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umka2103 [35]
3 years ago
13

BE10.4 (LO 2), AP Gundy Company expects to produce 1,200,000 units of Product XX in 2020. Monthly production is expected to rang

e from 80,000 to 120,000 units. Budgeted variable manufacturing costs per unit are direct materials $5, direct labor $6, and overhead $8. Budgeted fixed manufacturing costs per unit for depreciation are $2 and for supervision are $1. Prepare a flexible manufacturing budget for the relevant range value using 20,000 unit increments. Prepare a flexible budget for variable costs.
Business
1 answer:
WINSTONCH [101]3 years ago
4 0

Answer:

                             80,000 units 100,000 units     120,000  units

Variable cost         $1,520,000   $1,900,000       $2,280,000

Total costs          $1,820,000     $2,200,000    $2,580,000

Explanation:

Activity Level    

Finished Units                80,000 units 100,000 units     120,000  units

Variable Costs:    

Direct Materials(Units × $5) $400,000     $500,000     $600,000

Direct Labor(Units × $6)       $480,000     $600,000     $720,000

Overhead (Units × $8)        $640,000     $800,000     $960,000

Total Variable Costs        $1,520,000   $1,900,000     $2,280,000

Fixed Costs  

Depreciation                      $200,000            $200,000     $200,000

Supervision                      $100,000            $100,000     $100,000

Total Fixed Costs              $300,000            $300,000     $300,000

So, Total costs               $1,820,000     $2,200,000    $2,580,000

( Variable + Fixed)

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Since its formation, Roof Corporation has incurred the following net Section 1231 gains and losses. Year 1$(12,000)Net Section 1
vekshin1

Answer:

a. $0 will be reported as capital gain, while $7,500 will be reported as ordinary gain.

b. $1,000 will be reported as capital gain, while $8,000 will be reported as ordinary gain.

Explanation:

Note: This question is not complete as part 'a' of the requirement is omitted. The complete question with the part 'a' of the requirement is therefore provided before answering the question as follows:

Since its formation, Roof Corporation has incurred the following net Section 1231 gains and losses.

Year 1  $ (12,000)    Net Section 1231 loss

Year 2      10,500      Net Section 1231 gain

Year 3    (14,000)     Net Section 1231 loss

a. In year 4, Roof sold one asset and recognized a $7,500 net Section 1231 gain. How much of this gain is treated as capital, and how much is ordinary?

b. In year 5, Roof sold one asset and recognized a $9,000 net Section 1231 gain. How much of this gain is treated as capital, and how much is ordinary?

Explanation of the answer is now provided as follows:

When section 1231 losses exceed section 1231 profits in the prior five years, the excess loss (unapplied loss) is applied against the current year's section 1231 gain.

The amount that is reported as ordinary income is the amount of the loss that is applied against the current year's section 1231 gain.

Long-term capital gain is the excess of the current year's section 1231 gain over the the recaptured section 1231 loss from the prior five years.

You have to start with the earliest year to apply section 1231 losses from the previous five years to the current year's section 1231 gain.

Therefore, we have:

a. In year 4, Roof sold one asset and recognized a $7,500 net Section 1231 gain. How much of this gain is treated as capital, and how much is ordinary?

As a result of the loss from the previous year that is applied to the extent of $7,500, the whole of the $7,500 net Section 1231 gain will be recorded as ordinary gain.

Therefore, $0 will be reported as capital gain, while $7,500 will be reported as ordinary gain.

b. In year 5, Roof sold one asset and recognized a $9,000 net Section 1231 gain. How much of this gain is treated as capital, and how much is ordinary?

Unapplied losses in previous years can be calculated as follows:

<u>Details                                                       Amount ($)   </u>

Net Section 1231 loss in Year 3                  (14,000)    

Net Section 1231 gain in Year 4                   7,500

Net Section 1231 loss in Year 1                  (12,000)

Net Section 1231 gain in Year 2               <u>   10,500  </u>

Unapplied losses in previous years    <u>    (8,000)  </u>

Because there are unapplied losses of $8,000 from previous years, $8,000 will be reported as ordinary gain.

Therefore, the amount to be reported as capital gain can be calculated as follows:

Amount to be reported as capital gain = Gain in Year 5 – Amount to be reported as ordinary gain = $9,000 - $8,000 = $1,000

Therefore, $1,000 will be reported as capital gain, while $8,000 will be reported as ordinary gain.

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Answer:

Each payment is closest to $41,573.69.

Explanation:

This can be calculated using the formula for calculating the present value of an ordinary annuity as follows:

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Where;

PV = Present value or the balance to pay for the building = $830,000 - $265,000 = $565,000

P =Quarterly payment or payment after every three months = ?

r = Quarterly interest rate = Incremental borrowing rate / Number of quarters in a year = 16% / 4 = = 4%. or 0.04

n = number of quarters = Number of years * Number of quarters in a year = 5 * 4 = 20

Substitute the values into equation (1) and solve for P, we have:

$565,000 = P * ((1 - (1 / (1 + 0.04))^20) / 0.04)

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P = $565,000 / 13.5903263449677

P = $41,573.69

Therefore, each payment is closest to $41,573.69.

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