Answer:
the net income is $250,000
Explanation:
The computation of the net income is given below:
= Sales - variable cost of goods sold - fixed cost of goods sold - variable selling & admin expense - fixed selling & admin expense
= $1,080,000 - $280,000 - $170,000 - $160,000 - $220,000
= $250,000
Hence, the net income is $250,000
The above formula should be applied for the same
Pick the correct statement from below. Multiple Choice Project analysis should only include the cash flows that affect the income statement. A project can create a positive operating cash flow without affecting sales. The depreciation tax shield creates a cash outflow for a project. Interest expense should always be included when analyzing cost-cutting projects. A bid price maximizes profits on a project for the bidding firm.
Answer:
A project can create a positive operating cash flow without affecting sales.
Explanation:
A project cash flow analysis permits to look the cash inflows and cash outflows that are along with the existing or upcoming project. Also it addressed the opportunity cost
So as per the given situation, it involved that project in which it establish the positive operating cash flow without impacting the sales
Therefore as per the given options, the above statement represent an answer
Zisk Co. purchases raw materials on account Budgeted purchase amounts are April, $80,000, May, $110,000, and June, $120,000. Payments are made as follows: 70% in the month of purchase and 30% in the month after purchase. The March 31 balance of accounts payable is $22,000. Prepare a schedule of budgeted cash payments for April, May, and June. (I need ending accounts payable)
Answer:
A schedule of cash payments for April, May, and June is prepared.
Explanation:
The following image shows the calculation and explanation of the cash payment schedule.
A manufacturing firm has a marketable permit that currently allows for 150 tons of emissions. However, the marketable permit is shrinkable and the firm will only be allowed 100 tons of emissions next year. The manufacturing firm projects that its optimal emissions next year will be 160 tons. It is the best interest of the manufacturing firm to purchase permits allowing for _______ tons of emissions.
Answer: 60
Explanation:
Since we are given the information that the firm will only be allowed 100 tons of emissions next year while the manufacturing firm projects that its optimal emissions next year will be 160 tons, then it will be in the best interest of the manufacturing firm to purchase permits allowing for (160 - 100) = 60 tons of emissions.
The correct answer is 60 tons of emissions.
Company A produces paper and sells it to Company B for a total of $183. Company B uses the paper to make books and then sells the books to consumers for a total of $342.What is the value of GDP in this simple economy?
Answer:
$159
Explanation:
Value = cost of books - cost of paper
342 - 183 = 159
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
the cost of paper is not included because it is an intermediate good and not a final good.
An intermediate good is a good that is used in the production of the final good.
If it is added to GDP, it would result in double counting
The value of GDP in this simple economy is $159.
A gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
The formula for GDP is Consumption spending by households + Investment spending by businesses + Government spending + Net export
Note that "the cost of paper is not included because it is an intermediate good and not a final good and an intermediate good is a good that is used in the production of the final good"
The value of GDP = Cost of books - Cost of paper
The value of GDP = 342 - 183
The value of GDP = 159
In conclusion, the value of GDP in this simple economy is $159.
Read more about gross domestic product
brainly.com/question/1383956
A special investment project will require 5 years of planning and implementation, but will allow your firm to receive $350,000 at the end of years 6, 7, 8, 9, and 10. If the appropriate discount rate is 13%, what is the present value of those cash flows
Answer: $668,154
Explanation:
The present value would be the sum of the present values of the five cashflows.
= 350,000 / 1.13⁶ + 350,000 / 1.13⁷ + 350,000 / 1.13⁸ + 350,000 / 1.13⁹ + 350,000 / 1.13¹⁰
= $668,154.28
= $668,154
Elite Trailer Parks has an operating profit of $293,000. Interest expense for the year was $38,800; preferred dividends paid were $31,500; and common dividends paid were $36,900. The tax was $65,500. The firm has 20,200 shares of common stock outstanding.
Required:
a. Calculate the earnings per share and the common dividends per share for Elite Trailer Parks.
b. What was the increase in retained earnings for the year?
Answer:
a.Earnings per share $7.78
Dividends per share $1.83
b. $120,300
Explanation:
a. Calculation to determine the earnings per share and the common dividends per share for Elite Trailer Parks.
