Answer:
the tiny thing dont work
A. Joe decides to build a chicken coop in his suburban backyard. He has several hens and one rooster. The rooster wakes up his neighbor each morning at 5:00 am. Joe's chicken coop :_______.
a. creates a negative externality if his chickens do not lay eggs.
b. creates a positive externality if Joe sells his chickens' eggs at the local farmers' market.
c. creates a positive externality if the neighbor wants to sleep longer but accepts free eggs in exchange for the inconvenience.
d. creates a negative externality if the neighbor wants to sleep longer and a positive externality if the neighbor is happy to be awaken early each day.
B. Jostin is ill and goes to the doctor. The doctor diagnoses him with a bacterial infection and prescribes an antibiotic. Jostin's visit to the doctor:_______.
a. produces a negative externality if he was supposed to be home studying for his classes.
b. produces a negative externality if the doctor was hoping to leave early that day and a positive externality if the doctor was hoping to boost her income.
c. produces a positive externality if it prevents other people from getting sick and a negative externality if the bacterial infection becomes resistant to antibiotics.
d. produces a positive externality if his medical insurance pays for the visit and a negative externality if Jostin has to pay out of pocket.
C. An urban farmer decides to build a bee hive to help pollinate the rooftop gardens in his neighborhood. The beehive:_________.
a. generates a negative externality if the bees are killed by a colony of wasps.
b. generates a positive externality if the farmer creates a successful online business that sells products made from the bees' honey
c. generates a negative externality if the farmer spends nearly all his time tending the bees and rarely leaves his home.
d. generates a positive externality if the rooftop gardens benefit from the pollination and a negative externality if the neighbors get stung by bees.
Answer:
D
C
D
Explanation:
A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.
A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation. Taxation increases the cost of production and therefore discourages overproduction. Tax levied on externality is known as Pigouvian tax.
a. The chicken coop would be of advantage if the neighbours want to wake up early (positive externality) and a disadvrange if they want to wake up late (negative externality).
the neighbours accepting eggs for the inconvenience is an example of private solution to negative externality
B. If Jill is cured he doesnt infect others (positive externality) If the bacteria is resistant, others can become infected and sick (negative externality)
Patents are on the books of a British subsidiary of a U.S. firm at a value of 50,000 pounds. The patents were acquired in 2017 when the exchange rate was 1 pound = $1.50. The British subsidiary was acquired by the U.S. firm in 2019 when the exchange rate was 1 pound = $1.40. The exchange rate on December 31, 2020, the date of the most current balance sheet, is 1 pound = $1.55. The average rate of exchange for 2020 is $1.53. Assuming the dollar is the functional currency of the subsidiary, what exchange rate will be used to re-measure patents for the consolidated statements dated December 31, 2020?
Answer:
The exchange rate that will be used to re-measure patents for the consolidated statements dated December 31, 2020 is:
= 1 pound = $1.55.
Explanation:
a) Data and Calculations:
Patents on the books of a British subsidiary = 50,000 pounds
Patent's acquisition date = 2017 at 1 pound = $1.50
Subsidiary's acquisition date = 2019 at 1 pound = $1.40
Current exchange rate, most current balance sheet on December 31, 2020 = 1 pound = $1.55.
Average rate of exchange for 2020 is $1.53
Value of Patent for the consolidated accounts = $77,500 (50,000 pounds * $1.55)
b) The accounting standard rule is that assets and liabilities of subsidiaries should be consolidated at the current exchange rates. Business transactions are translated at the average rate of exchange for the year. For equity accounts, you can use either the current or historical exchange rates.
ohn Baker, a cash basis calendar year taxpayer, paid the following during the year:Social security tax (withheld from wages) $4,500Real estate taxes $3,200State income tax $3,400Special assessment for installation of sidewalks $1,140Penalty on tax underpayment $300Flat fee for automobile registration $90What itemized deduction may John claim for taxes on his return
Answer:
$6,600
Explanation:
Calculation to determine the itemized deduction that John may claim for taxes on his return
Real estate taxes $3,200
Add State income tax $3,400
Itemized deduction $6,600
($3,200+$3,400)
Therefore the itemized deduction that John may claim for taxes on his return is $6,600
The master budget at Western Company last period called for sales of 225,000 units at $9 each. The costs were estimated to be $3.75 variable per unit and $225,000 fixed. During the period, actual production and actual sales were 230,000 units. The selling price was $9.10 per unit. Variable costs were $4.50 per unit. Actual fixed costs were $225,000.
