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Katen [24]
3 years ago
14

Manta Ray Company manufactures diving masks with a variable cost of $25. The masks sell for $34. Budgeted fixed manufacturing ov

erhead for the most recent year was $792,000. Actual production was equal to planned production.
Required: Under each of the following conditions, state (a) whether operating income is higher under variable or absorption costing and (b) the amount of the difference in reported operating income under the two methods. Treat each condition as an independent case.
1. Production ............................................... 110,000 units
Sales ........................................................ 108,000 units
2. Production ............................................... 90,000 units
Sales ........................................................ 95,000 units
3. Production ............................................... 79,200 units
Sales ........................................................ 79,200 units
Business
1 answer:
Nonamiya [84]3 years ago
6 0

Answer:

(First Case) Absorption cost income is higher by 14,200 dollars

(Second Case) variable costing income is higher by 44,000 dollars

(Third Case) they are equal as produciton = sales

Explanation:

the difference arises when production differs with sales.

that's because variable will consider the entire amount of fixed cost as cost of the period while, absorption will capitalizethe fixed cost through inventory. If production matches sales then in both cases the fixed cost are entire expressed in the income statement. If they don't the difference is the difference times unit fixed cost.

(First Case)

fixed cost per unit $792,000 / 110,000 = $7.2

difference (110,000 - 108,000) x $7.2 = $14,200

(Second Case)

fixed cost per unit: 792,000 / 110,000 = $8.8

difference (90,000 - 95,000) x $8.8 = $44,000

(Third Case)

They match thus, no difference arises.

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3 years ago
What would happen if one of the factors of production was missing
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If the coupon rate on a bond is higher than the yield to maturity, Multiple Choice the bond sells at a discount. the coupon rate
Law Incorporation [45]

Answer:

the current yield on the bond is lower now than when the bond was originally issued.

Explanation:

A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.

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Hence, if the coupon rate on a bond is higher than the yield to maturity, the current yield on the bond is lower now than when the bond was originally issued.

7 0
2 years ago
After assessing the market growth potential and market competitiveness in Mexico for his company's baby products, Harold wanted
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Answer:

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<u>Explanation: </u>

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3 years ago
. Dallas Wildcat Drilling Co. sells an oil-drilling rig for $3,000,000. The drilling rig was purchased in 2013 for $2,000,000. D
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Answer:

$2,200,000 gain

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When the amount received from the disposal of an asset is lower than the carrying or net book value (NBV) of the asset, the company makes a loss on disposal otherwise, the company makes a gain on disposal.

The carrying amount of the asset is the difference between the asset's cost and accumulated depreciation as at the date of disposal.

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3 years ago
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