Finished goods that have not yet shipped to

Currently, you make one of the components needed for final assembly of your product and you are considering buying the part from

VashaNatasha [74]

Answer:

1. Break even quantity is 18,125 units

2. Cost to make 28,000 units = $ 775,000

3. Total costs to buy 28,000 units = $ 696,000

4. Savings by using low cost option ( buy from outside) $ 79,000

Explanation:

Computation of Break even point

Variable cost to make equipment in house $ 25 per unit

Cost to purchase the unit from outside $ 17 per unit

Differential Cost per unit $ 8 per unit

Fixed costs to be paid to outside supplier $ 220,000

Fixed costs to be incurred in house $ 75,000

Incremental fixed costs $ 145,000

Break even point - Differential in fixed costs / Differential cost per unit

$ 145,000/ $ 8 = 18,125 units

Computation of costs to make 28,000 units

Variable costs per unit - $ 25 per unit

Units to be produced - 28,000 units

Total Variable costs $ 25 * 28,000 units $ 700,000

Fixed costs $ 75,000

Total costs to make 28,000 units $ 775,000

Computation of costs to buy 28,000 units

Variable costs per unit - $ 17 per unit

Units to be produced - 28,000 units

Total Variable costs $ 17 * 28,000 units $ 476,000

Fixed costs $ 220,000

Total costs to make 28,000 units $ 696,000

Computation of savings

Buying 28,000 units $ 775,000

Making 28,000 units $ 696,000

Savings from buying from outside $ 79,000

6 0

3 years ago

A revenue account is increased by debits. is decreased by credits. has a normal balance of a debit. is increased by credits.

Elenna [48]

Answer: is increased by credits

Explanation:

Revenue accounts are increased by credits because they are an equity account and equity accounts increase by credit. This is because the corresponding entry would be an asset such as cash and as the asset has to increase by being debited, revenue must be increased by credit.

Other accounts that are increased by credit include liabilities. Accounts that increase by debits apart from assets include purchases and expenses.

5 0

3 years ago

When should supplies be recorded as an expense?

Crazy boy [7]

Answer:

Supplies should be recorded as an expense when it is used up during an accounting period.

Explanation:

Supplies which is also refers to as office supplies can be described as consumables and equipment which are used from time to time by company. Examples of office supplies include printer paper, pencils, notebooks, binders, pens and among others.

When supplies are bought before they are used, they are recorded as office supplies by adding them to office supplies on hand at the beginning of to obtain total supplies for an accounting period under the current asset in the balance sheet. Any part of the office supplies used up during an accounting period is recorded an expense during that accounting period in the income statement. The part used is deducted from the total supplies obtained supplies on hand at the an accounting period to be recorded under the current asset in the balance sheet.

Therefore, supplies should be recorded as an expense when it is used up during an accounting period.

7 0

3 years ago

Suppose Ginger deposits $5,000 in cash into her checking account at the Bank of Skidoo. Show this transaction in a T-account for

Nutka1998 [239]

Answer:

1) Suppose Ginger deposits $5,000 in cash into her checking account at the Bank of Skidoo. Show this transaction in a T-account for the Bank of Skidoo.

Reserves Checkable deposits

debit credit debit credit

5,000 5,000

2) The Bank of Skidoo has no excess reserves and is subject to a 6 percent required reserve ratio. Assume the Bank of Skidoo makes the maximum loan possible from Ginger's deposit to Thurston. Show this transaction in a new T-account for the Bank of Skidoo.

Reserves Loans

debit credit debit credit

5,000 4,700

4,700

300

3) Thurston decides to use the money he borrowed to purchase a sail boat. He writes a check for the entire loan amount to Gilligan's Seagoing Vessels, which deposits the check in its bank, the Paradise Bank of Kona, Hawaii. When the check clears, the Bank of Skidoo transfers the funds to the Paradise Bank. Show these transactions in a new T-account for the Bank of Skidoo.

Reserves Checkable deposits

debit credit debit credit

5,000 5,000

4,700 4,700

300 300

4,700

4,400

4) The maximum amounts of deposits that can be created from Ginger's initial deposit is $_____

Increase in checkable deposits = change in bank reserves / required reserves = $5,000 / 6% = $83,333.33

The maximum amounts of loans that can be created from Ginger's initial deposit is $_____

the maximum amount of loans that can be created in Ginger's bank is $4,700, but the maximum amount that loans can be created in the whole banking system = $83,333.33 - $5,000 = $78,333.33

3 0

3 years ago

A year ago, the Really Big Growth Fund was being quoted at an NAV of $22.28 and an offer price of $23.45. Today, it's being

Crank

Answer:

9.85%

Explanation:

Data provided in the question:

Initial Offer price = $23.45

Current NAV = $22.28

Dividends and capital gains distributions over the year = $1.09 per share

Now,

Holding period return

= [Current NAV + Dividends and capital gains distributions - Initial Offer price ] ÷ Initial Offer price

= [ $24.67 + $1.09 - $23.45 ] ÷ $23.45

= $2.31 ÷ $23.45

= 0.0985

or

= 0.0985 × 100%

= 9.85%

4 0

3 years ago