Answer; a. $ 2,000 understated
Explanation;
Inventory is usually self correcting so the overstatement in 2020 will not affect 2021. Only relevant effects will be the Depreciation in both years and inventory in 2021.
The Depreciation overstatement of $12,000 in 2020 had the effect of reducing Net income as it increased expenses so retained earnings will be understated.
In 2021, an understatement of Depreciation will overstate income as it understates expenses. The overstatement of Ending Inventory will lead to an understatement of Cost of Goods sold which will overstate Income as well.
2020 = $12,000 understatement
2021 = 6,000 + 4,000 = $10,000 overstatement
= 12,000 - 10,000
= $2,000 understatement
Rehmer Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.06 direct labor-hours. The direct labor rate is $8.00 per direct labor-hour. The production budget calls for producing 5,300 units in June and 5,800 units in July. Required: Prepare the direct labor budget for the next two months, assuming that the direct labor work force is fully adjusted to the total direct labor-hours needed each month. (Round your answers to 2 decimal places.)
Answer:
Results are below.
Explanation:
Giving the following information:
Each unit of output requires 0.06 direct labor-hours.
The direct labor rate is $8.00 per direct labor-hour.
The production budget calls for producing 5,300 units in June and 5,800 units in July.
Direct labor budget June:
Direct labor hours= 5,300*0.06= 318
Direct labor cost= 318*8= $2,544
Direct labor budget July:
Direct labor hours= 5,800*0.06= 348
Direct labor cost= 348*8= $2,784
Balls and Bats, Inc. purchased equipment on January 1, 2005, at a cost of $100,000. The estimated useful life is 4 years with a salvage value of $10,000. Complete the following tasks for this assignment: Prepare two different depreciation schedules for the equipment - one using the double-declining balance method, and the other using the straight-line method. (Round to the nearest dollar). Determine which method would result in the greatest net income for the year ending December 31, 2005
Answer and Explanation:
The computation of two different depreciation schedules is shown below:-
a. Using the Double-declining balance method
Year Equipment Cost Depreciation rate Amount
2005 $90,000 50% $45,000
2006 $45,000 50% $22,500
2007 $22,500 50% $11,250
2008 No depreciation as it is lower that straight line method that is $22,500 also we took the double rate of 25% so we consider 50%
b. Using the straight line method
Straight Line Depreciation Method:
$100,000 - $10,000
= $90,000
Year Equipment Cost Depreciation rate Amount
2005 $90,000 25% $22,500
2006 $90,000 25% $22,500
2007 $90,000 25% $22,500
2008 $90,000 25% $22,500
Depreciation rate is
= 1 ÷ 4 years
= 25
2. The double declining method reduced the net income while the straight line method increased the net icnome
Dirt is not dirt when it comes to baseball fields.About two-thirds of the pro baseball fields got their dirt from a dirt farm in New Jersey called Partac Peat.The company markets a secret mix for the infield (resilient),the warning track (extra crunchy),and the pitcher's mounds (firm).Mounds come in red,brown,orange,and gray colours.Roger Bossard,the White Sox head groundskeeper,scouted nationwide for dirt before settling on the mix provided by Partac Peat.(He uses sand under the grassy areas of the playing field. )
-Refer to Baseball Dirt.Some of the dirt sold by Partac Peat goes to make clay tennis court surfaces.As the number of people playing tennis increases,so does the demand for new clay courts and,therefore,the demand for Partac Peat clay.This occurs because the demand for Partac Peat is which of the following?
A) inelastic
B) intangible
C) heterogeneous
D) derived
Answer: D) derived
Explanation:
Derived demand refers to a situation where the demand for a good or service is as a result of the demand in another good or service. For example, if the demand for mobile phones increases, the demand for lithium batteries will increase as well.
In the example, Partac Peat clay demand increases as a result of an increase in the demand for tennis playing therefore it is a derived demand based on the demand for the tennis.
Which of the following organizations does notfollow the AICPA's Not-for-Profit Guide?
A) Political parties.
B) Voluntary health and welfare organizations.
C) City libraries.
D) Private foundations.
Answer: City Libraries
Explanation;
The American Institute of CPAs Not-for-Profit Guide is meant to help Not-for-Profit organizations prepare their financial statements in such a way that they can incorporate the unique aspects of their organization.
