Answer:
Inelastic
Explanation:
When the price elasticity of demand (PED) is lower than 1, the demand is said to be inelastic. This means that a 1% increase in the price of a good or service will result in a proportionally smaller reduction of the quantity demanded. The formula for calculating price elasticity of demand is:
PED = % of change in quantity / % of change in price
For example, if the price of gasoline increases by 5% but the quantity demanded for gasoline decreases only by 2%, the PED = 2% / 5% = 0.4, therefore the demand for gasoline is inelastic.
Answer:
True
Explanation:
As in the lean philosophy the production is based on specific customer demands, there are chances that when the order is received then the inventory required is not present and that the inventory is not held in hand.
Whereas in the traditional philosophy the production is based on the principle of budgets and sales forecast, accordingly the sales keeps on moving and the inventory is also held in hand prior to confirmation of order from customers.
Since there is no planning before the order is received from customers under lean, in emergency cases, or scarcity of resources, the inventory will fall short, and acquisition of inventory would not be easy.
Answer:
a) $12,500 unfavorable
b) 0
Explanation:
variable factory overhead controllable variance = actual variable overhead expense - (standard variable overhead per unit x standard number of units)
actual variable overhead expense = $725,000
standard variable overhead per unit = $712,500 / 60,000 = $11.875
standard number of units = 60,000
variable factory overhead controllable variance = $725,000 - $712,500 = $12,500 unfavorable
Controllable factory overhead is not related to any changes in the actual volume or quantity produced.
Fixed factory overhead volume variance = actual fixed overhead - standard fixed overhead = $262,500 - $262,500 = 0
Fixed overhead was exactly the same as the standard or budgeted overhead.
Answer:
5,275
Explanation:
The targeted pretax income is the difference between the targeted total sales and the estimated total cost.
The total cost is the sum of the fixed and variable cost. The sales and variable cost are dependent on the level of activities or number of units produced and sold.
Contribution margin is the difference between the sales and variable cost.
Let the number of units to be sold be F
114F - 34F - 222,000 = 200,000
80F = 422,000
F = 422,000/80
= 5,275
Answer:
Shellhammer Company
Ending inventory = $712
Cost of goods sold = $2,492
Explanation:
a) Data and Calculations:
Date Item Units Unit Cost Total Cost
September 1 Inventory 100 $3.34 $334.00
September 8 Purchases 450 3.50 1,575.00
September 18 Purchases 350 3.70 1,295.00
September 30 Total 900 $3,204.00
Ending inventory 200
Cost of goods sold 700
Weighted Average cost = Total cost of goods available for sale/Total units available for sale
= $3,204/900 = $3.56
Value of Ending Inventory = $3.56 * 200 = $712
Value of Cost of goods sold = $3.56 * 700 = $2,492
b) The weighted average inventory costing, under the period inventory system, used by Shellhammer is an assumption that the costs attributable to ending inventory and cost of goods sold are determined from the average cost per unit and that these the average cost is ascertained at the end of the period. Therefore, the cost of beginning inventory and purchases are accumulated and divided by the units of goods available for sale.
