Meginnis Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: AverageCost per UnitDirect materials$5.20 Direct labor$3.75 Variable manufacturing overhead$1.65 Fixed manufacturing overhead$2.60 Fixed selling expense$0.50 Fixed administrative expense$0.40 Sales commissions$1.50 Variable administrative expense$0.50 If 6,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:
A. $62,700
B. $53,700
C. $79,200
D. $63,600
Answer: B
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The stock in Rhea Corporation is owned by Jennifer (80%) and Lucy (20%), mother and daughter. In a liquidation of the corporation in the current year, Rhea distributes land that it purchased two years ago for $675,000 to Lucy. The property has a fair market value on the date of distribution of $450,000. One year later, Lucy sells the land for $400,000. What loss, if any, will Rhea Corporation recognize with respect to the distribution of land?
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