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Exam 3 AGBU 2389.01
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Terms in this set (37)
Partial Budget
Analyzing the profits potential of a small change in the overall farm plan.
Four Questions of a Partial Budget:
1. Additional Cost
2. Reduced Revenue
3. Additional Revenue
4. Reduced Cost
Additional Cost
Costs that don't exist at the current time with the current plan.
Reduced Revenue
Revenue currently being received that will be lost or reduced if the alternative is adopted.
Additional Revenue
Revenue will be received only if the alternative is adopted.
Reduced Costs
Costs that are now being incurred that will no linger exist if the alternative is adopted.
Limitations of a Partial Budget:
Can only compare the present management plan with one alternative.
Three common forms of a business:
1. Sole Proprietorship
2. Partnership
3. Corporation
Farm business organizations depend on:
-Size
-Number of people involved
-Career stage and age of the operator
-Owners Desire to pass on to next generation
-Life cycle
Life Cycle or "Entry Stage"
Choosing farming as a career
Selecting enterprises
Acquiring and organizing
Establishing a financial base
Growth Stage
Expansion- purchasing and leasing additional land, increasing the scale of livestock, merging with another enterprise
Consolidation Stage
Debt reduction
Increasing efficiency when you increase in size
Planning and merging the next generation
Exit Stage
Income taxes and retirement must be stable
Equitable treatment to all kids
Transferring property to next generation
Size may decline
Liquidity
Reducing risks
Sole Proprietorship
Advantages
-Simple
-Freedom
-Profits go to owner
-Flexible
Sole Proprietorship
Disadvantages
-Responsibilities
-Personally liable
-Limited capital
-Smaller size
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Verified questions
ACCOUNTING
How is cost of inventory determined? How is net realizable value determined?
ACCOUNTING
Jayzee Company manufactures a variety of products in a variety of departments and evaluates departments and departmental managers by comparing actual cost and output relative to the budget. Departmental managers help create the budgets and usually provide information about input quantities for materials, labor, and overhead costs. Kurt Jackson is the manager of the department that produces product Z. Kurt has estimated these inputs for product Z: The department produces about 100 units of product Z each day. Kurt’s department always gets excellent evaluations, sometimes exceeding budgeted production quantities. For each 100 units of product Z produced, the company uses, on average, about 48 hours of direct manufacturing labor (eight people working 6 hours each), 790 pounds of material, and 39.5 machine-hours. Top management of Jayzee Company has decided to implement budget standards that will challenge the workers in each department, and it has asked Kurt to design more challenging input standards for product Z. Kurt provides top management with the following input quantities: Discuss the following: 1. Are these budget standards challenging for the department that produces product Z? 2. Why do you suppose Kurt picked these particular standards? 3. What steps can Jayzee Company’s top management take to make sure Kurt’s standards really meet the goals of the firm? $$ \begin{matrix} \text{Input} & \text{Budget Quantity per Unit of Output}\\ \text{Direct material} & \text{8 pounds}\\ \text{Direct manufacturing labor} & \text{30 minutes}\\ \text{Machine time} & \text{24 minutes}\\ \end{matrix} $$ $$ \begin{matrix} \text{Input} & \text{Budget Quantity per Unit of Output}\\ \text{Direct material} & \text{7.9 pounds}\\ \text{Direct manufacturing labor} & \text{29 minutes}\\ \text{Machine time} & \text{23.6 minutes}\\ \end{matrix} $$
ACCOUNTING
Grand Garden is a luxury hotel with 150 suites. Its regular suite rate is $250 per night per suite. The hotel’s cost per night is$140 per suite and consists of the following. $$ \begin{matrix} \text{Variable direct labor and materials cost}\ldots\ldots\ldots & \text{\$ 30}\\ \text{Fixed cost}\ldots\ldots\ldots & \text{110}\\ \text{Total cost per night per suite} \ldots\ldots\ldots& \text{\$140}\\ \end{matrix} $$ The hotel manager received an offer to hold the local Bikers’ Club annual meeting at the hotel in March, which is the hotel’s low season with an occupancy rate of under 50%. The Bikers’ Club would reserve 50 suites for three nights if the hotel could offer a 50% discount, or a rate of $125 per night. The hotel manager is inclined to reject the offer because the cost per suite per night is$140. Prepare an analysis of this offer for the hotel manager. Explain (with supporting computations) whether the offer from the Bikers’ Club should be accepted or rejected.
ACCOUNTING
a. Which account(s) are used to close temporary accounts with debit and credit balances? b. How are temporary accounts with debit balances closed?
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