Answer:
(b) a loss of $750
Explanation:
Given;
Amount of spice mixture to be purchased = 1500 pounds
Price of spice mixture in 2014 = $5.00 per pound
Changed price of sugar mixture = $4.50 per pound
Now,
The amount to be received on the day of contract in 2014
= Amount of spice mixture to be purchased × Price of spice mixture in 2014
= 1500 × $5.00
= $7,500
and,
The amount to be received in 2015
= Amount of spice mixture to be purchased × Price of spice mixture in 2015
= 1500 × $4.50
= $6,750
The difference in Expected amount and the amount to be received
= $7500 - $6750
= $750
Since the amount to be received is less than the expected amount on the day of contract
Therefore,
a loss will be recognized
Hence,
the correct answer is option (b) a loss of $750
Answer:
Cost-volume-profit analysis.
Explanation:
An important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is cost-volume-profit analysis. It is an important tool in accounting that is used to determine how changes in differing levels of activities such as costs and volume affect a company's operating financial statements, both income and net income. It is also an accounting concept known as the break even analysis.
In order to use this cost-volume-profit analysis, accountants usually make some assumptions and these are;
1. Sales price per unit product is kept constant.
2. Variable costs per unit product are kept constant.
3. Total fixed costs of production are kept constant.
4. All the units produced are sold.
5. The costs accrued are as a result of change in business activities.
6. A company selling more than a product should simply sell in the same mix.
Answer:
1. Dr Cash $8,290
Cr Common stock $8,290
2. Dr Supplies $980
Cr Cash $390
Cr Accounts payable $590
3. No Entry $0
No Entry $0
Explanation:
Preparation of the entries to record the transactions
1. Based on the information given if he deposited the amount of $8,290 of his own money into this account in exchange for common stock the journal entry will be:
Dr Cash $8,290
Cr Common stock $8,290
(Being To record the investment)
2. Based on the information given in a situation where he Purchased photography supplies at a total cost of the amount of $980 which means that if The business paid the amount of $390 in cash, and the balance is on account the journal entry will be:
Dr Supplies $980
Cr Cash $390
Cr Accounts payable $590
($980-$390)
(Being To record the purchase of supplies)
3. Based on the information given in a situation where he Obtained the estimates on the cost of photography equipment from the three different manufacturers which means that no transaction or entry will be recorded.
No Entry $0
No Entry $0
Excessive spare parts inventories, a lack of transferable employee skills, increased support costs.
