Answer:
Firm should not shut down, as it is able to cover its Average Variable Cost
Explanation:
Perfect Competition firms in Short Run : The firms produce even if their average revenue (price) < their average total costs (AC). They continue production until Average variable cost (AVC) ≥ per unit price (P) i.e average revenue (AR). This is called Shut Down Point. P lower beyond AVC implies that firm won't continue even in short run.
Given : Variable Cost (VC) = 500 ; Revenue (R) = 510
Average Variable Costs & Average Revenue are variable costs & revenue, per unit quantity. AVC = VC / Q ; AR (P) = R / Q
R i.e 510 > VC i.e 500
So, R/ Q i.e AR is also > VC / Q i.e AVC
Since AVC > AR (P), firm should not shut down
Answer:
Option A is the correct answer.
Answer:
<em>Materials:</em>
P 2,000F
Q 7,650U
Labor:
Rate 800U
Efficiency 2,500.00F
<em>Questions:</em>
Solve for labor and materials variances
Explanation:
std cost $6.00
actual cost $5.75 ($46,000/ 8,000 pounds)
quantity 8,000
difference $0.25
price variance $2,000.00
std quantity 4500.00 (3,000 units x 1.5 pounds per unit)
actual quantity 6000.00 (8,000 purchased - 2,000 ending)
std cost $5.10
difference -1500.00
quantity variance $(7,650.00)
DIRECT labor VARIANCES
std rate $12.00
actual rate $12.50
actual hours 1,600 (160 hours x 10 employees)
difference $(0.50)
rate variance $(800.00)
std hours 1800.00 (3000 units x 0.6hours per unit)
actual hours 1600.00
std rate $12.50
difference 200.00
efficiency variance $2,500.00
Answer:
Fixed overhead application rate
= <u>Budgeted fixed overhead</u>
Budgeted direct labour hours
= <u>$200,000</u>
25,000 hours
= $8 per diect labour hour
Fixed overhead volume variance
= (Standard hours - Budgeted hours) x Fixed overhead application rate
$8,000 = (SH - 25,000) x $8
$8,000 = 8SH - 200,000
$8,000 + $200,000 = 8SH
$208,000 = 8SH
SH = $208,000/8
SH = 26,000 hours
Fixed manufacturing overhead application rate
= 26,000 hours x $8
= $208,000
The correct answer is C
Explanation:
In this case, we need to calculate the fixed overhead application rate, which is the ratio of budgeted fixed overhead to budgeted direct labour hours.
Then we will determine the standard hours from fixed overhead volume variance. Since budgeted hours and fixed overhead volume variance have been given, we need to make standard hours the subject of the formula.
Finally, we will calculate the fixed overhead applied, which is the product of fixed overhead application rate and standard hours.
Answer:
D. $12,400
Explanation:
Use the following formula to calculate the Bad debt expense for the period
Bad debt expesne = Debit balance of Allowance account + Allowance for the period
Where
Debit balance of Allowance account = $400
Allowance for the period = Account receivables x percentage of allowance = $1,200,000 x 1% = $12,000
Placing values in the formula
Bad debt expesne = $400 + $12,000
Bad debt expesne = $12,400