Answer:
Market based transfer pricing should be made only when it leads to the highest total profit for all sub units collated as a consolidated results of the entire organization.
Explanation:
Distress prices signal a markdown in the price of a good to sustain its production in the face of prevailing fall in prices.
When supply outstrips demand and sales slows down, continuing the production of the item is preferable as it covers some of the fixed costs of the product.
The distress price is the variable cost of the product plus a minimum mark-up.
The dual transfer prices should be used for judging performance if distress prices prevail
Answer:
d. Increase to interest payable for $2,250
Explanation:
At year end which is December 31, 2020, the company has incurred an interest expense of 3 months on the amount borrowed since October 1 to December 31 is a period of three months.
As a result, the interest expense to be accrued for is computed thus:
accrued interest expense= $100,000*9%*3/12
accrued interest expense=$2,250
The appropriate entries would to debit(increase) expense with $2,250 while interest payable is credited(increase) with the same amount
Answer:
The net present value of this project is $5,809.78.
Explanation:
Note: See the attached excel file for the calculation of net present value of this project.
In the attached excel file, the discounting factor is calculated as follows:
Discounting factor = 1 / (100% + required rate of return)^n
Where n is a particular year in focus.
From the attached excel file, we have:
Net present value = $5,809.78
Therefore, the net present value of this project is $5,809.78.
Answer: $99,300
Explanation:
The cost of the land includes the actual purchase price and every expense incurred to get it ready for use.
These include;
= Cash price + Accrued taxes + Attorney fees + Real estate broker’s commission + clearing and grading
= 86,000 + 3,200 + 2,600 + 1,800 + 5,700
= $99,300