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Paladinen [302]
3 years ago
10

A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,700 and is

paid at the beginning of the first year. Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?A. Option BB. Option AC. Option DD. Option C
Business
1 answer:
VikaD [51]3 years ago
4 0

Question:

A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,700 and is paid at the beginning of the first year. Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?

Product/ Period

a) $2,700 $0

b) $2,160 $540

c) $1,440 $360

d) $720 $180

a. Option A

b. Option B

c. Option C

d. Option D

Answer:

The correct answer is D.

Explanation:

Definition of Terms:

Product Cost is defined as the costs involved in creating a product.  These costs include materials, labor, production supplies and factory overhead. ..Product costs related to services should include things like compensation, payroll taxes and employee benefits.

It may also include  insurance on the building, and repairs and maintenance on the building and machinery.

Period Cost  is defined as expense items that will be entered onto the income statement without ever attaching or relating to products or services. Instead, period costs will be referred to as period expenses since they will be reported on the income statement as selling, general and administrative (SG&A) or interest expenses.

Given the above,

Step 1

To determine Product Cost for the first year,

We divide annual insurance premium by number of years paid for.

Annual insurance expense = $2,700 ÷ 3 = $900

Step 2: Derive the amount payable as product cost.

Portion applicable to Product cost = Percentage applicable to manufacturing multiplied by annual insurance premium:

=0.80 × $900 = (0.80) × $900 = <u>$720 </u>

Step 3

Portion applicable = Portion applicable to selling and administrative activities multiplied by annual premium amount.

= 0.20 × $900 = <u>$180</u>

The product and period costs are thus given as $720 and $180 respectievely.

Cheers!

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Answer:

Sole ownership

Explanation:

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Hence, in this case, If Garnett dies, the type of ownership Kennedy now have is called SOLE OWNERSHIP

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2 years ago
Perdue Company purchased equipment on April 1 for $38,880. The equipment was expected to have a useful life of three years, or 5
finlep [7]

Answer:

See explanation section.

Explanation:

Requirement 1

We know,

Depreciation expense under the straight-line method = (Cost price - residual value) ÷ useful life

The depreciation expense under the straight-line method remains same in every year.

December 31, Year 1 - depreciation expense = ($38,880 - $1,080) ÷ 3 years.

Depreciation expense = ($37,800 ÷ 3)

Depreciation expense = $12,600

Depreciation expense for year 1 = $12,600 × 9 ÷ 12

Depreciation expense for year 1 = $9,450

Requirement 2

The depreciation expense under the straight-line method remains the same every year.

Year 2 depreciation expense = ($38,880 - $1,080) ÷ 3 years = $12,600

Year 3 depreciation expense = ($38,880 - $1,080) ÷ 3 years = $12,600

Year 4 depreciation expense = ($38,880 - $1,080) ÷ 3 years = $12,600

The equipment will be dissolved after 4 year with a residual value of $1,080.

Requirement 3

The depreciation expense under units-of-activity method = [(Cost price - residual value) ÷ Total operating hours] × usage during the period.

Given,

Cost price = $38,880

residual value = $1,080

Total operating hours =  5,400

Putting the values into the formula, we can get

Depreciation expense rate = ($38,880 - $1,080) ÷  5,400

Depreciation expense rate = $37,800 ÷ 5,400

Depreciation expense rate = $7 per hour.

Depreciation expense for year 1 = $7 per hour × 1,000

Depreciation expense for year 1 = $7,000

Requirement 4

We get from requirement 3

Depreciation expense rate = $7 per hour.

Year 2 Depreciation expense = $7 per hour.

Depreciation expense for year 2 = $7 per hour × 1,900 hour.

Depreciation expense for year 2 = $13,300 hour.

Year 3 Depreciation expense = $7 per hour.

Depreciation expense year 3 = $7 per hour ×  1,600 hour.

Depreciation expense year 3 = $11,200 hour.

Year 4 Depreciation expense = $7 per hour.

Depreciation expense year 4 = $7 per hour ×  900 hour.

Depreciation expense year 4 = $6,300 hour.

Requirement 5

Depreciation rate under the double-declining-balance method = (100% ÷ useful life) ÷ 2

Depreciation rate = (100% ÷ 3 years) × 2

Depreciation rate = 66.67%

Depreciation expense for year 1 = cost price × depreciation rate

Given,

cost price = $38,880

depreciation rate = 66.67%

Putting the values into the formula, we can get

Depreciation expense for year 1 = cost price × depreciation rate

Depreciation expense for year 1 = $38,880 × 66.67%

Depreciation expense for year 1 = $25,921

Requirement 6

In double-declining-balance method, depreciation expense is decreasing.

Book value of year 1 after depreciation = Cost price - year 1 depreciation expense =  $38,880 - $25,921 = $12,959

Depreciation expense for year 2 = Book value of year 1 × depreciation rate.

Depreciation expense for year 2 = ($12,959 × 66.67%) = $8,640

Book value of year 2 after depreciation = Book value of year 1 - Depreciation expense for year 2 = $12,959 - $8,640 = $4,319

Depreciation expense for year 3 = Book value of year 2 × depreciation rate.

Depreciation expense for year 3 = $4,319 × 66.67% = $2,879.50

Book value of year 3 after depreciation = Book value of year 2 - Depreciation expense for year 3 = $4,319 - $2,879.50 = $1,439.5

Depreciation expense for year 4 = Book value of year 3 × depreciation rate.

Depreciation expense for year 4 = $1,439.5 × 66.67% = $960

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ROM Corporation had kept all its hiring plans on hold during the last four quarters because the economy was in a state of recess
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Answer:

7.28%

Explanation:

For this question we use the RATE formula that is shown in the attachment below:

Provided that

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Assuming figure - Future value or Face value = $1,000  

PMT = 1,000 × 8% ÷ 2 = $40

NPER = 20 years × 2 = 40 years

The formula is shown below:  

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The present value come in negative  

So, after solving this, the coupon rate is

= 3.64% × 2

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Answer:

2- Have each member specialize in the role that they are best in, to take advantage of benefits from specialization.

Explanation:

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3- Abandon the band, as continued practice is doomed to suffer diminishing marginal returns.

4- Invest their remaining savings in new instruments, as they are at a point where the marginal product of capital exceeds the marginal product of labor.

5- Change the rotation to be random rather than equal, to take advantage of heteroskedasticity.

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Jaco seems to be efficient at playing bass, thus he should specialise in this activity

Jonny seems to be efficient at playing the guitar, thus he should specialise in this activity

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