Not-for-Profit organizations are private in nature so this guide is mostly for private organizations. City Libraries on the other hand are Government owned and as such will use Government type accounting methods not the AICPA's Not-for-Profit Guide.
Compute the following probabilities:
a. If Y is distributed N (-8,9), Pr (Y≤-12) = —— . (Round your response to four decimal places.)
b. If Y is distributed N (-4,9), Pr (Y>-1) = ——. (Round your response to four decimal places.)
c. If Y is distributed N (40,25), Pr (34≤Y≤44) = ——. (Round your response to four decimal places.)
Answer: a. 0.3300 b. 0.3707 c. 0.1584
Explanation:
If X is distributed N([tex]\mu,\sigma^2[/tex]) [Normal distribution], then Z-score = [tex]\dfrac{X-\mu}{\sigma}[/tex] .
a. If Y is distributed N (-8,9),
Pr (Y≤-12) [tex]=P(\dfrac{Y-\mu}{\sigma}\leq \dfrac{-12-(-8)}{\sqrt{9}})[/tex]
[tex]=P(Z\leq -1.33)=1-P(Z<1.33)\\\\=1- 0.9082\ \ \ [\text{By z-table}]\\\\= 0.0917[/tex]
b. If Y is distributed N (-4,9),
Pr (Y>-1) =[tex]=P(\dfrac{Y-\mu}{\sigma}>\dfrac{-1-(-4)}{3})[/tex]
[tex]=P(Z>1)=1-P(Z<1)\\\\=1-0.8413\ \ \ [\text{By z-table}]\\\\=0.1587[/tex]
c. If Y is distributed N (40,25),
Pr (34≤Y≤44) = [tex]P(\dfrac{34-40}{5}<\dfrac{Y-\mu}{\sigma}<\dfrac{44-40}{5})[/tex]
[tex]P(-1.2<Z<0.8)=P(Z<0.8)-P(Z<-1.2)\\\\=P(Z<0.8)-(1-P(Z<1.2))\\\\=0.7881-(1-0.8849)\ \ \ [\text{By z-table}]\\\\=0.6730[/tex]
Connecticut, Inc. uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: Connecticut, Inc. Comparative Balance Sheet December 31, 2019 and 2018 2019 2018 Increase / (Decrease) Cash Accounts Receivable () Merchandise Inventory Plant and Equipment Accumulated DepreciationPlant and Equipment () () () Total Assets Additional information provided by the company includes the following: 1. Equipment was purchased for with cash. 2. Equipment with a cost of and accumulated depreciation of was sold for . What was the amount of net cash provided by (used for) investing activities?
Answer:
Net cash used by investing activities -$16,000
Explanation:
The computation of the amount of net cash provided or used by investing activities is shown below:
Equipment purchase for cash -$66,000
Proceeds from the sale of equipment $50,000
Net cash used by investing activities -$16,000
The purchase is a cash outflow so it is in negative sign while the sale is cash inflow so it is to be shown in a positive sign
What was the weighted average interest rate Colgate faced on its short-term borrowings in 2013? Enter with 1 decimal place and with % sign (Ex: 9.9%)
Answer:
The weighted average interest rate that Colgate faced on its short-term borrowings in 2013 was:
2.2%.
Explanation:
On page 62 of its 10-K annual report for the fiscal year ended December 31, 2013, it specifically reported that "the weighted-average interest rate on short-term borrowings of $13 in 2013 and $54 in 2012 included in Notes and loans payable in the Consolidated Balance Sheets as of December 31, 2013 and 2012 was 2.2% and 1.0%, respectively." To calculate the weighted-average interest rate, we multiply each loan amount by its interest rate to obtain the "per loan weight factor." Then add the per loan weight factors together. Add the loan amounts together. Divide the "total per loan weight factor" by the "total loan amount," and then multiply by 100 to calculate the weighted average.
Which of the following strategies yields positive profits when the stock price is low but not when the stock price is high?
a. Straddle
b. Bullish spread
c. Protective put
d. bearish spread
Answer: d. bearish spread
Explanation:
With a bearish spread, the investor believes the market to be heading for a price decline in the stock of interest. They will therefore purchase a put option on it. However, they also want to reduce the cost of the transaction so what they will do is to simultaneously buy 2 put options for the same asset for the same date of expiration but with different exercise prices.
