Unlimited wants and limited resources
Answer:
The incorrect option is D. The inventory shrinkage cannot be recognized by debiting an operating expense.
Explanation: Even though it is correct saying that diminishing inventories will have an impact on the P&L sheet through debiting the records, it is incorrect booking that operation in the expenses. Inventories are affected by cost variations, so the debt must go in Cost of goods sold (option c). The other options are correct since Inventory shrinkage refers to a loss in physical inventory not recognized yet in the accounting (option a and b). This loss can be caused by deterioration or robbery (option e).
This is an example
of kickbacks. This is a type of negotiated inducement in which a
commission is remunerated to the bribe-taker in payment for services accomplished.
In general, the payment for cash, goods, or services handed over is discussed in
advance or ahead of time.
Answer:
So a favorable material price variance might be more than offset by an adverse usage variance
Explanation:
<em>Material price variance</em>
<em>A material price variance occurs where materials are purchased at a price either lower or higher than the standard price. </em>A favourable variance is recorded where the actual total cost of materials of a given quantity is lower that the standard cost. While an adverse variance implies the opposite
<em>Material usage variance</em>
<em>A material usage variance occurs when the standard quantity required to active a particular level of production is higher or lower than than the actual actual quantity used.</em> A favorable variance would mean than less quantity of materials were used than the standard to achieve a given output level. And an adverse variance would mean the opposite
<em>Relationship between Usage variance and Price variance</em>
Where savings are made from purchase of cheap and inferior quality materials these might lead to an adverse usage variance by a greater value .This is so because workers might need to use a larger quantity ( more than the standard required) of a low-quality materials to achieve production.
So a favourable material price variance might be more than offset by an adverse usage variance
Answer:
$375
Explanation:
If Johnson will use the desired gross margin percentage to determine the selling price of its products, they must use the following formula:
selling price per unit = total manufacturing costs per unit / (1 - gross margin)
Total manufacturing costs = variable manufacturing costs + total fixed costs + batch level fixed overhead = $2,350,000 + $1,200,000 + $200,000 = $3,750,000
total manufacturing cost per unit = $3,750,000 / 20,000 units = $187.50
selling price per unit = $187.50 / (1 - 50%) = $187.50 / 50% = $375