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wolverine [178]
3 years ago
11

The cost of goods sold includes $1,200,000 of fixed manufacturing overhead; the operating expenses include $100,000 of fixed mar

keting expenses. A special order offering to buy 50,000 units for $7.50 per unit has been made to Magna. Fortunately, there will be no additional operating expenses associated with the order and Magna has sufficient capacity to handle the order. How much will operate profits be increased if Magna accepts the special order?
Business
1 answer:
Cerrena [4.2K]3 years ago
4 0

Answer:

The correct answer is $100,000.

Explanation:

Following is the information provided:

Sales @$10 per unit                                  $4,000,000

Cost of goods @$8 per unit                    ($3,200,000)

Operating cost @$0.75 per unit             <u>  ($300,000)  </u>

Profit for the year                                     <u>   $500,000  </u>

Now the company has to calculate variable costs that are relevant here. The variable cost included in cost of goods sold is:

Variable costs per unit = (Cost of goods sold - Fixed Costs included in Cost of goods) / Units Sold

The units sold can be calculated by dividing Sales with selling price per unit. Which is:

Number of units sold = $4,000,000 / $10 per unit = 400,000 Units

Now putting values in the above equation, we have:

Variable costs = ($3,200,000 - $1,200,000) / 400,000  = $5 per unit

Other variable operating costs per unit will also be calculated as it is also a variable cost here. Because the variable operating cost per unit is relevant here for decision making, it would be calculated as under:

Variable operating cost per unit = (Operating Cost - Fixed cost included) / Number of units sold

By putting values, we have:

Variable operating cost per unit = ($300,000 - $100,000) / 400,000 units

= $0.5 per unit

Now we will calculate Net benefits arising from this order. The relevant costs are variable costs and relevant revenues are at the rate $7.5 per unit.

Cost - Benefit analysis:

Savings from sales = 50,000 units * $7.5 per unit =                     $375,000

Variable cost = 50,000 units * $5 per unit =                                 ($250,000)

Variable operating cost per unit = 50,000 units * $0.5 per unit=<u> (</u><u>$25,000)</u>

Net Saving / (Loss)                                                                           $100,000

So the net gain from this opportunity will be $100,000.

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If the Federal Reserve sells securities on the open market, how are the purchases of U.S. financial assets by foreigners and the
Sergeeva-Olga [200]

Answer:

A. Increase/Increase

Explanation:

The Federal Reserve is part of the inner economy of the country, which means that if it sells products on the open market (in the world) the inner economy will increase, in consequence the International Value of Dollar will increase because of the demand.

8 0
3 years ago
Orange Corporation has budgeted sales of 26 comma 000 ​units, targeted ending finished goods inventory of 8 comma 000 ​units, an
Orlov [11]

Answer:

C. 30 comma 000 units

Explanation:

Inventory to be produced = Sales +ending inventory - Beginning inventory

= 26,000 + 8,000 -4,000

=30,000 Units (Answer is C. 30 comma 000 units ).

4 0
3 years ago
a company has net working capital of 661. long term debt is $4024, total assets are $6,129, and fixed assets are $3,894. what is
BigorU [14]

Answer:

$5,598

Explanation:

The computation is shown below:

As we know that

Total assets = fixed assets + current assets

$6,129 = $3,894 + current assets

The current asset is $2,235

Now

net working capital = Current asset - current liabilities

$661 = $2,235 - current liabilities

So, the current liabilities is $1,574

Now the total liabilities is

= Current liabilities + long term liabilities

= $1,574 + $4,024

= $5,598

Hence, the total liabilities is $5,598

3 0
3 years ago
Acme, Inc.'s books show an ending cash balance of $10,500 before preparing the bank reconciliation. Given the bank reconciliatio
netineya [11]

Answer:

a. $ 10,410

Explanation:

Balance per books                                                                  $ 10,500

Less: NSF Checks                                                                   $ (    110)

Add: Interest earned                                                              <u>$       20</u>  

Adjusted balance per books                                                 $  10,410    

The NSF checks is reduced from the book balance as the books would have included it as a positive balance.

The interest earned has to be added to the book balance as this information would have not been available with the book.

The outstanding checks represent checks issued by the company and thus would already have been recorded in the books.

the deposits in transit would also have been recorded in the books.    

6 0
3 years ago
"Kilian Company's inventory balance at the end of the current year does not include $10,000 of inventory that was stored in a se
makvit [3.9K]

Answer:

understated assets, retained earnings, and net income

Explanation:

As in the given case, the inventory balance at the end of the year does include the $10,000 of inventory plus it also excluded from the physical count

So, if the error is not found, the effect of this error is assets are understated instead of overstated which results the retained earnings and the net income understated

4 0
3 years ago
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