Answer:
The correct answer is the option A: Difference between the marginal cost and the price of the monopolistic competitor.
Explanation:
To begin with, the concept known as "Markup" in the field of business and economics refers to the difference in the price and the cost of a good that is able to sale. Moreover, the "markup" is added into the total cost of the production of the good in order to obtain a profit for the sale of that good, so therefore that it implicates the percentage that the producer gains for selling his product to a consumer. So that is why this concept is understood as that difference comprehended between the sale price and the cost of the good produced.
The three-component model of creativity proposes that individual creativity essentially requires expertise, creative thinking skills, and ________.
Answer:
intrinsic task motivation.
Explanation:
The three-component model of creativity proposes that individual creativity essentially requires expertise, creative thinking skills, and intrinsic task motivation.
According to Teresa M. Amabile in her work at the Harvard Business school titled: "Componential theory associated with creativity" she stated that, the three (3) components or elements that individual creativity essentially requires are;
1. Dominant relevant expertise: it is expected that for an individual to be creative, he or she must have be a expert or even a professional in the field (domain).
2. Creative thinking skills: a creative individual is one who possess such abilities and skills to think out of the box and has great cognitive skills to process his thoughts individually.
3. Intrinsic task motivation: an individual who is creative is determined to achieve the best outcome or success in a task out of volition or personally developed interest.
Answer:
The three-component model of creativity proposes that individual creativity essentially requires expertise, creative thinking skills, and intrinsic task motivation.
Refer to the following data: Net sales, first month $13,000 Normal gross profit as a percentage of sales 45% Inventory, start of period $8,000 Net purchases, first month $7,000 Using the gross profit method of inventory estimation, the amount of normal gross profit would be:______.a. $5,850.b. $3,600. c. $6,750. d. $15,000.
Answer:
a. $5,850
Explanation:
Using the gross profit method of inventory estimation, the amount of normal gross profit would be;
= Net sales × Normal gross profit margin percentage
= $13,000 × 45%
= $5,840
Quaker State Inc. offers a new employee a single-sum signing bonus at the date of employment. Alternatively, the employee can receive $8,600 at the date of employment plus $26,000 at the end of each of his first three years of service. Assuming the employee's time value of money is 8% annually, what lump sum at employment date would make him indifferent between the two options
Answer: $75,604.60
Explanation:
The lump sum that would make the employee indifferent between the two option is the one that is equal to the present value of the part payments.
Given a constant payment of $26,000 per year this will be the present value of an annuity.
Present Value of the Annuity = 26,000 * Present Value interest factor of an annuity, 3 years, 8%
= 26,000 * 2.5771
= 67,004.60
Total present Value = 8,600 + 67,004.60
= $75,604.60
If the lump sum offered was $75,604.60, employee would be indifferent.
All About Animals has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow: Total Cat Food Dog Food Sales revenue $85,000 Variable expenses $40,000 Contribution margin $45,000 Fixed expenses $52,000 Operating income (loss) $ $(7,000) Assuming the Dog food is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for per year, how will operating income be affected?
Answer:
Increase in operating income by $12,000
Explanation:
The above is an incomplete question because the value for 'space normally used to produce the rented line' is missing. However, I assumed the value is $26,000 per year as gotten from the internet -Chegg.
Given the above information, the operating income can be affected as calculated below;
Sales revenue $85,000
Add additional revenue $26,000
Total revenue $11,1000
Less: variable expenses ($40,000)
Contribution margin $71,000
Less: fixed expense ($52,000)
New net operating income
$19,000
Less: Original operating income
($7,000)
Increase in operating income
$12,000
Aaker Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $168 Units in beginning inventory 0 Units produced 9,550 Units sold 8,150 Units in ending inventory 1,400 Variable costs per unit: Direct materials $35 Direct labor $66 Variable manufacturing overhead $16 Variable selling and administrative $16 Fixed costs: Fixed manufacturing overhead $229,200 Fixed selling and administrative $138,550 What is the unit product cost for the month under absorption costing
Answer:
Unitary production cost= $141
Explanation:
Giving the following information:
Units produced 9,550
Direct materials $35
Direct labor $66
Variable manufacturing overhead $16
Fixed manufacturing overhead= $229,200
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
First, we need to calculate the unitary fixed manufacturing overhead:
unitary fixed manufacturing overhead= 229,200/9,550
unitary fixed manufacturing overhead= $24
Unitary production cost= 35 + 66 + 16 + 24
Unitary production cost= $141
A manufacturer of microwaves has discovered that female shoppers have little value for microwaves and attribute almost no extra value to an auto-defrost feature. Male shoppers generally value microwaves more than women 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 $82 and one with auto-defrost at $148, while women value a simple microwave at $66 and one with auto-defrost at $82.
