Answer:
The company should make the components because incremental costs are $2 less than the purchase price
Explanation:
The cost of making each unit of component = Direct Labour + Direct Material + Variable Overhead*
*The overhead cost of $4 contains both a fixed and variable element. It has been mentioned that 25% of overhead cost is incremental i.e. it increases with each additional unit produced (marginal cost). The incremental cost is the variable element.
Variable element = $4 x 25% = $1
Fixed element = $4 x 75% = $3
Thus, the cost of making each unit of component = $5 + $2 + $1 = $8,
whereas the cost of purchasing each unit of complement is $10. Hence, the company should produce the component as it is less by $2 ($10 - $8) to produce than it is to purchase.
Answer:
6.35%
Explanation:
If you purchase this bond you will need to pay $1,000 x 136.04% = $1,360.40
the coupon rate is 9.5% / 2 = 4.75% or $47.50 every six months
the bond matures in 18 years or 36 semiannual periods
yield to maturity = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]
YTM = {47.5 + [(1,000 - 1,360.4)/36]} / [(1,000 + 1,360.4)/2]
YTM = 37.49 / 1,180.2 = 0.031766 x 2 (annual yield) = 0.06353 = 6.35%
~Hello There!~
The key elements of this process involve customer value and customer satisfaction.
Hope This Helps You!
Good Luck :)
Have A Great Day ^_^
- Hannah ❤
Answer:
The question is incomplete, The complete question with options should be;
When Sebastian wrote the contract with BP for over two billion dollars, he included targets for performance that had to be met before a payment would be released. Sebastian was trying to avoid ________bias.
A. overconfidence
B. escalation of commitment
C. sunk-cost
D. framing
E. hindsight
The answer is
B. Escalation of commitment
Explanation:
Escalation of commitment is a human behavior pattern in which an individual or group facing increasingly negative outcomes from a decision, action, or investment regardless continues the behavior instead of changing the course.
It simply means the irrational behaviour of investing additional resources to a project that is failing.
These resources could be time, energy and money that an individual continue to invest into a falling and sinking venture or business
So, in this situation, before releasing the payment, Sebastian ensures that the targets should be met for the performance. He is avoiding the situation of escalation of commitment bias of him continuing to release or invest money into an already failing contract.
Answer:
Refer To The attached screen shot. It contains the Income Statement Prepared under Absorption Costing.
Explanation:
Absorption Costing assumes that the Manufacturing Costs include Direct Material, Direct Labor, Variable Overhead, and Fixed Overhead. Whereas, Selling and Administrative Expenses are classified as period Costs. These period costs are recognized in the period in which they are incurred. On the other hand, the manufacturing costs are recognized when the goods on which the costs were incurred are sold. That's why we don't recognize $78,000 as a Fixed Overhead because these overhead costs were incurred to produce 6,000 rackets. We have to calculate the fixed overhead cost per unit and multiply it with the units sold.
I hope I made it clear. If you have any queries, feel free to contact me.
Thanks.