First step is to calculate the Increase in retained earnings
Operating profit $293,000
Interest expense ($38,800)
=Earnings before taxes $254,200
Less Taxes ($65,500)
Earnings after taxes = $188,700
Preferred dividends ($31,500)
Available to common stockholders $157,200
Common dividends ($36,900)
Increase in retained earnings $120,300
($157,200-$36,900)
Now let determine Earnings per share and Dividends per share using this formula
Earnings per share = Available to common stockholders/ Number of common shares outstanding
Let plug in the formula
Earnings per share = $157,200/20,200
Earnings per share= $7.78
Dividends per share = Common dividends/ Number of shares outstanding
Let plug in the formula
Dividends per share=$36,900/20,200
Dividends per share= $1.83
Therefore the earnings per share and the common dividends per share for Elite Trailer Parks is:
Earnings per share $7.78
Dividends per share $1.83
B. Based on the information above calculation in (a) the increase in retained earnings for the year is $120,300
If fixed costs are $1,464,000, the unit selling price is $220, and the unit variable costs are $114, what are the break-even sales (units) if fixed costs are increased by $46,400? a.11,399 units b.21,374 units c.17,099 units d.14,249 units
Answer:
d.14,249 units
Explanation:
Break-even sales (units) = Fixed Costs ÷ Contribution per unit
Where,
Contribution per unit = Unit Selling Price - Unit Variable Cost
= $106
therefore,
Break-even sales (units) = ($1,464,000 + $46,400) ÷ $106
= 14,249
thus,
the break-even sales (units) if fixed costs are increased by $46,400 is 14,249 units.
Warren Co. recorded a right-of-use asset of $820,000 in a 10-year finance lease. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset after two years will be:
Answer:
$656,000
Explanation:
Calculation to determine what The balance in the right-of-use asset after two years will be
Using this formula
Right-of-use asset after 2 years balance=Value of Asset- (Value of Asset*Used year)/Estimated Life
Let plug in the formula
Right-of-use asset after 2 years balance= $820,000 - ($820,000 / 10) * 2
Right-of-use asset after 2 years balance=$820,000-$164,000
Right-of-use asset after 2 years balance= $656,000
Therefore The balance in the right-of-use asset after two years will be:$656,000
A fire destroyed a large percentage of the financial records of Carter Health System. You have the task of piecing together information to prepare a financial report. You find the profit margin to be 5.4 percent. If sales were $4 million on total assets of $2 million, and the amount of debt financing was $800,000, what was Carter's return on equity (ROE)?
a. 21.6%.
b. 25.8%.
c. 13.8%.
d. 18.0%.
e. 19.2%.
Answer:
d. 18.0%
Explanation:
Calculation to determine what was Carter's return on equity (ROE)?
First step is to calculate the Net income
Net income = sales * profit margin
Net income= 4 million * 5.4%
Net income= 216000
Second step is calculate the Equity
Equity = total assets - debt
Equity= 2000000 - 800000
Equity= 1200000
Now let determine the ROE
ROE = Net income/Equity
ROE= 216000/1200000
ROE= 18%
Therefore Carter's return on equity (ROE) is 18%
At the beginning of the year, Nothing More, Corp., had a long-term debt balance of $38,554. During the year, the company repaid a long-term loan in the amount of $11,714. The company paid $4,710 in interest during the year, and opened a new long-term loan for $10,250. What was the cash flow to creditors during the year
Answer: $6,174
Explanation:
Cash flow to creditors during the year is the amount that was paid to creditors less the amount that was received from them.
The relevant formula is:
= Long term loan repaid + Interest paid - Addition to long term loan
= 11,714 + 4,710 - 10,250
= $6,174
Nut and Bolt guy Inc, sells nuts, bolts, fasteners and other related equipment. The CFO projects that net FCF for the next three years will be $11,000, $12,500 and $16,000, respectively. After that, the cash flows are expected to increase by 4.5 percent annually. What is the value of the firm if the WACC is 12.2%?