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.
Use the following table to indicate the revenue from men, the revenue from women, and the total revenue from each strategy.
Strategy Revenue from Revenue from Total Revenue from Strategy
Men Women
1. Auto-Defrost
Microwave only at $82
2. Auto-Defrost Microwave
only at $148
3. Simple Microwave at $66,
Auto-Defrost Microwave at $131
Suppose that, instead of one man and one woman, the market for this microwave consisted entirely of men. For simplicity, you can assume this means that there are two men, and no women. Under these conditions, pricing strategy_____would maximize revenue for the manufacturer.
Answer:
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.
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 women and one with auto-defrost for men.Strategy Revenue Revenue Total Revenue
from men from women from strategy
1. Auto-Defrost $82 $82 $164
Microwave only
at $82
2. Auto-Defrost $148 $0 $148
Microwave only
at $148
3. Simple $131 $66 $197
Microwave at $66,
Auto-Defrost
Microwave at $131
Suppose that, instead of one man and one woman, the market for this microwave consisted entirely of men. For simplicity, you can assume this means that there are two men, and no women. Under these conditions, pricing strategy 2. Auto-Defrost Microwave only at $148 would maximize revenue for the manufacturer.
What effective time management tools should human resources managers use to make effective use of their time when it comes to coping with demands, constraints, and choices confronting them
Answer:
The answer is below
Explanation:
They are various Time Management Tools in which an individual can use to manage his or her time effectively. Thus, human resources managers can use any of the listed time management tools in order to make effective use of their time when it comes to coping with demands, constraints, and choices confronting them:
1. To Do List
2. Calendar
3. Address Book
4. Notebook
e can deposit $5,000 at the end of each six-month period for the next 12 years and earn annual interest of 8.5%, compounded semi-annually. What will the value of the investment be after 12 years
Answer:
$201,805.67
Explanation:
The formula for calculating future value = A (B / r)
B = [(1 + r)^n] - 1
A = amount
R = interest rate = 8.5 / 2 = 4.25%
N = number of years = 12 x 2 = 24
(1.0425^24 - 1 ) / 0.0425 = 40.361134
40.361134 x $5,000 = $201,805.67
Financial information for Forever 18 includes the following selected data (in millions): ($ in millions) 2018 2017 Net income $ 156 $ 188 Preferred stock dividends $ 23 $ 18 Average shares outstanding (in millions) 300 400 Stock price $ 11.87 $ 10.82 Required: 1-a. Calculate earnings per share in 2017 and 2018
Answer:
$0.4433 and $0.425
Explanation:
The computation of the earning per share is shown below:
Earning per share is
= (Net income - preference dividend) ÷ (average shares outstanding)
For 2017, it is
= ($156 - $23) ÷ (300 shares)
= $0.4433
For 2018, it is
= ($188 - $18) ÷ (400 shares)
= $0.425
We simply applied the above formula so that the earning per share could be come for both the years
During the current year, Orr Company incurred the following costs: Research and development services performed by Key Corp. for Orr $ 150,000 Design, construction, and testing of preproduction prototypes and models 200,000 Testing in search for new products or process alternatives 175,000 In its income statement for the current year, what amount should Orr report as research and development expense
Answer:
$525,000
Explanation:
The amount to be recognized as research and development expense for the year includes the cost of research and development services performed by Key Corp. for Orr, the cost incurred on testing of pre-production prototypes and models as well as the cost of testing in search for new products or process alternatives,
In other words, all costs incurred would be expensed since no of them met the capitalization criteria as per generally acceptable accounting principles
Seth Silver had the following items of income during the taxable year: Interest income from a checking account $1,000 Interest income from corporate bonds purchased 5 years ago $2,050 Interest income from a municipal bond he purchased during the current year $250 Interest income from federal bonds (which are not Series EE bonds) purchased 2 years ago $750. On his current year tax return, what amount is taxable income?
