Answer: c) Equity reduces by $2,000
Explanation:
Expenses have the effect of reducing the income that the company would have made. That income is classified under equity as retained earnings so when expenses like office rent reduce the income, they are reducing the company's equity as well.
This is why expenses are debited when they increase because they reduce the equity accounts which are credited when they increase.
Answer:
350 units
Explanation:
The break even point shows the earnings that the company has to generate to be able to cover all the expenses. The formula to calculate the break even point is:
Break even point= Fixed costs / contribution margin
Break even point= $7,000/0.50
Break even point= $14,000
Now, to determine the break even point in units you have to divide $14,000 by the sales price per unit:
$14,000/$40= 350 units
According to this, the break even point in units is 350.
Amor, a successful brand of women's clothing, recently introduced a line of fitness equipment. This is an example of diversification. Diversification describes the processes of having diverse product offerings. When you diversify, you are differentiating your products to meet more needs for consumers. Since the brand of clothing recently introducted a line of fitness equipment, they are diverisfying themselves by branching out into other markets.
Total contribution margin = $3,000, standard models sold at break even=800, deluxe models sold at break even=400, superior models sold at break even=100
<u>Explanation:</u>
1.Using sales mix stated in the fact from Figure to form a package what is the total contribution margin?
total contribution margin =($150 multiply 8) plus ($200 multiply 4) plus ($1,000 multiply 1) = $3,000
2.Refer to Figure, What is the number of standard models sold at break even.
break even units =Fixed cost divide contribution margin per package
= $300,000 divide $3000 =100 package standard models sold at break even=100 package multiply 8 = 800
2.Refer to Figure, What is the number of deluxe models sold at break even.
break even units
=Fixed cost divide contribution margin per package = $300,000 divide $3000
=100 package deluxe models sold at break even = 100 package multiply 4
Answer:
$3,115,770
Explanation:
Given:
Current ratio = 3.60
Current liabilities = $401, 000
Quick ratio = 1.50
Inventory turnover = 3.70
Current ratio is calculated by dividing your current assets by your current liabilities.
Current Assets = 3.60 × 401,000
= $1,443,600
1.50 × 401,000 = 1,443,600 - Inventory
601,500 = 1,443,600 - Inventory
Inventory = 1,443,600 - 601,500
= $842,100
Cost of Goods Sold = 3.70 × 842,100
= $3,115,770
