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3 years ago

Economists consider both explicit and implicit costs when measuring economic profit

1 answer:

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Explicit and Implicit costs should be considered when measuring economic profit because a business must cover its opportunity costs as well as its out-of-pocket expenses to be truly profitable. Economic profit consists of revenue minus implicit (opportunity) and explicit (monetary) costs. Explicit costs are monetary costs a firm has. Implicit costs are the opportunity costs of a firm’s resources.

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Exercise 11-1 (Algo) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On Janu

Dvinal [7]

Answer:

Straight line depreciation expense each year of the useful life would be $9,600

The double declining method

Deprecation expense in December 2021 = $20,800

Depreciation expense in 2022 = $12,480

Depreciation expense in 2023= $7488

Depreciation expense in 2024 = $4,492.80

Deprecation expense in 2025 = $2695.68

Explanation:

Straight line depreciation method = (Cost of asset - Salvage value) / useful life

Cost of asset = $52,000

Salvage value = $4,000

Useful life = 5

($52,000 - $4,000) / 5 = $9,600

The straight line depreciation method allocates the same deprecation expense for each year of the useful life of the asset.

So the deprecation expense each year would be $9,600.

Double declining depreciation method = Depreciation factor x cost of the asset

Depreciation factor = 2 x (1/useful life)

2 × (1/5) = 0.4

Deprecation expense in December 2021 = 0.4 x $52,000 = $20,800

Net book value = $31,200

Depreciation expense in 2022 = 0.4 x $31,200 = $12,480

Net book value = $31,200 - $12,480 = $18,720

Depreciation expense in 2023 = 0.4 x $18,720 = $7488

Net book value = $18,720 - $7488 =$11,232

Depreciation expense in 2024 = 0.4 x $11,232 = $4,492.80

Net book value = $11,232 - $4,492.80 = $6,739. 20

Deprecation expense in 2025 = 0.4 × $6,739. 20 = $2695.68

I hope my answer helps you

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3 years ago

Preparing a Cost of Goods Sold Budget Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct mater

Marta_Voda [28]

Answer:

Cost of goods sold = $960,839

Explanation:

Preparing cost of goods sold budget:

Number of units to be sold = 20,000 - 675 = 19,325

As for the information provided:

Direct Materials = $14 $\times$ 19,325 = $270,550

Direct Labor hours = 1.9 $\times$ 19,325 = 36,717.5

Direct Labor Cost = $16 $\times$ 36,717.5 = $587,480

Variable overhead = $1.20 $\times$ 36,717.5 = $44,061

Fixed overhead = $1.60 $\times$ 36,717.50 = $58,748

Therefore, cost of goods sold = $960,839.

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3 years ago

Your regular price is $30/unit, unit variable cost is $20/unit and fixed costs are $3,000 per month. Because of the recession, y

Jet001 [13]

Answer:

Answer is in table which is attached in the attachment. Please refer to the attachment.

Explanation:

Calculations:

Status quo: Revenue 30* 200= 6000, VC 30*20= 4000, CM 6000-4000= 2000, 2000-3000= -1000 (Contribution Margin – fixed cost = Profit/Loss)

(b) Since the loss is less in Advertising even after $300 cost of advertisement, so we would choose the option 3 for advertising.

(c). In order to survive in the period of recession, a business needs cash and reducing operation expenses can do it better. This business is in loss from last three months so it might be useful to shut down the business for some period.

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3 years ago

The advantages of using a licensing strategy to participate in foreign markets include.

PtichkaEL [24]

Answer:

The advantages of using license strategy are given below.

Well suited to acheive scale of economies.
Its helps in charging lower price than rivals.
Helps to achieve first-mover advantages quickly and easily.
Less risky strategy as you do not need to invest heavily in capital in the form of machinery, land , building and e.t.c
Easy do terminate operations as dis-investment is easy in this case.

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3 years ago

Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missin

tankabanditka [31]

Answer:

For 2013:

Net sales = $279,000

Ending inventory = $32,000

Purchases = $242,000

For 2014:

Sales revenue = $360,000

Cost of Goods sold = $269,000

Ending inventory = $24,000

For 2015:

Net sales = $390,000

Sales returns and allowances = $20,000

Beginning inventory = $24,000

Ending inventory = $31,000

Explanation:

Note: See the attached excel file for the tabulated income statement data to see the filled missing amounts. The answers are the ones in bold red color.

For each of the years, the calculations are done as follows:

For 2013:

Net sales = Sales revenue - Sales returns and allowances = $290,000 - $11,000 = $279,000

Ending inventory in 2013 = Beginning inventory in 2014 = $32,000

Purchases = Cost of Goods sold - Beginning inventory + Purchase returns and allowances – Freight-in + Ending inventory = $233,000 - 20,000 + 5,000 - 8,000 + $32,000 = $242,000

For 2014:

Sales revenue = Sales returns and allowances + Net sales = $13,000 + $347,000 = $360,000

Cost of Goods sold = Net sales - Gross profit on sales = $347,000 - $91,000 = $269,000

Ending inventory = Beginning inventory + Purchases - Purchase returns and allowances + Freight-in - Cost of Goods sold = $32,000 + $260,000 - $8,000 + $9,000 - $269,000 = $24,000

For 2015:

Net sales = Cost of Goods sold + Gross profit on sales = $293,000 + $97,000 = $390,000

Sales returns and allowances = Sales revenue - Net sales = $410,000 - $390,000 = $20,000

Beginning inventory in 2015 = Ending inventory in 2014 = $24,000

Ending inventory = Beginning inventory + Purchases - Purchase returns and allowances + Freight-in - Cost of Goods sold = $24,000 + $298,000 - $10,000 + $12,000 - $293,000 = $31,000

Download xlsx

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3 years ago