Define marginal revenue and explain its relationship with total revenue A. Marginal Revenue Marginal revenue is the increase in total revenue that results from the sale of one additional unit of output sold. (The extra incremental revenue generated from an additional single unit of output) 1. Explain its relationship with total revenue. The relationship between marginal revenue and total revenue is the change in total revenue with respect to the variable change in quantity.
The conservatism principle involves “recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received” (The conservatism principle). Requirement 2 – B Hudson’s wholesale inventories should be reported on the balance sheet at the replacement cost amount. The text indicates that the replacement cost is less than the NRV (or ceiling) and more than the NRV-NP (or floor) making the
Solvency ratios this is one of many ratios used to measure a company’s ability to meet long-term obligations. The solvency ratio measures the size of a company’s after-tax income, excluding non-cash depreciation expenses, as compared to the company’s total debt obligations. It provides a measurement of how likely a company will be to continue meeting its debt obligations. Users who may be interested in each type of ratio? Liquidity ratios are used by suppliers and other trade creditors.
| | | Establishes a market value for the firm. | | | Makes it easier for owner-managers to engage in profitable self-dealings. | 8 points Question 2 Financial Accounting Standards Board (FASB) Statement #13 requires that for an unqualified audit report, financial (or capital) leases must be included in the balance sheet by reporting the Answer | | residual value as a fixed asset. | | | residual value as a liability. | | | present value of future lease payments as an asset and also showing this same amount as an offsetting liability.
The interest charged on the multimillion dollar loan clearly will have a significant impact on the company’s financial reports. Thus, the Financial Accounting Standards Board (FASB) established SFAS No. 34, “Capitalization of Interest Costs,” to provide guidance on how to record this type of interest properly. Basically, this standard explains that the interest on the loan for building your new facility can be capitalized, as part of the costs of the facility because it meets their two criteria, (1) it is not yet ready for use, and (2) it is currently under construction (p.
Decision Making Accounting (ACC) 561 November 11, 2010 Eddie Mattison, Facilitator Decision Making Budgets and Performance Reports “Budgets…help to coordinate and implement plans. They are the chief devices for disciplining management planning. Without budgets, planning may not get the front and center focus that it usually deserves.” (Horngren at el. 2008, p. 13) Guillermo must be able to operate within his budgets; otherwise he may begin to operate at a profit loss. Creating a budget will allow Guillermo to know the exact amount of money that he has to allocate to specific expenses.
Having suppliers provide us with a written schedule that details their quality control process would give us a better understanding of the importance they place in this phase. How would they monitor meeting our specifications and expectations? Also, if there is a product failure, how fast will the turnaround be before an acceptable replacement can be delivered fully operational? The amount of inventory on hand that the suppler has or will have in order to meet our demand also demands our attention. What type of inventory control system does the supplier use?
completing the research or having the development deliverables completed. These phases and deliverable are also known as a substantive milestone. According to FASB the following criteria must be met before a company is able to label a deliverable as a substantive milestone: • “The milestone consideration must be proportionate with 1) the vendor’s performance to achieve the milestone or 2) the delivered item’s enhanced value resulting from the specific outcome of the vendor’s performance to achieve the milestone. • The milestone consideration must be related solely to the vendor’s past performance. • The milestone consideration must be reasonable relative to all deliverables and payment terms in the arrangement” Once the company has set the milestones it will recognize the revenue in the period that the milestone is achieved.
Pat could argue that signing the Notice of Unsatisfactory Performance/Corrective Action Plan as an implied contract protecting his employment with NewCorp. Critical information in this case needs to be further reviewed to assess the risks and rights of both parties in this scenario. For instance, was there any form of documented performance discussion regarding Pat’s performance? If so, was Pat given the opportunity to correct his performance issue? Or, in the initial employment arrangement, was there promise of employment for any period of time?
Clements and Gido (2012, p41-43) provide a list of guidelines for the drafting of an RFP: * Must state the project objective; * Must provide a statement of work, outlining the work elements to be performed; * The customer requirements must be included; * The deliverables must be stated clearly; * It should state acceptance criteria which would be used to determine if deliverables were achieved; * The schedule for completion should be included; and * The evaluation criteria for evaluation of proposals should be included. Based on the above Jennifer’s request cannot be seen as sufficient. It is unclear and does not state what her requirements are other than that it should either increase sales and decrease costs (strategic objectives). Question 2 Regarding the business case, which precedes the programme proposal, what should the order of priority for implementing the projects be in order to maximise the strategic organizational benefits? In your business case discussion, indicate how you would handle Joe Sanchez’s request to increase the sales force.