Akwamba made this statement ‘organisations cannot be successful if managers fail to pay attention to the forces in the external
1 answer:
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Answer:
Explanation:
1. Number of goods available for sale = Beginning Inventory + Purchase, March 5 + Purchase, September 19 = 4,000+10,000+6,000 = 20,000 units
Cost of goods available for sale = Beginning Cost of inventory + Cost of Purchase, March 5 + Cost of Purchase, September 19 = 4,000×24 + 10,000×25 + 6,000×27 = 96,000+250,000+162,000 = $508,000
2. Number of units in ending inventory = Number of units available for sale - Number of units sold = 20,000-4,200-9,000 = 6,800 units
3. Calculations are attached
4.
Income statement FIFO:
Sales $937,800 (4,200×69 + 9,000×72)
Less: Cost of Goods Sold ($326,000)
Gross profit $611,800
Less Operating expense $602,000
Net income $9,800
Income statement LIFO:
Sales $937,800 (4,200×69 + 9,000×72)
Less: Cost of Goods Sold ($342,000)
Gross profit $595,800
Less Operating expense $602,000
Net loss $($6,200)
Income statement LIFO:
Sales $937,800 (4,200×69 + 9,000×72)
Less: Cost of Goods Sold ($334,092)
Gross profit $603,708
Less Operating expense $602,000
Net income $1,708
**Cost of goods sold:-
Under FIFO = 96,000+5,000+225,000 = $326,000
Under LIFO = 105,000+162,000+75,000 = $342,000
Under weighted average method = 103,782+230,310 = $334,092
6. LIFO method minimize taxes
Answer: <em>The lowest interest rate at which the present value of the second contract exceeds that of the first is </em><em>a. 7 percent</em><em>.</em>
Explanation:
<em>Calculating present values is a useful way to compare cases where money is to be received in the future. The higher the present value (when comparing cases where you get money), the better</em>. To calculate it, we make use of the next formula:
Where PV: Present value,
C: Cash flow at a given period,
r: Interest rate, and
n: Number of periods that will have passed (in this case, we are talking about years).
Now, since we are getting money twice in each case (the first payment one year from today, and the final payment two years from today), we can restructure our present value formula to include these two payments. We will get something like this:
<em>Notice how each fraction represents one of the payments received, with one having an 'n' of 1 year, and the other one having an 'n' of 2 years. C₁ and C₂ represent the first and the second payment, respectively.</em>
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Now that we have our completed formula, let's review each contract's present value (PV) with the lowest interest rate (7%), just to see how it turns out. <em>Remember that 7% equals 0.07 in any formula</em>:
<em>Contract A) This one gives her $100,000 one year from today and $100,000 two years from today</em><em>.</em>
So Contract A's present value at 7% interest rate would be equal to <em>$180801.817</em>.
<em>Contract B) The second one gives her $132,000 one year from today and $66,000 two years from today</em><em>.</em>
So Contract B's present value at 7% interest rate would be equal to <em>$181011.442, </em><em><u>which exceeds that of Contract A</u></em><em>.</em>
<em>Since among our options of interest rates, 7 percent is the lowest one, and, with this taken into account, the present value of the second contract (Contract B) exceeded that of the first (Contract A), </em><em>the answer is a. 7 percent</em><em>.</em>