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kap26 [50]
3 years ago
6

The following information describes the production activities of Mercer Manufacturing for the yearActual direct materials used 3

0,000 lbs. at $5.15 per 1bActual direct labor used 9,150 hours for a total of $186, 660Actual units produced 54,120Budgeted standards for each unit produced are 0.50 pounds of direct material at $5.10 per pound and 10 minutes at $21.40 per hourAQ =Actual QuantitySQ= Standard QuantityAP =Actual PriceSP= Standard PriceAH =Actual HoursSH= Standard HoursAR= Actual RateSR =Standard Rate(1) Compute the direct materials price and quantity variances.(2) Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
Business
1 answer:
qaws [65]3 years ago
8 0

Answer:

Standard quantity = Actual units produced × 0.50 pound per unit

                              = 54,120 × 0.50

                              = 27,060 pounds

Standard hours = Actual units produced × 1/6 hour per unit

                          = 54,120 × 1/6

                          = 9,020 hours

Actual rate per hour = $186, 660 ÷ 9,150 hours

                                  = $20.4

(a) (i) Direct material price variance:

= (AQ × AP) - (AQ × SP)

= (30,000 × $5.15) - (30,000 × $5.10)

= $154,500 - $153,000

= $1,500 Unfavorable

(ii) Direct material quantity variance:

= (AQ × SP) - (SQ × SP)

= (30,000 × $5.10) - (27,060 × $5.10)

= $153,000 - $138,006

= $14,994 Unfavorable

(b) (i) Direct labor rate variances:

= (AH × AR) - (AH × SR)

= (9,150 × $20.4) - (9,150 × $21.40)

= $186,660 - $195,810

= $9,150 Favorable

(ii) Direct labor efficiency variances:

= (AH × SR) - (SH × SR)

= (9,150 × $21.40) - (9,020 × $21.40)

= $195,810 - $193,028

= $2,782 Unfavorable

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Answer:

The company records the investment by the entry:

(D) debit Cash and credit Owner's Equity

Explanation:

Mr. Decker invested $20,000 in cash in his new business. He is the Owner of the company.

In the case, the company that he invested received cash from Mr. Decker.

The company will record the increasing in cash and increasing in Owner's Equity account by the journal entry:

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8 0
3 years ago
Under ASC 606, the transaction price generally should be adjusted for the effect of the time value of money when
luda_lava [24]

Answer:

B. The selling price of the product and the consideration promised in the contract differ significantly.

Explanation:

"While determining the transaction price, an entity shall adjust the amount of consideration with respect to the time value of money, if the timing of payment to be made by customer under the contract provides some significant benefit of financing to the customer or the entity for the transfer of goods or services to the customer. The Significant financing benefit could be explicit or implicit in the contract.

The idea behind the significant financing component is that entity should consider the revenue based on the price that a customer would have paid at the time of transferring the goods or services to the customer by the entity i.e. Cash Selling Price (If the payment was made immediately)."

Reference: Prasenjit. “ASC 606: Step 3 – Determining the Transaction Price.” RevGurus, 25 Mar. 2019

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3 years ago
In July, 2013 the consulting firm Mercer released results from a survey where workers in the U.S. expected a 2.9% increase in pa
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Answer:

A 2.9% pay increase in 2014 for U.S. workers will cause the AS (aggregate supply) curve to shift inward in the short-run, signaling a decline in the quantity supplied.

Explanation:

The supply quantity declines because a pay increase increases suppliers' cost of production and reduces their ability to produce more goods and services.  On the contrary, a fall in workers' pay causes the aggregate supply curve to shift outward, thereby increasing the quantity supplied.  In the long-run, the pay increase will increase aggregate demand, thereby pushing prices to increase, while, at the same, suppliers try to increase the quantity supplied to meet with increased prices and demand.

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3 years ago
State of Economy Probability of State of Economy Rate of Return if State Occurs Recession .32 − .11 Boom .68 .23 Calculate the e
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Answer:

1) Expected return is 12.12%

2) Portfolio beta is 1.2932

Explanation:

1)

The expected return can be calculated by multiplying the return in a particular state of economy by the probability of that state occuring.

The expected return = (0.32 * -0.11) + 0.68 * 0.23

Expected return = 0.1212 or 12.12%

b)

The portfolio beta is the the systematic riskiness of the portfolio that is unavoidable. The portfolio beta is the weighted average of the individual stock betas that form up the portfolio.

Thus the portfolio beta will be,

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