Answer:
Since Mr Bob is always a pessimistic decision maker, he might choose pessimistic criterion. Using pessimistic criterion, the third alternative, equipment Texan will provide the smallest potential loss; so the best alternative is purchasing equipment Texan.
Conclusion: It is likely that in this criterion, Bill will arrive at a different decision.
The cost of making that the component should be compared to the price of buying the component is $15.55.
<h3 /><h3>What is cost of making?</h3>
First step
Relevant manufacturing cost
Direct materials $7.90
Direct labor 2.10
Variable manufacturing overhead 1.10
Fixed manufacturing overhead 0.4
(10% × $4.00 is avoidable)
Total $11.50
Second step
Cost of making=11.5+[($8.10 per unit ÷ 6 minutes per unit)×3 minutes]
Cost of making=$11.5+$4.07
Cost of making=$15.55
Therefore the cost of making that the component should be compared to the price of buying the component is $15.55.
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Answer:
Dr. Cr.
Work in process $73,000
Manufacturing overhead $13,000
Account Payable $86,000
Explanation:
The Direct cost are those which are directly attributable to the product or service under consideration. Indirect cost are those which cannot be directly assigned to product or service cost. All the direct cost is added to the work in process account and indirect cost are included in the manufacturing overhead account.
Stockbrokers who still had profits on their books were afraid that their profits would disappear.
Stockbrokers who had losses were afraid that those losses might get larger.
Investors decided to get out of the market.
Answer: $2,271,500
Explanation:
Cash flow to investors is:
= EBITDA - Taxes
Taxes = (EBITDA - Depreciation - Interest) * tax rate
= (2,767,000 - 596,000 - 189,000) * 25%
= $495,500
Cash flow to investors from operating activities is:
= 2,767,000 - 495,500
= $2,271,500
