aquisha's bookkeeping paid cash for the telephone bill, $134. what is the journal entry to record this transaction?

Answers

Answer 1

The journal entry to record Aquisha's Bookkeeping paying cash for the telephone bill of $134 would be as follows:

Date: [Date of the transaction]Account Debit Credit

Telephone Expense $134Cash

Debit Credit

Telephone Expense $134Cash $134

Explanation:

- The debit to the Telephone Expense account represents an increase in the expense related to the telephone bill.- The credit to the Cash account reflects a decrease in cash due to the payment made.

Please note that the specific account names used in the journal entry may vary based on the company's chart of accounts or accounting practices. It is important to use the appropriate account titles as per the company's FINANCIAL reporting guidelines.

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Related Questions

forte co., had 2,000 units of work in process on april 1 that were 60% complete. during april, 15,300 units were started and as of april 30, 6,800 units that were 30% complete remained in production. how many units were completed during april? multiple choice 10,500. 14,700. 15,300. 15,900. none of the answers is correct.

Answers

None of the answers is correct. The correct number of units completed during April cannot be determined from the given information.

To determine the number of units completed during April, we need to calculate the change in the number of units in progress from the beginning to the end of the month. However, the information provided only gives us the number of units started in April and the number of units remaining in production at the end of April. We know that 2,000 units were in progress on April 1, and 6,800 units were 30% complete on April 30. However, without information about the completion level of the units started in April, we cannot accurately determine the number of units completed during April. Therefore, none of the given answer choices is correct, as the calculation requires additional information that is not provided.

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the new deal set up a federal agency to produce electricity in the 1929 collapse of the stock market occurred on what has been called:

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During the Great Depression, the stock market crash of 1929 left the country in a state of economic turmoil. To address this issue, President Franklin D. Roosevelt implemented the New Deal.
The New Deal established the Tennessee Valley Authority (TVA) in 1933 as a federal agency to produce electricity and support economic development after the 1929 stock market collapse, known as the Great Depression. The stock market crash occurred on a day referred to as "Black Tuesday," October 29, 1929. The TVA aimed to improve the living conditions in the Tennessee Valley region through electricity generation, flood control, and promoting sustainable agriculture. It established the Federal Emergency Relief Administration (FERA) to help the American people. In addition, the New Deal also created the Tennessee Valley Authority (TVA), a federal agency tasked with producing electricity in the Tennessee Valley region. The TVA played a critical role in bringing electricity to rural areas and providing jobs to those affected by the economic crisis. The stock market crash occurred on what has been called "Black Tuesday," October 29, 1929.

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Fred is considering opening a ski shop in Colorado. Assume Fred will incur the following costs: building rent = $100,000/year, inventory = $250,000/year, energy = $50,000/year, and labor (one clerk) = $10,000/year. In addition, Fred's current income as a computer programmer is $40,000 per year. Assuming Fred would earn $460,000 in revenues, he could expect to earn:
a. an accounting profit of $10,000 per year.
b. an accounting profit of $60,000 per year.
c. an economic profit of $10,000 per year.
d. an economic profit of $50,000 per year.

Answers

Assuming Fred's revenues are $460,000 per year and he incurs various costs, he would expect to earn an(A) accounting profit of $10,000 per year.

To calculate Fred's profit, we need to consider both the accounting profit and the economic profit. Accounting profit is calculated by subtracting all explicit costs from the total revenues. In this case, Fred's explicit costs include building rent ($100,000), inventory ($250,000), energy ($50,000), and labor ($10,000), totaling $410,000. Therefore, Fred's accounting profit is calculated as $460,000 (revenues) - $410,000 (explicit costs) = $50,000.

On the other hand, economic profit takes into account both explicit costs and implicit costs. Implicit costs refer to the opportunity costs associated with the resources used in the business, such as Fred's current income as a computer programmer. In this case, Fred's implicit cost is $40,000, his current income as a computer programmer. So, to calculate the economic profit, we subtract both the explicit costs and the implicit costs from the total revenues: $460,000 (revenues) - $410,000 (explicit costs) - $40,000 (implicit costs) = $10,000.

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identify which principle applies to each scenario and place the appropriate terms in the corresponding spaces.
a. after spending hours researching his choices, mark decides on a laptop that will cost him $799. as he walks into his local retailer, a salesman presents him a laptop with marginally better features at the same price. however, mark would have to do further research to verify that the new alternative is in fact better. as a result, he decides that the laptop he previously decided on is good enough and buys it. Mark's decision is an example of__ a) bounded rationality. b) fairness. c) risk aversion

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Mark's decision is an example of a) bounded rationality.

