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You are the operations manager of a firm that uses the continuous-review inventory control system. Suppose the firm operates 52

Effectus [21]

Answer:

C. Greater than $6 but not greater than $9

Explanation:

The computation of the unit holding cost per year is shown below:

As we know that

$Economic\ order\ quantity = \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}$

where,

Annual demand is 450 × 52 weeks = 23,400 units

Ordering cost is $35 per order

Economic order quantity is 468 units

Now placing these values to the above formula

$468\ units = \sqrt{\frac{2\times \text{23,400}\times \text{\$35}}{\text{Carrying\ cost}}}$

Now to find out the carrying cost, the calculation is given below:

= (2 × 450 units × $35) ÷ 468^2

= $7.48 per unit

The carrying cost is also known as holding cost

6 0

3 years ago

On January 1, 2005, Marcy Company purchased 1,000 shares of its own common stock for $22,000. On February 1, 2005, they sold 600

Nastasia [14]

Answer: E) debit Contributed Capital, Treasury Stock, $1,800

Explanation:

Treasury stock was bought at price of;

= 22,000/1,000

= $22

Sold 600 for $25 so they made a profit of;

= (25 - 22) * 600

= $1,800

This gain was sent to Contributed Capital, Treasury Stock.

Now that stock is to be sold on March 1, it is sold at $15. Loss from initial purchase is;

= ( 22 - 15) * 400

= $2,800

Debit Contributed Capital, Treasury Stock of the maximum amount it can be debited of to reflect this loss which would be $1,800 which was gained in the February purchase. The rest of the loss will go to Retained earnings.

3 0

3 years ago

Bob manages a grocery store in a country experiencing a high rate of inflation. To keep up with inflation, he spends a lot of ti

Kitty [74]

Answer:

A. Menu Cost

Explanation:

7 0

3 years ago

Quantas Industries sold $300,000 of consumer electronics during January under a one-year warranty. The cost to repair defects un

finlep [7]

Answer:

January 31.

Warranty Expense $18,000 (debit)

Warranty Provision $18,000 (credit)

June 20.

Warranty Provision $183 (debit)

Cash $183 (credit)

Explanation:

There is no option on the customer to take the warranty or not. There this type of Warranty is known as an Assurance Type Warranty.

Assurance type warranties are accounted in terms of the Provision Standards as follows ;

Entry when the warranty is granted

Warranty Expense $18,000 (debit)

Warranty Provision $18,000 (credit)

Being recognition of warranty cost and provision.

Warranty Expense $300,000 × 6% = $18,000

When the Warranty Claim is subsequently received.

Warranty Provision $183 (debit)

Cash $183 (credit)

Being utilization of Provision when the warranty claim is received.

3 0

3 years ago

Indicate the proper accounting treatment for a change in the rate used to compute warranty costs.

Lana71 [14]

Answer:

a. Accounted for prospectively

Explanation:

Warranty cost is an expense i.e. to be incurred for the repair or replacement of the goods comes under the warranty given by the company.

Here if there is a change in the rate i.e. used for determining the warranty cost so it would be accounted in prospectively manner i.e. it would be changed in the current period and also the amount should be estimated or predicted

Hence, the correct option is a.

7 0

3 years ago