Required:
Prepare a flexible budget for Western.
Answer:
Operating profit = $982,500
Explanation:
Given:
Sales = 225,000 units at $9 each
Variable per unit = $3.75
Fixed cost = $225,000
Actual production and actual sales = 230,000 units
Selling price = $9.10 per unit
Variable costs = $4.50 per unit
Actual fixed costs $225,000
Find:
Flexible budget
Computation:
Flexible budget
Particular Amount
Sales revenue (230,000 x $9) $2,070,000
Less: Variable (230,000 x $3.75) $862,500
Contribution margin $1,207,500
Less: Fixed cost 225,000
Operating profit $982,500
The cost-plus approach: Multiple Choice uses an assumed reasonable profit margin to determine the stand-alone price. refers to contracts where the contractor is not expected to recover all costs incurred in completing the project. is not allowed under ASC Topic 606 guidance for revenue recognition. refers to contracts that are modified from their original terms during the course of the contract.
Answer:
Uses an assumed reasonable profit margin to determine the stand-alone price.
Explanation:
Is the pricing method in which a resonable profit margin is added to the total product cost to determine the sale price of a product.
For Example
Product A Incurred a total cost of $20 to produce one unit. The company XYZ wants to earn 20% profit margin on the cost of the product, hence the price will be $24 ( $20 x ( 1 + 20% ).
The properly formatted question is as follow
The cost-plus approach:
Uses an assumed reasonable profit margin to determine the stand-alone price.
refers to contracts where the contractor is not expected to recover all costs incurred in completing the project.
is not allowed under ASC Topic 606 guidance for revenue recognition.
refers to contracts that are modified from their original terms during the course of the contract.
Muscat Sayarati Co. uses a job-order costing system with a single plantwide predetermined overhead rate based on labor-hours . The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $525,000, variable manufacturing overhead of $6.00 per labor -hour, and 35,000 abor-hours. The job sheet of Job G828 shows that the number of units in this job order is 45 units which incurred total of 90 labor-hours. This job consumed \$14/unit of direct materials cost and \$64/unit of direct labor costs. What would be the ?total cost for Job G828 approximately
Answer:
$810
Explanation:
Calculation to determine cost for Job G828
Estimated total manufacturing overhead cost = $525,000 + ($6.00× 35,000) = 315,000
Predetermined overhead rate = $315,000 ÷ 35,000 = $9
Overhead applied to a particular job = $9×90 = $810.
You are a jeweler who wants to make sure you have the maximum number of diamonds for sale. You notice that the number of diamonds available drops more when the size is relevant versus when the color is relevant. By comparing these factors, you are conducting a(n) _____ analysis.
Answer:
sensitivity
Explanation:
A financial sensitivity analysis consists of analyzing the variables that influence decisions related to a business. That is, the dependent and independent variables are analyzed and how they will affect the economic results of a company.
This analysis is effective so that companies can make projections about how one variable is directly influenced by another according to the data found, assisting in the financial and economic decision-making process that will contribute to the profitability and positioning of the business.
Armed only with his fingers, the owner decides that the safest forecasting approach is a linear trend line. His fingers are aching by the time he reaches May and he is worried about his ability to stuff tacos during tomorrow's dinner rush. Help him out by finding the forecast for June.
a. 497.4
b. 482.8
c. 583.5
d. 588.0
Answer:
c. 583.5
Explanation:
The forecast for the Tacos in the month of June will be 583.5. The forecasting technique help the businessmen to plan and organize their business activities according to the expected demand. There can be slight deviation from forecast or in some case there can be major deviation due to unexpected events. Seasonal effects are also considered when forecasting sales for the product.
Which statement concerning the kinked demand curve model of oligopoly is false? The portion of the demand curve above the "kink" is more elastic than the portion below. The firm's marginal costs can sometimes shift without changing the profit-maximizing price and output. It assumes when one oligopolist raises the price, all others will follow. It addresses the question of price "stickiness."
Answer: It assumes when one oligopolist raises the price, all others will follow
Explanation:
An oligopoly is a form of market where there are dominated by few group of large sellers.
A kinked demand curve simply happens when the elasticity is not thesame for the lower and higher prices and the demand curve isn't a straight line.