a. $3,050
b. $3,300
c. $3,800
d. $4,050
Answer:
c. $3,800
Explanation:
Calculation for the amount of taxable income
Using this formula
Taxable income =Interest income from a checking account+Interest income from corporate bonds +Interest income from federal bonds
Let plug in the formula
Taxable income =$1,000+$2,050+$750
Taxable income=$3,800
Therefore on his current year tax return the amount of his taxable income will be $3,800
D. When incorporating, it is important to consider whether or not the company will conduct business internationally. 1. Summarize the impact of foreign exchange rates on the company’s financial statements. What risks do foreign exchange rates pose? Provide academically supported example(s) in your response
Answer with Explanation:
Foreign exchange rates can have significant impact on the company's financial statements because the spot rate at that date can be affect the value of the company's assets. It is very common in consolidated financial statement of a multinational companies.
The impact on the financial statements can be as under:
The fluctuation in currency value can under or over statement of assets, liabilities and Income & Expenses.The fluctuation makes the analysis of the financial statements meaningless. The performance of the company in a consolidated statement will be in a state that would not be better understood or time consuming by experts to develop understanding of what the financial statement is saying. It would be difficult for an ordinary person to understand the performance of the business.It can also also manipulate the value of the assets of the company because increase in devaluation of the currency means increase in inflation and vice versa.The value of the company acquired can be affected significantly which means that the investment (value of whole company) can turn into significant losses which means it can result reporting losses of in a consolidated financial statement. This would also result in decrease in the stock value of the group as a whole.Average fixed cost A. increases as output rises. B. remains constant as output rises. C. equals marginal cost for the first unit of output. D. decreases as output rises.
Answer:
D
Explanation:
Average fixed cost = total fixed cost / output
Fixed cost is cost that does not vary with output.
for example electricity tariff
for example, total fixed cost is $10,000. what is average fixed cost when output is 500 and 1000
$10,000 / 500 = $20
$10,000 / 1000 = $10
We can see that average fixed cost decreased as output increased
New issues of municipal short term notes are available in which form?
Answer: book entry
Explanation:
A municipal bond, which is commonly referred to as a muni bond, can be defined as a bond that is issued by a particular territory or local government in order to finance public projects like airports, schools, roads, museums, seaports, and infrastructure. It should be noted that new issues of municipal short term notes are available in book entry form.
Suppose marginal cost is constant and equal to 50 and marginal revenue equals 100 - 10Q. A profit-maximizing monopolist will set quantity equal to:
Answer: 5
Explanation:
From the question, we are informed that the marginal cost is constant and equal to 50 and marginal revenue equals 100 - 10Q.
For a profit-maximizing monopolist, we should note that the marginal revenue will be equated to the marginal cost. Therefore:
100 - 10Q = 50
100 - 50 = 10Q
50 = 10Q
Q = 50/10
Q = 5
Therefore, a profit-maximizing monopolist will set quantity equal to 5.
A stock is selling at $40, a 3-month put at $50 is selling for $11, a 3-month call at $50 is selling for $1, and the risk-free rate is 6%.How much, if anything, can be made on an arbitrage?
Answer:
$0.745
Explanation:
GIven that
Current stock price [tex]S_o[/tex] = $40
strike price X = $50
time to expiry of option = 3 - month
put price option [tex]P _o[/tex] = $11
call price option [tex]C_o[/tex] = $1
and the risk-free rate r = 6%
The amount that can be made on the arbitrage can be evaluated as a function of the Put-call parity.
i.e For parity ;
[tex]C_o + (X \times e^{-rt} ) = P_o + S_o[/tex]
[tex]1 + (50 \times e^{-(0.06 \times 0.25} ) = 11 + 40[/tex]
[tex]1 + (50 \times 0.9851 ) = 51[/tex]
[tex]1 + (49.255 ) = 51[/tex]
50.255 = 51
the difference in both values above illustrates that there is no parity taking place and the arbitrage estimation here = 51 - 50.255 = $0.745
You establish a straddle on Fincorp using September call and put options with a strike price of $80. The call premium is $7.00 and the put premium is $8.50. a. What is the most you can lose on this position
Answer: $15.50
Explanation:
From the question, we are informed that someone establish a straddle on Fincorp using September call and put options with a strike price of $80 and that the call premium is $7.00 and the put premium is $8.50.
