1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
777dan777 [17]
3 years ago
6

A company using the perpetual inventory method paid $200 cash to have goods delivered from one of its suppliers. The payment of

$200 for transportation-in is considered:__________.
Business
1 answer:
Montano1993 [528]3 years ago
5 0

Answer:

An asset exchange transaction which increases the cost of the purchased merchandise.

The firm gives the transportation company money (which is an asset) and since the transportation costs are included in the cost of the merchandise, the firm is paying a fraction of the cost of the asset.

When you are calculating the purchase cost of goods you must include the price of the goods, transportation costs, and any other associated expense like insurance costs and import fees, etc.

Transportation costs are only included in the COGS when the firm acquires the goods, but when the firm sells the goods, any distribution cost is not included under production costs, instead they are included under the sales costs.

You might be interested in
Premium Watches, Inc. produces and sells children’s smart watches. The company started the year 2019 with 1,500 watches and prod
borishaifa [10]

Answer:

(1)Cost of Good Manufactured $191,830(2)) Net income $21,547.25 (3) cost of producing one watch $2.45

Explanation:

The question is not complete, here is the missing part of the question

Premium watches inc

Income statements As at December 31st, 2018

Sales revenue (67,500 watches) 269,500

Unearned rent revenue. 4,000

Gain on sale of investment. 1,200

Royalty revenue. 500

Interest payable. 1,500

-----------

Total Revenue. 276,700

Less operating expenses

Indirect manufacturing labour cost 7,200

Utilities 9,200

Direct manufacturing labour cost 47,000

Factory equipment 50,000

Direct materials purchased 95,000

Insurance expense 2,500

Rent Expense 27,000

Interest expense 300

Selling expense 34,700

Administrative expense 30,900

Research & development expense 4,000

Short term investment 8,000

Dividend paid 500

Restructuring cost 6,000

Total operating expenses. 327,300

------------

Net operating loss. ($50,600)

(a) 65% of utilities & 70% of insurance expense related to factory operations. Apply the remaining amount equally to selling expense & Administrative expense

(b) 90% of the rent expense is associated with factory operations. Allocate the remaining 10% equally to selling expense and Administrative expense

(c) Factory equipment is estimated to have a useful life of 5 years with a $5,000 salvage value remaining at the end of its useful life. The company uses the straight line method of depreciation.

(d) inventory balances at the beginning and ending of the period were

January 2018. Dec 31,2018

Direct materials. 4,600. 7,000

Work in process. 9,000. 12,000

Finished goods. 3,750. ?

These amount were not taken into account when the statement were prepared

(e) The company tax rate is 21%

The president is dissapointed with the result of operations and has asked you to review the income statement and make a recommendation as to whether the company should look for a buyer for its assets Required

(1) prepare a schedule cost of good manufactured for the year ended December 31, 2018

(2) prepare a corrected multiple -step income statement for the year ended 31st December, 2018

(3) Calculate the cost of producing one watch if the company produced 110,000 watches in 2018 (round your answer to 2 decimal places )

Here is the solution

Schedule cost of Goods Manufactured for the year ended December 31st, 2018

Beginning work in process inventory

Direct materials used

Add: Beginning Direct materials 4,600

Add: purchases of Direct materials 95,000

Add: Direct Labour. 47,000

------------

Prime Cost. 146,600

Add: Manufacturing overhead

Indirect material labour cost 7,200

Utilities. 5,980

Insurance. 1,750

Rent Expense. 24,300

Depreciation of factory equipment 9,000

Add: Beginning work in process 9,000

Less: Ending work in process. 12,000

-----------

45,230

------------

Cost of Good Manufactured. 191,830

---------------

(2) corrected Multiple - step income statement for the year ended December 31st, 2018

Sales. 269,500

Less: Cost of good sold 195,580

----------

Gross Margin. 73,920

Operating Expenses

Utilities 3,220

Insurance 750

Selling Expense 12,145

Administrative expense 9,270

Rent allocated to selling expense 3,470

Rent allocated to Administrative expense 3,090

Research &Development expense 5,000

Prepaid insurance expense 4,000

Restructuring cost 6,000

-----------------

46,945

------------

Operating income. 26975

Interest expense. 300

------------

Income before taxes. 27,275

Income taxes. 5,727.75

--------------

Net income. 21,547.25

------------------

(3) To calculate the cost of producing one watch if the company produced 110,000 watches in 2018