Bounded rationality refers to the idea that individuals make decisions based on limited information and cognitive abilities, rather than being fully rational and able to consider all possible alternatives. In this scenario, Mark has already spent a significant amount of time researching his choices and has made a decision based on the information he has gathered so far. When presented with a potentially better alternative, he is hesitant to change his decision without further research, as he is limited by his cognitive abilities to fully consider all possible alternatives.

Therefore, Mark's decision is an example of bounded rationality.

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which of the following statements about investment decision models is true? the discounted payback rate takes into account cash flows for all periods. the payback rule ignores all cash flows after the end of the payback period. the net present value model says to accept investment opportunities when their rates of return exceed the company's incremental borrowing rate. the internal rate of return rule is to accept the investment if the opportunity cost of capital is greater than the internal rate of return.

Answers

When making investment decisions, companies have several decision models to choose from.

The discounted payback rate model takes into account cash flows for all periods, ensuring that the investment is profitable in the long run. On the other hand, the payback rule ignores all cash flows after the end of the payback period, which may not be the best option for long-term investments.
The net present value model advises companies to accept investment opportunities when their rates of return exceed the company's incremental borrowing rate. This model takes into account the time value of money and the risk associated with the investment. Therefore, it is a more comprehensive model for making investment decisions.
The internal rate of return rule is to accept the investment if the opportunity cost of capital is greater than the internal rate of return. This model calculates the rate at which the investment generates cash flows equal to the cost of the investment, making it a valuable tool for decision-making.

In conclusion, the net present value model is the most recommended investment decision model because it takes into account the time value of money and the risk associated with the investment. The internal rate of return model is also a useful tool to determine the potential profitability of an investment. It is essential for companies to choose the right investment decision model to make informed and profitable investment decisions.

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which of the following formulas would be used to calculate fixed cost volume variance? multiple choice question. budgeted fixed cost - actual fixed cost applied fixed cost based on actual volume - budgeted fixed cost based on planned volume applied fixed cost based on actual volume - budgeted fixed cost based on actual volume actual fixed cost - budgeted fixed cost

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The formula used to calculate the fixed cost volume variance is: applied fixed cost based on actual volume - budgeted fixed cost based on actual volume.

The fixed cost volume variance measures the difference between the fixed costs that were applied based on the actual volume of activity and the fixed costs that were budgeted based on the planned volume of activity. It helps analyze the impact of the difference in activity levels on fixed costs. By subtracting the budgeted fixed cost based on actual volume from the applied fixed cost based on actual volume, we can determine if the actual fixed costs were higher or lower than what was originally budgeted for the actual volume of activity.

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roy deposits $5000 . determine the apy if there is an apr of 8.5% compounded quarterly. round your answer to the nearest hundredth of a percent, if necessary.

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The APY for Roy's deposit is 8.708%. The APY for Roy's deposit can be calculated using the formula:

APY = (1 + APR/n)^n - 1

Where APR is the annual percentage rate, n is the number of compounding periods per year, and APY is the annual percentage yield.

Given that Roy deposits $5000 and the APR is 8.5% compounded quarterly, we can determine the APY as follows:

n = 4 (since the interest is compounded quarterly)
APR = 8.5%

APY = (1 + 0.085/4)^4 - 1
APY = 0.08708 or 8.708%

To calculate the APY for Roy's deposit, we need to take into account the compounding frequency of the interest. In this case, the interest is compounded quarterly, which means that the interest is calculated and added to the account balance every three months.

The formula for APY takes into account the compounding frequency and provides a more accurate representation of the actual return on the deposit. Using the formula, we can calculate the APY for Roy's deposit as 8.708%.

To arrive at this answer, we first determined the number of compounding periods per year, which is 4 in this case. Then, we used the formula to calculate the APY by plugging in the APR and n values.

It's important to note that the APY represents the total return on the deposit over the course of a year, including the effect of compounding. This means that Roy's deposit will earn 8.708% over the course of a year, assuming that he doesn't withdraw any money and that the interest rate remains constant.

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a verbal reasonable accommodation starts the reasonable accommodation process. T/F

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It is true that verbal request for a reasonable accommodation can initiate the reasonable accommodation process.