The most that can be lose on this position will be the addition of the call premium and the put premium. This will be:
= $7.00 + $8.50
= $15.50
Wireless Solutions reports operating expenses of $855,000. Operating expenses include both rent expense and salaries expense. Prepaid rent increases during the year by $17,000 and salaries payable increases by $13,500. What is the cash paid for operating expenses during the year
Answer:
$858,500
Explanation:
Cash paid for operating expenses = Operating expenses + Prepaid rent increase - Salaries payable increase
= $855,000 +$17,000 - $13,500
= $858,500
Ottawa, Inc. provides the following data: 2019 2018 Cash Accounts Receivable, Net Merchandise Inventory Property, Plant, and Equipment, Net Total Assets For the year ending December 31, 2019: Net Credit Sales Cost of Goods Sold () Gross Profit Calculate the days' sales in inventory for 2019. (Use 365 days for any calculations. Round any intermediate calculations and your final answer to two decimal places.)
Answer:
days sales in inventory = 85.88 days
Explanation:
The numbers are missing, so I looked for a similar question:
"Ottawa, Inc. provides the following data: 2019 2018 Cash $23,000 $22,000 Accounts Receivable, Net 37,000 37,000 Merchandise Inventory 55,000 25,000 Property, Plant, and Equipment, Net 127,000 96,000 Total Assets $242,000 $180,000 For the year ending December 31, 2019: Net Credit Sales $300,000 Cost of Goods Sold (170,000) Gross Profit $130,000"
first we must determine the inventory turnover ratio:
inventory turnover ratio = COGS / average inventory
average inventory = ($55,000 + $25,000) / 2 = $40,000
COGS = $170,000
inventory turnover ratio = $170,000 / $40,000 = 4.25
days sales in inventory = 365 / inventory turnover ratio = 365 / 4.25 = 85.88 days
Some investment projects require that a company increase its working capital. Under the net present value method, the investment and eventual recovery of working capital should be treated as:
Answer:
Both an initial cash outflow and future cash inflow
Explanation:
Net value cash flow is the different cash flows that happens at different times. It takes into account the initial cash outflow or capital investment and the amount that it would be getting in the future that is the future cash inflow.
The net present value gives us a difference between cash inflows and cash outflows in their present values over a period of time.
In 2020, a customer buys 1 GE 10%, $1,000 par debenture, M '35, at 115. The interest payment dates are Jan 1st and Jul 1st. The bond is first callable in 2030 at 102. The yield to call on the bond is
Answer:
8.02%
Explanation:
the yield to call = {coupon + [(call price - market price)/n]} / [(call price + market price)/2]
coupon = $50call price = $1,020market price = $1,150n = 10 x 2 = 20YTC = {50 + [(1,020 - 1,150)/20]} / [(1,020 + 1,150)/2]
YTC = 43.50 / 1,085 = 4.01% x 2 (annual interest) = 8.02%
In their business partnership, George has an ownership interest of 55% and Ben has an ownership interest of 45%. In the current year, they purchase equipment for $9900. In order to finance the equipment purchase, George makes a cash contribution of $7400 and Ben makes a cash contribution of $2500 to the partnership. Based on the information provided, which of the following is TRUE regarding the partnership balance sheet?
A) Both George, Capital and Ben, Capital will increase by $9900.
B) George, Capital will increase by $7400 and Ben, Capital will increase by $2500.
C) George, Capital will increase by $9900 and Ben, Capital will remain unchanged.
D) George, Capital will increase by $5445 and Ben, Capital will increase by $4455.
Answer: B) George, Capital will increase by $7400 and Ben, Capital will increase by $2500
Explanation:
The Capital Accounts reflect the investments by the various shareholders in the business. It is based on the worth of what was contributed.
As George made a cash contribution of $7,400, George's capital account must be increased by the same amount of $7,400 to reflect the investment that George has made.
The same goes for Ben.