It simply suggests that there are rigid prices and assumes when one oligopolist raises the price, all others will follow.
A consumer's need to apply for a loan is escalated to a motive under which of the following conditions.
A. Crisis
B. The need is aroused to sufficient level of intensity
C. Pressure
D.Seeking satisfaction
A consumer's need to apply for a loan is escalated to a motive under The need is arous - ed to a sufficient level of intensity. Thus option B is correct.
Who are consumers?A customer is a person or an organization that is not directly involved in commercial or company performance and who expects to order or uses purchased items, commodities, or resources primarily for their personal, societal, family, or home needs.
When a need is sufficiently sparked, it transforms into a purpose. A need is a customer's perception of a certain benefit of a commodity or a service, whether the value is practical or emotional.
A person is constantly in need of many things. Some of these are emotional, while others are natural. That whenever a need is sufficiently sparked, it develops into a motive. Therefore, option B is the correct option.
Learn more about consumers, Here:
brainly.com/question/13420317
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A product sells for $210 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. If the firm wants to earn $35,000 after tax income (assume a 30% tax rate), how many units must be sold
Answer:
5,688 units
Explanation:
Target sales = Target Profit + Fixed Costs ÷ Contribution per unit
where,
Contribution per unit = Sales - Variable Costs
= $210 - $130 = $80
therefore,
Target sales = ($35,000 + $420,000) ÷ $80 = 5,688 units
Private producers have no incentive to provide public goods because A. the government subsidy granted is usually insufficient to enable private producers to make a profit. B. production of huge quantities of public goods entails huge fixed costs.
Answer:
Private producers have no incentive to provide public goods because
B. production of huge quantities of public goods entails huge fixed costs.
Explanation:
There is rivalry in the production and consumption of private goods. This rivalry is generally described as competition. Most public goods are produced naturally or provided by the government to her citizens. Since they are made available for the welfare of the people, there is usually no cost recovery or exclusion of persons based on financial affordability. But private goods are manufactured and sold by private companies or individuals for a profit motive.
What was the price of a Coca-Cola's in 1945
A bottle of Coke cost only five cents in 1945.
Answer:
5 cents
Explanation:
The 40s and 50s A bottle of Coke (there were no cans of Coke then) coats only 5 cents during those times
Karl's Keychain Company produces keychains that sell in its stores for $1 each. On January 1, 2015, the company had inventory of 10,000 keychains. During 2015, the company produced 900,000 keychains. At the end of the business year on December 31, 2015, the company's inventory of keychains was 8,000. What was the value of Karl's inventory investment in 2015
Answer:
$2,000
Explanation:
Calculation to determine the value of Karl's inventory investment in 2015
On January 1, 2015, beginning inventory $10,000
Less December 31, 2015, ending inventory $8,000
2016 value of Karl's inventory investment $2,000
Therefore the value of Karl's inventory investment in 2015 will be $2,000
Based on your understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher? The outlook for the economy and the markets is for a downturn. The outlook for the economy and the markets is for an improvement.
Answer:
The outlook for the economy and the markets is for an improvement.
Explanation:
p/e ratio = price / earning
the higher the equity, the lower the ratio
If the p/e ratio is expected to be higher, it means that the equity would have to be lower this year than next year .
