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Black_prince [1.1K]
3 years ago
14

Donovan Company incurred the following costs while producing 500 units: direct materials $10 per unit, direct labour $25 per uni

t, variable manufacturing overhead, $15 per unit, total fixed overhead costs, $10,000; variable selling and administrative costs, $5 per unit; total fixed selling and administrative costs, $7,500. There are no beginning inventories.
What is the operating income using absorption costing if 500 units are sold for $100 each?

a. $500
b. $2,500
c. $2,750
d. $5,000
Business
1 answer:
Dafna1 [17]3 years ago
8 0

Answer:

Option (D) is correct.

Explanation:

Unit product cost:

= Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead

= $10 + $25 + $15 + $20

= $70

Operating income using absorption costing:

= (500 units × $100) - (500 units × $70) - (500 units × $5) - $7,500

= $50,000 - $35,000 - $2,500 - $7,500

= $5,000

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Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 for taxes and lawyer fees. Geo also paid $60,000 to mod
ycow [4]

Answer: $495,000 User “Parrain” is the person who solved this question

Explanation: ALL costs that went into the DIRECT acquisition of the asset as well as COSTS TO SET IT UP for use by the firm should be accounted for in the amount recorded. In this case that would mean that the cost price, the closing fees and the modification fees all need to be accounted in the final amount. That would be $400,000 + $35,000 + $60,000= $495,000$495,000 should be recorded as the building's cost.

4 0
2 years ago
All of the following can be used as an allocation base for calculating factory overhead rates except a.direct labor hours b.mach
liq [111]

Answer:

The correct answer is C. Total units produced.

Explanation:

The following five bases are generally used in calculating the application rate of manufacturing overhead:

1. Production units

2. Direct material cost

3. Direct labor cost

4. Hours of direct labor

5. Machine hours

When he mentions the Production Units, he refers to the product or merchandise produced by the company, that is, what is intended for sale, in which this method is used is very simple, since the information on the units produced is readily available. to apply indirect manufacturing costs. It is based on the unit of finished product.

5 0
2 years ago
Read 2 more answers
At the beginning of the year, accounts receivable were $146,000 and the allowance for bad debts was $11,700. During the year, sa
Julli [10]

Answer:

Ending balance Accounts Receivable $153,800 Ending balance Allowance for Bad Debts $14,300

Net Accounts Receivable at end of year $139,500

Explanation:

Calculation for the balances at the end of the year for both Accounts Receivable and Allowance for Bad Debts accounts

T ACCOUNT

ACCOUNT RECEIVABLE

DEBIT SIDE

Beginning balance $146,000

Sales on account $602,000

Total $748,000

Ending balance $153,800

($748,000-$594,200)

CREDIT SIDE

Cash collections $582,000

Bad Debts written off $12,200

Total $594,200

T ACCOUNT

ALLOWANCE FOR BAD DEBT

DEBIT SIDE

Bad Debts written off $12,200

Total $12,200

CREDIT SIDE

Beginning balance $11,700

Bad debts expense $14,800

Total $26,500

Ending balance $14,300

($26,500-$12,200)

Calculation for Net Accounts Receivable at end of year:

Net Accounts Receivable at end of year = ($153,800-$14,300)

Net Accounts Receivable at end of year=$139,500

Therefore the Ending balance for Accounts Receivable is $153,800 and Allowance for Bad Debts is $14,300 while the Net Accounts Receivable at end of year is $139,500

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3 years ago
Brandon's wallet slips from his jacket pocket in the mall. By the time he realizes his wallet is missing and reports the loss, a
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Answer:

$950

Explanation:

Since the total amount of items purchased by the thief is $950, then Brandon has to pay back the amount deducted from his card.

4 0
3 years ago
Finish Co. uses the allowance method to account for bad debts. At the end of 2010, Finish Co.'s unadjusted trial balance shows a
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Answer:

The answer is: D) $5,800

Explanation:

The doubtful accounts should have a total balance of $6,000, representing 1% of total sales (= $600,000 x 1%).

Since doubtful accounts balance is only $200, you must entry a debit record of $5,800 (so that the total balance of that account is $6,000).

3 0
3 years ago
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