A refinery buys 20 million barrels of crude oil at a market price of $25 per barrel on17thAugust 20X1. Having processed the oil, the refinery sells its final products in October 20X1 for an average price of $43 perbarrel, when the average market price of crude oil is $30 per barrel.Which of the following statements about current replacement cost accounting is/are correct:(i)Cost of sales is $500 million.(ii)The capital maintenance adjustment is $130 million.(iii)Replacement cost profit of $360 million is made on the sale.Select one:a. (i) onlyb. (ii) onlyc. No statement is correctd.(i) and (iii)e.(i) and (ii)○ f. (iii) onlyg. (ii) and (iii)

The objective of the question is to determine the correct statement(s) about current replacement…

Answered: A refinery buys 20 million barrels of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that 4,500 units of the halogen light have been produced and sold during the current year. Analysis of the domestic market indicates that 3,600 additional units of the halogen light are expected to be sold during the remainder of the year at the normal product price determined under the total cost concept. Twilight Lumina Company received an offer from Contech Inc. for 1,400 units of the halogen light at $202.50 each. Contech Inc. will market the units in Southeast Asia under its own brand name, and no selling and administrative expenses associated with the sale will be incurred by Twilight Lumina Company. The additional business is not expected to affect the domestic sales of the halogen light, and the additional units could be produced using existing capacity. a. Prepare a differential analysis report of the proposed sale to Contech Inc. $Revenue from sale of additional units Variable costs of additional units Differential income (loss) from accepting offer
2. Foxx Company manufactures water sealant. This sealant is used to stop leaks in basement orin concrete retainer walls. In 2019 the company sold 1.6M gallons of sealant at price of P3.00per gallon with a variable cost per gallon of P1.50. The fixed costs were P1,550,000In 2020, new automated equipment will be used in production. This will increase fixed costsfor the year to P1,785,000. The variable cost per gallon has been estimated at P1.30 per gallon.The sales volume increased by 15% percent in 2020.Required:1. For 2019 compute the BEP in gallons and pesos.2. For 2020 compute the BEP in gallons and pesos.3. How much is the EBIT for 2019 & 20204.Using the cost and revenue data for 2019 consider each of the following situationsindependently:a. What is the effect on the break even point (in gallons) for the decrease in variable cost fromP1.50 to P1.30?b. What is the effect on the break even point for the increase in fixed costs of P235,000?
On average, PT. ABH would order from PT. GDAM 1.000.000 kg Crude Palm Oil (CPO) every month to be used as the raw materials for its production. This amount of CPO is refined and processed to produce cooking oils. The inventory is depleted each month and needs to be reordered. If the carrying cost is IDR 32.000 and the fixed order cost is IDR 4.000.000 (Assume a 360-day year)a. Does PT. ABH already follows an economically advisable strategy?b. If it is further noted that PT.ABH procurement team takes 10 days to place and receive an order and the firm’s production policy requires it to hold 50.000 kg as safety stock to prevent against stockouts. Determine the reorder point that must be set
Currumbin Ltd sells a product for which they have a target profit of $30000. This product has variable costs of $4 per unit and total fixed costs of $45000. If 15000 units are to be sold, what should be the selling price? a. $2 b. $5 c. $3 d. $9 Arnold Company Pty Ltd provided these estimates for the three months ending 30 June 2020, its first period of operation. The beginning cash balance is $1,000. Cash receipts from sales $300 000 Cash payments for expenses 130 000 Payment for the purchase of new motor vehicle 15 000 Depreciation of motor vehicle 15 000 Repayment of a loan 100 000 What is the estimated cash balance at 30 June 2010? a. $55000 deficit b. $40000 surplus c. $56000 surplus d. $155000 surplus e. $50000 surplus Park Ltd produces financial calculators. The production capacity is 35,000 calculators, and the company is currently operating at 80% capacity. Variable…