However, it is important to follow up with a written request and documentation of the need for the accommodation. The interactive process between the employee and employer should also take place to determine the appropriate accommodation and any potential alternatives. It is the responsibility of the employer to engage in good faith in the interactive process and provide reasonable accommodations, unless doing so would cause undue hardship on the employer. It is also important to note that employees with disabilities have the right to request reasonable accommodations at any time during their employment, not just during the hiring process.

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The statement is True. A verbal reasonable accommodation request starts the reasonable accommodation process.

What does this mean?

This means that an individual can make a request for accommodation by speaking with their employer or supervisor. Once the request is made, the employer must engage in an interactive process with the individual to determine what accommodations may be necessary to allow the individual to perform the essential functions of their job.

This process may involve gathering medical documentation or discussing potential accommodations with the individual.

It is important for employers to take requests for reasonable accommodations seriously and to provide accommodations that are effective and appropriate for the individual's needs.

Hence, its true.

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Tony has eight years left until retirement. He is currently earning $25,000 per year. However, Tony lacks only one year of coursework to finish his college degree H Tony goes back to school and finish

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If Tony goes back to school and finishes his college degree, it can have a positive impact on his career and earning potential.

Completing his degree can open up new opportunities for higher-paying jobs and career advancement. With eight years left until retirement, investing in education can still yield significant benefits. A college degree can enhance Tony's qualifications, making him more competitive in the job market and increasing his chances of securing higher-paying positions.

By increasing his earning potential through a college degree, Tony can potentially earn a higher salary than his current $25,000 per year. This can lead to improved financial stability, better retirement savings, and an enhanced quality of life. It's important for Tony to carefully consider the costs and time commitment required to complete his degree.

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Gaston owns equipment that cost $28,500 with accumulated depreciation of $5,700. Gaston sells the equipment for $20,500. Which of the following would not be part of the journal entry to record the disposal of the equipment?
a. Credit Equipment $28,500.
b. Debit Cash $20,500.
c. Debit Loss on Disposal of Equipment $2,300.
d. Credit Gain on Disposal of Equipment $2,300.
e. Debit Accumulated Depreciation $5,700.

Answers

"Credit Gain on Disposal of Equipment $2,300," would not be part of the journal entry to record the disposal of the equipment. The correct option is d.

When Gaston sells the equipment, the first step is to remove the asset's cost and accumulated depreciation from the books. This involves crediting Equipment for $28,500 (option a) and debiting Accumulated Depreciation for $5,700 (option e).

Next, Gaston receives cash for the sale, so a debit to Cash for $20,500 (option b) is recorded.

To determine if there's a gain or loss on the disposal, we need to compare the net book value of the equipment (cost minus accumulated depreciation) to the cash received. In this case, the net book value is $28,500 - $5,700 = $22,800. Since Gaston sells the equipment for $20,500, which is less than its net book value, there's a loss on disposal.

The loss on disposal is calculated as the net book value minus the cash received: $22,800 - $20,500 = $2,300. To record this loss, a debit to Loss on Disposal of Equipment for $2,300 (option c) is necessary.

Since there's a loss on disposal, a credit to Gain on Disposal of Equipment (option d) would not be appropriate in this journal entry.

Therefore, The correct option is d. Credit Gain on Disposal of Equipment $2,300.

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Show in tabular form the depreciation schedule of the computation for the annual depreciation expenses for a machine worth $1,000,000 with a salvage salue of 10% the orginal cost and a depreciable life of 5 years, using:
(show BV, dn and Dn)
a. straight line method
b. sum of year's digit
c. declining balance
d. double declining balance

Answers

a. Straight Line Method:

In the straight-line method, the annual depreciation expense is the same throughout the depreciable life.

b. Sum of Years' Digits Method:

In the sum of years' digits method, the annual depreciation expense is calculated based on a fraction of the depreciable cost, where the numerator is the remaining years of useful life and the denominator is the sum of the digits of the useful life.

c. Declining Balance Method:

In the declining balance method, a fixed percentage is applied to the book value to calculate the depreciation expense.

d. Double Declining Balance Method:

In the double declining balance method, a fixed percentage (twice the straight-line rate) is applied to the book value to calculate the depreciation expense.

