Why do companies use a predetermined overhead rate rather than an actual overhead rate?.

Deborah Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $2,100,000 an

mart [117]

Answer:

The amount of the adjusting entry for bad debts at December 31 is C. $91,000

Explanation:

Adjustment entry is made on changes on the amount of provision for doubtful debts.

Increase in amount of provision for doubtful debts increases the expenses in income statement.

Decreases in amount of provision for doubtful debts decreases the expenses in income statement.

Allowance for Doubtful Accounts Balance $35,000 (cr)

Allowance during th year $126,000

Increase in Allowance $ 91,000

$ 91, 000 increase in allowance for doubtful debts increases the expenses in Income Statement

5 0

3 years ago

Klose Outfitters Inc. believes that its optimal capital structure consists of 60 percent common equity and 40 percent debt, and

Eduardwww [97]

Answer:

WACC 10.38305%

Explanation:

<em><u>First we solve for the source of financing:</u></em>

Expansion: 5,900,000

60% Equity: 3,540,000

Retained Earnins 2,000,000

then 1,540,000 will be common equity

40% debt: 2,360,000 It can raise up to 3,000,000 so it will be sufficient

D 2,360

E 1,540

RE 2000

V 5,900

Now we can solve for Weighted average cost of capital

$WACC = K_e(\frac{E}{E+RE+D}) + K_{re}(\frac{P}{E+RE+D}) + K_d(1-t)(\frac{D}{E+RE+D})$

Ke 0.15

Equity weight 0.261016949 (1,540,000 / 5,900,000)

Kre 0.12

RE Weight 0,338983 (2,000,000 / 5,900,000)

Kd 0.1

Debt Weight 0.4 ( 2,360,000 / 5,900,000)

t 0.4

$WACC = 0.15(0.261016949152542) + 0.12(0.338983050847458) + 0.1(1-0.4)(0.4)$

WACC 10.38305%

5 0

2 years ago

The COB Division of Northern Corp. produces and sells a product to both external customers and other Northern divisions. Per-uni

svetoff [14.1K]

Answer:

$425

Explanation:

Data provided as per the question

Direct material = $350

Direct labor = $75

The computation of transfer price should be set is shown below:-

Transfer price should be = Direct materials + Direct labor

= $350 + $75

= $425

Note :- The minimum transfer price shall be "Variable Rate" if there is an excess capacity to produce for internal transfer.

8 0

2 years ago

Give an example of two economic goals conflicting with each other

Alexxandr [17]

Any country around the world has certain targets for becoming an ideal and economically stable nation. Economic goals of full employment, stability, economic growth, efficiency, and equity are widely considered to e beneficial and worth pursuing for a country to achieve economic stability. Full employment and price stability are goals that conflict with each other. Full employment is an economic situation in which all the available labor resource is being used in the most efficient way possible while price stability implies avoiding both prolonged inflation and deflation.

4 0

3 years ago

Read 2 more answers

M7-7 to M7-9 Calculating Cost of Goods Available for Sale, Ending Inventory, Sales, Cost of Goods Sold, and Gross Profit under P

zvonat [6]

Answer:

Date Units Unit Cost Unit Selling Price

July 1 Beginning Inventory 50 $ 10

July 13 Purchase 250 13

July 25 Sold (100 ) $ 15

July 31 Ending Inventory 200

Cost of Goods Available for sale= 250 units at $ 13+ 50 units at $ 10

= 3250 + 500= $3750

FIFO Ending Inventory $ 2600

200 units at $ 13= $ 2600

Sales 100At $ 15= $1500

FIFO Cost Of Goods Sold $ 1150

50 units at $ 10= $ 500

50 units at $ 13= $ 650

LIFO Ending Inventory $ 2450

50 units at $ 10= $ 500

150 units at $ 13= $ 1950

Sales 100 at $ 15= $1500

LIFO Cost Of Goods Sold $ 1150= Cost of Goods Available for Sale Less LIFO Ending Inventory = 3750- 2450= $ 1300

100 units at $ 13= $ 1300

Weighted Average Ending Inventory 12.5 * 200= $ 2500

Total Cost/ total units= 3750/300= 12.5

Weighted Average Cost Of Goods Sold $ 1150= Cost of Goods Available for Sale Less Weighted Average Ending Inventory = 3750- 2500= $ 1250

Weighted Gross Profit= Sales Less Weighted Cost Of Goods Sold= $ 1500- $ 1250= $ 250

7 0

3 years ago