Emma, a 70-year-old widow living alone, has a fixed income of $11,000 per year from social security. If the local option homeste

d. $13.00 Explanation: The contribution margin formula is determined by subtracting variable costs from the selling price. Here, the sales price is $25 per unit while the variable costs consist of: Direct materials: $6.20, Direct labor: $2.80, variable overhead: $1.45, sales commissions: $1.00, and administrative variable expense: $0.55 totaling a variable cost of $12.00 per unit. Thus, $25 selling price per unit minus $12 variable cost per unit equals $13 contribution margin per unit, the amount each unit contributes to cover fixed costs and generate profit during the period.

Answer:

The first statement is false, while the second is true.

Answer:

False

Explanation:

According to GAAP, if the costs associated with providing accounting information surpass the benefits of obtaining such data, then it should not be reported.

For instance, there might be minimal discrepancies in particular accounts that prevent a balance sheet from being accurate. If the accounting mistake is negligible, such as a few hundred dollars, it isn't practical to have an entire audit team re-examine all financial statements to find the source of the error. An adjusting entry could be utilized to balance the accounts.

Consider a scenario where you, as an auditor, need to verify the physical inventory at a factory, but some supply boxes have been misplaced. Counting all supplies and materials again could take an entire day; however, is it truly worth that time? If the items are highly valuable, then yes, otherwise, if they consist of low-cost components, likely not.

Answer:

Espinoza Company

The activity rate for the order fulfillment cost pool:

Expenses associated with fulfilling orders divided by the number of orders

= $130,500/3,500

= $37.29 per order

Explanation:

a) Relevant data and calculations:

Overhead expenses:

Salaries and wages: 220,000

Other expenses: 150,000

Total: $510,000

Distribution of resource usage:

Filling Orders Activity Cost Pools

                                    Filling Orders  Customer Support  Other  Total

Wages and salaries             35%                      55%              10%     100%

Other expenses                  35%                    50%              15%     100%

Fulfilling orders: 3,500 orders

Customer support: 15 customers

Overhead Allocation:

                              Filling Orders  Customer    Other        Total

                                                       Support

Salaries and wages: $77,000        $121,000      $22,000     $220,000

Other expenses:        $53,500           $75,000        $22,500        $150,000

Total:                       $130,500       $196,000      $44,500     $370,000

The activity rate for fulfilling orders is determined as $130,500/3,500, giving $37.29 per order.

Activity Based Costing (ABC) is a costing method that uses activity pools to gather and allocate overhead expenses based on the level of engagement for each activity pool.