Here is the depreciation schedule for the computation of annual depreciation expenses for a machine worth $1,000,000 with a salvage value of 10% of the original cost and a depreciable life of 5 years using different depreciation methods:

a. Straight Line Method:

In the straight-line method, the annual depreciation expense is the same throughout the depreciable life.

|------|---------------------|------------------|--------------------------|

| 1 | $1,000,000 | $200,000 | $200,000 |

| 2 | $800,000 | $200,000 | $200,000 |

| 3 | $600,000 | $200,000 | $200,000 |

| 4 | $400,000 | $200,000 | $200,000 |

| 5 | $200,000 | $200,000 | $200,000 |

b. Sum of Years' Digits Method:

|------|---------------------|------------------|--------------------------|

| 1 | $1,000,000 | $250,000 | $250,000 |

| 2 | $750,000 | $200,000 | $200,000 |

| 3 | $550,000 | $150,000 | $150,000 |

| 4 | $400,000 | $100,000 | $100,000 |

| 5 | $300,000 | $50,000 | $50,000 |

c. Declining Balance Method:

In the declining balance method, a fixed percentage is applied to the book value to calculate the depreciation expense.

Assuming a depreciation rate of 40%:

|------|---------------------|------------------|--------------------------|

| 1 | $1,000,000 | $400,000 | $400,000 |

| 2 | $600,000 | $240,000 | $240,000 |

| 3 | $360,000 | $144,000 | $144,000 |

| 4 | $216,000 | $86,400 | $86,400 |

| 5 | $129,600 | $51,840 | $51,840 |

d. Double Declining Balance Method:

In the double declining balance method, a fixed percentage (twice the straight-line rate) is applied to the book value to calculate the depreciation expense.

Assuming a depreciation rate of 40% (twice the straight-line rate):

|------|---------------------|------------------|--------------------------|

| 1 | $1,000,000 | $400,000 | $400,000 |

| 2 | $600,000 | $

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By adopting the twinning strategy and encouraging collaboration across units, ArcelorMittal was trying to become more of a ___________ organization. a) Hierarchical b) Decentralized c) Centralized

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The b) Decentralized organizational structure, in which decision-making and power are divided among various levels and departments within the firm, as demonstrated by ArcelorMittal's adoption of the twinning strategy and encouragement of collaboration between units.

This is in contrast to a hierarchical organization, which has a clear chain of command and centralized decision-making, or a centralized organization, which has decision-making concentrated at the top levels of management.

An organization that distributes decision-making authority among several organisational levels or units is said to be decentralized. Decentralization's major characteristics include twinning strategy and fostering cooperation since they foster information exchange, teamwork, and improved decision-making by incorporating many units in the process.

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do you prefer to work at a job you hate and get paid a lot of money or at a job that's fun and doesn't pay well? in asl

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One would prefer to work at a job that's fun and doesn't pay well. While money is important, I believe that being happy and enjoying what you do is equally important.

Happiness and job satisfaction are factors that can greatly impact your overall well-being. However, this is just my personal preference and others may feel differently based on their own priorities and circumstances. The decision ultimately depends on an individual's priorities and values. Some may prioritize financial stability and the benefits that come with a high salary, even if it means sacrificing enjoyment in their work.

Others may prioritize job satisfaction and fulfillment, valuing a positive work environment and personal happiness over monetary compensation. Each person's choice is subjective and influenced by their unique circumstances and aspirations. It is important to strike a balance that aligns with one's personal values, taking into consideration both financial stability and personal happiness in the decision-making process.

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First National Bank buys and sells securities, expecting to earn profits on short-term differences in price. The company’s fiscal year ends on December 31. The following selected transactions relating to First National’s trading account occurred during the year.
December 20 Purchases 230,000 shares in Classic Computers common stock for $989,000.
December 28 Receives cash dividends of $5,300 from the Classic Computers shares.
December 31 The fair value of Classic Computers’ stock is $4.10 per share.
Required:
1. Record each of these transactions, including an adjustment on December 31 for the investment’s fair value, if appropriate. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answers

The calculation for the fair value adjustment assumes that the entire investment of 230,000 shares is being adjusted. If there are any specific instructions or proportions mentioned, those should be considered in the calculation.

To record the transactions and the fair value adjustment for First National Bank's trading account, use the following accounts:

1. December 20:

- Debit: Trading Securities (Classic Computers) - $989,000

- Credit: Cash - $989,000

2. December 28:

- Debit: Cash - $5,300

- Credit: Dividend Income - $5,300

3. December 31 (Fair Value Adjustment):

- Debit: Unrealized Loss on Trading Securities - $62,700 ($4.10 - $4.30 * 230,000 shares)

- Credit: Allowance for Unrealized Loss on Trading Securities - $62,700

Note: The adjustment on December 31 reflects the fair value of the Classic Computers' stock at the end of the fiscal year, assuming it decreased from the purchase price of $4.30 per share to $4.10 per share. This adjustment accounts for the unrealized loss on the trading securities.