Answer:
$184791
Explanation:
The calculation of the value of the firm is given below:
Year Future Cash Flow PVF at 12.2% PV of Cash Flow
1 11000 0.891 9801
2 12500 0.794 9925
3 16000 0.708 11328
Total 31054
Present Value of Terminal Value
= [16000 × (1 + 0.045) ÷ 0.122 - 0.045] × 0.708
= [16720 ÷ 0.077] × 0.708
= 153737
Now
value of Firm = 31054 + 153737
= $184791
Which of the following food borne illness has a preventative vaccine
A. E.coli
B.norovirus
C. Hep. A
D. Shigella
Answer:
C. Hep. A
Explanation:
From the available options, Hep. A is preventable with a vaccine. The vaccine was created in 1995. It is administered to individuals in two seperate doses and usually done with a time span of 6 months between dose. Having both doses administered helps prevent the individuals from the Hep. A virus long term. Like most vaccines, this one has a 95% effectiveness for preventing the virus from affecting the individual's body.
Which of the following is true regarding the corporate form of ownership?
A. All of these
B. Generally has the greatest ability accumulate capital.
C. Separate legal entity in the eyes of the law.
D. Most complex form of ownership.
Answer:
A. All of these
Explanation:
A corporation can be defined as a corporate organization that has facilities and owns or controls assets used for the production of goods and services in at least one country other than its headquarter (home office) located in its home country.
This ultimately implies that, a corporation is a corporate organization that owns or controls its business in two or more countries. Also, it is a body that comprises of a group of people such as directors, shareholders etc., who act as a single entity.
Generally, a corporate form of ownership is considered to be perpetual in nature.
Corporations can be sold to investors through stocks or shares, as a public entity. Thus, a company that engages in the sales of ownership shares to many investors is referred to as a corporation.
Some examples of multinational firms are Ap-ple, Volkswagen, G-oogle, Shoprite, Nestlé, Accenture, Shell BP, Chevron etc.
On a related note, an owner of a corporation is commonly referred to as a stockholder.
The true statements regarding the corporate form of ownership are;
I. Generally has the greatest ability accumulate capital.
II. Separate legal entity in the eyes of the law.
III. Most complex form of ownership.
direct operating margin may be used to determine departmental?
Answer:
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You wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $30,000 for 25 years after retirement. During the period before retirement you can earn 11 percent annually, while after retirement you can earn 13 percent on your money. What annual contributions to the retirement fund will allow you to receive the $30,000 annuity
Answer:
$3,425.08
Explanation:
The computation of the annual contributions to the retirement fund is shown below:
The Present value of the annuity is
= $30,000 × [1 - (1 ÷ (1 + 13%)^25)] ÷ 13%
= $219,899.55
Now
Future value of annuity = P×[(1+r)^n-1]÷r
$219,899.55 = P×[(1+11%)^20-1]÷11%
Hence, Annual contribution required, P = $3,425.08
The inventory turnover ratio: Multiple Choice Is used to analyze collectability. Is used to measure solvency. Reveals how many times a company sells its merchandise inventory during a period. Reveals how many days a company can sell inventory if no new merchandise is purchased. Calculation depends on the company's inventory valuation method.
Answer: Reveals how many times a company sells its merchandise inventory during a period.
Explanation:
The Inventory Turnover Ratio is used to measure how often a company is able to sell off all its inventory within a single period. The higher this is, the better because it means that the company has a high sales rate and is incurring low storage costs since the inventory does not stay with them for long.
It is important to use this ratio relative to the type of industry it is being applied to however. For instance, a car dealership would be expected to have a lower inventory turnover ratio than a grocery store so comparing them using this ratio would be inaccurate.
Ivanhoe Diesel owns the Fredonia Barber Shop. He employs 5 barbers and pays each a base rate of $1,380 per month. One of the barbers serves as the manager and receives an extra $535 per month. In addition to the base rate, each barber also receives a commission of $3.75 per haircut.
Other costs are as follows.
Advertising $270 per month
Rent $1,010 per month
Barber supplies $0.50 per haircut
Utilities $160 per month plus $0.15 per haircut
Magazines $35 per month
Ivanhoe currently charges $11 per haircut.
Determine the variable costs per haircut and the total monthly fixed costs. (Round variable costs to 2 decimal places, e.g. 2.25.)
Total variable cost per haircut
$enter a dollar amount rounded to 2 decimal places
Total fixed
$enter a dollar amount
eTextbook and Media
Compute the break-even point in units and dollars.
Break-even point
enter the Break-even point in units
haircuts
Break even sales
$enter the Break-even sales in dollars
eTextbook and Media
Determine net income, assuming 1,670 haircuts are given in a month.
