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2 years ago

If a firm’s expenses equal or exceed its revenue, what actions might management take?

1 answer:

7 0

In a case whereby firm’s expenses equal or exceed its revenue, the actions that might be taken by management is To check their production process and check the cost of their input.

<h3>What are expenses?</h3>

This are the cost of inputs that the company put into production of their goods and services.

When expense is higher than revenue then the organization is running at loss, but when the revenue equal to the expenses, there is no Gain.

Therefore, the actions that might be taken by management is to check their production process .

Learn more about expenses at:

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Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an ela

brilliants [131]

Answer:

Becton Labs, Inc.

1. Direct materials:

a. Price variance

= $20,600 Favorable

Quantity variance

= $1,890 Unfavorable

b. The company can sign the contract provided it is made clear to the new supplier that price variations would not be welcome shortly after signing the contract, but will depend on the market realities.

2. Direct labor:

a. Direct labor rate and efficiency variances:

Direct labor rate variance

= $3,200 Favorable

Efficiency variance

= $8,160 Unfavorable

b. I would not recommend that the new labor mix be continued. The old mix may be working better because the labor efficiency cost increased with the new mix labor mix.

3. The variable overhead rate and efficiency variances:

Variable overhead rate variance

= $5,200 Favorable

Variable overhead efficiency variance

= $2,380 Unfavorable

Explanation:

a) Data and Calculations:

Standard Costs for 1 Unit of Fludex:

Standard Standard Standard Cost

Quantity or Hours Price or Rate

Direct materials 2.40 ounces $27.00 per ounce $64.80

Direct labor 0.60 hours $12.00 per hour 7.20

Variable manufacturing

overhead 0.60 hours $3.50 per hour 2.10

Total standard cost per unit $74.10

Activities recorded during November:

a. Materials purchased = 13,000 ounces at $330,300

Each ounce = $25.41 (330,300/13,000)

b. Materials used for production = 10,150 ounces (13,000 - 2,850)

Standard materials = 4,200 * 2.40 = 10,080 ounces

c. Direct labor hours = 20 * 160 = 3,200 hours

Standard labor hours = 0.60 * 4,200 = 2,520

Average labor rate = $11.00 per hour

Direct labor costs = $35,200 ($11.00 * 3,200)

d. Standard variable overhead = $11,200 (3,200 *$3.50)

Actual overhead incurred = $6,000

Actual overhead rate = $1.43 ($6,000/4,200)

e. Units produced = 4,200

1. Direct materials:

a. Price variance = (Actual price - standard price)* Actual units

= ($25.41 - $27.00)13,000 = $20,600 F

Quantity variance = (Actual quantity - Standard quantity) Standard Cost

= (10,150 - 10,080) * $27.00

= $1,890 U

2. Direct labor:

a. Direct labor rate and efficiency variances:

Direct labor rate variance = (Actual rate - Standard rate) * Actual hours

= ($11 - $12) * 3,200 = $3,200 Favorable

Efficiency variance = (Actual hours - Standard hours) * Standard rate

= (3,200 - 2,520) * $12

= $8,160 Unfavorable

b. I would not recommend that the new labor mix be continued. The old may be working better because the labor efficiency cost increased.

3. The variable overhead rate and efficiency variances:

Variable overhead rate variance = Actual costs − (AH × SR)

= $6,000 - (3,200 * $3.50)

= $6,000 - $11,200

= $5,200 Favorable

Variable overhead efficiency variance = (AH − SH) × SR

= (3,200 - 2,520) * $3.50

= $2,380 Unfavorable

3 0

3 years ago

In order to make sure that audiences can correctly identify which words you are using, it is necessary to make sure you have cor

Vladimir [108]

In order to make sure that audiences can correctly identify which words you are using, it is necessary to make sure you have correct Pronunciation.

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3 years ago

Read 2 more answers

A dressmaker can sew 400 garments with 100 bolts of fabric and 1,500 hours of labor. Another dressmaker can sew 400 garments wit

faust18 [17]

Answer:

No, because the second method has lower total costs of production.

Explanation:

In a bid to make profits businesses must always compare different processes and choose the cheapest one.

This will eventually reflect in the profitability of the business.

In this instance let's get the cost of each process.

Fabric costs $110 a bolt and labor costs $20 an hour.

The first dress maker can sew 400 garments with 100 bolts of fabric and 1,500 hours of labour

Total cost = (100 bolts * 110) + (1500 * 20)

Total cost = $41,000

For the second dress maker he can sew 400 garments with 150 bolts of fabric and 1,000 hours of identical labour

Total cost = (150 *110) + (1000 * 20)

Total cost = $36,500

As can be seen the second dressmaker has a lower cost of production so he is more efficient than the first dress maker

7 0

3 years ago

When a hurricane rips through Florida, the price of oranges rises because the demand curve shifts to the left. supply curve shif

maw [93]

Answer:

Supply curve shifts to the left.

Explanation:

It is know that Florida is the biggest orange producer in America, when a hurricane rips through Florida, there is no change in demand, so the demand curve remains unaltered. As for the supply curve, the hurricane is likely to destroy orange crops causing a shortage in supply which corresponds to a shift to the left by the supply curve.

The answer is: supply curve shifts to the left.

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3 years ago

The direct write off is used when:

Thepotemich [5.8K]

Answer:

The correct answer is letter "A": Uncollectible accounts are not anticipated or immaterial.

Explanation:

Direct write-off is a method used to record debts from credit sales. An allowance account is not used with this method but an account receivable directly written-off for the outstanding amount once it is determined to be uncollectible. This method is used for tax-reporting purposes.

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3 years ago