If the price of the stock then falls, they will make a profit on both aand reduce costs.
Caterpillar,the manufacturer of tractors and other earthmoving equipment,has an extremely high market share,which means customers seek the dealers out regardless of where they are.There are approximately 50 Caterpillar dealers in the United States--one in each state.From this information,you can surmise that Caterpillar uses _____ distribution.
A) selective
B) premium
C) intensive
D) exclusive
E) inclusive
Answer: exclusive
Explanation:
From the information that is provided in the question, we can deduce that Caterpillar uses exclusive distribution. In exclusive distribution, the dealers are given an exclusive right whereby they are allowed to sell the products at a certain geographical location
Since we are told that the company has an extremely high market share,which means customers seek the dealers out regardless of where they are. Then the answer is exclusive distribution.
Karen wants to create a visual aid to compare 1st, 2nd, 3rd and 4th quarter sales. Which
visual aid would she use?
Pie chart
Bar graph
Picture
Line graph
Answer:
Pie Chart
Explanation:
A pie chart is a statistical graphic chart in a shape of a pie. Usually, it is divided into part, or slices if you may, to show and explain numerical proportion.
In pie charts, the length of the arc of each slice or part, is usually proportional to the quantity it represents.
Pie charts are generally used to show percentage or proportional data. Normally, if percentage is used, the percentage value is marked or written near the part or slice it represents.
Answer:
c
Explanation:
Which of the following statements is true with regard to the reimbursement of employee business expenses?
a. Excess reimbursements of ordinary and necessary expenses are never subject to withholding.
b. Provided that reimbursements are received by an employee under a plan which requires the employee to substantiate the expenses to his employer, the amounts are excluded from the definition of wages subject to withholding, without regard to whether the employee actually substantiates the expenditures.
c. Reimbursements of ordinary and necessary expenses are subject to federal income tax withholding.
d. Reimbursements received by an employee under a plan which contains a requirement to return excess amounts, and the employee does so on a timely basis, are excluded from the definition of wages subject to withholding.
e. All of these choices are true.
Answer: All ofthe choices are true
Explanation:
It should be noted that the reimbursements of ordinary and necessary expenses are subject to federal income tax withholding. Also, excess reimbursements of ordinary and necessary expenses are never subject to withholding.
Lastly, the reimbursements that is received by an employee under a plan which contains a requirement to return excess amounts, and the employee does so on a timely basis, are excluded from the definition of wages subject to withholding.
Therefore, all the options are correct.
An investor receives a 15% total return by purchasing a stock for $40 and selling it after one year with a 10% capital gain. How much was received in dividend income during the year
Answer:
Dividend per share = $2
Explanation:
The total yield or return on a stock consists of two components namely dividend yield and capital gains yield.
Total yield or return = Dividend yield + Capital gains yield
If the total return is 15% while the capital gains yield was 10%, the dividend yield on the stock will be,
0.15 = Dividend yield + 0.1
0.15 - 0.1 = Dividend Yield
Dividend Yield = 0.05 or 5%
Thus, dividend income per share will be,
0.05 = Dividend per share / 40
0.05 * 40 = Dividend per share
Dividend per share = $2
For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate: a. The expected return. b. The volatility (standard deviation).
Full question attached
Answer:
A. 8.6%
B. 14.09%
Explanation:
A) given that portfolio weights =50% each
Expected return= w*r+w*r where w is portfolio weight and r is return on each asset:
=0.50*0.078+0.50*0.094= 0.086
=8.6%
B) The volatility (standard deviation)
=√w²*std²+w²*std²+2*w*w*std*std*corr
=√0.50²*0.157²+0.50²*0.203²+2*0.50*0.50*0.157*0.203*0.213
=0.1409
=14.09%
Assume that the substitution effect is large relative to the income effect. If a tax reform is designed to increase saving, what does it do to the interest rate and spending on capital goods?
a.
It increases the interest rate and decreases spending on capital goods.
b.
It increases the interest rate and increases spending on capital goods.
c.
It decreases the interest rate and increases spending on capital goods.
d.
It decreases the interest rate and decreases spending on capital goods.
Answer:
a.
It increases the interest rate and decreases spending on capital goods.
