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n200080 [17]
3 years ago
8

AJ plans to attend a retreat on mindfulness. He paid a $500 nonrefundable registration fee, made a reservation at a hotel that c

osts $200, and budgeted $150 for gas and food Two days before the retreat, he becomes ill. Assuming he is able to cancel the hotel without penalty, AJ's sunk cost equals:
A) $150
B) $500
C) $650
D) $850
Business
1 answer:
galina1969 [7]3 years ago
4 0

Answer: AJ's sunk cost equals $500. Option B.

Explanation: A sunk cost refers to a cost that has already been incurred and cannot be recovered. Sunk costs are the opposite of prospective costs.

Prospective costs refer to future costs that may be avoided if action is taken.

Therefore from the scenario presented above, we can see that:

$500 = nonrefundable registration fee.

$200 = hotel reservation.

$150 = gas and food.

Of the above costs, the sunk cost is $500.

This is because it is a nonrefundable registration fee that has already been paid for.

However, after canceling the hotel, there was no penalty, and therefore, no cost was incurred.

The money for gas and food have not even been spent, therefore the money is a prospective cost.

We can therefore see conclude that the sunk cost is $500.

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Answer:

Explanation:

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8 0
2 years ago
Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of return is 7%. Use
konstantin123 [22]

Answer:

$1,900.35

Explanation:

Net present value is the present value of after tax cash flows from an investment less the amount invested.

The npv can be calculated using a financial calculator:

Cash flow in year 0 = -$32,400

Cash flow in year 1 = $9720

Cash flow in year 2 = $9720

Cash flow in year 3 = $9720

Cash flow in year 4 = $ 4,860

Cash flow in year 5 = $ 4,860

Cash flow in year 6 = $2,430

I =7%

NPV = $1,900.35

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

3 0
3 years ago
The level of inventory of a manufactured product has increased by 8,000 units during a period. The following data are also avail
LiRa [457]

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.

7 0
3 years ago
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