)   </u>

Net Income                    84,800

Cash from operating activities 107,800

tax-shield from depreciation 4,600

Explanation:

Cash flow from operations (indirect method)

net income 84,800 + depreciation expense = 107,800

The depreciation provides a tax shield as they are an accounting concept. The depreciation expense did not involve the outflow of cash but, it is a taxable deduction therefore generates a tax-shield.

23,000 x 20% = 4,600

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Restaurant A uses 60 bags of potatoes each month. The potatoes are purchased from a supplier for a price of $80 per bag and an o
iVinArrow [24]

Answer:

D. Decreases from 30 to 28.5 bags

Explanation:

The computation of the economic order quantity is shown below:

= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}

where,

Carrying cost is $80 × 40% = $32

Annual demand = 60 bags × 12 months = 720 bag

And, the ordering cost is $20 per order

Now put these values to the above formula  

So, the value would equal to

= \sqrt{\frac{2\times \text{720}\times \text{\$20}}{\text{\$32}}}

= 30 bags

Now the demand is decreased by 10% So, the annual demand would be

= (60 - 6) × 12 months

= 54 bags × 12 months

= 648 bags

The other things will remain the same  

Now put these values to the above formula  

So, the value would equal to

= \sqrt{\frac{2\times \text{648}\times \text{\$20}}{\text{\$32}}}

= 28.46 bags

4 0
3 years ago
Which of the following statements is true of an​ activity-based costing​ system?
eimsori [14]

Answer:

The correct answer is A. It uses separate predetermined overhead allocation rates for each activity.

Explanation:

he ABC cost model allocates and distributes indirect costs according to the activities carried out in the process of manufacturing the product or service, identifying the origin of the cost with the necessary activity, not only for production but also for distribution and sale; The activity is understood as the set of actions that aims to incorporate added value to the product through the manufacturing process. Complementing the definition of activity, it should be mentioned that the ABC Model is based on the fact that products and services consume activities, and these in turn are the ones that generate costs.

7 0
3 years ago
Related to the Economics in Practice on page​ 77: If a hurricane results in the supply of hotel rooms decreasing and the demand
UkoKoshka [18]

Answer:

Increases; Ambiguous effect on equilibrium quantity

Explanation:

This situation states that the supply of hotel rooms decreases and the demand for hotel rooms increases due to the hurricane, so this change will shift both the supply curve and the demand curve in the hotel rooms market.

This will shift the supply curve leftwards and demand curve rightwards, therefore as a result, there is an increase in the equilibrium prices and the effect of this change on the equilibrium quantity is ambiguous because that will be dependent upon the magnitude of the shifts of demand and supply curve.

5 0
3 years ago
Employers cite dressing inappropriately as one of the biggest mistakes job applicants make in interviews. True or False
IrinaK [193]

Answer:

True

Explanation:

If you dress inappropriately, that is not showing a good first impression. Most, if not all jobs want to have employees that can dress well, cooperate, and work well with others.

6 0
3 years ago
On January 1, 20X7, Server Company purchased a machine with an expected economic life of five years. On January 1, 20X9, Server
djverab [1.8K]

Based on the information given for Server Company, the machine will be valued a<u>t $42,000 </u>and the machinery account will be credited.

<h3>What would be the value of the machine?</h3>

The machine was sold on January 1, 20X9 and at that point, the accumulated depreciation was $28,000.

The value of the machine was therefore:

= Cost of machine - Accumulated depreciation

= 70,000 - 28,000

= $42,000

Find out more on accumulated depreciation at brainly.com/question/1287985.

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4 0
1 year ago
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