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The A-B-C department of a large company makes three products (A, B and C). To determine the best production schedule, the manager has formulated the following linear programming model: Decision variables: A - quantity of product A B - quantity of product B C - quantity of product C Objective function: Maximize 12 A+ 15 B + 16 C (total profit: coefficients are net profit per unit in dollars) Constraints: Material 1 3 A+ ** B + 8 C<= 720 pounds Material 2 +3C <600 pounds Material 3 4 A+6 B+ 4 C<= 640 pounds Non-negativity A, B, C >=0 The manager has solved this problem using Excel Solver and the sensitivity report is given below: 2A Variable Cells Name Cell $B$2 A $C$2 B $D$2 C Final Reduced Objective Allowable Allowable Value Cost Coefficient Increase Decrease 16 12 4 0.5 0 - 1 15 1 1E+30 84 0 16 2 Constraints Cell Name $E$6 Material 1 $E$7 Material 2 $E$8 Material 3 Final Shadow Constraint Allowable Allowable Value Price R.H. Side Increase Decrease 720 0.8 720 80 420 284 0 600 1E+30 316 400 2.4 400 40 560 Based on the information given (No need to implement this problem into solver), what is the most the company willing to pay to purchase one additional pound of Material 12 Can't be computed with the given information

Answers

Based on the given information, it is not possible to determine the most the company is willing to pay to purchase one additional pound of Material 1 (not Material 12 as stated).

The sensitivity report provides information on the allowable increase and decrease in the objective function coefficients and the constraints' right-hand side values. However, it does not directly provide the information needed to calculate the maximum amount the company is willing to pay for an additional pound of Material 1.

To determine the most the company is willing to pay for an additional pound of Material 1, you would need the shadow price associated with Material 1 constraint.

The shadow price indicates the rate of change in the objective function value per unit increase in the right-hand side value of the constraint while keeping all other variables and constraints constant.

Unfortunately, the shadow price for Material 1 constraint is not provided in the sensitivity report. Therefore, without that information, it is not possible to compute the maximum amount the company is willing to pay for an additional pound of Material 1.

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required purchases is the multiple choice question. a) total inventory needed plus ending inventory. b) amount of inventory that must be purchased to meet sales demand and satisfy beginning inventory requirements minus ending inventory amount of inventory that must be purchased to meet sales demand. c) amount of inventory that must be purchased to meet sales demand and satisfy ending inventory requirements minus beginning inventory. d) amount of inventory that must be purchased to meet next period's sales demand.

Answers

The term "required purchases" refers to the- B. amount of inventory that must be purchased to meet sales demand and satisfy beginning inventory requirements minus ending inventory amount of inventory that must be purchased to meet sales demand.

What is that?

In other words, it is the quantity of inventory that a business needs to purchase to maintain sufficient stock levels to meet customer demand and ensure that there is enough inventory on hand to support future sales.

By calculating the required purchases, businesses can ensure that they have enough inventory on hand to meet demand without overstocking, which can result in excess inventory costs and storage expenses.

This calculation is an important part of inventory management and helps businesses maintain efficient operations and profitability.

Hence, option b. is correct.

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a company's product sells at $12.04 per unit and has a $5.06 per unit variable cost. the company's total fixed costs are $97,800. the break-even point in units is:

Answers

To calculate the break-even point in units, we need to determine the number of units that need to be sold in order to cover the total fixed costs.

The break-even point is the point at which total revenue equals total costs, resulting in zero profit or loss.

Let's calculate the break-even point:

Break-even point (in units) = Total fixed costs / Contribution margin per unit

Contribution margin per unit = Selling price per unit - Variable cost per unit

Selling price per unit = $12.04

Variable cost per unit = $5.06

Contribution margin per unit = $12.04 - $5.06 = $6.98

Break-even point (in units) = $97,800 / $6.98 ≈ 14,006.01

Rounding to the nearest whole number, the break-even point in units is 14,006 units.

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You have to motivate the installation of an IPCC system at your mine that would last
for at least 10 years. Discuss the advantages, disadvantages and risks typically
inherent to an IPCC system

Answers

Installation of an IPCC system at your mine can help to reduce operational costs and increase efficiency.Supporting

An IPCC system is an in-pit crushing and conveying system that has a wide range of benefits. This system can help reduce the operational costs of a mine by eliminating the need for haul trucks and reducing fuel consumption. IPCC systems are also more efficient than traditional mining methods, as they can transport larger quantities of material in a shorter period of time.Another benefit of IPCC systems is that they are environmentally friendly. Since the IPCC system does not require the use of haul trucks, there is less air pollution and noise pollution. Additionally, the system is safer for workers, as it reduces the number of heavy vehicles on the mine site.Overall, the installation of an IPCC system can improve the productivity and profitability of a mine while also providing environmental benefits and improving worker safety.

