If two service departments service the same number of departments, which service department's costs should be allocated first when using the step method?
A. The service department with the least cost.
B. The service department that provides the most service to other service departments.
C. The service department that provides the least service to other service departments.
D. The service department that provides the most service to the user departments.
Answer: B
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A company purchases an asset on a deferred payment plan, ultimately paying $10,000 . On the payment date, the company would
a. credit Cash for less than $10,000. b. debit Interest Expense for the imputed amount. c. debit the asset account for $10,000. d. debit Accounts Payable for $10,000.
Withholding tax is
A. a direct tax levied on earned income. B. a 30% tax levied on foreign residents. C. an indirect tax paid by employers before employees receive salaries. D. an indirect tax levied on passive income.
A company has the choice of either selling 1,000 unfinished units as is or completing them. The company could sell the unfinished units as is for $4.00 per unit. Alternatively, it could complete the units with incremental costs of $1.00 per unit for direct materials, $2.00 per unit for direct labor, and $1.50 per unit for overhead, and then sell the finished units for $8.00 each. What should the company do?
A. Finish the units. B. Neither sell nor finish because both alternatives produce a loss. Instead, the company should store the units permanently. C. It does not matter because both alternatives have the same result. D. Sell the units as is. E. Donate the units.
Exhibit 4.1The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over. Balance Sheet (Millions of $)Assets 2018 Cash and securities $3,000 Accounts receivable 15,000 Inventories 18,000 Total current assets $36,000 Net plant and equipment $24,000 Total assets $60,000 Liabilities and Equity Accounts payable $18,630 Accruals 8,370 Notes payable 6,000 Total current liabilities $33,000 Long-term bonds $9,000 Total liabilities $42,000 Common stock $5,040 Retained earnings 12,960 Total common equity $18,000 Total liabilities and equity $60,000 Income Statement (Millions of
$)2018Net sales $84,000 Operating costs except depreciation78,120 Depreciation 1,680 Earnings before interest and taxes (EBIT)$4,200 Less interest 900 Earnings before taxes (EBT) $3,300 Taxes 1,320 Net income $1,980 Other data: Shares outstanding (millions) 500.00 Common dividends (millions of $) $693.00 Int rate on notes payable & L-T bonds6% Federal plus state income tax rate40% Year-end stock price $47.52 ? Refer to Exhibit 4.1. What is the firm's operating margin? Do not round your intermediate calculations. A. 5.85% B. 4.55% C. 4.80% D. 4.10% E. 5.00%