Net income / (Loss)
$enter net income in dollars
Answer:
Fredonia Barber Shop
a. Variable costs per haircut = $4.40
Total monthly fixed costs = $8,910
b. Break-even point in units = 1,350
Break-even point in sales dollars = $14,850
Net income with 1,670 haircuts = $2,120
Explanation:
a) Data and Calculations:
Fixed costs:
Wages of barbers per month = $6,900 ($1,380 * 5)
Manager's allowance per month = $535
Advertising per month = $270
Rent per month = $1,010
Utilities per month = $160
Magazines per month = $35
Total fixed costs per month = $8,910
Ivanhoe currently charges $11 per haircut.
Variable costs per haircut:
Commission per haircut = $3.75
Barber supplies per haircut = $0.50
Utilities per haircut = $0.15
Total variable costs per unit $4.40
Contribution margin per haircut = $6.60 ($11 - $4.40)
Contribution margin ratio = 0.6
Break-even point in units = $8,910/$6.60 = 1,350
Break-even point in sales dollars = $8,910/0.6 = $14,850
Net income assuming 1,670 haircuts for a month:
Sales revenue = $18,370 ($11 * 1,670)
Variable costs = 7,340 ($4.40 * 1,670)
Contribution $11,030
Fixed costs 8,910
Net income $2,120
Stock dividends distributable should be classified on the:________.
A) income statement as an expense.
B) balance sheet as an asset.
C) balance sheet as a liability.
D) balance sheet as an item of stockholders' equity.
Answer:
a) income statement as an expense
Hellman Industries is estimating the weighted average cost of capital of its new project. The company plan to finance this new project by 50 percent ordinary shares, 10 percent preference equity and rest by issuing debt. The return on FTSE 100 index is 11.4 percent and the 3 months’ treasury bills yield is 4%. The Hellman beta is 1.05. The average yield to maturity of Hellman semiannual coupon bonds is 8.3 percent. The Preference share are currently valued at £76, with a par value of £100 and an 8% dividend. The Hellman Industries is in the 40% marginal Tax bracket. a. Find the Pretax cost of Debt,
Question Completion:
a. Find the Pretax cost of Debt, cost of preference, and ordinary shares.
b. Calculate Hellman Pre- tax and after Tax WACC.
Answer:
Hellman Industries
a) Pretax cost of debt = Yield on bonds = 8.3%
b) Cost of Common equity
= 11.77%
c) Cost of preferred stock
= 10.53%
d) Pre-tax WACC
= 10.3%
e) After-tax WACC
= 8.93%
Explanation:
a) Data and Calculations:
Weight of Common stock = 50%
Weight of Preferred stock = 10%
Weight of Debts (Bonds) = 40% (100% - 50% - 10%)
Market return on common stock = 11.4%
Risk-free return (treasury bills yield) = 4%
Beta = 1.05
Average yield to maturity of Hellman semiannual coupon bonds = 8.3%
Market price of Preferred stock = £76 per share
Par value of Preferred stock = £100
Dividend rate of Preferred stock = 8%
Dividend per share = £8 (£100 * 8%)
Cost of Preferred stock = £8/£76 * 100 = 10.53%
Marginal tax rate = 40%
a) Pretax cost of debt = Yield on bonds = 8.3%
After-tax cost of debt = 8.3% (1 - 0.4) = 4.98%
b) Cost of Common equity, Re = Risk Free Rate + Beta x (Market Return - Risk Free Rate) = 4% + 1.05 x (11.4% - 4%)
= 4% + 1.05 * 7.4%
= 4% + 7.77%
= 11.77%
c) Cost of preferred stock = Dividend per share/Price * 100
= $8/$76 * 100
= 10.53%
d) Pre-tax WACC = 50% * 11.77% + 10% * 10.53% + 40% * 8.3%
= 5.885 + 1.053 + 3.32
= 10.258
= 10.3%
e) After-tax WACC = 50% * 11.77% + 10% * 10.53% + 40% * 4.98%
= 5.885 + 1.053 + 1.992
= 8.93%
All of the following are properties of typical indifference curves except Select one: a. indifference curves are bowed outward. b. higher indifference curves are preferred to lower ones. c. indifference curves do not cross. d. indifference curves are downward sloping.
