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stira [4]
3 years ago
10

The FOURX Corp. has purchased $50,000 of experimental equipment. The anticipated salvage value is $5500 at the end of its 5-year

depreciable life. This profitable corporation is considering two methods of depreciation: straight-line and double declining balance. If it uses 10% interest in its comparison, which method do you recommend?
a. NPW(SL): $37,908; NPW(DDB): $37,068; Recommendation: SL
b. NPW(SL): $33,738; NPW(DDB): $37,068; Recommendation: DDB
c. NPW(SL): $33,738; NPW(DDB): $26,551; Recommendation: SL
d. NPW(SL): $33,738; NPW(DDB): $38,069; Recommendation: DDB
Business
1 answer:
Anestetic [448]3 years ago
5 0

Answer:

b. NPW(SL): $33,738; NPW(DDB): $37,068; Recommendation: DDB

Explanation:

The computation is shown below:

As we know that

Present value is

=  [Cash Flow ÷ (1 + Rate of Interest)^Year]

where,

Rate of Interest = 10%

Under Straight-line depreciation:

Beginning book value = $50,000

Salvage value = $5,500

So, the depreciationper year is

=  [($50,000 - $5,500) ÷ 5]

= $8,900

<u>Year    Beginning   Depreciation  End                 Present value </u>

<u>            book value                  book value of depreciation </u>

1            $50,000      $8,900        $41,100             $8,090.91

2           $41,100         $8,900        $32,200           $7,355.37

3           $32,200       $8,900         $23,300           $6,686.70

4           $23,300       $8,900         $14,400           $6,078.82

5           $14,400        $8,900         $5,500              $5,526.20

                                                                                  $33,738.00

Under Double declining depreciation:

Depreciation rate per year = (1 ÷ Useful  Life) × 100

= 1 ÷ 5 × 100

= 20%

Now for double-declining, the rate is doubled

So,

= 20% × 2

= 40%

<u>Year    Beginning   Depreciation  End                 Present value </u>

<u>            book value                  book value of depreciation </u>

1            $50,000      $20,000       $30,000           $18,181.82

2           $30,000       $12,000       $18,000            $9,917.36

3           $18,000       $7,200         $10,800            $5,409.47

4           $10,800       $4,320         $6,480             $2,950.62

5           $6,480       $980              $5,500            $608.50

                                                                                $37,068

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Lagle Corporation has provided the following information:
mezya [45]

Answer:

b.$20,550

Explanation:

The period costs are those costs which include costs  for a particular period. The calculation for these costs differ under the two methods  absorption and variable. Under absorption Costing the Period costs include Variable selling and administrative + Fixed selling and administrative expenses.

<u>Lagle Corporation</u>

<u>Absorption Costing</u>

Direct materials $ 4.75 * 7000= $ 33250

Direct labor $ 3.70  * 7000= $ 25900

Variable manufacturing overhead $ 1.45  * 7000= $ 10150

Fixed manufacturing overhead $ 18,200

Total Product costs $ 87,500

Sales commissions $ 1.70  * 7000=$ 11900

Variable administrative expense $ 0.55  * 7000= $ 3850

Fixed selling and administrative expense $ 4,800

Total Period Costs $ 20550

<u><em>Mostly Absorption costing is used for daily basis. Therefore Choice b is the best option</em></u><em>. </em>

Under variable costing the Period costs include Fixed manufacturing overheads + Fixed selling and administrative expenses.

<u>Lagle Corporation</u>

<em>Variable Costing</em>

Direct materials $ 4.75 * 7000= $ 33250

Direct labor $ 3.70  * 7000= $ 25900

Variable manufacturing overhead $ 1.45  * 7000= $ 10150

Sales commissions $ 1.70  * 7000=$ 11900

Variable administrative expense $ 0.55  * 7000= $ 3850

<em>Total Product costs $ 85,050</em>

Fixed selling and administrative expense $ 4,800

Fixed manufacturing overhead $ 18,200

<em>Total Period Costs $ 23000</em>

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Answer:

True. This is because the curve of ATC shifted downward to show an increase in output. As the ATC curve moves downward, the quantity of goods increase while the price decreases. The quantity of goods produced is equivalent to 68 units which is consistent with the regulation of price. Price regulation is used to manage the effects of monopoly on the market system.

Explanation:

True. This is because the curve of ATC shifted downward to show an increase in output. As the ATC curve moves downward, the quantity of goods increase while the price decreases. The quantity of goods produced is equivalent to 68 units which is consistent with the regulation of price. Price regulation is used to manage the effects of monopoly on the market system.

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2 years ago
What happens if you get pulled over without insurance?.
ehidna [41]

Answer:

It depends on which state you are in. In Michigan if you operate a motor vehicle on state roadways and you don't have car insurance, you could face the following: Driver's license and registration suspension. Up to one year in jail. Fines and fees up to $500.

Explanation:

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1 year ago
Which of the following theories argues that organizations try to minimize their reliance on other organizations for the supply o
aleksklad [387]

Answer: The answer is C.

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Although such transactions may be advantageous, they may also create dependencies that are not, and so organization A may want to rely less on organization B, in their quest to influence the environment to make resources available.

This theory actually originated in the 1970s with the publication of The External Control of Organizations: A Resource Dependence Perspective by Jeffrey Pfeffer and Gerald R. Salancik.

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2 years ago
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On January 2, 2020, Pronghorn Company sells production equipment to Fargo Inc. for $52,000. Pronghorn includes a 2-year assuranc
Yanka [14]

Answer:

January 2, 2020

Dr Cash $52,000

Cr Sales Revenue $52,000

December 31, 2020

Dr Warranty expense $890

Cr Cash $890

December 31, 2020

Dr Warranty expense$640

Cr Warranty Liabiltiy $640

Explanation:

Preparation of the journal entry to record this transaction on January 2, 2020, and on December 31, 2020.

January 2, 2020

Dr Cash $52,000

Cr Sales Revenue $52,000

December 31, 2020

Dr Warranty expense $890

Cr Cash $890

December 31, 2020

Dr Warranty expense$640

Cr Warranty Liabiltiy $640

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