Explanation:
Tax reform is a process through which most government controls the spending on capital goods and encourage local goods purchases. This is accomplished through increase on the taxes on those goods in such a way that, it becomes highly discouraging to spend such amount on it thereby encouraging savings.
Prior to the merger, Firm A has $1,250 in total earnings with 750 shares outstanding at a market price per share of $42. Firm B has $740 in total earnings with 220 shares outstanding at $21 per share. Assume Firm A acquires Firm B via an exchange of stock of 0.5 share of A’s stock for each share of B's stock. Both A and B have no debt outstanding and the merger does not create any synergy. What will the earnings per share of Firm A be after the merger? A) $2.10 B) $1.67 C) $3.36 D) $2.05 E) $2.31
Answer:
E) $2.31
Explanation:
Shares offered to Firm B = Shares outstanding * 0.5
= 220 * 0.5
= 110 shares
Total shares of firm A after merger = Shares outstanding before merger + Shares offered to Firm B
= 750 + 110
= 860 shares
Total earnings of firm A after merger = $1,250 + 740
Total earnings of firm A after merger = $1,990
Earnings per share of firm A after merger = Total earnings of firm A after merger / Total shares of firm A after merger
Earnings per share of firm A after merger = $1,990 / 860
Earnings per share of firm A after merger = $2.31 per share
Assume you have $1,000,000 to invest Current spot rate of the pound = $1.30 90 day forward rate of pound = $1.28 3 month deposit rate in US = 3% 3 month deposit rate in Great Britain = 4% If you use covered interest arbitrage for a 90-day investment, what will be the amount of U.S.dollars you will have after 90 days? Show your work.
Answer:
$1,024,000
Explanation:
with your $1,000,000 you can currently buy $1,000,000 / $1.3 = £769,231
then you invest your £769,231 and receive = £769,231 x (1 + 4%) = £800,000
since the forward rate for three months = $1.28, then at the end of the three months you will have £800,000 x $1.28 = $1,024,000
if you simply invested your money in the US, you would earned more money ? $1,000,000 x (1 + 3%) = $1,030,000. You lower gains are the result of the British pound depreciating against the dollar.
Hejl Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $213 per month plus $104 per job plus $23 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in March to be 22 jobs and 82 meals, but the actual activity was 27 jobs and 76 meals. The actual cost for catering supplies in March was $4,713. The spending variance for catering supplies in March would be closest to:
Answer:
$56 (Favorable)
Explanation:
Standard cost = Actual Quantity * Standard rate
Standard cost = Catering supplies cost + Actual number of jobs * Rate per job) + Actual number of meals * Rate per meal
Standard cost = {213 + (27 jobs * $104 per job) + (76 meals * $23 per job)
Standard cost = ($213 + $2,808) + $1,748
Standard cost = $3,021 + $1,748
Standard cost = $4,769
Spending variance = Actual cost - Standard cost
Spending variance = $4,713 - $4,769
Spending variance = $56 (Favorable)
During February, assets increased by 87000 and liabilities increased by 31000 . Equity must have:___________.
a. increased by 56000
b. increased by 118000
c. decreased by 56000
d. decreased by 118000
Answer:
a. increased by $56,000
Explanation:
General accounting equation ;
Assets = Liabilities + Owners equity
Owners equity = Assets - Liabilities.
Therefore,
Increase in stockholder's equity
= $87,000 - $31,000
= $56,000
Sally's Fries sells five large fries for every four small ones. A small fry sells for $2.00 with a variable cost of $0.25 . A large fry sells for with a variable cost of What is the weighted average contribution margin?
Answer:
Weighted average contribution margin= (weighted average selling price - weighted average unitary variable cost)
Explanation:
Sales proportion:
Large fries= 5/9= 0.56
Small fries= 4/9= 0.44
A small fry sells for $2.00 with a variable cost of $0.25.
