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When cities pass laws limiting the rent landlords can charge on apartments, the laws usually apply to existing buildings and exempt any buildings not yet built. Advocates of rent control argue that this exemption ensures that rent control does not discourage the construction of new housing. Evaluate this argument in light of the time-inconsistency problem.
Dan’s Hardware is a small hardware store in the rural township of Twin Bridges. It rarely extends credit to its customers in the form of an account receivable. The few customers who are allowed to carry accounts receivable are long-time residents of Twin Bridges with a history of doing business at Dan’s Hardware. Identify the method of accounting for uncollectible receivables should Dan’s Hardware use? Why?
An investor purchases shares of stock at per share holds the stock for years and then sells the stock for a share.
The buying and selling commission schedule shown in the table is from an online discount brokerage firm. Taking into consideration the buying and selling commissions in this schedule, find the annual compound rate of interest earned by the investment.
Crescent Pharmaceuticals manufactures an over-the-counter allergy medication. The company sells both large commercial containers of 1,000 capsules to health care facilities and travel packs of 20 capsules to shops in airports, train stations, and hotels. The following information has been developed to determine if an activity-based costing system would be beneficial:
Actual production information includes the following:
- Compute the predetermined overhead allocation rate for each activity.
- Use the predetermined overhead allocation rates to compute the activity-based costs per unit of the commercial containers and the travel packs. Round to two decimal places. (Hint-. First compute the total activity-based costs allocated to each product line, and then compute the cost per unit.)
- Crescent's original single plantwide overhead allocation rate costing system allocated indirect costs to products at $153.00 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then compute the indirect cost per unit for each product. Round to two decimal places.
- Compare the indirect activity-based costs per unit to the indirect costs per unit from the traditional system. How have the unit costs changed? Explain why the costs changed.