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Libbee Corporation is presently making part I50 that is used in one of its products. A total of 7,300 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials $3 Direct labor $0.7 Variable overhead $6.5 Supervisor's salary $8.1 Depreciation of special equipment $4 Allocated general overhead $2 An outside supplier has offered to produce and sell the part to the company for $25.4 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition to the facts given above, assume that the space used to produce part I50 could be used to make more of one of the company's other products, generating an additional segment margin of $15,500 per year for that product. What would be the impact on the company's overall net operating income of buying part I50 from the outside supplier and using the freed space to make more of the other product? Net operating income would increase by $51,830 per year. Net operating income would decline by $36,330 per year. Net operating income would increase by $20,830 per year. Net operating income would decline by $15,500 per year.
Patrick Seeley has $2,400 that he is looking to invest. His brother approached him with an investment opportunity that could double his money in four years. What interest rate would the investment have to yield in order for Patrick's brother to de..
A 10-year, $1,000 face value bond has an 8.5% annual coupon. The bond has a current yield of 8%. What is the bond's yield to maturity?
Determine Debbie's and Elizabeth's realized gain or loss, recognized gain or loss, and the basis in their new property.
The standard labor time for the Cutting and Sewing departments is 0.20 hour and 0.30 hour per unit, respectively.What is the total direct labor variance for (1) the cutting department?
A company established a petty cash fund of $100 on September 1. On September 15, the petty cash fund was increased to $125 in total. Record the above transactions in general journal form.
From an employer's point of view, what is preferred a defined contribution plan or a defined benefit plan. What are the cash ramifications as well as reporting requirements?
Which of the following statements about methods of accounting is false?
Dixie Corporation distributes $31,000 to its sole shareholder, Sally. At the time of the distribution, Dixie's E&P is $25,000 and Sally's basis in her Dixie stock is $10,000. Sally's basis in her Dixie stock after the distribution is ??
What was the affect of unethical behavior on the profitability of the company?
Sam Jones is a pharmacist earning $90,000 per year and he decided whether to purchase a pharmacy and become manager of a business that generates revenue of $500,000 each year.
Would you answer in above question be different if the shareholder had also lent the subchapter S corporation cash in an amount in excess of the shareholders' allocable share of losses and deductions, and if so how?
Described below are certain transactions of Edwardson Corporation. The company uses the periodic inventory system. Make all journal entries necessary to record the transactions above using appropriate dates.
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