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Anit [1.1K]
3 years ago
9

Sales $2,150,000 Manufacturing costs: Direct materials $960,000 Direct labor 420,000 Variable manufacturing cost 156,000 Fixed m

anufacturing cost 288,000 1,824,000 Selling and administrative expenses: Variable $204,000 Fixed 96,000 300,000 Required: 1. Prepare an income statement based on the absorption costing concept.
Business
1 answer:
son4ous [18]3 years ago
5 0

Answer:

Net income                                                      <u> 26,000</u>

Explanation:

Absorption costing classifies costs as production cost and non-production costs ( selling and distibution , administration e.t.c)

Income statement using Absorption costing

                                                                          $

Sales Revenue                                        2,150,000

Less cost of goods sold

Direct material                         960,000

Direct labour cost                   420,000

Variable manufacturing           156,000

Fixed manufacturing                <u>288,000</u>

production cost                                          (<u> 1,824,000 )</u>

Gross profit                                                  326,000

Selling and distribution

Variable                                   204,000                

Fixed                                          <u>96,000</u>    

                                                                     <u>(300,000) </u>

Net income                                                      <u> 26,000</u>

                 

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A standard "money demand" function used by macroeconomists has the form ln( ) = + ln( ) + m β , 0 β1 GDP β2R Where m is the quan
kvasek [131]

Answer:

1.The money demand will rise by 1.154%

2. The money demanded will fall and for a 1% increase in interest , the money demanded will fall by 0.38%

Explanation:

1. Money demand function

ln(m) = β0 +β1 ln(GDP)+β2R

Suppose β1 = 1.5 , β2 = −0.04 , GDP = $ 100 & R = 3%

ln(m) = 1.5 ln ($100) - 0.04 X 0.03

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ln(m) = 6.92

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If the GDP increases by 1% ,the money demand will rise by 1.154%

2.

If the interest rate increases from 3% to 4%

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True or false: in situations where an annual budget deficit exists, cutting expenses from the budget is optimal.
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The statement in situations where an annual budget deficit exists, cutting expenses from the budget is optimal is True.

<h3>What is budget deficit?</h3>

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Cutting down expenses from the budget is most desirable if we want to  have budget surplus. Budget surplus is when revenue is higher than expenditure.

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