McGraw Inc manufactures 12,000 units of a part used in its production to manufacture guitars. The annual production activities related to this part are as follows: Direct materials $24,000 Direct labor 60,000 Variable overhead 54,000 Fixed overhead 84,000 Hill Inc has offered to sell 12,000 units of the same part to McGraw for $22 per unit. If McGraw were to accept the offer, some of the
facilities presently used to manufacture the part could be rented to a third party at an annual rental of $18,000. Moreover, $4 per unit of the fixed overhead applied to the part would be totally eliminated. What should McGraw's decision be, and what is the total cost savings that would result?
A) Make, $60,000
B) Buy, $60,000
C) Make, $78,000
D) Buy, $78,000
A
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Lorenzo offered Ida a job at his new law firm. In anticipation, Ida quit her job at Mega Firm, bought a new computer, and invested in a new set of law books. Shortly before her anticipated first day at Lorenzo's firm, Lorenzo informed Ida that he had changed his mind, and no longer wanted her to work for him. Ida may recover under the doctrine of ________.
A. express contract B. unilateral contract C. promissory estoppel D. unjust enrichment
Fox Chapel Company wishes to issue $400,000 of 5-year, 6% bonds, with interest paid annually at the end of the year. The market rate of interest is currently 5%. What information is needed in order to determine the selling price?
a. The life of the bonds, the market rate of interest, the bond rating, and the face amount of the bonds. b. The face amount of the bonds, the stated rate of interest, the market rate of interest, and the bond life. c. The face amount of the bonds, the stated rate of interest, the market rate of interest, and the bond life. d. The face amount of the bonds, the market rate of interest, the purpose of the issue, and the bond life.
Handbags Company had 500 units of inventory on hand at the end of the year. These were recorded at a cost of $18 each using the last-in, first-out (LIFO) method. The current replacement cost is $15 per unit. The selling price charged by Handbags Company for each finished product is $23. In order to record the adjusting entry needed under the lower-of-cost-or-market rule, the Cost of Goods Sold will be ________.
A) debited by $7,500 B) credited by $7,500 C) debited by $1,500 D) credited by $1,500
What factors influence the total level of discretionary costs in an organization?