Answer:
1. The financial advantage of accepting the special order is $20,910.
2. The relevant unit cost is the variable selling and administrative expenses of $1.40 per unit.
Explanation:
1. What is the financial advantage (disadvantage) of accepting the special order?
Since this order would not affect regular sales or the company's total fixed costs, it implies that only the variable costs will be considered to determine the financial advantage (disadvantage) of accepting the special order.
Therefore, we have:
Total variable cost per unit = Direct materials + Direct labor + Variable manufacturing overhead + Variable selling and administrative expenses = $2.40 + $2.00 + $0.90 + $1.40 = $6.70
Special order financial advantage (disadvantage) = (Special price per unit - Total variable cost per unit) * Units of special order = ($19.00 - $6.70) * 1,700 = $20,910
Therefore, the financial advantage of accepting the special order is $20,910.
2. As a separate matter from the special order, assume the company’s inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units?
Since these units are inferior to the current model and must be sold through regular channels at reduced prices, the unit cost that is relevant for establishing a minimum selling price for the inferior units is therefore the variable selling and administrative expenses of $1.40 per unit.
Answer:
4) when resources are scarce, people face tradeoffs
Explanation:
All resources are scarce, but some are more scarce than others. For example, the day of the richest or poorest person in the world last exactly the same, 24 hours. You cannot buy more time per day. Even the richest person in the world has a limited amount of money, he/she cannot own all the money in the world. Some countries are rich in natural resources, but do not have capital. This leads to the concept of opportunity costs, which are the benefits lost or extra costs associated with choosing one alternative action or investment over another one. If Ken buys the new pair of sneakers, his opportunity cost is the pair of designer pants.
Answer:
debit to Accounts Receivable for $3,500 credit to Sales for $3,430
Explanation:
Merchandise with a sales price of $3,500 is sold on account with terms 2/10, n/60. The journal entry to record the sale would include a debit to Accounts Receivable for $3,500 credit to Sales for $3,430.
Since the goods were sold on account, it means that it was sold on credit and an entry to cash will be a wrong entry. The right Journal entry will be a debit to accounts receivable for the total amount and a credit to sales for the total amount less the proposed discount amount of 2%
Answer:
The correct answer is (A)
Explanation:
Marginal benefit and marginal cost are two important factors to make a decision. If the marginal benefit of meeting a friend is higher than the marginal cost I will keep running to meet a friend. Because I am tired, I want the marginal benefit to exceed the marginal cost. In case I am not tired I will choose to meet the friend if MC=MR.