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On august 1, year 1, jackson company issued a one-year $70,000 face value interest-bearing note with a stated interest rate of 9.00% to galaxy bank. jackson accrues interest expense on december 31, year 1, its calendar year-end. What is the amount of interest expense and the cash outflow for interest during the year ending december 31, year 1? (do not round your intermediate calculations.) option interest expense cash outflow a. $6,300 $6,300 b. $6,300 $0 c. $2,625 $0 d. $2,625 $2,625

Answers

To calculate the interest expense and cash outflow for interest during the year ending December 31, Year 1, The final answer is correct answer is: Option: c. $2,625 (Interest Expense) $0 (Cash Outflow).

We need to determine the interest amount and the payment made.

The interest amount can be calculated using the formula: Interest Expense = Face Value * Interest Rate

Interest Expense = [tex]$70,000 * 9.00[/tex]% =[tex]$6,300[/tex].

Since Jackson accrues interest expense, the interest expense of $[tex]6,300[/tex] would be recorded.

However, since the note has not matured yet, there would be no cash outflow for interest expense during the year ending December 31, Year 1. The payment of the interest would occur at the maturity of the note.

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consider the market for gasoline. because there are very few good substitutes for gasoline, the demand for gasoline is probably inelastic. i. if the price of gasoline rises by 10%, by what percentage is the quantity demanded likely to fall?

Answers

If the demand for gasoline is inelastic, the quantity demanded is likely to fall by a smaller percentage than the price increase.

When the demand for a good is inelastic, it means that the quantity demanded is not very responsive to changes in price. In this case, if the price of gasoline rises by 10%, the quantity demanded is expected to fall by a smaller percentage.

For example, if the price of gasoline increases by 10% and the quantity demanded only decreases by 2%, it indicates an inelastic demand. In this scenario, the percentage decrease in quantity demanded (2%) is less than the percentage increase in price (10%).

The inelastic demand for gasoline can be attributed to the limited availability of substitutes. Since there are few viable alternatives to gasoline for most consumers, they may continue to purchase gasoline even if the price increases, albeit in slightly lower quantities.

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Company currently has the capacity to manufacture 250,000 widgets a year and 100,000 gadgets a year in its factory. Company has the following costs related to manufacturing and selling 200,000 widgets:
Scenario 1
Scenario 2
Direct materials and direct labor
$840,000
Variable manufacturing overhead
$180,000
Rent on equipment only used for the widgets
$40,000
Allocated share of depreciation on factory
$100,000
Annual salary of widget production manager
$70,000
Variable selling costs (commissions)
$60,000
Allocated share of fixed selling costs
$80,000
Total
$1,370,000
Scenario 1: Assume Firm asks Company to manufacture a special order of 4,000 widgets. Indicate in the column labeled ‘Scenario 1’ whether each cost is relevant (R) or not relevant (NR) for this special order decision.
Scenario 2: Assume Company is considering outsourcing production of the widget product line. They would purchase the widgets from a supplier. The widget production manager will be laid off. Sales of the widget are expected to stay at 200,000 units. Indicate in the column labeled ‘Scenario 2’ whether each cost is relevant (R) or not relevant (NR) for making the decision to outsource the widget production.

Answers

The allocated share of depreciation on the factory is a fixed cost that does not change with the decision.

Here are the relevant (R) or not relevant (NR) categorizations for each cost in Scenario 1 and Scenario 2:

Scenario 1:

Direct materials and direct labor: Relevant (R)

Direct materials and direct labor costs are directly attributable to the production of widgets, including the special order of 4,000 widgets. These costs would increase with the additional production.

These costs should be considered when evaluating the profitability of accepting the special order.

Variable manufacturing overhead: Relevant (R)

Variable manufacturing overhead costs are directly related to the level of production. Since the special order would increase the production of widgets, these costs would also increase.

These costs should be considered when evaluating the profitability of accepting the special order.

Rent on equipment only used for the widgets: Not Relevant (NR)

The rent on equipment used exclusively for widgets remains the same regardless of the level of production or the special order. It does not change with the decision to accept the special order.