The right answer is b. The output units sold totaled 8,000. The sales revenue reached $9,600,000. Variable costs stand at $6,000,000, with fixed costs amounting to $2,600,000. The product's price is $1,200. Average variable cost calculates to $750. Profit calculation results in TR - TC, hence Profit = $1,270,000 = $1,200Q - $750Q - $2,600,000. Resulting in $3,870,000 = $450Q, thus Q is 8,600 units.
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
