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ikadub [295]
3 years ago
9

Item 3Item 3 Cutter Enterprises purchased equipment for $87,000 on January 1, 2018. The equipment is expected to have a five-yea

r life and a residual value of $4,800. Using the sum-of-the-years'-digits method, depreciation for 2018 and book value at December 31, 2018, would be
Business
1 answer:
Rus_ich [418]3 years ago
8 0

Answer:

$27,400 and $59,600

Explanation:

The computation of the depreciation expense and the book value using the sum of-the-years'-digits method is shown below:

Depreciation expense is

= (Purchase cost - residual value) × useful life ÷ sum of years

= ($87,000 - $4,800) × 5 years ÷ (5 + 4 + 3 + 2 + 1)

= $27,400

And, the book value is

= Purchase cost - depreciation expense

= $87,000 - $27,400

= $59,600

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The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based
son4ous [18]

Answer:

$81.96 per unit

Explanation:

For computing the selling price using the absorption costing approach we need to do the following calculations which are shown below:

Unit Product Cost = Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead

= $26.50 + 15.50 + 3.70 + [$156,71,400 ÷ 97,000 Units]

= $26.50 + 15.50 + $3.70 + $16.20

= $61.90

Now

Selling and administrative expenses  is

=$1,540,000 + [97,000 Units × $3.60]

= $1,540,000 + 349,200

= $1,889,200

And,

Markup on absorption cost

= [(Investment × Return on Investment) + Selling and administrative expenses] ÷ (Number of units × unit product cost)

= [($380,000 × 15%) + 1,889,200] / [97,000 × $61.90]

= $19,46,200 ÷ 60,04,300

= 0.3241 or  32.41%

So,

The selling price based on the absorption costing approach

= Unit product cost × (1 + Markup on absorption cost)

= $61.90 per unit × (1 + 0.3241)

= $81.96 per unit

5 0
3 years ago
If the economy is at potential output and the fed increases the money supply, in the long run real gdp will likely:________
Soloha48 [4]

If the economy is at potential output and the fed increases the money supply, in the long run real gdp will likely decrease.

<h3><u>What is supply?</u></h3>
  • A basic economic notion called supply refers to the total amount of a particular commodity or service that is made available to consumers.
  • When shown as a graph, supply can refer to the quantity that is offered at a particular price or the quantity that is offered over a range of prices.
  • This is strongly related to the demand for an item or service at a particular price; all other things being equal, the supply offered by producers will increase if the price rises because all businesses aim to maximize profits.

Trends in supply and demand are what underpin the modern economy. Based on price, utility, and personal choice, any particular commodity or service will have its own unique supply and demand patterns.

Know more about supply with the help of the given link:

brainly.com/question/13296654

#SPJ4

7 0
1 year ago
The BVM Corp., construction company, purchased a used hybrid electric pickup truck for 30,000 and used MACRS depreciation in the
Alina [70]

Answer:

The BVM Corp.

The After-tax Rate of Return for the truck = After-Tax Income/Investment in Truck x 100

= $10,200/$30,000 x 100 = 34%

Explanation:

a) Calculations:

Current Value of the Truck =

Sale of Truck =             $9,000

Savings from Truck = $38,000 ($9,500 x 4)

Total                           $47,000

Investment increase  = $17,000 ($47,000 - 30,000)

Combined Tax = $6,800 (40% x $17,000)

After Tax Income = $10,200 ($17,000 - 6,800)

b) MACRS means the modified accelerated cost recovery system.  It is an allowance by the IRS for faster depreciation in the first years of an asset's life and the depreciation slows later on in order to allow a business to recover the cost basis of certain assets that deteriorate over time.

c) Rate of return (ROR) is the percentage increase or decrease of an investment (truck) over a set period of time (4 years), which is calculated by taking the difference between the current (or expected) value ($47,000) and original value ($30,000), dividing by the original value, and then this is multiplied by 100.

3 0
3 years ago
Business Information Management 1a: Introduction / Unit 2: The Finances of Business
Y_Kistochka [10]

The finances of businesses involve several things, including:

  • Revenue and profit.
  • Costs and expenses.
  • Budgets.

<h3>What are some components of finance in business?</h3>

The financial aspect of a business is hugely important to the success of the business because it involves making a profit which is the sole purpose of business.

In order to be successful in business, one needs a good financial plan. This plan will predict the revenue that the company should be earning in order to make profit.

It should also include the various costs and expenses that the business will incur as it engages in business. This financial plan usually comes in the form of a budget which provides ideas on how a business should spend money.

Note: Question was incomplete so a general overview of business finance was given.

Find out more on business finance at brainly.com/question/1265337.

5 0
2 years ago
Read 2 more answers
Andrea has prepared the following list of statements about corporations. Identify each statement as true or false.
Zolol [24]

Answer:

1. A corporation is an entity separate and distinct from its owners.  TRUE

2. As a legal entity, a corporation has most of the rights and privileges of a person.  TRUE

3. Most of the largest U.S. corporations are privately held corporations.  TRUE

4. Corporations may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be sued.  TRUE

5. The net income of a corporation is not taxed as a separate entity.  TRUE                  

6. Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts.  FALSE

7. The transfer of stock from one owner to another requires the approval of either the corporation or other stockholders.   TRUE

8. The board of directors of a corporation legally owns the corporation.  FALSE

9. The chief accounting officer of a corporation is the controller.   FALSE

10. Corporations are subject to fewer state and federal regulations than partnerships or proprietorships. TRUE                                                                                                        

Explanation:

A corporation is a business that is a separate, legal entity that is run by board of directors chosen by the shareholders. A corporation operates or exists as an entity separate and distinct from it's owner or owners. This means that as separate or legal entity, a corporation has the rights and privileges of an individual except the right to vote and be voted for.

The stakeholders or shareholders of the corporation usually select officers to serve is board of directors and every year this board of directors nominate officers for the positions of a president, secretary and treasurer to handle the running's and activities of the corporation. If the board of directors also wishes or decides they can nominate a vice president too.

7 0
3 years ago
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