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CaHeK987 [17]
3 years ago
7

7. The management accountant for Giada's Book Store has prepared the following income statement for the most current year: Cookb

ook Travel Book Classics Total Sales $65,000 $164,000 $55,000 $284,000 Cost of goods sold 37,000 67,000 20,000 124,000 Contribution margin 28,000 97,000 35,000 160,000 Order and delivery processing 21,000 25,000 11,000 57,000 Rent (per sq. foot used) 5,000 4,000 4,000 13,000 Allocated corporate costs 10,000 10,000 10,000 30,000 Corporate profit $ (8,000) $58,000 $10,000 $60,000 If the travel book line had been discontinued, corporate profits for the current year would have decreased by ________. A) $97,000 B) $72,000 C) $68,000 D) $58,000
Business
1 answer:
vekshin13 years ago
8 0

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Travel Book

Sales= $164,000

Cost of goods sold= (67,000)

Contribution margin= 97,000

Order and delivery processing (25,000)

Net income= 72,000

Rent and allocated corporate costs remain constant in both decisions (drop or not). Therefore, they are irrelevant.

<u>Now, if the travel book product line was discontinued, the company's net income would have decreased by $72,000</u>

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On October 1, 20X3, Green Corporation paid $450,000 for all of Yellow Company's outstanding common stock. On that date, the book
Damm [24]

Answer:

The differential implicit in this acquisition is $110,000

Explanation:

The computation of the differential implicit is shown below:

Differential implicit = Amount paid - book value

                               = $450,000 - $340,000

                               = $110,000

The differential implicit shows a difference between the amount paid and the book value so we do not consider the fair value which is given in the question

3 0
2 years ago
According to the classical dichotomy, when the money supply doubles, which of the following also doubles?
masha68 [24]

Answer: Option (C) is correct.

Explanation:

Correct option: The price level and nominal wages.

According to the classical dichotomy, nominal variables moves proportionately with the quantity of money whereas real variables remains unchanged.

A classical model that is based on the flexibility of prices and wages, conclude that any changes in money supply only affects the nominal variables whereas real variables remains constant. This theory results in the independence of the real variables from any changes in the money supply and nominal variables.

7 0
3 years ago
What is good about having a credit card? what is bad?​
navik [9.2K]

Answer:

Credit cards are neither good nor bad. They are financial tools that must be used with care. Cards can help or hurt your finances if you don't use them responsibly.  At the same time, credit cards used properly offer a convenient payment method that can build credit and earn rewards for users.

Explanation:

7 0
2 years ago
A combination of high crude oil prices and government subsidies for ethanol have led to a sharp increase in the demand for corn
Firlakuza [10]

Answer:

a) Increase

b) Increase

c) Increase

d) Increase

e) Increase

Explanation:

a) The price of corn

The increase in the demand for corn will cause an increase in the price of corn

b) The quantity of corn supplied

The quantity of corn supplied will increase rapidly in the short run before equilibrium will be established in the market

c) The cost of producing soybeans and wheat crops will Increase due to the High demand for corn hence the supply will decrease as well

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3 0
2 years ago
On January 1, 20Y3, The Simmons Group, Inc., purchased the assets of NWS Insurance Co. for $37,152,500, a price reflecting an $5
Triss [41]

Answer:

The Simmons Group, Inc.

a. December 31, 20Y9, the book value of Goodwill before impairment = $5,572,875

b. Effects on the accounts of the December 31, 20Y9 adjustment for the goodwill impairment:

1. Impairment loss of $3,901,012 will be accounted for in the Income Statement for the year, thus reducing the reported profits by $3,901,012.

2. Goodwill be reduced to $1,671,863 in the balance sheet by deducting the impairment loss of $3,901,012 from the book value before the impairment.

Explanation:

a) Data and Calculations:

Jan. 1, 20Y3, Purchase price of NWS Insurance Co. = $37,152,500

Goodwill on acquisition = $5,572,875

December 31, 20Y9, the book value of Goodwill before impairment = $5,572,875

Impaired value - $1,671,863

Impairment loss = $3,901,012 ($5,572,875 - $1,671,863)

b) The Goodwill impairment shows that the carrying amount, $1,671,863, is less than the fair value of $5,572,875.  Goodwill is an intangible asset which Simmons Group acquired from NWS Insurance on January 1, 20Y3.  It is annually tested for impairment by comparing the fair value with the carrying value.  

6 0
2 years ago
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