Answer:
A
Explanation:
An indifference curve is a graph that shows the two combinations of goods for which an individual is indifferent in its consumption.
Points on an indifference curve represents various combination of goods to which an individual is indifferent to
higher indifference curve represents higher level of utility
Rachelle transfers property with a tax basis of $740 and a fair market value of $935 to a corporation in exchange for stock with a fair market value of $620 and $93 in cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $222 on the property transferred. What is the corporation's tax basis in the property received in the exchange
Answer:
$927
Explanation:
Calculation to determine the corporation's tax basis in the property received in the exchange
The corporation's TAX BASIS in the property received in the exchange will be TAX BASIS of $740 plus gain recognized of $187 Calculated as ($935-$740) and Assuming the corporation sells the property for the amount of $935, the gain recognized will be $187.
Therefore the corporation's tax basis in the property received in the exchange will be :
Corporation's tax basis=Tax Basis +Gain recognized
Corporation's tax basis=$740+($935-$740)
Corporation's tax basis=$740+$187
Corporation's tax basis=$927
Show what happens to the firm's output choice and profit if the price of the product falls from $52 to $42. If the market price falls from $52 to $42, then the firm's output will decrease or increase from _____units to _____ units. (Enter your responses using integers.)
Answer: The firm's output will therefore decrease from 9 units to 8 units.
Explanation:
This firm most likely operates in a competitive market where price is the same as marginal revenue.
In such a market, firms will try to maximize output by selling at a level where Price is equal to Marginal cost and if they cannot get here, they try to make them as close as possible so long as marginal cost does not exceed price.
As this is the case, when the price was $52, the closest Marginal cost that isn't higher than price was $45 for an output level of 9 units.
If the product falls to $42, the closest marginal cost that isn't higher than the cost is $38 for 8 units.
The firm's output will therefore decrease from 9 units to 8 units.
On December 31, 2018, a company had assets of $34 billion and stockholders' equity of $28 billion. That same company had assets of $50 billion and stockholders' equity of $12 billion as of December 31, 2019. During 2019, the company reported total sales revenue of $27 billion and total expenses of $25 billion. What is the company's debt-to-assets ratio on December 31, 2019
Answer:
131.6%
Explanation:
Total assets is $50 billion
Liabilities = 50-stock holder equity which is $12 billion
= 50-12
= $38 billion
Therefore the debt to assets ratio can be calculated as follows
= 50 billion/38 billion
= 1.3157×100
°= 131.6
Hence the debts to assetsrayion is 131.6%
Over a certain period, large-company stocks had an average return of 12.34 percent, the average risk-free rate was 2.53 percent, and small-company stocks averaged 17.25 percent. What was the risk premium on small-company stocks for this period
Answer: 14.72%
Explanation:
Risk premium is the amount of return that an investment provides over the risk free return of the market. This is to cater for the higher risk that an investor would incur for investing in the stock.
Risk premium for small company stocks = Average return for small stocks - Risk free rate
= 17.25% - 2.53%
= 14.72%
Your company sponsors a 401(k) plan into which you deposit 8 percent of your $65,000 annual income. Your company matches 50 percent of the first 3 percent of your earnings. You expect the fund to yield 8 percent next year. Assume you are currently in the 31 percent tax bracket.
Required:
a. How many dollars did you invest out of your salary in your 401(k) plan this year?
b. What is your one-year return?
Answer:
a. $6,669
b.85.87%
Explanation:
Annual income = $65000
Employee deposit = 8%
= 65000*8%
= $5200
Tax rate given = 31%
Tax savings = $5200*31%
Tax savings= 1/$1,612
Net employee cost = $5200 - $1612
Net employee cost=$3588
Employer deposit = 65,000 * 50% * 3%
Employer deposit= $975
Total employee and employer investment = $5200 + $975
Total employee and employer investment= $6175
Given yield rate = 8%
a) Calculation to determine How many dollars did you invest out of your salary in your 401(k) plan this year
Using this formula
Total investment at end of year 1 = $6,175*(1+yield)
Let plug in the formula
Total investment at end of year 1=$6,175*1.08
Total investment at end of year 1= $6,669
Therefore How many dollars did you invest out of your salary in your 401(k) plan this year is $6,669
b) Calculation to determine your one-year return
Using this formula
One year return = (Year end investment - Employee net cost) / Employee net cost
Let plug in the formula
One year return= ($6,669 - $3588) / $3588
One year return=$3,081/$3,588
One year return= 0.8587*100
One year return= 85.87%
Therefore your one-year return is 85.87%
Assume that instead of distributing a stock dividend, Sharper did a 3-for-1 stock split. Required: (1) Prepare the updated stockholders' equity section after the split. (2) Compute the number of shares outstanding after the split.
