Answer:
Company A
a. Differential Analysis dated May 29
Alternative 1 Alternative 2
Opportunity cost $250,000 $550,000
Variable production costs 580,000 192,000
Total cost $830,000 $742,000
b. Sunk cost in this situation is: $225,000 ($400,000 - $175,000) cost of the old machine.
Explanation:
Company A's relevant cost for the old machine is the opportunity cost that it will lose if it continues with Alternative 1 or continued use of the old machine and the additional cost for the new machine for Alternative 2. Also relevant is the variable production costs that would be incurred if the old or new machine is used.
Company A's sunk cost is the cost of the old machine minus accumulated depreciation. Sunk cost is not relevant for decision making under differential analysis.
Company A's differential analysis is a managerial tool that is used to differentiate one decision alternative from another. In this analysis, only relevant costs are considered. A relevant cost in this case is cost that its inclusion or elimination makes a difference in the decision outcome.
Answer:
C. all fixed costs.
Explanation:
Under variable costing, all fixed cost are period cost. This make them non-capitalizable
Are treated as expenses and impact entirely on the net income
In other method some fixed cost are capitalzied through inventory but, in variable costing is not the case.
The only capitalized cost are the variable cost using this method.
Answer:
$1,320,000
Explanation:
According to the scenario, computation of the given data are as follow:-
Purchase of raw material = $1,800,000
Opening stock of raw material = $20,000
Closing stock of raw material = -$3,140,000
Direct Material Used = Purchase of Raw Material + Opening Stock of Raw Material - Closing Stock of Raw Material
= $1,800,000 + $20,000 - $3,140,000
= $1,320,000
Answer: Stockholders equity $254,900
Explanation: Stockholders’ equity is the difference in a company's total assets and total liability. From the above question, total stockholders’ equity is calculated thus:
Current assets = $435,200
Fixed assets = $550,800
Total Assets. $986,000
Current liabilities = $416,600
Long-term debt = $314,500
Total liability. $731,100
Total stockholders equity is Total Assets less Total liability.
Total Assets. $986,000
Total liability. ( $731,100 )
Stockholders equity $254,900
