Answer:
An adjustment to retained earnings is necessary when when there is a change from LIFO to FIFO.
Calculating the effect on retained earnings:
- In the year 1 company followed LIFO and recorded ending inventory at $177500. Had it followed FIFO it would have recorded at $195000. So there would be increase in income of $17500 (195000 - 177500).
- In year 2 it followed LIFO and recorded opening inventory at $177500 and closing inventory at $355000 and thereby recording Net closing stock of $177500 (355000 - 177500). Had it followed FIFO it would have recorded a net stock of $195000.(390000-195000). So there would be increase in income by of $17500 (195000 - 177500).
So in total of 2 years there would be an increase of $35000 Net income i.e., Retained earnings and increase in stock value of $35000.
The journal entry is:
Inventory A/c Dr $35,000
To Retained earnings A/c $35,000
Explanation:
Answer:
The opportunity cost for a year will be $240,000.
Explanation:
The opportunity cost of any decision is the second-best alternative that is given up or sacrificed.
Here, the manager has a farm of 100 acres of land.
If he sells it to a developer for $40,000 per acre, he will get $4,000,000 for the whole land.
He can invest this amount and get an interest of 6% per year.
The opportunity cost of keeping the farm to the manager himself will be
= 6% of $4,000,000
= 
= $240,000
Answer:
The Draper Corporation would be indifferent between continuing and discontinuing of Doombugs at 20,000 units.
Explanation:
The draper should be indifferent at the level at which they covered all of their Fixed Cost.
The sales price per unit is ⇒ 150,000/15,000 = 10 per unit
The Variable cost per unit is ⇒ 120,000/15,000 = 8 per unit
The Break-even units for Draper should be:
Break-even units = <u> Fixed Cost </u>
Sale price - Variable Cost
Break-even units = <u>40,000</u>
10-8
Break-even units = <u>40,000</u>
2
Break-even units = 20,000 units
Answer:
An advertising agency that provides the most complete range of services including market research, media selection, copy development, artwork and production.
Explanation:
Advertising can be described as the various strategies used to create an awareness of a product to the public. The main objective of advertising is to persuade potential customers to purchase the product.
Full service advertising offers a complete range of services which include carrying out an extensive market research on the product, a good media management, excellent design and packaging of the product.
Hiring the services of full advertising agencies creates room for a team of specialists to work together inorder to boost the sales of the product. It also provides enough time for the management of an organisation to figure out new ways to strategize their business.
Answer: The correct answer is option (A)
Explanation: Activity rates is calculated by dividing the budgeted activity cost by the total activity-base usage.
Activity Rate = (Budgeted Activity cost) ÷ ( total activity base usage)
