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3 years ago

What is meant by market in the lower-of-cost-or-market rule?

Business

1 answer:

Pavel [41]3 years ago

7 0

Answer:

Stock is valued at lower of : cost or market price [prudence principle]

Explanation :

Prudence or Conservatism is an accounting principle : anticipating for all possible losses & expenditures, not anticipating for possible profits & gains. This makes business better prepared to face all contingent expenditures/ losses.

This concept's implication is that : Stock or Inventory is valued at the value whichever is lesser between 'cost of inventory' & sale price. This makes inventory valuation as per the above explained Prudence/ Conservatism principle.

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The following variable production costs apply to goods made by O'Brien Manufacturing Corporation: Item Cost per Unit Materials $

Reika [66]

Answer:

$50,000 ; $100,000 ; $150,000

Explanation:

The computation of the total variable production cost is shown below:

For 4,000 units, it would be

= 4,000 units × $12.50

= $50,000

For 8,000 units, it would be

= 8,000 units × $12.50

= $100,000

For 12,000 units, it would be

= 12,000 units × $12.50

= $150,000

Simply we multiplied the total variable cost per unit with the respective units

6 0

3 years ago

The following information pertains to Lightning Inc., at the end of December: Credit Sales $ 20,000 Accounts Payable 10,000 Acco

OLEGan [10]

Answer:

Lightning Inc.

Computation of Bad Debts Expense:

7% of $7,500 = $525

21% of $1,600 = 336

46% of $1,300 = 598

Total $1,459

Explanation:

a) Data and Calculations:

Credit Sales $ 20,000

Accounts Payable 10,000

Accounts Receivable 10,400

Allowance for Uncollectible Accounts 400 credit

Cash Sales 20,000

Lightning uses the aging method and estimates it will not collect 7% of accounts receivable not yet due, 21% of receivables up to 30 days past due, and 46% of receivables greater than 30 days past due.

The accounts receivable balance of $10,400 consists of $7,500 not yet due, $1,600 up to 30 days past due, and $1,300 greater than 30 days past due.

Age Analysis of Accounts Receivable balance of $10,400

Not yet due up to 30 days greater than 30

past due days past due

Percentage 7% 21% 46%

Balance $7,500 $1,600 $1,300

Bad debts $525 $336 $598

Bad debts Expense = $1,459

6 0

3 years ago

You receive a call from "Credit Services." The person on the line compliments you on your great credit history and also informs

Murrr4er [49]

I took the test your answer is C

6 0

3 years ago

Mars Corp. is choosing between two different capital investment proposals. Machine A has a useful life of four years, and machin

Zigmanuir [339]

Answer:

c. Mars should invest in Machine B becuase the net present value of Machine A after 4 years is lower than the net present value of Machine B after 4 years.

Explanation:

Net present value is the present value of after tax cash flows from an investment less the amount invested.

Considering that machine b can be sold on 4 years, The NPV of machine b should be calculated based on the cash flow in for 4 years

NPV can be calculated using a financial calculator.

Machine A :

Cash flow in year 0 = $-200,000

Cash flow each year from year 1 to 4 = $70,000

I = 10%

NPV = 21,890.58

Machine B :

Cash flow in year 0 = $-200,000

Cash flow each year from year 1 = $80,000

Cash flow each year from year 2 = $70,000

Cash flow each year from year 3 = $60,000

Cash flow each year from year 4 = $40000 + $35,000 = $75,000

I = 10%

NPV = $26,883.41

Machine b should be accepted because its NPV is greater than that of machine A

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

6 0

3 years ago

A company’s new eco-friendly dish soap is an extension of its current dish soap line. What type of adopters would probably be mo

Tcecarenko [31]

The company would most probably be interested in early majority .

<u>Explanation: </u>

Adopter categories split consumers into sections on the basis of their willingness to try out new innovations or products. The categories of adopters had been first given the name and defined by social scientist Everett Rogers in 1962 in the famous book Propagation of Innovation.

Adopter categories as a concept for the propagation of the theory of creativity are extended to several studies, amongst others, marketing, administrative studies, management of information, communications and research of complexity.

Early majority: If this group joins an idea or some other innovation, it appears to be adopted by the public shortly. This group makes useful decisions and practical advantages over coolness.

4 0

3 years ago