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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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Jackson says that his fifth game of chess gave him greater utility than his first, and therefore the law of diminishing marginal
iris [78.8K]

Answer:

the fifth game of chess is a different good than the first game of chess.

Explanation:

In this scenario Jackson says that the fifth game of chess gave him more utility than the first game he played. This goes against the law of diminishing marginal utility which states that the utility a consumer gains from consuming a good diminishes as more of the good is consumed.

The logical explanation an economist will give is that the fifth game was a different product than the first game. So the utility between the products are different.

In such a situation it is possible that the utility from the fifth game is higher than that of the first game

6 0
3 years ago
Consider a market where the demand curve is downward sloping and the supply curve is upward sloping (so they are neither vertica
sukhopar [10]

Answer:

Possible options are:

A. The equilibrium price is $5.00

B. The equilibrium, quantity is 100 units

C. There is an excess supply of 75 units at $5.00

D. There is an excess demand of 75 units at $5.00

Answer: C. There is an excess supply of 75 units at $5.00

Explanation:

The slope of the demand curve (downward to the right) indicates that a greater quantity will be demanded when the price is lower. On the other hand, the slope of the supply curve (upward to the right) tells us that as the price goes up, producers are willing to produce more goods.

In this situation, If the consumers' willingness to pay for the hundredth unit and the seller's willingness to accept for the 175th unit are both $5.00, then it means there is an excess supply of 75 units at $5.00

4 0
3 years ago
A solar panel dealer acquires a used panel for $9,000, with terms FOB shipping point. Compute total inventory costs assigned to
zaharov [31]

Answer: $‭9,965‬

Explanation:

FOB Shipping point is a shipping condition that means that the buyer takes over the ownership and control of the inventory as soon as the seller ships it. Everything afterwards is therefore the responsibility of the buyer.

As the following costs come after shipping, they will be included in the acquisition cost;

= Acquisition cost + shipping insurance + transportation-in by train + used panel restoration

= 9,000 + 135 + 280 + 550

= $‭9,965‬

<em>Sales staff salaries, online advertising and lawn care are not related to the inventory. </em>

5 0
3 years ago
Dougherty Corporation purchased a new delivery van for use in its dry-cleaning business. As part of the purchase of the van the
vfiekz [6]

Answer:

Company logo cost and the two year service contract

Explanation:

The capitalized cost of the asset includes those costs that is shown on the asset side of the balance sheet.  

In the given scenario, the capitalized cost includes acquisition cost, sales cost, and the title transfer fee

But the cost that is not capitalized and is not reflected on the balance sheet is a company logo on the van and the two-year service contract

6 0
3 years ago
Reebok International Ltd. is a global company that designs and markets sports and fitness products, including footwear, apparel,
zubka84 [21]

Answer:

Dividends paid ⇒ Financing Activities (F)

Repayments of long term debt  ⇒ Financing Activities (F)

Depreciation and amortization  ⇒ (NA)

Proceeds from issuance of common stock to employees   ⇒ (NA)

Change in accounts payable and accrued expenses  ⇒  Operating Activities (O)

Cash collections from customers  ⇒  Operating Activities (O)

Net repayments of notes payable to banks   ⇒ Financing Activities (F)

Net income   ⇒ Operating Activities (O)

Payments to acquire property and equipment   ⇒ Investing Activities (I)

Change in inventory   ⇒ Operating Activities (O)

5 0
3 years ago
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