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KIM [24]
3 years ago
12

A clothing manufacturer makes both shirts and shorts. The sales price for shirts is $24 with variable costs of $10 and shorts ha

ve a price of $32 and variable costs of $17. Which of the following is a true statement for this clothing manufacturer in the short term? 1. They would prefer to make shorts instead of shirts. 2. They would prefer to make skirts instead of shorts. 3. They would not have a preference for either product. 4. If both products used the same machine for different lengths of time, it would make no difference.
Business
1 answer:
Gnoma [55]3 years ago
6 0

Answer:

1)They would prefer to make shorts as contribution margin per unit is higher for shorts

Explanation:

Step 1. Given information.

  • Sales price shirts is $24
  • Variable costs shirts is $10
  • Sales price shorts $32
  • Variable costs shorts $17

Step 2. Formulas needed to solve the exercise

Contribution margin = sales price - variable cost

Step 3. Calculation.

Contribution margin shirts  = 24 - 10 = 14

Contribution margin shorts = 32 - 17 = 15

Step 4. Solution.

<h2>Contribution margin shorts > Contribution margin shirts</h2>

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Biloxi Gifts uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, and a general jou
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<u>Solution and Explanation:</u>

<u>The following journal entries are passed in the books of accounts.</u>

Purchase of merchandise on credit - no entry is to be passed

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Sale of merchandise on credit:

Not recorded in gernal journal

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Date           Details                                            debit                 credit

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Explanation:

Schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods is attached.  

<u>Straight-line </u>

Depreciation expense 2nd year=$5.000=(Original Value -Residual Value)/Useful life

<u>Units-of-production </u>

Units of Production Rate=2.5=(Original Value -Residual Value)/estimated productive life

Depreciation expense 2nd year= 7250

<u> Double-declining-balance. </u>

Depreciation rate        20,00%        1/useful life *100

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