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Alisiya [41]
3 years ago
8

Cornerstone, Inc. has $125,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell

the goods "as is" for $45,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $23,000. There the goods could be sold for $80,000. What alternative is more desirable and what is the relevant cost for that alternative?
Business
1 answer:
kotegsom [21]3 years ago
4 0

Answer:

Alternative of cleaning and shipping is better as loss value is less.

Relevant cost of this alternative is $23,000 incurred for cleaning and shipping.

Explanation:

Evaluating both the proposals

In case the goods are sold as it is then net cost/ loss = Carrying value of inventory - Sales Revenue

= $125,000 - $45,000 = $80,000

In case the goods are cleaned and shipped then

Total cost = $125,000 + $23,000 = $148,000

Revenue = $80,000

Net loss/ cost = $148,000 - $80,000 = $68,000

Thus Since the loss value is less i alternative 2 that is of cleaning and shipping, it shall be chosen.

The relevant cost of that alternative is $23,000 incurred in cleaning and shipping.

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The owner of Chips etc. produces two kinds of chips: lime (L) and vinegar (V). He has a limited amount of the three ingredients
Sloan [31]

Answer:

Objective function (maximize)

Profit=0.40L+0.50V

Constraints

- Availabitily of salt: 2L+3V\leq4800

- Availability of herbs: 1C+2V\leq 2000

- Availability of flour: 6C+8V\leq9600

Explanation:

This a linear programming problem. We have an objective function (in this case it is the profit) that we want to optimize, but complying with constraints (in this case, the availability of ingredients).

The objective function can be defined taking into account the profits of the two kind of chips:

Profit=0.40L+0.50V

The constraints can be expressed taking into account the amount of ingredients every unit of chip needs and stating that it has to be less or equal to the availability of this ingredient:

- Availabitily of salt:

2L+3V\leq4800

- Availability of herbs

1C+2V\leq 2000

- Availability of flour

6C+8V\leq9600

With these expressions the linear programming problem can be solved.

3 0
3 years ago
Lewis Company had the following transactions involving notes payable.
Fiesta28 [93]

Answer and Explanation:

The journal entries are shown below

1. Cash Dr $50,500

        To Note payable $50,500

(Being the amount borrowed is recorded)                    

2. Cash Dr $61,200

        To Note payable $61,200

(Being the amount borrowed is recorded)          

3. Interest expense $2,020

         To Interest payable $2,020

(Being the interest expense is recorded)

The computation is shown below:

= $50,500 × 8% × 6 months ÷ 12 months

= $2,020        

4. Interest expense $612

         To Interest payable $612

(Being the interest expense is recorded)

The computation is shown below:

= $61,200 × 6% × 2 months ÷ 12 months

= $612    

5. Note payable $61,200

    Interest expense $306

   Interest payable $612

          To Cash $62,118       ($61,200 + $918)

(Being the principal and the interest is recorded)

= $61,200 × 6% × 3 months ÷ 12 months

= $2,020

5. Note payable $50,500

    Interest expense $1,010

   Interest payable $2,020

          To Cash $62,118       ($50,500 + $3,030)

(Being the principal and the interest is recorded)

= $50,500 × 8% × 9 months ÷ 12 months

= $3,030

8 0
3 years ago
Joe works for a life insurance company that funds commercial investment projects and often insures these projects by insisting o
Mademuasel [1]

Answer: Participation

Explanation:

Participation financing is a firm of financing whereby a loan is shared by several parties because such loans are too huge and a party cannot take the loan alone.

Since we are informed that works for a life insurance company that funds commercial investment projects and often insures these projects by insisting on an equity position, this means that participation financing is being practiced.

7 0
3 years ago
Forner, Inc., manufactures and sells two products: Product Z1 and Product Z8. The company has an activity-based costing system w
Alona [7]

Answer:

$184.34

Explanation:

The computation of activity rate for the Order Size activity cost pool is shown below:-

The Activity rate for Order size = Estimated order size overhead cost ÷ Total machine hours

= 1,069,190 ÷ 5,800

= $184.34

Therefore for computing the activity rate for the Order Size activity cost pool we simply applied the above formula and ignore all other value.

7 0
3 years ago
The automobile industry in​ Rhizo, a small developing​ country, has a monopolistic market structure. Crimson​ Inc., the only pla
IceJOKER [234]

Answer:

Option D is the correct answer to this question.

Explanation:

An increase in the average family size in recent years has created a demand for bigger cars. Since Roger Woods proposed that Crimson must introduce some variety in its product line to maintain overall profit margins, option D is the only option that suggests a need for adding a new variety to its product line (Bigger Cars), since there is a demand for it already arising from the increase in the average family size.

6 0
2 years ago
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