1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
notsponge [240]
3 years ago
11

Company XYZ has 2 fixed price contracts for 2 different clients. The company has enough capacity for both contracts but is uncer

tain whether they will be profitable. Using the information below, a) calculate the activity-based costs and profits for each contract (this requires more than one step) and b) calculate the profit for each job using absorption costing, absorbing overheads using molding hours: Enter all answers in number format without commas, decimals, or dollar signs. Customer AAA BBB Component Type A999 B999 Contract Value ($) $27,000 $100,000 Contract Quantity 1,000 unit 2,000 unit Material cost/unit $15 $20 Molding time/batch 5 hours 7.5 hours Batch size 100 units 50 unitsAnnual Budgeted overheads as follows:Activity Cost Driver Cost driver CostMolding Molding hours 2,000 $150,000Inspection Batches 150 $75,000Production Mgmt Contracts 20 $125,000 Required:Calculate the activity-based costs and profits for each contract.
Business
1 answer:
frozen [14]3 years ago
3 0

Answer:

<em>The contract A yields a loss under ABC but Contract B yields a profit.</em>

<em>ABC Profit  contract A  $ (3000) contract B  $ 11250</em>

<em>Under absorption costing both contract yield profits.</em>

<em>Absorption Profit    contract A  $ 3250 contract B    $7500   </em><em> </em>

<em>Management should make decisions using ABC and reject Contract A and accept Contract B.</em>

<em></em>

Explanation:

Customer                         AAA               BBB

Component Type           A999                B999

Contract Value ($)       $27,000            $100,000

Contract Quantity         1,000 unit        2,000 unit

Material cost/unit              $15                        $20

Molding time/batch          5 hours            7.5 hours

Batch size                       100 units                50 units

Activity Based Rate= Cost per Unit of Cost Driver

Activity                Cost driver         Cost                 Rate

Molding                2,000              $150,000        $150,000 / 2,000 = 75

Inspection            150                   $75,000        $75,000/150 = 500

<u>Production             20                 $125,000        $125,000/20=  6250         </u>

<u>Total                                             $ 350,000                                           </u>

<u />

<u>Cost Drivers Consumed</u>

<u>Activity</u>                              A999                                      B999

Molding time/batch          5 hours* 10                    7.5 hours *40

                                            50                                   300

Batch size              1,000 unit/ 100 units          2,000 unit/50 units

                                     = 10                                      =40

ABC  Profits for Each Contract

                                         A999                                      B999

Selling Price                  $27,000                              $100,000

Materials                      15*1000                                  20 * 2000  

                                    =   15000                                   =   40,000

Molding                   50 hours *75                               300* 75

                                    3750                                       22500

Inspection             10 batches *500                       40 batches *500

                                 $ 5000                                    $ 20000

Management Contracts    $ 6250                             $ 6250

<u>Total                            $ 30,000                               $ 88,750</u>

<u>Profit                            $ (3000)                                $ 11250</u>

<u></u>

<u>Overhead Rate  Absorption Costing</u>

Total Overheads= ( 150,000 + 125,000+ 75000) = $ 350000

Annual Molding Hours = 2000

<u>Rate= $ 350,000/2000=$ 175 per molding hour</u>

<u></u>

<u>Absorption Costing </u>

<u>Profit For each Contract</u>

<u></u>

                                         A999                                      B999

Selling Price                  $27,000                              $100,000

Materials                      15*1000                                  20 * 2000  

                                    =   15000                                   =   40,000

Overheads                50 hours *175                           300 Hours *175

                               =  8750                                            = 52,500

<u>Total Cost                    23750                                      92500            </u>

<u>Profit                             3250                                            7500         </u>

<u></u>

<em>The contract A yields a loss under ABC but Contract B yields a profit.</em>

<em>Under absorption costing both contract yield profits.</em>

<em>Management should make decisions using ABC and reject Contract A and accept Contract B.</em>

You might be interested in
Which scenario below is an example of complementary products, based on their cross-price elasticity?A. Bananas and lettuce, with
ipn [44]

Answer: B. Shampoo and conditioner, with an elasticity of -3.5.

Explanation:

Complimentary products are those which see their quantity demanded move together because the goods usually compliment each other like tea and sugar.

