Answer:
C. A capital expenditure.
Explanation:
This is an example of a capital expenditure as it makes significant improvements to the machines and extends the life considerably.
These types of expenses are capitalized in the balance sheets under the original asset name and the asset is revalued by the improvement cost and stated at net book value + improvement.
Revised depreciation is then calculated on this new NBV as applicable with increased life of asset.
Hope that helps.
To get the total insurance premium, just add the three premiums:Total premium = liability + collision + comprehensivewhere:liability = $510collision = $220comprehensive = $ 130Total premium = $510+$220+$130 =$860
Here are the four major needs:
Answer:
1. $50 and 40%
2. 177 units and $22,125
3. 473 units and 72.77%
Explanation:
Price = $125
Variable cost = $75
Fixed cost =$8,850
Contribution margin is the net of sales price and variable cost of the product. It is the cost available to recover the fixed cost and make profit afterward.
1. Contribution margin = Sales price - Variable cost = $125 - $75 = $50
Contribution margin ratio = Contribution margin / Sale price = $50 / $125 = 40%
Break-even is the level of sales at which business has no profit no loss situation.
2. Break-even point = Fixed cost / Contribution margin per unit = $8,850 / $50 = 177 units
Break-even in $ = 177 units x $125 = $22,125
Margin of safety is the level of sales at which the business is safe from making loss. Margin of safety measures the profit after the break-even point.
3. Margin of Safety = Total sales - Break-even point = 650 units - 177 units = 473 units
Margin of safety to sales = ( Margin of safety / Total sales ) = ( 473 units / 650 units ) x 100 = 72.77%
Answer:
$10,500
Explanation:
Calculation for Stanford Company's Working Capital
Using this formula
Working capital =Current Assets- Current Liabilities
Where,
Current Assets = Cash + Accounts Receivable + Inventory + Prepaid Insurance
Current Assets = ($5,000 + $15,000 + $40,000 + $3,000) = $63,000
Current Liabilities = Accounts Payable + Notes Payable in 5 Months + Salary Payable
Current Liabilities = ($15,000 + $12,500 + $25,000) = $52,500
Let plug in the formula
Working capital =$63,000-$52,500
Working capital =$10,500
Therefore the Working Capital for Stanford Company will be $10,500
