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Schach [20]
3 years ago
15

The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also avail

able: Variable Fixed Unit manufacturing costs of the period $24.00 $10.00 Unit operating expenses of the period 8.00 3.00 What would be the effect on income from operations if variable costing is used rather than absorption costing
Business
1 answer:
LiRa [457]3 years ago
7 0

Answer:

There will be a difference in the income .

Absorption costing income will be lower as it transfers all the fixed costs to the ending inventory.

Variable costing income will be higher as it does not transfer  the fixed costs to the ending inventory.

The difference will be  of $ 104000

Explanation:

Increase in units 8000                                                              

                                                              Variable       Fixed

Unit manufacturing costs of the period $24.00 $10.00

Unit operating expenses of the period    8.00       3.00

Total Unit Costs                                       $ 32.00    $ 13.00

The net operating income under variable costing for the year will be $ 13* 8000= $ 104000 Lower than the net operating income under  absorption costing.  This is because the all fixed costs will be treated as period cost rather than product costs.

In variable costing the ending inventory will be $104000 lower than the ending inventory under absorption costing  because the fixed costs will not be allocated to products.

Under variable costing, the units in the ending inventory will be costed at $32 each.Under absorption costing, the units in the ending inventory will be costed at $32+ $ 13= $ 45 each.

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One of the necessary steps in the financial planning process is a forecast of financial statements under each alternative versio
Natalija [7]

Answer:

A) True

Explanation:

When you are elaborating a financial plan your ultimate goal is to determine in what projects or activities should your company invest its resources. In order to decide which alternative better suits your company, you must be able to compare how your company will be affected by the different options available. The only way to compare this is by forecasting different financial statements for every possible alternative that your company might choose.

6 0
3 years ago
A firm in a competitive industry has a total cost function of TC = 0.2 Q2 – 5Q + 30, whosecorresponding marginal cost curve is M
Mama L [17]

Answer:

Consider the following calculations

Explanation:

TC=0.2Q2 - 5Q + 30,

MC=0.4Q - 5.

Equilibrium condition

MC=P

0.4Q - 5 = 6

0.4Q = 11

Q = 11/.4

=27.5

Profit = TR - TC

        =27.5*6 - .2(27.5)2 -5(27.5)+30

       =165 -756.25 -137.5 +30

       = - 698.5

Firm is incurring loss

Firm will continue to produce as long as it is able to recover AVC

AVC =0.2Q -5

=0.2(27.5) -5

=5.5 -5

=0.5

Hence firm will continue to produce

7 0
3 years ago
​matthew's fish fry has a monthly target operating income of​ $7,200. variable expenses are​ 60% of sales and monthly fixed expe
slamgirl [31]

Given, Operating income = 7,200

Fixed expenses = 1800

Let the target sales be assumed to be X

Sales = 7200 + 1800 + 0.6*Sales

X = 7200 +1800 +0.6X

X-0.6X = 9000

0.4X =9000

X = 22,500

Target Sales = 22,500

Break even point = Fixed Costs/(Price -Variable cost)

Break even point = 1,800/(1-0.6) = 1,800/0.4 = 4,500

Break even point =4,500

Margin of Safety = (Target sales - break even point)/ Target Sales

Margin of Safety = (22,500-4,500)/22,500 = 18,000/22,500 = 0.8 = 80%

Margin of Safety =80%

7 0
3 years ago
Read 2 more answers
an investment property generates a cash flow of $40,000. the owner has $360,000 equity in the property. what is the owner’s retu
evablogger [386]

The owner’s return on equity is 0.111

$40,000 ÷ $360,000 = 0.111 = 11%

In finance, equity is the possession of property that could have money owed or other liabilities attached to them. equity is measured for accounting functions by using subtracting liabilities from the fee of the property.

Equity is described as ​“the state, first-rate or ideal of being simple, impartial and truthful.” The idea of fairness is synonymous with fairness and justice. it's far helpful to consider fairness as now not genuinely a preferred situation or a lofty value.

Equity may be calculated through subtracting liabilities from property and may be carried out to an unmarried asset, along with actual property, or to a business. as an instance, if someone owns a house worth $400,000 and owes $three hundred,000 on the loan, the difference of $a hundred,000 is fairness.

Learn more about equity here brainly.com/question/1957305

#SPJ4

8 0
1 year ago
On February 1, Alan, a single individual, purchased his first personal residence for $400,000. On July 1, Alan sold this residen
zavuch27 [327]

Answer:

Recognized gain = $60000

Explanation:

Below is the calculation:

Price of personal resident = $400000

Selling price = $460000

Since Alan purchased the house for $400000 and selling it for $460000. Therefore recognized gain can be determined by subtracting the purchase price from the selling price.

Recognized gain = $460000 - $400000

Recognized gain = $60000

3 0
2 years ago
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