Cruz Company uses LIFO for inventory costing and reports the following financial data. It also recomputed the inventory and cost
of goods sold using FIFO for comparison purposes. 2015 2014
LIFO inventory $330 $280
LIFO cost of goods sold 910 850
FIFO inventory 400 305
FIFO cost of goods sold 965
Current assets (Using LIFO) 390 360
Current Liabilities 175 155
Required:
1) Compute its current ratio, inventory turnover, and day's sales in inventory for 2015 using
(a) LIFO numbers and
(b) FIFO numbers. (Round your answers to 1 decimal place.)
Note: Labour hired per day = L, Total product = Q, Marginal Product of labor=MPL, VMPL =Price*MPL
A firm will maximize the profit by increasing the number of labor as long as VMPL is higher than or equal to the wage rate. In this case, we observe that VMPL ($80)>wage rate ($75) for L=5 but VMPL ($60)<wage rate ($75) for L=6. So, the optimal number of labor to be hired is 5.
If these error are nit corrected, the income before taxes be overstated by $ 35,000
.
As, Overstatement of Ending Inventory will affect the gross profit (Increase) by $ 25,000 and then understatement of Depreciation will further increase Net Profit by $ 10,000
Explanation: When the interest rate on a bonds issued by an organization is lesser than the prevailing interest rate being offered in the market at a certain time on Bank deposits, loans or other interest bearing funds, organization tends to issue discounts on bonds in scenarios like this and as such bonds are being issued or traded at prices lower or below it's face value in other to encourage investors and bridge the interest gap between the bond rate and the market rate.
