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3 years ago

Garrett Company provided the following information:

Business

1 answer:

uysha [10]3 years ago

3 0

Answer:

Overall operating profit will decrease by $25,000

Price is $32.5

Explanation:

A product should be shut down if doing so would make the savings in fixed costs associated with the product to exceed the lost contribution. Other wise , the product should remain.

In a shut down decision , the following relevant cash flows should be considered:

1. Lost contribution from the product to be shut down

2. Savings in fixed directly attributable to the product under consideration.

Lost contribution from products 2

(15-10)× 20,000 (100,000)

Savings in direct fixed cos 75,000

Net loss from the drop of product 2 (25,000)

Overall operating profit will decrease by $25,000

Mark up is the proportion of cost as profit

Price = cost + (mark-up %× cost

Price = 25 + (30%× 25) = 32.5

Price is $32.5

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Answer:

TRUE

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2 years ago

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Answer: Credit of $217480 to Paid-in Capital in Excess of Par

Explanation:

The following information is given in the question as:

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Credit: Paid in capital in excess of Par = $217480

The above were calculated as:

Common stock = ($1250,000/$1,000) × 30 × 30

= $1250 × 90

= $1,125,000

% Conversion will be:

= $1,250,000 / $3960000 = 0.32

Unamortized bond premium will then be:

= 0.32 × $289,000

= $92,480

Paid in capital in excess of par will be:

= $1,250,000 + $92,480- $1,125,000

= $217,480

Therefore, the answer will be to

"Credit of $217480 to Paid-in Capital in Excess of Par"

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