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Vitek1552 [10]
3 years ago
9

Kemper Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2021 at a

cost of $1,000,000. At December 31, 2020, the raw materials to be purchased have a market value of $950,000. In 2021, Kemper paid $1,000,000 to obtain the raw materials which were worth $950,000. Prepare the entry to record the purchase
Business
1 answer:
gogolik [260]3 years ago
7 0

Answer:

the recording of materials purchased is handled by three different methods.

Explanation:

Sr. No                Particulars                        Debit                  Credit

                    Purchases                            $950,000

 Material Price Purchase Price Variance     $50,000

                            Cash                                                      $1000,000

Method 1: Record the price variance when materials are received.

Method 2: Record the materials on actual costs and determine the price variance when material is requisitioned.

Method 3:  Combination of method 1 and method 2.

For control purposes the price variance should be determined when the material is received          

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Explanation:

a) Data and Calculations:

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Further processing of the products X, Y, and Z will yield further or added profit of $1.00 from products X and Z, but a loss of $4 from product Y.  Therefore, product Y should not be processed further, unless its cost structure is such that there is a more than $4 profit to be generated and its further processing is necessary for the other two to be sold, that is if the three products must be sold jointly.  In such a case, management could take further analysis to reduce the cost for consumers.

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Vince’s Vehicle Repairs has a gross profit margin of 60% and a net profit margin of 22%. Turnover was £180000. Calculate:
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Answer:

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Explanation:

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