The Herbertson Company leases machines to clients. Annual rentals are paid each year, with the first payment due on the day the lease begins. A machine with a book value of $12,000 is leased. Unguaranteed salvage value is $1,500. Lease term is six years. Herbertson's interest rate is 5%. What is the approximate annual lease payment? "Coursehero"
Answer:
$2,251.63
Explanation:
Calculation for the approximate annual lease payment
Since we looking for the approximate annual lease payment this means that our annual lease payment will be x and since the interest rate is 5% and we were been told that the first payment occured at the beginning of lease in which balance of 5 payments at the end of each year which means that we would find the PVA factors of (5%,5)
Hence,
x + x × Present value annuity factor (5%,5)
= $12,000
x + x(5.3295) = $12,000
5.3295x = $12,000
Now let divide the PVA of 5.3295 by $12,000 in order to get the approximate annual lease payment
x = $12,000 / 5.3295
x = $2,251.63
Therefore the approximate annual lease payment will be $2,251.63
If a gourmet cooking store encourages customers to sample fresh baked apple pie in order to encourage purchases of pie pans and rolling pins they are engaging in
Answer:
Sensory retailing.
Explanation:
If a gourmet cooking store encourages customers to sample fresh baked apple pie in order to encourage purchases of pie pans and rolling pins they are engaging in sensory retailing.
In marketing, sensory retailing can be defined as a strategic process which involves the creation of an atmosphere that attracts potential customers and has a positive influence or effect on them.
Generally, sensory retailing involves the process of appealing to the customer's taste, smell, sight, tactile, and olfactory senses, thus, affecting their perception, judgment and behavior positively.
Hence, when properly designed, harnessed and applied, it boost purchasing behaviors, increases sales revenues, improve customer loyalty, and enhances good vibes or mood among end consumers.
Caddie Manufacturing has a target debt-equity ratio of .35. Its cost of equity is 12 percent, and its pretax cost of debt is 6 percent. If the tax rate is 21 percent, what is the company’s WACC?
Answer:
10.12%
Explanation:
The computation of the WACC is shown below:
= Cost of debt × (1 - tax rate) × weight of debt + cost of equity × weight of equity
= 6% × (1 - 0.21) × 0.35 ÷ 1.35 + 12% × 1 ÷ 1.35
= 1.23% + 8.89%
= 10.12%
We simply multiplied the capital structure with each of its weight so that the WACC could come and the same is to be considered
Gilbert City had the following transactions involving resource inflows into its general fund for the year ended June 30, 20X8:
1. The general fund levied $2,200,000 of property taxes in July 20X7. The city estimated that 2 percent of the levy would be uncollectible and that $180,000 of the levy would not be collected until after August 31, 20X8.
2. On April 1, 20X8, the general fund received $50,000 repayment of an advance made to the internal service fund. Interest on the advance of $1,500 also was received.
3. During the year ended June 30, 20X8, the general fund received $2,000,000 of the property taxes levied in transaction (1).
4. The general fund received $265,000 in grant monies from the state to be used solely to acquire computer equipment. During March 20X8, the general fund acquired computer equipment using $240,000 of the grant. The city has not yet determined the use of the remainder of the grant.
5. During the year ended June 30, 20X8, the general fund received $135,000 from the state as its portion of the sales tax. At June 30, 20X8, the state owed the general fund an additional $22,000 of sales taxes. The general fund does not expect to have the $22,000 available until early August 20X8.
6. In July 20X7, the general fund borrowed $810,000 from a local bank using the property tax levy as collateral. The loan was repaid in September 20X7 with the proceeds from property tax collections.
7. In February 20X8, a terminated debt service fund transferred $30,000 to the general fund. The $30,000 represented excess resources left in the debt service fund after a general long-term debt obligation had been paid in full.
8. On July 1, 20X7, the general fund estimated that it would receive $78,000 from the sale of liquor licenses during the fiscal year ended June 30, 20X8. For the year ended June 30, 20X8, $66,000 had been received from liquor license sales.
9. The general fund received $19,000 in October 20X7 from one of the city’s special revenue funds. The amount received represented a reimbursement for an expenditure of the special revenue fund that the city’s general fund paid.
10. In July 20X7, the general fund collected $81,000 of delinquent property taxes that had been classified as delinquent on June 30, 20X7. In the entry to record the property tax levy in July 20X6, the general fund estimated that it would collect all property tax revenues by July 31, 20X7.
