Faulks Corporation Is a Shipping Container Refurbishment Company That

question 321

Multiple Choice

Faulks Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of August, it assumed that 23 containers would have been refurbished.However, 26 containers were actually refurbished during August. The amount shown for total expenses in the planning budget for August would have been closest to:

• A)$111,904
• B)$126,500
• C)$122,400
• D)$128,100

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Definitions:

Goodwill

Goodwill represents the excess of the purchase price paid for an acquired company over the fair value of its identifiable net assets at the time of acquisition.

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee, recognizing their share of the profits and losses.

Indefinite Useful Life

An intangible asset with an expected life that extends beyond the foreseeable future, not requiring amortization but subject to annual impairment tests.

Acquisition Differential

The difference between the purchase price of an acquired entity and the fair value of its identifiable net assets.