Munoz Corporation incurs the following annual fixed costs: Item Cost Depreciation Officers' salaries Long-term lease Property taxes $ 51,000 180, 000 100,000 11,000 Required Determine the total fixed cost per unit of production, assuming that Munoz produces 2,000, 2,500, or 3,000 units. (Round your answers to 2 decimal places.) Units Produced 2,000 2,500 3,000 Fixed cost per unit
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- Sony Inc. is a lessor-manufacturer of expensive machinery. On January 1,2011, amachinery is leased to another entity with the following information:Annual rental payable at the end of each year P200,000Lease term 4 yearsUseful life of machinery 5 yearsCost of Machinery 300,000Estimated residual value 50,000Initial direct cost paid by lessor 20,000Incremental borrowing rate of lessee 14%Implicit interest rate of lessor known to lessee 12%Note: At the end of the lease term on December 31,2014, the machinery will revert to lessor.Problem 17. Except from the fact that the leased machinery will not revert to lesser because there is bargain purchase option of P50,000 at the end of lease term.Required: Based on the result of your audit, determine the following:____________1. Gross Lease Receivable____________2. Sales or Net Investment____________3. Unearned Interest____________4. Profit on saleDirect Finance Lease – Lessor (PAS 17 and PFRSA lessor made an investment of ₱550,000 in equipment with an expected life of 5 years. He determined that he will incur the following annual costs: Costs of sales₱120,000; Marketing, admin, and maintenance ₱150,000. Tax rate is 25%. Annual depreciation is ₱110,000. Cost of capital is 11%. The breakeven lease per year would be? ₱ 460,000 ₱ 503,717 ₱ 521,756 ₱ 468,203 ₱ 436,127 ₱ 324,846Canada M. manufactures special equipment with an estimated economic life of 12 years and leases it to Phranka for a period of 10 years commencing January 1, 2021. The unguaranteed residual value at the end of the lease term is estimated to be $15,000. Phranka will make annual payments of $25,000 at the beginning of each year and pay for all maintenance and insurance costs. Canada M. incurred costs of $105,000 in manufacturing the equipment but is looking to make a profit on the sale of equipment. In addition, Phranka incurred $7000 in costs tied to negotiating and closing the lease. Canada M. has determined that the collectability of the lease payments is reasonably predictable, that no additional costs will be incurred, and that the implicit interest rate is 8%. Phranka has a borrowing rate of 8%. How should Canada M. classify this lease transaction? a. Classify as an operating lease. b. Classify as a capital, sales type lease. c. Classify as a capital, direct finance type lease.…
- A lessor made an investment of ₱550,000 in equipment with an expected life of 5 years. He determined that he will incur the following annual costs: Costs of sales₱120,000; Marketing, admin, and maintenance ₱150,000. Tax rate is 25%. Annual depreciation is ₱110,000. Cost of capital is 11%. The breakeven lease per year would be?a. ₱ 460,000 b. ₱ 503,717 c. ₱ 521,756d. ₱ 468,203 e. ₱ 436,127 f. ₱ 324,846Eminem Company recognized gross profit of P720,000 on its long-term project which has accumulated costs of P2,880,000. To finish the project, the company estimates that it has to incur additional costs of P1,920,000. Determine the contract price.A piece of machinery is on a {A}-month lease at {B}% compounded annually. Beginning-of-month payments are $397.95, and a $5,000 down payment was made. The residual value is $5,525.00. What was the purchase price of the product? {A}40 {B}6.99% {C}$334.52 {D} $7,000 {E} $5,350
- The owner of an industrial warehouse receives US$700,000. per year for leases. Monthly operation and maintenance expenses are US 160D0. The remaining useful life of the building is 9 years, at the end of which the building can be sold for US$5,000.0G0 The building has already been fully depreciated, also consider the 15% employee participation and a tax on 10% rent.The project to convert the infrastructure into an office complex that will generate annual revenues of US$600.0G0 and annual operation and maintenance costs representing 35% of profits is being studied.To do this, U5 1,000,000 must be invested in the remodeling of the building that lasts two years (equal expense each year). The total of the improvements can be depreciated over 7 years straight line, with no residual value. The remodeling will allow the building to be used for 7 years, at the end of which it can be sold for 3,000,000 Perform incremental cash flow in excel and graph with bar chart.George Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $299,140, and its unguaranteed residual value at the end of the lease term is estimated to be $20,000. National will pay annual payments of $40,000 at the beginning of each year. George incurred costs of $180,000 in manufacturing the equipment and $4,000 in sales commissions in closing the lease. George has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 8%. Instructions a. Discuss the nature of this lease in relation to the lessor and compute the amount of each of the following items. 1. Lease receivable. 2. Sales price. 3. Cost of goods sold. b. Prepare a 10-year lease amortization schedule for George, the lessor. c. Prepare all of the lessor's journal entries for the first year.Grouper Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $260,015, and its unguaranteed residual value at the end of the lease term is estimated to be $20,500. National will pay annual payments of $37,300 at the beginning of each year. Grouper incurred costs of $195,000 in manufacturing the equipment and $4,100 in sales commissions in closing the lease. Grouper has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 10%.
- Bridgeport Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Indigo Airlines for a period of 10 years. The normal selling price of the equipment is $281,987, and its unguaranteed residual value at the end of the lease term is estimated to be $21,100. Indigo will pay annual payments of $42,000 at the beginning of each year. Bridgeport incurred costs of $193,400 in manufacturing the equipment and $3,800 in sales commissions in closing the lease. Bridgeport has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 11%. Indigo Airlines has an incremental borrowing rate of 11%.Excess Construction Corp. has a $16 million contract to construct a building. The company estimates $10.4 million in costs to construct the building and an expected gross profit of $5.6 million. During the current year, the company incurred $3,120,000 of costs on the contract. Under the percentage-of-completion method, how much will Excess Construction Corp. report as revenue in the current year?On January 1, 2021, ABC Co. purchased 50,000 units at P100 per unit.During 2021, the entity sold 40,000 units at P180 per unit. The entity paidP700,000 for operating expenses. The current replacement cost of theinventory on December 31, 2021 is P150 per unit. What is the net incomeunder current cost accounting for the year 2021?