Answer:
Under last in, first out (LIFO) inventory method, the units purchased last are used to determine the cost of goods sold. This doesn't mean that exactly the last units purchased will be sold first, it is just used as an accounting tool.
In this case, the last unit purchased costed $20, and the immediately previous one costed $15. Under LIFO, these 2 units would have been sold (COGS = $35), and the ending inventory = $10 (the price of the "oldest" unit).
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Answer:
Margin of safety = 3190.922902 units rounded off to 3191 units
Explanation:
Margin of safety is the cushion or extra number of units that the business sells over the break even point in units. The break even point is the point where total revenue equals total cost and the business earns no profit or no loss. To calculate the margin of safety in units, we deduct the break even number of units from the budgeted number of units or sales.
Margin of safety = Budgeted units - Break even number of units
First we need to calculate the break even in units. The formula for break even in units is,
Break even in units = Fixed cost / (Selling price per unit - Variable cost per unit)
Break even in units = 9376 / (6.74 - 2.33)
Break even in units = 2126.077098 rounded off to 2126 units
Margin of safety = 5317 - 2126.077098
Margin of safety = 3190.922902 units rounded off to 3191 units
Answer:
$1,815,000
Explanation:
First we must determine the gross income = $2,000 x 10 units x 12 months = $240,000
minus the vacancy rate = $240,000 x 5% = $12,000
minus the annual expense = $10,200
net income = $240,000 - $12,000 - $10,200 = $217,800
to calculate the maximum amount that the investor should pay we must divide the net income by the expected rate of return = $217,800 / 12% = $1,815,000
When you are calculating a project's price (buying this asset is an investment project), depreciation and debt service are not included in the calculations.
The answer to the question is false
