Answer:
The Consolidated Sales are $1,400,000. Whereas, the Consolidated Cost of Sales is $974,400.
Explanation:
The effect of Intra-Group Trading must be removed from the Consolidated Financial Statements. Two adjustments are required:
1st one - The Subsidiary has made Sales of $140,000 to Parent Company. It must be removed from the Accounts because it is like you are telling your Right Side Pocket that you will soon be having money because you have made Sales to Left Side Pocket. So, Debit the Sales and Credit the COS.
2nd one - The unrealized Profit should be added back to the Cost of Goods Sold to remove the effect of Profit gained by the Seller. We are not concerned with the Profit effect in the Goods Sold by Pot Co. to outsiders because it is a realized profit. The matter of concern here is the Profit effect in the unsold Inventory. Pot Co. has 56,000 (140,000 * 40%) stock in-hand. It has Profit Figure of 40%. So, $22,400 (56,000 * 40%) has been added back to Cost of Sales.
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Answer:
B
Explanation:
Given Time (T) = 4
Standard deviation of daily demands (STDdaily) = 10
Standard deviation of usage = STDdaily × sqrt T
= 10 × 2
=20
Monopoly would be the right answer
Answer:
the gross profit of XYZ is $294,000
Explanation:
The computation of the gross profit is shown below:
= Revenue - cost of goods sold
= $485,000 - ($38,000 + $186,000 - $33,000)
= $485,000 - $191,000
= $294,000
Hence, the gross profit of XYZ is $294,000
The above formula should be used for the same
Answer:
Option A is correct.
Explanation:
Though it might be seen initially that the CEO is not trying to increase the value of the shareholders wealth because the share price of the acquiring firm is falling down. This is half picture of the story. It is possible that this acquisition will bring value to the shareholders of the acquiring firm because the acquiring firm will add value to the firm acquired and the sales will grow drastically. As the story we are told is till interval so initially it is more relateable to principal agent problem. Principal agent problem is that agent (CEO) is not acting in the best interest (Wealth maximisation) of the principal (shareholders).
The CEO is not behaving unethically because there are doubts, CEO is pursuing profit maximization is totally wrong because we are not seeing short term profits and it is evident from the past that many parent companies added values to its subsiduaries.