Answer:
Product X Product Y
Contribution Margin per $10 $12
Production Hour
Explanation:
The hours used in the product X and product Y is computed as:
Product X Product Y
Units produce in per hour 2 3
Hours used per units 1/2 = 0.5 1/3 = 0.333
The contribution margin per production hours is calculated as, divide the contribution margin by hours as shown below:
Product X Product Y
Contribution margin $5 $4
Hours used 0.5 0.333
Contribution margin per 5/0.5 = 10 4/0.333 = 12
Production Hour
Answer:
D.
Revenues to be understated
Explanation:
Understated amounts indicate a reported amount is not correct and the reported amount is less than the true amount.
A major difference between IFRS and GAAP relates to the A Revaluation Surplus Account.
A revaluation reserve is an equity account that stores changes in the value of fixed assets. If the revalued assets are subsequently disposed of by the company, the remaining revaluation reserve is credited to the company's retained earnings account.
This reserve is only used when the organization prepares its financial statements in accordance with International Financial Reporting Standards. No revaluation reserve is allowed for companies using generally accepted accounting principles.
A revaluation reserve is an equity account that stores changes in the value of fixed assets. If the revalued assets are subsequently disposed of by the company, the remaining revaluation reserve is credited to the company's retained earnings account.
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Firms are known to have financial statements. Companies communicate information about their business activities primarily through financial statements.
<h3>What are Financial statements?</h3>
This is simply known as the written records that tells us the business activities and the financial performance of a specific firm.
Financial statements are known to be audited by government agencies, accountants, firms, etc. to known its accuracy etc.
The order of financial statements are:
- Income statement
- Cash flow statement
- Statement of changes in equity
- Balance sheet, etc.
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Option b. 7.78% is the correct answer. The cost of equity from retained earnings is 7.78% as per the CAPM approach
The relationship between systematic risk, or the general dangers of investing, and expected return for assets, particularly stocks, is described by the Capital Asset Pricing Model (CAPM).
A linear relationship between the required return on investment and risk is established by this financial model.
Retained earnings refer to the total earnings that a company has generated from its operations minus the dividends distributed among shareholders. The retained earnings are earnings reinvested in the business.
The calculation is shown below.
Cost of equity = Risk-free rate + (beta * Market risk premium)
Cost of equity = 4.10% + (0.70 * 5.25%)
Cost of equity = 4.10% + 3.675%
Cost of equity = 7.77% or 7.78%
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