this implies that earnings would be higher next year and p/e ratio would be lower. this means there is a positive economic outlook
Campbell Corporation uses the retail method to value its inventory. The following information is available for the year 2021: Cost Retail Merchandise inventory, January 1, 2021 $ 290,000 $ 290,000 Purchases 622,000 920,000 Freight-in 18,000 Net markups 30,000 Net markdowns 5,000 Net sales 900,000 Required: Determine the December 31, 2021, inventory by applying the conventional retail method using the information provided
Answer:
Estimated ending inventory at retail $335,000
Estimated ending inventory at cost $251,250
Explanation:
Calculation to determine the December 31, 2021, inventory by applying the conventional retail method using the information provided
COST RETAIL
Merchandise inventory, January 1, 2021
$290,000 $ 290,000
Purchases $622,000 $920,000
Freight-in 18,000 $0
Net markups$0 30,000
Total $930,000 $1,240,000
Less Net markdowns $0 $5,000
Goods available for sale $930,000 $1,235,000
($930,000-$0=$930,000)
($1,240,000-$5,000=$1,235,000)
Cost-to-retail percentage 75%
($930,000/$1,235,000)
Less Net sales $0 $900,000
Estimated ending inventory at retail $335,000
($1,235,000-$900,000)
Estimated ending inventory at cost $251,250
($335,000 x 75%)
Therefore the December 31, 2021, inventory by applying the conventional retail method using the information provided will be:
Estimated ending inventory at retail $335,000
Estimated ending inventory at cost $251,250
Assume the following information appears in the standard cost card for a company that makes only one product: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 5 pounds $ 11.00 per pound $ 55.00 Direct labor 2 hours $ 18.30 per hour $ 36.60 Variable manufacturing overhead 2 hours $ 3.00 per hour $ 6.00 During the most recent period, the following additional information was available: 20,000 pounds of material was purchased at a cost of $10.50 per pound. All of the material that was purchased was used to produce 3,900 units. 8,000 direct labor-hours were recorded at a total cost of $132,000. What is the direct labor rate variance
Answer:
Direct labor rate variance= $14,400 favorable
Explanation:
Giving the following information:
Direct labor 2 hours $ 18.30 per hour $ 36.60
8,000 direct labor hours were recorded at a total cost of $132,000
To calculate the direct labor rate variance, we need to use the following formula:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (18.3 - 16.5)*8,000
Direct labor rate variance= $14,400 favorable
Actual rate= 132,000/8,000= $16.5
Pettijohn Inc. The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over. Refer to the data for Pettijohn Inc. What is the firm's dividends per share
Answer:
The appropriate solution is "$2.91". A further explanation is given below.
Explanation:
Seems that the given question is incomplete. Below is the attachment of the full problem.
According to the question,
Common dividend,
= 509.83
Shares outstanding,
= 175
Now,
The dividend per share will be:
= [tex]\frac{Common \ dividend}{Shares \ outstanding}[/tex]
On substituting the values, we get
= [tex]\frac{509.83}{175}[/tex]
= [tex]2.9133[/tex]
or,
= [tex]2.91[/tex]
Ron was vacationing in France, when his camera was stolen. As he walked into a camera store, Ron noticed that camera prices were in euros. If Ron was willing to pay $ for a new digital camera and the exchange rate is $ per euro, how much will Ron be paying in euros? Ron will be paying nothing euros for the camera. (Instructions: Enter your response by rounding two places after the decimal.)
Answer:
130.43 euros
Explanation:
Since Ron willing to Pay is $150
Now we have to convert $150 in euros
As we know that
exchange rate × willing to pay in euro = Willing to pay in Dollar
i.e.
willing to pay in euro = Willing to pay in Dollar ÷ Exchange rate
= 150 ÷ 1.15
= 130.43 euros
Hence, the ron be paying in euros is 130.43
The same would be relevant
One year ago, Jack and Jill set up a vinegar-bottling firm (called JJVB). Use the question facts to calculate JJVB's opportunity cost of production during its first year of operation. JJVB's opportunity cost of production during its first year of operation is $ __________. (do not include any commas in your answer) Prof. Taylor's note: assume the 6% interest rate stated in fact 8 applies to all money in the bank
Answer: $111,000
Explanation:
The opportunity costs incurred by Jack and Jill include:
Wages of $15,000 paid to employeeCost of equipment and goods and services Interest sacrificed on capital put into businessSalary that Jack gave upHours of leisure given up by JillDepreciation of equipmentOpportunity costs were therefore:
= 15,000 + 30,000 + 10,000 + (30,000 * 5%) + 40,000 + (25 * 10 * 50 weeks) + (30,000 - 28,000)
= $111,000
Home Run Inn began producing frozen pizza in their single restaurant in South Chicago in the 1950s. They did this because their customers wanted this product. Today, businesses use IT to track customer tastes and desires in order to both attract new customers and retain current ones. Today this customer/business interaction is called
Answer:
Customer relationship management
Explanation:
Customer relationship management consists of an organizational strategy whose main objective is to increase brand awareness and value for your potential customer.
When Home Run Inn uses IT strategies to track customer tastes and desires in order to attract new customers and retain current ones, it is having a positive interaction with the consumer, who has their needs and preferences met by the company and thus build a relationship of loyalty with the brand that becomes more competitive and well positioned in the market.
The relationship between client and company is extremely valued today, whose digital age has narrowed this relationship and has made companies much more than profitable entities, but rather as providers of identification, value and satisfaction for the client.
