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3 years ago

For a profitable firm, an increase in which one of the following will increase the operating cash flow?

1 answer:

3 0

Employee salaries

The employee salaries is something that comes under the Operating Activities of a business, in its Cash Flow Statement. Therefore an Operating Cash Flow would be Employee Salaries in this case.

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Exercise 7-9 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LO7-2, LO7-3]

Reil [10]

Answer:

1 a. Year 1 unit product cost = 45

Year 2 unit product cost = 45

Notes: Unit product cost = Direct materials + direct labor + Variable manufacturing overhead = 25 + 15 + 5 = 45 units

1 b. Income statement

Year 1 Year 2

Sales 2,400,000 3,000,000

(40000*60); (50000*60)

Less:

Variable cost of goods sold 1,800,000 2,250,000

Variable selling and adm. 80,000 100,000

Contribution margin 520,000 650,000

Less:

Fixed manufacturing overhead 250,000 250,000

Fixed selling & adm expense 80,000 80,000

Net income $190,000 $320,000

2 a. Notes

Year 1 Year 2

Direct materials 25 25

Direct labor 15 15

Variable manufacturing overhead 5 5

Fixed manufacturing overhead <u> 5 6.25</u>

(250,000/50,000); (250,000/40000)

Unit product cost 50 51.25

b. Income statement

Year 1 Year 2

Sales 2400000 3000000

Less: cost of goods sold <u>2000000</u> <u>2550000</u>

Gross margin 400,000 450,000

Less: Selling and <u>160,000</u> <u> 180,000</u>

administrative expense

Net income 240,000 270,000

Workings

Cost of goods sold for year 2 = (10,000* 50) + (40000 * 51.25)

= 500,000 + 2,050,000

= 25,500,000

3. Reconciliation Year 1 Year 2

Variable costing net operating 190,000 320,000

income (loss)

Add: Deferred fixed overhead 50,000

in ending inventory (10000*5)

Less: Fixed overhead realized <u> -50,000</u>

in beginning inventory(10000*5)

Absorption costing net operating $240,000 270,000

income (loss)

6 0

3 years ago

One major reason countries trade with one another is to:

mario62 [17]

Answer:

I got B. secure access to natural resources.

Explanation:

7 0

3 years ago

Read 2 more answers

Under a partnership agreement, sarah is to receive 25% of the partnership's income, but not less than $12,000. the partnership's

Rudiy27

Given: -
Sarah's income = 25% of the partnership income but not less than $12,000.
Net income of partnership for the year = $32,000.
To find: -
1) Amount that can be deducted by partnership as guaranteed payment.
2) Income that Sarah is to report on her tax return.
Solution: -
Partnership income = $32,000
Sarah's share = 25% of 32000 = $8,000
But Sarah must receive $12,000 (Shortfall $12,000-$8,000=$4,000)
So, 1) $4,000 can be deducted by partnership as guaranteed payment.
2) Income that Sarah needs to report on her tax return = $12,000.

6 0

3 years ago

Which inventory costing method results in the lowest net income during a period of rising inventory costs?.

scoray [572]

Due to the greatest cost of goods sold, the LIFO (Last In Last Out) technique displays the lowest net profitability. Compared to the other techniques of inventory valuation, the cost of goods sold for the LIFO approach is the greatest.

<h3>Which technique of inventory valuation will result in the lowest net profit?</h3>

The application of LIFO will produce the lowest net income and the greatest estimated cost of goods sold among the three options during periods of inflation.

<h3>Which method of inventory has the lowest income tax rate?</h3>

LIFO is the inventory cost flow method that yields the lowest income tax liability. A form of inventory cost flow mechanism called last-in-first-out (LIFO) operates under the presumption that the last item acquired will be the first item to be sold.

<h3>In an era of inflation, which inventory method results in the lowest income tax?</h3>

Due to increasing COGS, LIFO leads to reduced net income (and taxes). However, under LIFO during inflation, there are fewer inventory write-downs. Results from average cost are in the middle of FIFO and LIFO.

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1 year ago

Mary wants to help pay for beth's education(her granddaughter). she has decided to pay for half of the tuition costs, which are

STALIN [3.7K]

First, you have to calculate the amount of tuition when the student reaches age 18. Do this by multiplying $11,000 by 1.07 each year from age 12 until it reaches age 18. Thus, 7 times.

At age 18: 16,508

At age 19: 17,664

At age 20: 18,900

At age 21: 20,223

Then, we use this formula:

A = F { i/{[(1+i)^n] - 1}}

where A is the monthly deposit each year, F is the half amount of the tuition each year illustrated in the first part of this solution, n is the number of years lapsed.

At age 18:

A = (16508/2) { 0.04/{[(1+0.04)^6] - 1}} = $1,244.389 deposit for the 1st year

Ate age 19

A = (17664/2) { 0.04/{[(1+0.04)^7] = $1,118 deposit for the 2nd year

At age 20:

A = (18900/2) { 0.04/{[(1+0.04)^8] = $1,025 deposit for the 3rd year

At age 21:

A = (18900/2) { 0.04/{[(1+0.04)^8] = $955 deposit for the 4th year

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3 years ago