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a_sh-v [17]
3 years ago
6

After graduating, you might decide to start a small business. As discussed in this chapter, owners of any business need to know

how to calculate the cost of their products. In fact, many small businesses fail because they don't accurately calculate their product costs, so they don't know if they are making a profit or losing money—until it's too late.Suppose that you decide to start a landscape business. You use an old pickup truck that you've fully paid for. You store the truck and other equipment in your parents' barn, and you store trees and shrubs on their land. Your parents will not charge you for the use of these facilities for the first two years, but beginning in the third year they will charge a reasonable rent. Your mother helps you by answering phone calls and providing customers with information. She doesn't charge you for this service, but she plans on doing it for only your first two years in business.In pricing your services, should you include charges for the truck, the barn, the land, and your mother's services when calculating your product cost?InstructionsWrite a response indicating your position regarding this situation. Provide support for your view.
Business
1 answer:
Elanso [62]3 years ago
5 0

Answer:

When the value of the service ends, it will be necessary to include the charges for the truck, the granary and the land. It is not necessary to include your mother's service charges, as she is not charging for the service.

Explanation:

Setting up your own business can be quite a big challenge and you need a lot of control and planning so you don't have to lose money. One of the biggest challenges of becoming an entrepreneur is to price the service performed. As was said in the question above, many people do not know how to place a value on the service produced, mainly because they are unable to identify the expense for service production.

In summary, the expense to produce the service must take into account all charges related to any element necessary to perform the service. Thus, we can consider that in the case shown in the question above, it will be necessary for you to include expenses with the truck (gasoline, repairs, exchange of parts, etc.), with the rent of the granary, with the rent of the land and with the gratification of any employee. Since your mother is not charging for her services, this charge should not be included, however, your mother will only be in this service for two years. If the person replacing your mother charges for the service, this should be added to the cost.

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Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an in
Anettt [7]

Answer:

$5,472

Explanation:

Calculation for Alison record of purchase :

First step

Invoice price ×Percentage of payment term

Where:

Invoice price =$5,700

Percentage of payment term =96%

(100%-4%)

Second step

$5,700×96%

=$5,472

Therefore Alison should record the purchase at: $5,472

4 0
3 years ago
During 2020, Morefield Building Company constructed various assets at a total cost of $14,700,000. The weighted average accumula
nikdorinn [45]

Answer:

1. $1,015,000

2. $1,015,000

Explanation:

1. Computation for the Avoidable interest.

First step is to Compute the weighted average interest rate:

Principal Interest

12% ten-year bonds$ 7,000,000 $840,000

9% 3-year note $3,500,000 $315,000

Total $10,500,000 $1,155,000

Weighted average interest rate = $1,155,000 ÷ $10,500,000

Weighted average interest rate= 11%

Now let compute the Avoidable Interest

Weighted Average Accumulated Expenditures *Applicable interest rate = AVOIDABLE INTEREST

$6,300,000 *.10 = $630,000

$3,500,000 *.11= $385,000

Total $9,800,000 $1,015,000

Therefore the Avoidable Interest is $1,015,000

2. Computation for Total interest to be capitalized during 2020

2020 Actual interest cost

Construction note $6,300,000 × .10 =$630,000

12% ten-year bonds, $7,000,000 × .12 =$840,000

9% three-year note, $3,500,000 × .09=$315,000

Total $1,785,000

Therefore Total interest to be capitalized during 2020 will be $1,015,000 which is the LESSER of

$1,785,000

8 0
2 years ago
True or False, The Occupational Outlook Handbook is a reference book designed to help determine personality types?
Galina-37 [17]
It is FALSE.

A newspaper of the United States Department of Labor’s Bureau which is Occupational Outlook Handbook contains data and statistics about the types of work, working environments, training and education, incomes and job viewpoint for hundreds of different occupations in the United States
6 0
3 years ago
Read 2 more answers
Ticket, Inc. issued 10% bonds, dated January 1, with a face amount of $240 million on January 1, 2016. The bonds mature in 2025
k0ka [10]

Answer:

1. Determine the price of the bonds at January 1st 2016.

face value = $240,000,000

n = 10 years x 2 = 20

coupon = $240,000,000 x 10% x 1/2 = $12,000,000

market interest = 12% x 1/2 = 6%

using an excel spreadsheet and the NPV function you can calculate the present value: 19 cash flows of 12,000,000 and one final cash flow of 252,000,000, with a dscount rate of 6%:

=NPV(6%,12000000 ...19 times,252000000) = <u>$212,472.189</u>

2. Prepare the journal entry to record their issuance by Ticket on January 1, 2016.

Dr Cash 212,472,189

Dr Discount on bonds payable 27,527,811

    Cr Bonds payable 240,000,000

3. Prepare the journal entry to record interest on June 30, 2016 (at the effective rate).

to determine effective interest paid:

($212,472,189 x 6% x 1/2) - ($240,000,000 x 5% x 1/2) = $6,374,166 - $6,000,000 = $374,166

Dr Interest expense 6,374,166

    Cr Cash 6,000,000

    Cr Discount on bonds payable 374,166

4. Prepare the journal entry to record interest on December 31, 2016 (at the effective rate).

($212,846,355 x 6% x 1/2) - ($240,000,000 x 5% x 1/2) = $6,385,391 - $6,000,000 = $385,391

Dr Interest expense 6,385,391

    Cr Cash 6,000,000

    Cr Discount on bonds payable 385,391

Discount on bonds payable is a contra liability account that has a credit balance and reduces the value of the liability. Using the effective rate, as real interest is paid, the amount of bonds payable increases since discount on bonds payable account decreases.

3 0
3 years ago
What is the probability that small-company stocks will produce an annual return that is more than one standard deviation below t
GREYUIT [131]

Answer:

16%

Explanation:

To answer this question, we make reference to the standard normal distribution curve and the z-scores value

For 68% confidence interval, the value of z will return a value of 1 SD

Hence, the Probability that the company stocks will produce an annual return that is more than one standard deviation is calculated below:

Probability = (1 - 68%) / 2

= 32%/2 = 16%

5 0
2 years ago
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