On October 1, a client pays a company the full $12,000 balance of a year-long contract. Using the accrual method, what's the unearned revenue as of December 31

Answers

Answer 1
Answer:

Using the accrual method, the unearned revenue as of December 31 is $12,000.

What is Unearned revenue?

Unearned revenue can be defined as the amount a company received from their client for the service they are yet to rendered.

Since the company has received full balance for the services not yet provided. The unearned revenue as of December 31 will be $12,000 .

Reason been that the amount that the client paid the company is for a year-long contract, hence the $12,000 represent a prepayment amount for the service the company is yet to rendered to their client

Inconclusion using the accrual method, the unearned revenue as of December 31 is $12,000.

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Answer 2
Answer:

The $12,000 payment is for a one-year contract, however, we will only record revenue from October 1 up to December 31 which are the months that already lapsed. The remaining nine months are still considered unearned revenue. Thus, the remaining unearned revenue is $9,000.

Unearned revenue is the amount received from a client for a service that has yet to be rendered. Since the company has received the full balance over the services not yet provided. As of December 31, the unearned revenue will be $12,000.

Because the client paid the company for a year-long contract, the $12,000 represents a prepayment for the service the company has yet to render to their client. Using the accrual method, the revenue that is not earned as of December 31 is $9000.

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Royal Enterprises has presented the following information for the past three months operations: Month Units Average Cost June 3,300 $ 11.80 July 5,700 $ 7.80 August 6,900 $ 7.00 a. Using the high-low method, calculate the fixed cost per month and variable cost per unit. (Round your variable cost to 2 decimal places.) b. What would total costs be for a month with 5,300 units produced?

xercise 11-3 The controller of Norton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month Total Maintenance Costs Total Machine Hours January $2,700 300 February 3,000 350 March 3,600 500 April 4,500 690 May 3,200 500 June 5,500 700 Determine the variable cost components using the high-low method. (Round variable cost to 2 decimal places e.g. 12.25.) Variable cost per machine hour $ LINK TO TEXT LINK TO TEXT Determine the fixed cost components using the high-low method. (Round answer to 0 decimal places e.g. 2,520.) Total fixed costs $

Answers

Answer:

Variable per hour is $7

total variable costs for 700 hours=$4900

Fixed costs is $600

Explanation:

Under the high-low method,variable cost formula is as stated below

variable cost=highest maintenance cost-lowest maintenance/machine hours at highest maintenance cost-machine hours at the lowest maintenance cost

highest maintenance cost is $5500

lowest maintenance is $2700

machine hours at highest maintenance cost is 700 hours

machine hours at lowest maintenance cost is 300 hours

variable cost=($5500-$2700)/(700-300)

variable cost=$7

Fixed cost=total cost-total variable cost

total variable cost for 700 hours =$7*700=$4,900

Fixed cost=$5,500-$4900

fixed cost=$600

Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January. Sales (3,600 units)$108,000 Variable expenses 49,680 Contribution margin 58,320 Fixed expenses 44,300 Net operating income$14,020 If the company sells 4,300 units, its total contribution margin should be closest to: (Do not round intermediate calculations.)

Answers

Answer:

$69,660

Explanation:

For computing the contribution margin first we have to determine the contribution margin per unit which is shown below:

Contribution margin per unit = Contribution margin ÷ Number of units

= $58,320 ÷ 3,600 units

= $16.2

Now if the sales unit is 4,300 so the contribution margin is

= Sales units × contribution margin per unit

= 4,300 units × $16.20

= $69,660

Nombre Company management predicts $1,764,000 of variable costs, $2,364,000 of fixed costs, and a pretax income of $282,000 in the next period. Management also predicts that the contribution margin per unit will be $63. (1) Compute the total expected dollar sales for next period.
Contribution margin
Pretax income
(2) Compute the number of units expected to be sold next period.
Choose Numerator: / Choose Denominator: = Units
/ = Units

Answers

Answer and Explanation:

1. The computation of the total expected dollar sales for next period is given below:

Sales $4,410,000

Less: variable cost $1,764,000

Contribution margin $2,646,000

Less: fixed cost $2,364,000

Pre tax income $282,000

2. The number of units that should be sold is

= $2,646,000 ÷ $63 per unit

= 42,000 units

In this way it should be calculated

Portside Watercraft uses a job order costing system. During one month Portside purchased $153,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the application of factory overhead to production is:

