Question 7

Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $42,000. The estimated useful life was

inysia [295]

Answer:

Depreciation schedule for :

Straight-line Units-of-production Double-declining-balance

Year 1 $ 7,400 $8,325 $16,800

Year 2 $ 7,400 $10,175 $10,080

Year 3 $ 7,400 $8,325 $6,048

Year 4 $ 7,400 $8,325 $3,629

Year 5 $ 7,400 $1,850 $2,177

Straight Line Method will result in the highest Net Income. This is because it provides for the lowest charge of depreciation expense

Explanation:

Straight-line

Straight line method charges the same amount of depreciation (fixed on cost) over the useful life of an asset.

Depreciation Charge = (Cost - Residual Value) ÷ Estimated Useful Life

= ($42,000 - $5,000) ÷ 5

= $ 7,400

Annual Straight line Depreciation Charge

Year 1 = $ 7,400

Year 2 = $ 7,400

Year 3 = $ 7,400

Year 4 = $ 7,400

Year 5 = $ 7,400

Units of Production

Depreciation Charge = (Cost - Residual Value) / Total Expected Production × Period`s Production

Therefore,

Depreciation Charge = Rate of depreciation × Period`s Production

then,

Rate of depreciation = ($42,000 - $5,000) / 20,000 units

= $1.85 per unit of production

Annual Units of Production Deprecation Charge

Year 1 = 4,500 units × $1.85 = $8,325

Year 2 = 5,500 units × $1.85 = $10,175

Year 3 = 4,500 units × $1.85 = $8,325

Year 4 = 4,500 units × $1.85 = $8,325

Year 5 = 1,000 units × $1.85 = $1,850

Double-declining-balance.

Depreciation Expense = 2 × SLDP × BVSLDP

Where,

SLDP = 100 ÷ Number of useful life

= 100 ÷ 5

= 20 %

Annual Double-declining-balance Expense

Year 1 = 2 × 20% × $42,000

= $16,800

Year 2 = 2 × 20% × ($42,000 - $16,800)

= $10,080

Year 3 = 2 × 20% × ($42,000 - $16,800 - $10,080)

= $6,048

Year 4 = 2 × 20% × ($42,000 - $16,800 - $10,080 - $6,048)

= $3,629

Year 5 = 2 × 20% × ($42,000 - $16,800 - $10,080 - $6,048- $3,629)

= $2,177

3 0

1 year ago

Jack Simpson, contract negotiator for Nebula Airframe Company, is currently involved in bidding on a follow-up government contra

Schach [20]

Answer:

3,825.2 labor hours

Explanation:

Learning rate (Unit 1 and unit 2):

= Labor hour required for 2nd unit ÷ Labor hour required for 1st unit

= 1,200 ÷ 2,000

= 0.60

Learning rate (Unit 2 and unit 3):

= Labor hour required for 3rd unit ÷ Labor hour required for 2nd unit

= 1,130 ÷ 1,200

= 0.94

Average of learning rates = (0.60 + 0.94 ) ÷ 2

= 0.77

As per learning curve calculator the value of 77% for 6 units = 4.0776

Cumulative time = Factor × Time of first unit

= 4.0776 × 2,000

= 8,155.2

Hence,

Time for next three units:

= Cumulative time - Sum of the time of first, second and third unit

= 8,155.2 - (2,000 + 1,200 + 1,130)

= 3,825.2 labor hours should Simpson plan for.

4 0

1 year ago

DonutVille caters to its retirement population by selling over 10,000 donuts each week. To produce that many donuts weekly, Donu

nata0808 [166]

Answer:Flour should be acquired through a contract.

Explanation: Acquiring flour through a contact will be very important for DonutVille as it will ensure a follow-up and a feedback system where the manager of DonutVille establish a relationship with the company supplying the flour through one of its distributors or agents.

When purchasing of flour is achieved through a contact, it makes the contact a responsible person who will be needed to guarantee the supply of flour on time and to Communicate with the manager of DonutVille should there be any matters arising in the process getting supplies.

8 0

1 year ago

A company opting to boost its sales of branded footwear by offering buyers 500 models/styles to choose from should consider redu

Pavel [41]

Answer:

D. investing in production improvement option B at those production facility locations producing 500 models.

4 0

2 years ago

Which of these statements about the production order quantity model is FALSE? The production order quantity model is appropriate

Rzqust [24]

Answer:

Question is written again to add options:

A. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous.

B. Average inventory is more than one-half of the production order quantity.

C. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory.

D. All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity.

E. None of these is false.

The correct answer is option B "Average inventory is more than one-half of the production order quantity."

Explanation:

With an inventory, it is possible to separate parts of the production process , to separate assets from goods are yet to be produced or are already produced that could serve as a source of income for a company.

An average inventory is less than one-half of the production order quantity.

The production order quantity model doesn't make it possible for the ordered quantity to be received at one time.

The production order quantity model helps a company on how to manage inventory holding costs and the average fixed ordering cost, thereby making it possible for a company to check and minimize its inventory cost and to have a guide on what quantity to produce at every point in time.

6 0

1 year ago