Judgement Case 9-1 – Inventory costs; lower of cost or market; retail inventory method Requirement 1 Theoretically, Hudson should account for the warehousing costs related to its wholesale inventories as a part of inventory. All of the necessary costs associated with preparing, and in this case storing, items for sale are to be included in inventory. The key here is that the warehousing cost is related to a particular set of items and for that reason it is important to account for the warehousing cost with the inventory in order to satisfy the matching principle. The matching principle “requires that revenues and any related expenses be recognized together in the same period” (The matching principle). By following the matching principle all of the costs associated with a particular product, not just its wholesale price, is expensed when the item is sold.
(p. 204) The pay-mix component in which benefits is likely to be largest is ______________. A. work-life balance b. security or commitment c. performance driven d. market watch 10. (p. 207) Which of the following is not a consequence of level of competitiveness of total compensation? a. increase probability of union-free status B. increase organization profitability c. reduce voluntary turnover
a. To obtain the long run equilibrium, number of firms in the industry should be infinity, and it is calculated by: qi= (a-c) / [(n+1)*b] b. For two firms: Quantity: q1=q2= (a-c)/[(n+1)*b]= (100-20)/3 = 26.67 Price: P=100-(2*26.67)=46.67 Cost: Cost= 20*26.67=789.4 Profit: Profit=46.67*26.67-789.4=0 For Three firms: Quantity: q1=q2= q3 = 20 Price: P=60 Cost: Cost= 296 Profit: Profit=904 For Four firms: Quantity: q1=q2= q3 =
In any case, after conducting the market research, PLE next needs to decide whether to keep the sales only in North America, market globally, or drop the product. If the North American response is high and PLE stays only in North America, the expected revenue is $1.2 million. If it markets globally, at an additional cost of $200,000), the probability of high global response is .9 with revenues of $2 million, $450,000 if the global response is low). If the North American response is low and it remains in North America, the expected revenue is $200,000. If it markets globally (at an additional cost of $600,000), the probability of a high global response is .05, with revenues of $2 million ($450,000 if the global response is low).
As a sale manager you can retrieve the first profit by other mean, including decreasing cost in administration (redundancy). Admin cost = 25000 Drop profit = 1285.8787 New admin cost = 23714.1213 That means the administration cost will be reduce at about 5.14 %. Task6 Consider the effects of the following deviations upon the Master Budget: 1. A 2.5% increase in materials costs 2. A 6% increase in Electricity costs.
This statement is true for: 29 What method of inventory valuation should be used for economic decision-making problems? 30 ____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem. 31 If TC = 321 + 55Q - 5Q2, then average total cost at Q = 10 is: 32 According to the theory of cost, specialization in the use of variable resources in the short-run results initially in: MIDTERM QUIZ 2 The different methods by which the sellers inform their potential buyers about the product is called: knowledge
Question 1 In summary: Product Line 1 (time in minutes) Line 2 (time in minutes) Profit ( $ ) X1 SUPER 3 4 42 X2 EXCELLENT 6 2 87 Let X1 = Number of SUPER model produced during 8 hour shift. X2 = Number of EXCELLENT model produced during 8 hour shift. Max 42X1 + 87X2 ST X1 + X2 ≤ 480 3X1 + 6X2 ≤ 480 4X1 + 2X2 ≤ 480 X1, X2 ≥ 0 It is recommended to produce 80 units of EXCELLENT and none SUPER in order to get the maximum profit (See attached print-out, table № 1). If the company wants to produce SUPER, the maximum profit will reduce by $1.5 per each unit, with $6960 - $1.5 = $6958.5 (See attached print-out, table № 2). As the company has extra 320 minutes
Assume that (i) if the trial proceeds it is expected to last less than a month and result in two possible outcomes in terms of the price per share established in court: the $273,000 claimed by the plaintiffs, or the $55,400 being defended by Herbert Kohler; (ii) Kohler estimates the probabilities of these outcomes at 30% and 70%, respectively. 5. How would your answer to question 4 change if you also assume that (i) the inheritance tax owed on Frederic Kohler’s estate was 50.2% of its holdings in Kohler Co. (equivalent to 489 shares of the 975 he owned); (ii) the taxes paid by the estate amounted to $27 million (489 shares at $55,400 each); (iii) were the settlement or the trial to result in a revised share price in excess of $55,400, the IRS would likely demand a similar valuation for its claim on Frederic’s estate; and (iv) Herbert Kohler estimates the probability of the IRS’s demand at 100% if he proceeds to trial, and 50% if he
The average value (Exhibit 1 red line) represents the cost savings realized by Ohio over the total daily tonnage. OP should take into consideration that once the pipeline is installed, cost efficiencies will be gained through lower average cost savings per day, as well as cost savings/ton. Ultimately this will improve their marginal value (Exhibit 1 green line), and the optimal range that OP should negotiate a fixed price and quantity is between 40-45 tons/day at a contract rate of $60.00-$65.00/ton respectively (Exhibit 1 green & purple intersection). This would represent a fair deal for both parties, and OP must negotiate diligently at this level and counter any arguments made by PH. OP’s
As you can see, the choice of an inventory method often can significantly affect gross profit and hence net income (and also ending inventory valuation for balance sheet purposes). Specific Identification The specific identification method (column 1) recognizes the actual cost paid for the specific physical item sold. Gross profit depends on which can the vendor sells. As Exhibit 16-18 shows, cost of goods sold could be either 30, 40, or 56 cents. Therefore, gross profit for operations of Monday through Thursday could be 60 cents, 50 cents, or 34 cents, depending on the particular can handed to the customer.