We need to complete the information to calculate the weighted average contribution margin:
For example= A large fry sells for $2.9 with a variable cost of $0.4
To calculate the weighted-average contribution margin, we need to use the following formula:
Weighted average contribution margin= (weighted average selling price - weighted average unitary variable cost)
Weighted average contribution margin= (0.56*2.9 + 0.44*2) - (0.56*0.4 + 0.44*0.25)
Weighted average contribution margin= 2.504 - 0.334
Weighted average contribution margin= $2.17
Activity rates from Quattrone Corporation's activity-based costing system are listed below. The company uses the activity rates to assign overhead costs to products: Activity Cost Pools Activity Rate Processing customer orders $96.72 per customer order Assembling products $3.43 per assembly hour Setting up batches $53.23 per batch Last year, Product F76D involved 5 customer orders, 528 assembly hours, and 22 batches. How much overhead cost would be assigned to Product F76D using the activity-based costing system
Answer:
Total allocated overhead= $3,465.71
Explanation:
Giving the following information:
Processing customer orders $96.72 per customer order
Assembling products $3.43 per assembly hour
Setting up batches $53.23 per batch
Product F76D:
5 customer orders
528 assembly hours
22 batches
To assign overhead, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Product F76D:
Processing= 96.72*5= $483.6
Assembling= 3.43*528= 1,811.04
Setting up batches= 53.23*22= 1.171.07
Total allocated overhead= $3,465.71
Assume that Cane expects to produce and sell 106,000 Betas during the current year. One of Cane’s sales representatives has found a new customer who is willing to buy 4,000 additional Betas for a price of $74 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?
Answer:
The first part of the question is missing, so I looked for a similar question to fill in the blanks:
Relevant production costs per unit:
Direct material $30 Direct labor $20 Variable manufacturing overhead $7 Variable selling expenses $12 Total relevant costs per unit $69incremental revenue if special order is accepted = 4,000 x $74 = $296,000
incremental costs if special order is accepted = 4,000 x $69 = $276,000
financial advantage of accepting special order = $296,000 - $276,000 = $20,000
If the special order is accepted, operating profits will increase by $20,000
For a company with a product mix of 40% of product A and 30% each of products B and C, which of the following mixed-model sequences best reflects the lean philosophy?
A. BBAACCABBC.
B. AAABBCCCBB.
C. BBBBAAACCC.
D. ACBACABCAB.
E. BACBACBACB.
Answer:
E. BACBACBACB
Explanation:
The lean philosophy was originated from manufacturing practices but has grown to cover all aspects of an organization. The philosophy discourages waste by encouraging efficiency which is directed at continuous improvement for the goal of creating value for the customer. In the example above, applying lean philosophy, we would pick the last option since this reduces waste of inventory by making sure that the product with the highest demand comes first; therefore we sequence as per demand rate under lean philosophy to reduce waste and increase efficiency.
Most products in the marketplace are in the ________ stage of the product life cycle.
a) growth
b) development
c) decline
d) maturity
e) introduction
Answer:
D. Maturity stage
Explanation:
Most products in the marketplace are in the maturity stage of the product life cycle.
There are four stages in the product life cycle:
1. Introduction stage: This is the stage where awareness is created about a new product in the market. Consumers are made to the aware of a new product by advertisement and marketing.
2. Growth: After awareness has been created for the product, there is an increase in firms expansion and demand.
3. Maturity: This is a stage where firms realise more profits due to
reduction in cost of production and marketing.
4. Decline: When the firm start making more peofits, other firms will join the industry leading to competition. This may lead to the product declining if it can't compete in the industry.
A manufacturer of microwaves has discovered that male shoppers have little value for microwaves and attribute almost no extra value to an auto- defrost feature. Female shoppers generally value microwaves more than men do and attribute greater value to the auto-defrost feature. There is little additional cost to incorporating an auto-defrost feature. Since men and women cannot be charged different prices for the same product, the manufacturer is considering introducing two different models. The manufacturer has determined that men value a simple microwave at $56 and one with auto-defrost at $74, while women value a simple microwave at $74 and one with auto-defrost at $130.
Suppose the manufacturer is considering three pricing strategies:
1. Market a single microwave, with auto-defrost, at $69, to both men and women.
2. Market a single microwave, with auto-defrost, at $121, to only women.
3. Market a simple microwave to men, at $52. Market a microwave, with auto-defrost, to women at $103. For simplicity, assume there is only 1 man and 1 woman and that if the price of a microwave is equal to an individual's willingness to pay, the individual will purchase the microwave.
Answer:
If the number of male and female buyers is the same, then the best pricing strategy is to offer 2 different microwaves (option 3). One simple and cheap microwave for men and one with auto-defrost for women.