Required:
Prepare a schedule showing the amount of revenue that should be reported by Gilbert City’s general fund on the statement of revenues, expenditures, and changes in fund balance for the year ended June 30, 20X8.
Answer:
Gilbert City
A Schedule showing the amount of revenue in the general fund:
1. July 20X7 Property Taxes $2,200,000
2. Apr. 1, 2018 Interest on Advance 1,500
4. 2018 Grant Monies 265,000
5. June 30 Sales Tax 135,000
5. June 30 Additional Sales Taxes 22,000
6. July 20X7 Liquor Licenses 78,000
Total Revenue $2,701,500
Explanation:
Gilbert City, like other government bodies, reports its transactions on the accrual basis. For Gilbert City, this implies that the city will report all revenues receivable, whether actually received or not. And the city only reports the revenues that pertain to the current fiscal period in the current period. Gilbert City's revenues attributed to past and future years do not form part of the revenue for the current period. Gilbert City's reporting basis is in line with the accrual concept and the matching principle of Generally Accepted Accounting Principles.
Upon review of the effectiveness of a strategic business decision using evidence-based analytics, business leaders may reverse course. Refer to Highlight, "Unanticipated Consequences at FedEx" What factor(s) led to reversal of the new scheduling system? a) Restrictions on international air space were were not accounted for in the decision making b) The cost of upgrading the technology infrastructure was cost prohibitive. c) The new system contained assumptions that did not consider critical factors such as changes in time zones, travel time across hemispheres, and pilot flying hours d) There was an inadequate number of aircraft to accommodate the new schedule
Answer: c. The new system contained assumptions that did not consider critical factors such as changes in time zones, travel time across hemispheres, and pilot flying hours
Explanation:
Upon review of the effectiveness of a strategic business decision using evidence-based analytics, business leaders may reverse course.
The factor that led to the reversal of the new scheduling system is that the new system contained assumptions that did not consider critical factors such as changes in time zones, travel time across hemispheres, and pilot flying hours.
Concord Corporation has several outdated computers that cost a total of $18000 and could be sold as scrap for $6000. They could be updated for an additional $2900 and sold. If Concord updates the computers and sells them, net income will increase by $9000. What amount would be considered sunk costs?
Answer:
$18,000
Explanation:
Sunk costs refers to a cost that has been expended and cannot be recovered or recouped.
With regards to the above, $18,000 was expended concord by corporations to purchase computers hence cannot be recovered. Therefore, it is a sunk cost.
Explain how you can use the knowledge of subject matter experts and your peers to enhance your learning in workplace
Explanation:
Remember, a workplace is an environment not just working but for learning.
For example, subject matter experts (SMEs) are individuals inn a workplace who has special skills or experience on a particular job or topic. So, they can provide necessary assistance through this common methods
oral instructionswritten instructionsvideo based instructionsA persons's peers can also assist with information to do one's job using the above methods.
The authorized service center is located in Boston. Because Cookie Creations values serving its customers, it pays the shipping to Boston for any mixers needing repair under Kzinski’s warranty terms. Based on past experience, Kzinski has found that approximately 10% of mixers are returned for repair or replacement. The average cost to ship a mixer to Boston is $60.The following transactions take place in 2020 and 2021.1. A total of 30 mixers are sold in 2020.2. Four of the mixers sold in 2020 are returned for repair in 2021. The total shipping cost for returning these four mixers to Boston is $210.3. A total of 40 mixers are sold in 2021.4. Two of the mixers sold in 2021 are returned for repair in 2021. The total shipping cost for returning these two mixers to Boston is $55.Calculate Cookie Creations’ warranty liability for the shipping costs at December 31, 2020.Warranty liability $
Answer:
$180
Explanation:
Calculation to determine Cookie Creations’ warranty liability for the shipping costs at December 31, 2020.
Using this formula
Warrant liability=Numbers of mixers sold × Percentage of mixers returned for repair or replacement ×The average cost to ship a mixer
Let plug in the formula
Warrant liability=30 x 10% x $60
Warrant liability=$180
Therefore Cookie Creations’ warranty liability for the shipping costs at December 31, 2020 will be $180