<span>Decrease by $57,400 per month.
Looks look at the cash flow for continuing to produce product a and discontinuing product a.
Continuing to produce
Income = 15900 * $29 = $461,100
Variable Expenses = 15900 * 23 = $365,700
Fixed overhead = $109,000
Total cash flow = $461,100 - $365,700 - $109,000 = -$13,600
So the Lusk company is losing $13,600 per month while producing product a. Let's see what happens if they stop producing it.
Income = $0
Variable Expenses = $0
Fixed overhead = $71,000
Total cash flow = $0 - $71,000 = -$71,000
So if they stop producing it, their fixed overhead decreases, but is still at $71,000 per month, for a total loss per month of $71,000.
The conclusion is to either lose $13,600 per month, or $71,000 per month. So if they stop production of product a, their loss per month will increase by $57,400.</span>
Answer:
It is the sum of the fixed costs and variable costs.
Hope this helps!
Answer:
June 1st:
Retained Earnings (Dr.) $8,000,000
Dividends Payable (Cr.) $8,000,000
June 30th
Dividends Payable (Dr.) $8,000,000
Cash (Cr.) $8,000,000
These entries will remain same even in the case of liquidating dividend.
Explanation:
On June 1st the dividend is declared so the journal entry will be
Retained Earnings (Dr.) $8,000,000
Dividends Payable (Cr.) $8,000,000
There will be no journal entry on June 14th.
On June 30th the dividend is paid:
Dividends Payable (Dr.) $8,000,000
Cash (Cr.) $8,000,000
The entry would not have differed if it was a liquidating dividend.
