Answer:
Parrish Plumbing
1. Opportunity cost of not working on Saturday:
= $52,000 per year.
2. Parrish's monthly rent or depreciation related to office equipment are not considered because they are not incremental costs. Non-incremental costs do not make any difference to the decision to work on Saturday or not. Therefore, the costs are regarded as sunk, because they must be incurred no matter the decision. They are therefore irrelevant and non-variable in nature.
Explanation:
Daily revenue = $2,500
less relevant or incremental expenses:
Labor $700
Parts 500
Transport 100
Office staff 200 (1,500)
Incremental profit $1,000 per week
Annual incremental profit = $52,000 (52 * $1,000) or opportunity cost
The opportunity cost of not working on Saturday for Parrish Plumbing is $52,000, which is the foregone profit. This is calculated by subtracting operation costs from potential revenue. Sunk costs like rent or depreciation are not considered as they don’t affect incremental costs.
To calculate the opportunity cost of not working on Saturday for Parrish Plumbing, we need to subtract the total costs associated with working on Saturday from the total revenue that could be generated if work was done on that day. Ken is projecting a daily revenue of $2500 for each Saturday they would be opened for 52 Saturdays in a year, giving a total annual revenue of $130,000 ($2500 * 52).
The costs for staying open on Saturday include $700 for labor, $500 for parts, $100 for transportation, and $200 for office staff which totals to $1500. Therefore, the net profit for working on a Saturday would be the revenue ($2500) subtracted by the costs ($1500), which gives us $1000. Over 52 Saturdays in a year, this amounts to $52,000 ($1000 * 52). The $52,000 is the opportunity cost of not working on Saturday. This represents the amount of profit Ken is foregoing to give his employees the day off.
Regarding why we don’t need to consider rent or depreciation of office equipment, those are considered sunk costs. Sunk costs are expenses that have already been incurred and cannot be recovered. These costs do not change regardless of business operations, hence, they are not relevant when considering incremental costs for extra operation days.
#SPJ3
Answer:
Produce more widgets.
Explanation:
Given the price charge by the competitive firm is = $15
The unit produced = 100
The marginal cost of the last unit = $12
The firm should produce more widget because in the competitive market the firm charge the price that is equal to MC. Moreover, in the given question the price is greater than the marginal cost. Therefore, the firm should produce more widgets in order to reach the condition “P=MC”.
Answer:
The service sector grows because of the same reason that any other economy sector grows: the demand for it increases.
Explanation:
Demand increases because new services are created, or existing ones obtain more customers: a larger market share.
In the case of Amazon, the service it offers is deliveries, but Amazon took deliveries to its logical conclusion, becoming an online store that essentially sells everything, from books to car accessories, to fruits and vegetables.
Amazon has become a giant company because it exploited a existing market that had a lot of untapped potential, and customers at the same time responded by demanding even more of these services. In other words, Amazon and the customers formed a virtous cycle that feeds economic growth.
Answer:
1. Cost of goods manufactured =437,000.00
2. cost per hockey stick= $230
Explanation:
Total product cost: The sum of direct material cost, direct labour cost and overhead.
Direct material cost is the costs of all specific materials required to product a product. For example, cost of the flour, sugar used to produce cakes. Where there exist inventory of materials at the beginning and end of a period, the cost of material used is calculated as follows:
Cost of material used is calculated as = Opening stock + Purchases - closing stock
Direct labour cost : the cost of the man hours used directly for the purpose of production. The cost of hours paid to the tailors for making garments in a clothing factory . It is arrived as the active hours used for production × wage rate per hour.
Overhead : Sum of the indirect costs. These include expenditutures on materials , labour and expenses incurred not specifically for a particular product. Example are cost of toiletries used in a bakery, salaries of the security guard , rent of the bakery, e.t.c.
Opening working in progress represents accumulated production cost incurred on goods for which production commenced in a prior period but was not concluded. These items will need to be continued in the following period, hence further production costs would be incurred.
Closing working in progress this represents the cost production work for which work is yet to be completed as the end of the current period.
Working in Progress is adjusted on the production cost in the current period as follows to determine the production cost of the completed units as thus:
Cost of the goods manufactured =
opening WIP + production cost incurred in the period - closing W.I.P.
So we are not set to apply these explanation
Direct materials (132000+48,000-45,000) 135,000.00
Direct labour 113,000.00
Manufacturing Overhead 187,000.00
Add opening W.I.P 65,000.00
less closing W.I.P (63,000.00)
Cost of goods manufactured 437,000.00
Cost of one hockey stick = cost of good manufactured / Hocky sticks produced
=$ 437,000/1900 sticks
Cost per hockey stick= $230
The cost of goods manufactured for Slapshot Company in June is $429,000. The cost of one hockey stick, given that 1,900 hockey sticks were produced in June, is approximately $225.79.
To determine the cost of goods manufactured, we need to add purchases, direct labor costs, and manufacturing overheads then subtract the change in materials inventory. Here, the purchases are $132,000, direct labor cost of $113,000, and manufacturing overhead is $187,000. The materials inventory decreased by $3,000 ($48,000 - $45,000). So, the total cost of goods manufactured is $429,000 ($132,000+$113,000+$187,000-$3,000).
To find the cost of one hockey stick, we just need to divide the cost of goods manufactured by the number of items produced. Therefore, if 1,900 hockey sticks were completed during June, each hockey stick costs $225.79 ($429,000 / 1,900).
#SPJ6
Prepare the journal entry to recognize the impairment.
Explanation:
The journal entries are as follows
On December 31,2017
Loss on impairment Dr $80,000
To Debt investment - available for sale $80,000
(Being the loss on impairment is recorded)
It is computed below:
= $800,000 - $720,000
= $80,000
On December 31, 2017
Fair value adjustment- available for sale Dr $80,000
To Unrealized holding gain or loss - equity $80,000
(Being the fair value adjustment is recorded)
Answer:
Dr Allowance for Doubtful Accounts $80,000
Cr Debt Investments 80,000
Explanation:
Impairment = Cost - Fair Value = 800,000 - 720,000 = 80,000
Companies should use the CECL model to record the impairment of debt investments similar to receivables.
In evaluating the securities, Hagar now determines that it is probable that it will not collect all amounts due. In this case, it records a debit to allowance for doubtful accounts. Hagar includes this amount in income and records the impairment as shown above.
Answer:
$50
Explanation:
Solution
Recall that:
The company plans on giving out $50 million by repurchasing stock hence, number of stock to be purchased = 50/50 = 1 million
The Number of share bought back = 300-1 = 299
Thus
$20,000 + $1,000 - $6000 = $15,000
$15,000 / 300 shares = $50
Before Repurchase After the repurchase
Value of operations 20000 20000
Short-term investments 1000 950
Less : Debt 6000 6000
Intrinsic value of equity 15000 14950
Number of shares 300 299
Intrinsic value per share 50 50
Therefore the intrinsic per share stock price be immediately after the repurchase is $50
Answer: a. Brands enhance loyalty.
Explanation:
Brands enhance loyalty because people are more likely to identify with a symbol than with something that has a general identity. When a company has a brand therefore, it will enhance the loyalty of its consumers as they look to identify with that brand.
Take Adidas for instance, the three stripes logo is so iconic that people can sometimes have entire wardrobes of Adidas apparel to show those three stripes off and show that they identify with it. This is the benefit that Nancy stands to gain with branding.