Answers

Answer:

Payroll = $95,000,

Indirect labor   = $25000

Direct labor paid = $95000 - $25000 = $70000

∵ predetermined overhead application rate is 170 % of direct labor cost

Overhead applied to work in process = 70000 × 170 %

= $119,000

Journal entry:

Debit  ⇒ Work in process = $1190000

Credit ⇒ Factory Overheads = $119000

Final answer:

To record the application of factory overhead to production, you first calculate the direct labor cost, then multiply by the predetermined overhead rate. The journal entry is a debit to Work in Process and a credit to Factory Overhead for this calculated amount.

Explanation:

The Portside Watercraft company is using a job order costing system and a predetermined overhead rate based on direct labor cost. In this case, to record the application of factory overhead to production, you would first calculate the factory overhead applied by multiplying the direct labor cost (total labor cost minus indirect labor cost) by the predetermined rate.

The direct labor cost would be calculated by subtraction: $95,000 (total factory payroll) - $25,000 (indirect labor) = $70,000. Then multiply $70,000 by 170% (the predetermined overhead rate) to get $119,000. The journal entry would then be a debit to Work in Process for $119,000 and a credit to Factory Overhead for $119,000.

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Suppose that a 5-year Treasury bond pays an annual rate of return of 1.3%, and a 5-year bond of the fictional company Risky Investment Inc. pays an annual rate of return of 7.1%. The risk premium on the Risky Investment bond is __________ percentage points.Consider a decrease in the annual rate of return on the Risky Investment bond from 7.1 percent to 5.5 percent. Such a change would _________ the interest rate spread on the Risky Investment bond over Treasuries to ___________ .

Which of the following explains the decrease in the annual rate of return on the Risky Investment bond?

1. The expected default rate on the Risky Investment bond has decreased.
2. The expected default rate on the Treasury bond has increased.
3. The expected default rate on the Treasury bond has decreased.
4. The expected default rate on the Risky Investment bond has increased.

Answers

Answer:

a. The risk premium on Risky Investment bond = 5.8

b. Such a change would decrease/reduce 4.2%

c. The expected default rate on the Risky Investment bond has decreased (1).

Explanation:

a. The risk premium on a risky investment is equal to the total return on a risky investment less the return on the risk free asset. The risky asset here gives an annual return of 7.1% while the risk free rate is 1.3%. So, the risk premium on the risky asset for additional risk is,

  • 7.1 - 1.3 = 5.8%

b. A reduction in the annual return on the risky asset will decrease/reduce the interest rate spread which is equal to the difference between the return of the risky and risk free asset. The new spread will be equal to,

  • 5.5 - 1.3 = 4.2%

c. The risk free rate is expected to be the same as no information is provided. Besides, a fall in annual rate of risky investment means that there is a reduction in the riskiness of such an investment and that would mean that there is a reduction in the default risk in turn leading to a reduction in compensation for default and the default rate.

The risk is made up of risk free + maturity risk + liquidity risk and default risk.

Sandhill Company reports the following operating results for the month of August: sales $382,500 (units 5,100), variable costs $245,000, and fixed costs $98,000. Management is considering the following independent courses of action to increase net income.1. Increase selling price by 16% with no change in total variable costs or units sold.
2. Reduce variable costs to 59% of sales.
Compute the net income to be earned under each alternative.
1. Net Income
$enter a dollar amount
2. Net Income
$enter a dollar amount
Which course of action will produce the higher net income? select an option

Answers

Answer:

Results are below.

Explanation:

Giving the following information:

Sales $382,500 (units 5,100 $75 per unit)

variable costs $245,000 (48.04 per unit)

fixed costs $98,000.

Option 1:

Increase selling price by 16%.

New selling price= 75*1.16= 87

Sales= 5,100*87= 443,700

variable costs= (245,000)

fixed costs= (98,000)

Net income= 100,700

2. Reduce variable costs to 59% of sales.

Contribution margin= (382,500*0.41)= 156,825

fixed costs= (98,000)

Net income= 58,825

The most profitable option is the first one.