Sales / Numbers of watches produced

= 269,500 / 110,000

= $2,45

Workings of schedule of cost of Goods Manufactured

Utilities =0.65 × 9,200 = 5,980

Insurance = 0.7 × 2,500 = 1,750

Rent Expense = 0.9 × 27,000 = 24,300

Factory equipment depreciation = Cost - Salvage value / Number of years

= 50,000 - 5,000 / 5

= 45,000 /5

= 9,000

Workings of cost of Goods sold

Cost of good sold = Beginning finished good inventory + Cost of Good Manufactured - Ending finished good inventory

= 3,750 + 191,830

= 195,580

Workings of income statement

Utilities = 0.35 × 9,200 = 3,220

Insurance= 0.3 × 2,500 = 750

Selling Expense = 0.35 × 34,700 = 12,145

Administrative expense = 0.3 × 30,900 = 9,270

10% of rent expense allocated to selling & Administrative

Selling = 0.1 × 34,700 = 3,470

Administrative = 0.1 × 30,900 = 3,090

Income taxes = 0.21 × 27,275 = 5,727.75

4 0
3 years ago
Assume that Jack, Hal, and Sophia enter into a valid contract for the sale of the restaurant and for the covenant not to compete
Andrei [34K]

Answer: C. Reformation

Explanation: A non-compete agreement or clause is a legal binding entered into by two or more parties which restricts the parties from being in competition with the other usually through the sale of similar product. However, in the context above, since the non-compete clause has been breached by Jack, and the judge feels the time constraint in the clause was unreasonably long, The reformation process will be best to remediate the situation, which refers to the change or alteration of the terms of an existing document using the judicial process and requires the conformation of the parties involved.

6 0
3 years ago
During 2004 Elway Corporation transferred inventory to Howell Corporation and agreed to repurchase the merchandise early in 2005
Svet_ta [14]

Answer:

d. Product financing arrangement.

Explanation:

A business transaction in which an organization sells and agrees to repurchase inventory with the repurchase price equal to the initial or original sales price plus the carrying and financing costs is known as the Product financing arrangement.

A product financing arrangement is more likely to exist when the seller commits to having a third party client purchase the item and then agrees to repurchase the item from the third party client.

It's noteworthy to know, that the seller controls how the item sold under either of the above mentioned situations is analysed and disposed of.

6 0
3 years ago
In Jackson Jones Company, land decreased $270,000 because of a cash sale for $270,000, the equipment account increased $90,000 a
marin [14]

Answer:

The answer is D. $180,000

Explanation:

Investing activities is about spending on long term asset or long term investments.

Under investing activities in cash flow, what constitutes inflow is the sales of these long term assets like plant and machinery and what constitutes outflow is the purchase of these assets.

In this question, the inflow is the sale of equipment which us $270,000 and outflow is the purchase of equipment for $90,000.

So net cash flow from investing activities is:

$270,000 - $90,000

=$180,000

5 0
3 years ago
A process in which different individuals and units perform different tasks is known as:
elena-s [515]
The process is a multiplicative inverse of which people seem to check
4 0
3 years ago
Other questions:
  • What is one disadvantage to consumers of a rebate offer?
    15·2 answers
  • 1.) If you decide to be a tranchises and open a
    12·1 answer
  • A commercial bank sells a treasury bond to the federal reserve for $100,000. (assume that all proceeds from this bond sale are l
    11·1 answer
  • When a grocery store chain adopts a new practice of its competitors by staying open 24 hours a day, requiring employees to work
    14·1 answer
  • Joe makes an hourly salary of $8.10 for 40 regular hours of work. For each hour worked over 40 hours, he is paid at a rate of $1
    13·1 answer
  • Which of the following statements is not true? Multiple Choice
    7·1 answer
  • An outdoor clothing company's blog gives information about its latest products, such as waterproof jackets. The blog also allows
    11·1 answer
  • Keeping in mind uncertain economic conditions, the workers at a steel plant agree to a lower wage package in exchange for job se
    12·1 answer
  • Explain why full employment may be inconsistent with no shirking. Shirking may be likely with full employment because A. it may
    7·1 answer
  • Suppose the current price of a pound of chicken is $3 per pound and the equilibrium price is $6 per pound. What takes place
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!