List and discuss two common reasons why companies invest in debt or equity securities.
What will be an ideal response?
1. The company may have short-term, excess cash that it doesn't need for normal operations. The company wants to make use of this excess cash, so it invests in debt or equity securities to generate investment income, which includes interest earned from debt investments, dividends earned from stock investments, and/or increases in the market value of the security.
2. The company may invest in debt or equity securities of other companies to pursue a certain business strategy. This may enhance a business relationship. An example is investing in the business of a vendor. This investment may strengthen the relationship and improve the company's business.
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Refer to the following information about the Shaping Department of the Minnesota Factory for the month of August. Minnesota Factory uses the FIFO method of inventory costing. The cost per equivalent unit of materials is $10.00, and the cost per equivalent unit of labor and overhead is $22.00. Compute the cost that should be assigned all units that were completed and transferred during August.?EquivalentUnitsTotalCostBeginning Work in Process:?? Costs from prior month………………………?$ 7,000 Materials added………………………………300? Labor and overhead added……………………375?Started and completed goods:?? Materials added………………………………2,000? Labor and overhead
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