Answer:
The savings from the switch is negative savings of $6300,in other words loss is recorded not savings in costs.
The interest would have to fall to 10% for the planned switch to production to be feasible.
Explanation:
The extra cost savings of switching over to level production is given below
Cost savings $42000
interest on inventory finance($420000*11.5%) ($48300)
Negative savings ($6,300)
The company would a loss of $6300 if it switches to level production,hence it is advisable to shelve the plan for now.
However,interest rates would have to fall to 10% as calculated below to make the planned switch to level production feasible
new interest rate=savings/increase in inventory
=42000/420000*100
=10%
Answer:
The people in an economy have $25 million in money. There is only one bank where they deposit their money and it holds 10% of the deposits as reserves. What is the money multiplier in this economy?
D. 10
Explanation:
10% of $25, 000, 000= $2,500,000
Money multiplier in this economy is by 10
Answer:
Break-even price = $7
Explanation:
<em>The break-even price is the price at which the the total contribution from the sale is equal to the fixed cost of $300,000.</em>
(x- 4)× 100,000 = 300,000
100,000X - 400,000 = 300,000
100,000X = 300,000 + 400,000
x= 700,000/100,000
X = $7
Break-even price = $7
Answer:
a. Compare the details of cash receipts with journal entries.
b. Prepare a bank transfer schedule.
c. Confirm the terms of borrowing with the lenders agreement.
d. Send request to confirm the entity's account receivable balance.
e. Inspect payroll data of employees and cross check with the transaction recorded.
f. Obtain cut off bank statement to reconcile the transaction.
g. Examine the selected repair order and physically examine the equipment whether repair work is don or not.
h. Examine the supporting documents for the invoice such as purchase order, goods received note and Purchase requisitions.
i. Inspect the payroll endorsements for similar handwriting.
Explanation:
Audit is mandatory for all the companies. The verified financial statements are considered as reliable because they are rechecked by the auditors and if any error or fraud is found it is immediately corrected and rectified. Audit is a critical process which involves objectivity and integrity of a person. The auditors must be independent and they should not have any familiarity with the business employees or owners.