Pollyanna Publishing, a textbook publishing firm, purchased a new machine for $80,000. This machine is expected to operate for 1

Answer:

Income statement prepared under the absorption costing method

Sales 2,600,000

Less: Cost of Goods Sold

Beginning Inventory 0

Add: Cost of Goods Produced

Materials Used 1,218,000

Labor Costs 522,000

Variable Overhead 87,000

Fixed Overhead 130,500

Less: Ending Inventory (1,957,500/4,350)×350 (157,500)  1,800,000

Gross Profit 800,000

Less: Operating Costs:

Selling and Administrative Expenses:

Variable Sales/Administrative Costs (60,000)

Fixed Sales/Administrative Costs (25,000)

Net Profit 715,000

Explanation:

Product/Manufacturing Cost under Absorption Costing = Direct Materials + Direct Labor + Variable Overheads + Fixed Overheads

Period Cost under Absorption Costing  = All Non-Manufacturing Expenses

Answer:

A label indicating "the letter is Unclassified when separated from classified enclosures"

Explanation:

Response:

Greg's profit from the apartment sale = $590,000

Details:

Cost of purchase = $100,000

Renovations = $300,000

Overall Initial Cost = Cost of Purchase + Renovations

Overall Initial Cost = $100,000 + $300,000

Overall Initial Cost = $400,000

Depreciation over 20 Years = Yearly Depreciation * 20

= $2,500 * 20

= $50,000

Net Value after 20 Years = Initial Cost - Depreciation over 20 Years

= $400,000 - $50,000

= $350,000

Capital Gain = Net Sale Price - Net Value

When Net Sale Price = Selling Price - Commission

= $1,000,000 - $60,000

= $940,000

Thus, Capital Gain = Net Sale Price - Net Value

Capital Gain = $940,000 - $350,000

Capital Gain = $590,000

If Airbnb guests in Malibu begin to pay hotel taxes, it could lead to an increase in the equilibrium price in that market, thus reducing overall efficiency. The equilibrium price is defined as the point at which the supply of goods and services matches consumer demand. An increase in the equilibrium price would result in decreased efficiency as supply and demand would no longer align.

Answer and Explanation:

The calculation of the cost of goods manufactured is detailed below:

Statement of Cost of Goods Manufactured

Details Amount

Direct Materials

Initial Inventory a $40,000

Purchases b $290,000

Direct Materials Available $330,000

(c = a + b)

Ending Direct Materials Inventory d $10,000

Direct Materials Used $320,000

(e = c - d)

Direct Labor $398,000

($683,000 - $285,000 - $320,000)

Factory Overhead $285,000

Total Manufacturing Costs $683,000

Add: Beginning WIP Inventory $42,000

($690,000 + $35,000 - $683,000)

Less: Ending WIP Inventory $35,000

Cost of Goods Manufactured $690,000

b and c The preparation of the cost of goods sold and income statement for the year is outlined below:

Schedule of Cost of Goods Sold

Income Statement for the Year

Details Amount

Sales $915,000

($270,000 + $645,000)

Cost of Goods Sold

Beginning Inventory of

Finished Products $50,000

Cost of Goods Manufactured $690,000

Cost of Goods Available

for Sale $740,000

Less: Ending Finished Goods

Inventory $80,000

($740,000 - $660,000)

Cost of Goods Sold

(Unadjusted) $660,000

Overapplied Overhead $15,000

($285,000 - $270,000)

Cost of Goods Sold (Adjusted) $645,000

($660,000 - $15,000)

Gross Profit $270,000

($30,000 + $100,000 + $140,000)

Less: Selling & Administrative Expenses

Selling Expenses $140,000

Administrative Expenses $100,000 $240,000

Operating Income $30,000