Response:
$20,000
Clarification:
At the issuance of the bond, the bond discount is calculated as follows:
= Value of Bonds issued - [(Value of Bonds issued ÷ 100) × Issue price]
= 705,000 - [($705,000 ÷ 100) × 98]
= $705,000 - $690,900
= $14,100
Bond Payable equals $705,000
The unamortized bond discount is calculated as:
= Bond discount at issuance - Amortized amount
= $14,100 - $8,200
= $5,900
Redemption Value of Bond is determined by:
= Retired price of bonds × 7,050
= 102 × 7,050
= $719,100
Loss on retirement of the Bond is calculated as:
= Redemption Value of Bond - (Value of Bonds issued - Unamortized bond discount)
= 719,100 - (705,000 - 5,900)
= 719,100 - 699,100
= $20,000
The activity variance totals $20 U. Given the following data: budgeted in March = 7,900 units, actual activity level = 7860 units, revenue = $297,318, direct labor = $59,962, direct materials = $135,850, manufacturing overhead = $51,370, selling and administrative expenses = $31,950. To determine the budgeted selling and administrative expense, the variable expense is calculated as 0.5 × 7900 = $3,950, while the fixed expense remains at $27,400. Hence, total budgeted selling and administrative expenses computes to $31,350. For the flexible budget, the variable expense adjusts to 0.5 × 7860 = $3,930. Therefore, the total flexible budget for selling and administrative cost becomes $31,330. Activity variance, computed as (31350 - 31330), equals $20 U, indicating that actual performance fell below budgeted expectations, with the difference rooted solely in variations between the budgeted and actual activity levels.
The accurate answer is $33,000. The details of the scenario allow us to compute the provided information as follows: If the company purchases the CDs from external sources, only the Fixed Overhead can be avoided while all others remain unchanged. Therefore, the external price can be derived using this formula: Maximum external price = Direct Materials + Direct Labor + Variable Overhead + Fixed Overhead. Plugging in the figures, we find Maximum external price = $11,000 + $15,000 + $3,000 + $4,000 = $33,000.
