Answer:
Variable unit cost = $27.70
Absorption cost = $36.60
Explanation:
The calculation of unit cost using variable costing and absorption costing is shown below:-
Variable costing Absorption costing
Raw material per unit $7.90 $7.90
Direct labor per unit $10.90 $10.90
Variable manufacturing
overhead per unit $8.90 $8.90
Fixed manufacturing
overhead per unit $8.9
($347,100 ÷ 39,000)
Unit cost $27.70 $36.60
Therefore the variable unit cost is $27.70 and absorption cost is $36.6 by using the above computation.
Answer:
c. Accounting rate of return.
Explanation:
The Accounting rate of return is calculated by dividing the after tax net income by average investment (i.e. Accounting rate of return = <em>After tax net income / Average investment </em>)
Answer:
Compute the Allowance for Doubtful Accounts as of year end by adding the Uncollectible Accounts Expense (which is 1% of sales on account) and Uncollectible Accounts Charged off during the Year since those accounts are deemed uncollectible and are deducted from Accounts Receivable and removed from the allowance account.
Allowance for Doubtful Accounts = [Sales on Account × 1%] - Write-offs
Allowance for Doubtful Accounts = [$320, 000 × 0.01] - $1,400
Allowance for Doubtful Accounts = $1,800
The Allowance for Doubtful Accounts balance as of year end is $1,800.
The factor affecting elasticity is the luxury versus necessity factor. A cruise is considered a luxury so its demand is considered more elastic when compared with a necessity.
Elasticity of demand measures how the quantity demanded of a good responds to changes in the price of the good.
<u><em>Types of demand elasticity. </em></u>
- Elastic demand: This means that demand is very sensitive to change in the price of a good. The coefficient of elasticity is greater than one.
- Inelastic demand: this means that demand is not very sensitive to changes in the price of the good. The coefficient of elasticity is less than one.
- Unit elastic demand: a change in price of the good leads to an equivalent change in the demand for the good. The coefficient of elasticity is equal to one.
<u><em>Factors that affect elasticity of demand </em></u>
- The number of substitutes the good has: the more substitutes the good has, the more elastic demand would be.
- The length of time: demand is less elastic in the short run when compared with the long run. This is because in the long run, consumers would have more time to search for suitable substitutes.
- Luxury versus necessity: a good that is considered a necessity is inelastic. While the demand for a luxury is considered elastic.
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