A retired auto mechanic hopes to open a customizing shop for installing heated or ventilated seats. Two locations are being considered, one in the center of the city and one on the outskirts. The central city location would involve fixed monthly costs of $6,500 and labor, materials, and transportation costs of $20 per car. The outside location would have fixed monthly costs of $3,900 and labor, materials, and transportation costs of $30 per car. Dealer price at either location will be $80 per car. a. Which location will yield the greatest profit if monthly demand is (1) 150 cars
Answer:
Outskrits
Explanation:
The Cost of labor and materials is quite a bit less than if in the middle of town, in the big picture that 10 dollar difference in transportation is nothing in the long run. The only problem is as your not a big pass-by kinda place you might not get as many customers from it as you might like. Saving money is a key but a good product is the door to fortune.
Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the cost recovery method to recognize revenue on these installment sales. In 2020, Lake began operations and sold jet skis with a total price of $690,000 that cost Lake $345,000. Lake collected $230,000 in 2020, $230,000 in 2021, and $230,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1,860,000 that cost Lake $1,116,000. Lake collected $620,000 in 2021, $430,000 in 2022, and $430,000 in 2023 associated with those sales. In 2023, Lake also repossessed $380,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $142,500 at the time they were repossessed. In 2020, Lake would recognize realized gross profit of:
Answer:
$115,000
Explanation:
Calculation to determine what Lake would recognize realized gross profit
First step is to calculate the Gross profit percentage
Gross profit percentage = [($690,000 − $345,000)/$690,000]
Gross profit percentage =$345,000/$690,000
Gross profit percentage =0.5*100
Gross profit percentage = 50%
Now let calculate the realized gross profit
Realized gross profit=50% × $230,000
Realized gross profit = $115,000
Therefore Lake would recognize realized gross profit of:$115,000
The Consumer Price Index (CPI) is determined each month by multiple choice 1 averaging all the prices of goods and services in the economy. estimating the prices of goods and services in the economy at the same rate as the cost of living increases. comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in cities around the country. comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in a base year.
Answer:
The Consumer Price Index (CPI) is determined each month by
comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in a base year.
Explanation:
The US Consumer Price Index (CPI) is an important statistical tool for identifying inflation and deflation periods in the US economy. It computes the weighted average of prices of a predetermined basket of consumer goods and services. With the CPI changes, the assessment of the general cost of living in the economy becomes easier.
Riverbed Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $4,320,000 on March 1, $2,880,000 on June 1, and $7,200,000 on December 31. Riverbed Company borrowed $2,400,000 on March 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $4,800,000 note payable and an 11%, 4-year, $8,400,000 note payable. Compute avoidable interest for Riverbed Company. Use the weighted-average interest rate for interest capitalization purposes.
Answer:
total capitalized interests = $572,727
Explanation:
weighted expenditures:
$4,320,000 x 10/12 = $3,600,000
$2,880,000 x 7/12 = $1,680,000
$7,200,000 x 0/12 = $0
total = $5,280,000
$2,400,000 x 10/12 x 10% = $200,000
Capitalized interests = $200,000 (for $2,000,000)
weighted interests
$4,800,000 x 12/12 x 12% = $576,000
$8,400,000 x 12/12 x 11% = $924,000
weighted interest rate = $1,500,000 / $13,200,000 = 11.36%
Capitalized interests = ($5,280,000 - $2,000,000) x 11.36% = $372,727
total capitalized interests = $572,727
Comcast (CMCSA) is trading at 54.33. You decide to short sell 100 shares of their stock, providing 2850 in collateral to your broker. You hold the short position for one year and expect Comcast to pay a dividend of 1 per share. In one year, the stock price is 56. Assuming the brokerage account pays no interest on your cash, what is your return, relative to your collateral
Answer: =-9.34%
Explanation:
Assuming the brokerage account pays no interest on your cash, the return, relative to the collateral will be calculated as:
= (Short sell price - dividend - Share buy price)/Capital employed
= (5433 - 100 - 5600) / 2850
= -267 / 2850
= -0.09368
=-9.34%
Note:
Short sell price = 54.33 × 100 = 5433
Dividend = 100
Share buy price = 56 × 100 = 5600
Before expiration, the time value of a call option is equal to Group of answer choices zero. the actual call price minus the intrinsic value of the call. the intrinsic value of the call. the actual call price plus the intrinsic value of the call.