Explanation:
If most buyers were women (significantly higher), then option 2 would be better, since $121 per microwave is a much higher price and even though total sales numbers may not be maximized, profits will probably be maximized.
If most buyers are men, then option 1 would be probably better, depending on the proportion of male vs female buyers.
________ is the model in which an effective leader makes desirable rewards available, clarifies how employees can achieve objectives, and provides them support in doing so.
Answer:
House's path-goal model.
Explanation:
Robert House developed the theory of the objective-path, which is a theory that supports the servile leadership style, because House believed that the behavior of the leader is capable of directly interfering in the behavior of the collaborators, therefore, the leaders must be the biggest suppliers of essential support and resources for employees to carry out their work effectively.
He has developed 4 different leadership styles that leaders must have to help employees achieve their goals and objectives.
They are:
Directive, Supportive, Participative, Achievement-oriented.These four styles will provide the essential guidelines and conduct for being a servant and collaborative leader.
high-end whole home electronic systems. The company provides a one-year warranty for all products sold. The company estimates that the warranty cost is $310 per unit sold and reported a liability for estimated warranty costs $10.6 million at the beginning of this year. If during the current year, the company sold 59500 units for a total of $324 million and paid warranty claims of $12120000 on current and prior year sales, what amount of liability would the company report on its balance sheet at the end of the current year?
Answer:
$16,925,000
Explanation:
The company estimates that the warranty cost is $310 per units sold
The estimated warranty costs at the beginning of the year is $10,600,000
In the current year, the company sold 59,500 units
The company paid warranty claims of $12120000
Therefore, the amount of liability that should be reported at the end of the current year can be calculated as follows
= 10,600,000+(59,500×310)-$12,120,000
= $10,600,000+18,445,000 -$12,120,000
= $29,045,000-$12,120,000
= $16,925,000
Hence the amount of liability that should be reported on the balance sheet at the end of the current year is $16,925,000
The combo box (form control) option in macros can be used to substitute for ___ when doing scenario analysis.
Answer:
Data validation
Explanation:
Here the combo box determines the validating the data and also provides the data list that is to be chosen from the given set of the data. Now if can be chosen from the drop-down list with respect to combo box also the motive would remain the same as it comes under data validation option
Hence, the correct option is data validation
Devin is a landscaper who needs to prepare different types of grass seed for his customers' yards. Bluegrass seed costs $2.00 per pound while drought-resistant seed costs $3.00 per pound. If for a particular day the two types of grass seed totaled $68.00 and together weighed 25 pounds, how many pounds of bluegrass seed did Devin prepare?
Answer:
7 pounds
Explanation:
To solve this we need to use simultaneous algebraic equations.
Assume
x = 1 pound of bluegrass seed
y = 1 pound of drought resistant seed
Our first equation considers the number of pounds
x + y = 25
y = 25 - x
For the combined bluegrass seeds and thought resistant seeds bought
For the second equation we consider the price
2x + 3y = 68
Substitute value of y in equation 2
2x + 3(25 - x) = 68
2x + 75 - 3x = 68
x= 7
So the amount of bluegrass seed is 7
We can also get the amount of drought resistant seed from equation
7 + y = 25
y = 18
Suppose a State of California bond will pay $1,000 eight years from now. If the going interest rate on these 8-year bonds is 5.5%, how much is the bond worth today
Answer:
The bond is worth $651.59 today
Explanation:
FV = $1000
N = 8
I/Y = 5.5%
Present Value = ?
PV = FV*(1+r)^(-n)
PV = $1000 * (1 + 0.055)^-8
PV = $1000 * (1.055)^-8
PV = $1000 * 0.651599
PV = $651.59
Zhao Co. has fixed costs of $286,200. Its single product sells for $163 per unit, and variable costs are $110 per unit. Compute the level of sales in units needed to produce a target (pretax) income of $106,000.
Answer:
The level of sales in units is 7,400
Explanation:
The computation of the level of sales in units is shown below:
= (Fixed cost + target income) ÷ (Contribution margin per unit)
= ($286,200 + $106,000) ÷ ($163 per unit - $110 per unit)
= $392,200 ÷ $53 per unit
= 7,400 units
The Contribution margin per unit is
= Selling price per unit - variable cost per unit
Henec, the level of sales in units is 7,400