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3 years ago

D Discuss whether or not an increase in income will cause an increase in spending. (8)

Business

1 answer:

Karolina [17]3 years ago

5 0

Answer:

It depends on the individual.

Explanation:

Increase income will leads to increase in spending because more money is available to spend on luxurious items. There are two types of people on the world. First are those who spends more with the increase of income, while on the other hand, the second type of people can save money when their income increases. So we can say that it depends on the type of people, if the people belongs to first type then we can say that income will cause an increase in spending.

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Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year:

m_a_m_a [10]

Answer:

Deoro Company

Unit cost for each model

Model A Model B

1. Using direct labor hours $176.72 $232.815

2. Using the four activity drivers $136.45 $298.20

3. ABC (method 2) produces the more accurate cost assignment. The overhead cost depends on the level of activity consumed by each model.

Explanation:

a) Data and Calculations:

Activity Expected Cost Activity Driver Activity Capacity

Setting up equipment $492,880 Number of setups 610

Ordering costs 372,000 Number of orders 18,600

Machine costs 963,600 Machine hours 43,800

Receiving 501,600 Receiving hours 11,400

Total overhead costs $2,330,080

Activity rates:

Setting up equipment = $808 ($492,880/610) per setup

Ordering costs = $20 ($372,000/18,600) per order

Machine costs = $22 ($963,600/43,800) per machine hour

Receiving = $44 ($501,600/11,400) per receiving hour

Total direct labor hours = 8,000

Total overhead costs = $2,330,080

Predetermined overhead rate using direct labor hours:

= $291.26 ($2,330,080/8,000)

Unit cost for each model:

Using direct labor hours to apply overhead:

Model A Model B

Direct materials $600,000 $800,000

Direct labor $480,000 $480,000

Overhead $1,747,560 $582,520

Total costs $2,827,560 $1,862,520

Unit costs $176.72 $232.815

Units completed 16,000 8,000

Direct labor hours 6,000 2,000

Number of setups 400 200

Number of orders 6,000 12,000

Machine hours 24,000 18,000

Receiving hours 3,000 7,000

Overhead assigned to:

Using predetermined rate based on direct labor hours:

Model A Model B

Overhead rate = $291.26 per direct labor hours

Direct labor hours 6,000 2,000

Using direct labor hours $1,747,560 $582,520

Using activity-based costing method:

Rates Model A Model B

Setting up equipment = $808 $323,200 ($808*400) $161,600 ($808 * 200)

Ordering costs = $20 120,000 ($20 *6,000) 240,000 ($20 * 12,000)

Machine costs = $22 528,000 ($22 *24,000) 396,000 ($22 * 18,000)

Receiving = $44 132,000 ($44 * 3,000) 308,000 ($44 * 7,000)

Total overhead assigned $1,103,200 $1,105,600

Using activity-based rates to apply overhead:

Model A Model B

Direct materials $600,000 $800,000

Direct labor $480,000 $480,000

Overhead $1,103,200 $1,105,600

Total costs $2,183,200 $2,385,600

Units completed 16,000 8,000

Unit costs $136.45 $298.20

4 0

3 years ago

Which of the following is a disadvantage of barter as a countertrade arrangement?

Wittaler [7]

Answer:

(C). Firms engaged in barter run the risk of having to accept goods they do not want or cannot use.

Explanation:

Countertrade is a trade system in which goods and services are exchanged for other goods and services.

Barter is a type of countertrade where money isn't involved. Only goods and services are exchanged between participating parties.

<em>A disadvantage of barter is that, in the absence of required goods, a firm may have to accept the goods the other firm is offering even though it doesn't need or cannot use those goods at that point in time. </em>The firm could resell the goods later.

5 0

3 years ago

At the beginning of the year, Plummer’s Sports Center bought three used fitness machines from Advantage, Inc. The machines immed

Nata [24]

Answer:

1) Journal Entry

Debit Depreciation Expense $11,714 Credit Accumulated Depreciation on : Machine A $3,400, Machine B $2,500 Machine C $5,814

Explanation

Machine A Machine B Machine C

Purchase Price $22,900 $32,100 $19,550

Installation cost $1,900 $2,400 $900

Renovation cost $4,200 $3,000 $1,600

Total Cost $29,000 $37,500 $22,050

Residual Value -$1,800 -$3,000 -$1,700

Depreciable value $27,200 $34,500 $20,350

Depreciation method:

Straight line = (Cost- Residual Value)/useful life = 27,200/8 yrs = $3,400

Units of production = Depreciable value * units produced / total units that can be produced over the life = 34,500 * 5,000/69,000 =$2,500

Double declining Balance = 2 * (cost of asset - Residual Value ) /Useful life

= 2*(20,350/7) = $5,814

Depreciation Expense = $3,400 + $2,500 + $5,814 = $11,714

To get total cost, we add all the costs incurred for the asset to be in the location where it will operate in and also add the cost incurred to make the Asset be in a working Condition.

Depreciation value = cost - residual value

Depreciation expense is recorded at total only accumulated depreciation is separated.

7 0

3 years ago

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for

Tatiana [17]

Answer:

60 pounds

Explanation:

The computation of the reorder point is shown below:

= Daily demand for pizzas × lead time

= 20 pounds × 3 days

= 60 pounds

The reorder point would be found out by multiply the daily demand of pizzas and the lead time which is given in the question.

All other information which is given in the question is not relevant. Hence, ignored it

7 0

3 years ago

Zigma Corporation is authorized to issue 2,000,000 shares of $4 par value capital stock. The corporation issued half the stock f

Nat2105 [25]

Answer:

Total paid-in capital of Zigma Corporation = $4,000,000

Explanation:

Given:

Number of authorized issue = 2,000,000

Half issued at $8 per share

Find:

Total paid-in capital of Zigma Corporation

Computation:

Total paid-in capital of Zigma Corporation = [Number of authorized issue][1/2][Paid up amount for each share]

Total paid-in capital of Zigma Corporation = [2,000,000][1/2][8]

Total paid-in capital of Zigma Corporation = [2,000,000][0.5][8]

Total paid-in capital of Zigma Corporation = [2,000,000][4]

Total paid-in capital of Zigma Corporation = $4,000,000

5 0

3 years ago