Answer: the actual call price minus the intrinsic value of the call.
Explanation:
The actual price of a call is calculated as the sum of the intrinsic value of the call and the time value of the call option in the manner:
Price of call = Intrinsic value of call + Time value of call
The Time value of the call is therefore:
Change subject of below formula:
Price of call = Intrinsic value of call + Time value of call
Time value of call = Price of call - Intrinsic value of call
1. Evaluate the situation that Mason and Shepherd find themselves in with respect to their existing employers. What are the legal and ethical issues raised
Answer:
The answer is provided in two separate headings for Mason and Shepherd with regard to the issues faced by them and how to handle them.
Explanation:
Mason
Mason's goal is start a venture by utilising the information received from the company she has worked for. This could lead to the violation of the agreement with her employer with regard to Non-competition, Non-disclosure and Development provisions.
So to tackle this situation she needs to first of all prove that the business is not a competitor of ATS. Moreover, she must refrain from coming into contact of the current customers of ATS. Finally, data kept in her office computer on the details of the new venture is currently under the ownership of ATS. Therefore, she should removed that data. Other than that she could negotiate with ATS with the help of a legal consultant.
Shepherd
Shepherd has signed an agreement with NOVA, where he is being bound to disclose all the inventions he has worked on so far. This problem is more likely on the intellectual property law.
To resolve this issue he could own his inventions by way of patent the translate engines as early as possible. While the process may take some years, it will be protected from NOVA as it would in pending status.
The following information is given from The Gathering Sound, Inc. for the month of August, 2020: Beginning raw materials inventory $21,600 Ending raw materials inventory $18,600 Beginning work in process inventory $35,000 Ending work in process inventory $37,450 Beginning finished goods inventory $29,340 Ending finished goods inventory $28,995 Raw material purchases $88,210 Direct materials used $89,300 Direct labor used $51,730 Total factory overhead applied $62,076 Calculate the Cost of Goods Sold. a. $203,106 b. $203,656 c. $201,001 d. $200,311 e. $200,656
Answer:
Explanation:
Step 1 : Cost of Goods Manufactured
Step 2 : Cost of Goods Sold
Opening Finished Goods Inventory $29,340
Add Cost of Goods Manufactured
Less Finished Goods Inventory ($28,995)
Cost of Goods Sold
Classic Limo, Inc. provides limousine service to Tri-Cities airport. The price of the service is fixed at a flat rate for each trip and most costs of providing the service are stable for each trip. Marc Pence, the owner, budgets income by estimating two factors that fluctuate with the economy: the fuel cost associated with each trip and the number of customers who will take trips. Looking at next year, Marc develops the following estimates of contribution margin (price less variable cost of the trip, including fuel) and for the estimated number of customers. Although Marc understands that it is not strictly true, he assumes that the cost of fuel and the number of customers are independent.
Contribution Margin Per
Scenario Ride (Price - Variable cost) Number of Customers
Excellent $40 10,500
Fair $25 6,000
Poor $15 4,500
In addition to the costs of a ride, Marc estimates that other service costs are $50,000 plus $5 for each customer (ride) in excess of 6,000 rides. Annual administrative and marketing costs are estimated to be $25,000 plus 10% of the contribution margin.
Required:
1) Using the above information, construct an Excel spreadsheet to prepare an analysis of the possible operating income for Classic Limo, Inc.
2) 2) If you were manager of Classic Limo, Inc. and had to choose only one budget scenario to use for planning for the year, which one of the nine scenarios would you choose?
Answer:
1) See the attached excel file for the analysis of the possible operating income for Classic Limo, Inc.
2) The scenario with the highest operating profit $280,500 which is Excellent with $40 Contribution Margin and 10,500 Numbers of Customers.
Explanation:
1) Using the above information, construct an Excel spreadsheet to prepare an analysis of the possible operating income for Classic Limo, Inc.
Note: See the attached excel file for the analysis of the possible operating income for Classic Limo, Inc.
2) If you were manager of Classic Limo, Inc. and had to choose only one budget scenario to use for planning for the year, which one of the nine scenarios would you choose?
The scenario that would be chosen is the scenario with the highest operating profit $280,500 which is Excellent with $40 Contribution Margin and 10,500 Numbers of Customers.