Answer and Explanation:
Sales = $175,000
Less: Cost = $93,000
Gross Profit = $82,000
Less: Depreciation = $24,800
EBT = $57,200
Less: Tax [email protected]% = $13,156
EAT = $44,044
a). OCF = EBIT + Depreciation - Taxes
= $57,200 + $24,800 - $13,156
= $68,844
b). OCF = [(sales - costs - Depreciation) * (1 - T)] + Depreciation
= [($175,000 - $93,000 - $24,800) * (1 - 0.23)] + $24,800
= $68,844
c). OCF = [(sales - costs) * (1 - T)] + [Depreciation * T]
= [($175,000 - $93,000) * (1 - 0.23)] + [$24,800 * 0.23]
= $68,844
d). OCF = Net income + depreciation
= $44,044 + $24,800
= $68,844
<span>Implicit Cost Explicit Cost
The wholesale cost for the pianos that Darnell pays the manufacturer $452,000
The salary Darnell could earn if he worked as an accountant $48,000
The wages and utility bills that Darnell pays $301,000
The rental income Darnell could receive if he chose to rent out his showroom $38,000
B.
Profit ($)
Accounting Profit 842,000 - 452,000 - 301,000 = 89,000
Economic Profit 842,000 - 452,000 - 301,000 - 48,000 - 38,000 = 3,000
C. Economic Profit as an accountant = 48,000 + 38,000 - 89,000 = -$3,000. Thus, Darnell should stay in the Piano business to maximize the Economic Profit.</span>
It is a false statement that outsourcing some process in production is a means of supporting a constraint.
<h3>What is an
outsourcing?</h3>
An outsourcing refers to act of hiring external body to perform services that are normally performed in-house of the company by the employees.
Rather, the use of outsourcing some of production is intended to overcome some organization constraints.
Therefore, the statement is false.
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A stabilized budget is used to forecast income and expense over some period of years.
<h3>What is A
stabilized budget?</h3>
A budget that forecasts income and expenses over a short period of time, typically five years, is considered steady. a property's rent roll. can be used to calculate the potential annual rental income of a property.
After construction or a large refurbishment, the projected rental income, cost, or Net Operating Income Example: Stabilized income was predicted two years after an office building opened.
Thus, A stabilized budget is used to forecast income and expense
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Answer:
Stock is valued at lower of : cost or market price [prudence principle]
Explanation :
Prudence or Conservatism is an accounting principle : anticipating for all possible losses & expenditures, not anticipating for possible profits & gains. This makes business better prepared to face all contingent expenditures/ losses.
This concept's implication is that : Stock or Inventory is valued at the value whichever is lesser between 'cost of inventory' & sale price. This makes inventory valuation as per the above explained Prudence/ Conservatism principle.