Complete Question:
On June 30, Sharper Corporation's stockholders' equity section of its balance sheet appears as follows before any stock dividend or split. Sharper declares and immediately distributes a 50% stock dividend. Common stock-$10 par value, 120,000 shares authorized, 72,000 shares issued and outstanding $ 720,000
Paid-in capital in excess of par value, common stock 310,000
Retained earnings 715,000
Total stockholders' equity $1,745,000
Assume that instead of distributing a stock dividend, Sharper did a 3-for-1 stock split. Required: (1) Prepare the updated stockholders' equity section after the split. (2) Compute the number of shares outstanding after the split. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the updated stockholders' equity section after the split.
Answer:
Sharper Corporation
1. SHARPER CORPORATION
Stockholders' Equity Section of the Balance Sheet June 30
Total stockholders' equity
Common stock-$3.33 par value, 360,000 shares authorized,
216,000 shares issued and outstanding $ 720,000
Paid-in capital in excess of par value, common stock 310,000
Retained earnings 715,000
Total stockholders' equity $1,745,000
2. The number of shares outstanding after the split is:
= 216,000 shares.
Explanation:
a) Data and Calculations:
Common stock-$10 par value, 120,000 shares authorized,
72,000 shares issued and outstanding $ 720,000
Paid-in capital in excess of par value, common stock 310,000
Retained earnings 715,000
Total stockholders' equity $1,745,000
Authorized shares = 360,000 (120,000 * 3)
Outstanding shares = 216,000 (72,000 * 3)
Common stock par value = $3.333 ($10/3)
b) A 3-for-1 stock split means that shareholders will now have 3 shares for each share that they previously held. Therefore, the outstanding and authorized shares will be multiplied by 3 while the stock price is divided by 3 to arrive at their values after the split.
Write an example of liability accounts
Alternative or non-traditional assessments are become more popular among teachers. One type of alternative assessment is called ___________
Answer:
Alternative or non-traditional assessments are becoming increasingly popular with teachers. An alternate evaluation type is called _Task
Explanation:
At the end of the previous year, a customer owed Days Company $400. On February 1 of the current year, the customer paid $600 total, which included the $400 owed plus $200 owed through February 1st. The journal entry on February 1 is? (Check all that apply.)
Answer:
The relevant journal entry would be:
Date Account Title Debit Credit
February 1 Cash $600
Accounts Receivable $400
Revenue $200
The entire $600 will be debited to cash to show that $600 was received in cash.
$400 will go to Accounts Receivable to cancel out the debt owed by the customer.
Revenue will be credited $200 for the amount owed through February 1st. Revenue is credited when it increases.
Answer: Cash will debited for $600
Accounts receivable will be credited for $400
Service revenue would be credited for $200
Explanation: it’s was the correct answer on the homework
Davis-Bell Corporation has an activity-based costing system with three activity cost pools - Machining, Setting Up, and Other. The company's overhead costs have already been allocated to the cost pools and total $5,800 for the Machining cost pool, $4,700 for the Setting Up cost pool, and $7,500 for the Other cost pool. Costs in the machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products are below: MHs Batches Product Z7 3,800 700 Product K9 6,200 300 Total 10,000 1,000 Calculate activity rates for each activity cost pool using activity-based costing. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.
Answer and Explanation:
The computation is given below:
Calculation of Activity Rates
Cost Pool Cost Driver Cost Activity Rate
Machining Machine Hours $5800 $0.58 (5800 ÷ 10000)
Setting Up Batches $4700 $4.70 (4700 ÷ 1000)
Calculation of Overhead Cost to each Product:
Particulars Product Z7 Product K9 Total
Machining $2204 ($0.58 × 3800) $3596 ($0.58 × 6200) $5800
Setting Up $3290 ($4.7 × 700) $1410 ($4.7 × 300) $4700
$5494 $5006 $10500
