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
The right choice is option (D). According to the given situation, the details are as follows: Purchase cost = $3,300 Transportation cost = $290 Return value = $230 Discount rate = 3% To find the total cost of merchandise, we follow this procedure: First, we deduct the return value from the purchase value. Then, $3,300 - $230 = $3,070 Now, we apply the discount, which is 3% of $3,070 = $92.10 Net purchase value = $3,070 - $92.10 = $2,977.90 Next, we add the transportation expense to the purchase value: $2,977.90 + $290 = $3,267.90 Thus, the complete cost of this merchandise is $3,267.90.
Answer:
e) $23.89
Explanation:
To find the present value of Canine Crates shares today, based on a return rate of 13%, we must first compute the annual value derived from dividends over three years as follows
D1= The yearly dividend x 2 ( Canine Crates intends to double the dividend each year for three years
D1= $0.45 x 2 = $0.9D2= $0.90 x 2 = $1.80
D3= $1.80 x 2 = $3.60
Subsequently, we calculate the stock’s value by summing the present values of each year's dividends.
This is founded on the following formula
Dividend per year / (1+r)∧n
= Dividend per year
r = required rate
n= period
Stock value = $0.9 / (1.13) + $1.80 / (1.13)∧2 + $3.60/ (1.13)∧3
Final stock valuation = $23.89