Equipment costing P1M is expected to produce 10,000 pieces of pipes during its economic life before being replaced. Annual production of this equipment is 2,500 pipes. The equipment's scrap value is estimated at P50,000. The cost of housing the equipment is P25,000 per year. Costs of power and maintenahce per unit are P9.00 and P7.00, respectively. Cost of labor is P35.00 per unit. Use sinking fund method of depreciation with j=12%. What is the total fixed cost per unit? O P168.98 O P137.51 O P114.76 O P121.87
(Whether to explore or not the foreign market). A company annually manufactures 10,000 units of a product at a cost of $ 4 per unit and there is home market for consuming the entire volume of production at the sale price of $ 4.25 per unit. In the year 2019, there is a fall in the demand for home market which can consume 10,000 units only at a sale price of $ 3.72 per unit. The analysis of the cost per 10,000 units i : $ $ Material 15,000 Fixed overheads 8,000 Wages 11,000 Variable overheads 6,000 The foreign market is explored and it is found that this market can consume 20,000 units of the product if offered at a sale price of $ 3.55 per unit. It is also discovered that for additional 1000 units of the product (over initial 10,000 units) the fixed overheads will increase by 10%. Is it worthwhile to try to capture the foreign market ?
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Assume that a merchandiser purchases a product from a supplier for $3.00 per unit and then sells it to customers for $5.00 per unit. Ordinarily, the company sell 30,000 units per year; however, it is considering lowering its price to $4.50 per unit. At the lower price, the company expects to sell 49,250 units per year. What total contribution margin will the company earn if it sells 49,250 units at a price of $4.50 per unit? Multiple Choice $69,400 $73,875 $64,025 $83,725
Coe Aggregates Ltd has scheduled the production and sale of 35,700 tonnes of aggregates for the Month of April, 2021. Given the following information: Selling prices: $23.15 / tonne Tax rate 30% (of net income) Operating costs Direct material cost: $5.75 /tonne Direct labour cost: $8.05/ tonne Variable overhead costs: $1.56/tonne Fixed overhead cost: $115,820 Selling and Administrative costs Variable: $1.27/tonne Fixed: $28,000 1)Calculate the expected monthly net income after tax (profit) for the month of April 2021 2)Calculate the scheduled production tonnage and sale required to attain a desired net income after tax (profit) of $78,500 for the month of April 2021. PLEASE type or print clearly
A machine manufacturer sells each machine for $6,900. The fixed costs are $287,450 per annum, variable costs are $2,050 per machine, and the production capacity is 74 machines in a year. a. What is the break-even volume? Round up to the next whole number b. What is the break-even revenue? Round to the nearest cent c. What is break-even as a percent of capacity per annum? % Round to two decimal places d. What is the profit or loss made if 68 machines are sold in a year?
Big Construction Company operates in all US Western states and has contracts starting six months from today. The revenues from contracts will be $540,000. An important determinant of the company's cost structure is the cost of fuel to power their engines. They estimated the deliveries in six months will require 18,000 gallons of fuel. Currently, fuel sells for $4.75 per gallon. There is a concern that the price could increase significantly between now and in six months. Big was able to purchase call options that would allow the company to purchase 18,000 gallons of fuel at $4.75 per gallon in six months. The cost of the options was $1,500, Six months after purchasing the options, the price of the fuel was $5.85 per gallon. What was the net benefit to Big of using call options to hedge its fuel exposure? e $16,500. O $24.523. $12.256. O $28,125.
National Chemical Company manufactures a chemical compound that is sold for $59 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new variant, the selling price would be $84 per gallon. National expects the market for the new compound variant to be 8,400 gallons initially and determines that processing costs to refine the basic compound into the new variant would be $159,600. Required: a. What would be the effect on total profit if National produces the new compound variant? b. Should National produce the new compound variant? Complete this question by entering your answers in the tabs below. Required B What would be the effect on total profit if National produces the new compound variant? if National produces the new compound, profit will Required A increase Required A Required B >

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