Their Cross-price elasticity shows this by being a negative figure. This is because when the price of one commodity goes up, the quantity demanded of the other goes down because higher prices lead to lower quantity demanded.

The actual question showed that Conditioner and Shampoo had a cross-price elasticity of -3.5 so this is the correct answer.

3 0
3 years ago
During 2019, half of the treasury stock was resold for $180,000; net income was $510,000; cash dividends declared were $1,320,00
Sliva [168]

Answer:

$5,790,000 using opening balance assumption which was not provided in the question

Explanation:        

Shareholders Equity 2019= Opening Shareholders Equity + Resold Treasury Stock + Net income - Cash Dividends Paid

Here

Resold Treasury Stock is $180,000

Net income $510,000

Cash Dividends Paid $1,320,000

Opening Shareholders Equity is missing so we assume the following remainder part as I didn't find the remainder part anywhere:

As of Dec. 31, 2018, Warner Corporation reported the following: Dividends payable- 20,000; treasury stock- 600,000; paid-in capital-share repurchase- 20,000; other paid-in capital accounts- 4,000,000; retained earnings- 3,000,000.

So

Opening Shareholder Equity = Opening paid-in capital accounts + Retained earnings - Treasury Stock + Paid in Capital share repurchases

Opening Shareholder Equity = $4,000,000 + $3,000,000 - $600,000 + 20,000 = $6,420,000

By putting values, we have:

Shareholders Equity = $6,420,000 + $180,000 + $510,000 - $1,320,000

Shareholders Equity = $5790,000

4 0
3 years ago
How are command group in menu tabs
Lera25 [3.4K]

Answer:

Typically, related commands are clustered together on the same menu or toolbar. Menus typically are displayed as one-word strings clustered in a row at the top of the integrated development environment (IDE) or a tool window.

Explanation:

7 0
3 years ago
The Impulse Shopper recently paid an annual dividend of $1.13 per share. The company just announced that it is suspending all di
vivado [14]

Answer:

Stock value today = $1.21

Explanation:

Current Dividend = D{_0} = $1.13

After 5 years that is D{_6} = $0.50

Since expected growth = 0

Therefore

P{_5} = D{_6} / Ke = 0.5/18% = $2.77

Its present value will be \frac{1}{(1 + 0.18){^5}} X 2.77 = $1.21

Stock value today = $1.21

5 0
3 years ago
Cardinal Industries purchased a generator that cost $11,000. It has an estimated life of five years and a residual value of $1,0
bagirrra123 [75]

Answer:

$11,000 cost, five-year life, and $1,000 salvage value

Explanation:

given data

cost = $11,000

residual value = $1,000

estimated to be good = 5,000 hour

solution

as per the straight-line method

formula to compute the depreciation expense that is express as

depreciation expense = (Purchase value of generator - residual value) ÷ (estimated useful life)   .......................1

and

here by considering here these three item

and other information that is not relevant that ignore

depreciation expense = ($11,000 - $1,000) ÷  5 years = 2000

so $11,000 cost, five-year life, and $1,000 salvage value

3 0
3 years ago
Other questions:
  • Ray Jene earns $900 a week at a Publix supermarket. Ray's payroll deductions are 28%. What is Ray's take-home pay?
    13·1 answer
  • Ethical decisions often need to be made within gray areas. for example, should an isp comply with a request from a government fo
    9·1 answer
  • One of the advantages of starting your own business is
    9·2 answers
  • Albert Co. acquired 4,000 shares of Nolan, Inc., common stock on October 20, Year 2, for $66,000. On November 30, Year 4, Nolan
    14·1 answer
  • Dunkin' Brands just paid an annual dividend of $1.10 a share. The firm expects to increase this dividend by 8 percent per year t
    7·1 answer
  • Why do you think brand advocates willingly promote companies via social media?​
    10·1 answer
  • To qualify as a tax preparer for a seasonal job at a tax preparation chain, Martin must answer written questions on tax terminol
    8·2 answers
  • An individual or a firm can internalize an externality by​ ___________. A. disputing that an externality exists. B. doubling the
    9·1 answer
  • Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 130 shares of its common st
    15·1 answer
  • In 2015, what percentage of united states exports went to countries that were part of free-trade agreements?.
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!