Alitech Corporation Is Liquidating Under Chapter 7 of the Bankruptcy

question 19

Essay

Alitech Corporation is liquidating under Chapter 7 of the Bankruptcy Act. The accounts of Alitech at the time of filing are summarized as follows:
The land and building are pledged as security for the mortgage payable as well as any accrued interest on the mortgage. Wages and salaries were earned within 90 days of filing the petition for bankruptcy and do not exceed $11,725 per employee. Liquidation expenses are expected to be $30,000.
Required:
1. Prepare a schedule showing the priority rankings of the creditors and the expected payouts.
2. Billing Corporation was a supplier to Alitech Corporation and at the time of Alitech's bankruptcy filing, Billing's account receivable from Alitech was $40,000. On the basis of the estimates, how much can Billing expect to receive?

Distinguish between the concepts of prime costs and conversion costs.

Recognize the definitions of product costs and period costs, and their implications on financial statements.

Identify the different categories of inventory in the manufacturing process.

Comprehend the role of managerial accounting in providing information for internal decision-making.

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Definitions:

Per-unit Cost

The cost associated with producing or acquiring one unit of a product.

Factory Size

The physical dimensions or capacity of a manufacturing facility, which may influence its output, efficiency, and employment levels.

Average Costs

The total cost of production divided by the number of goods produced, used to calculate the cost on a per-unit basis.

Diseconomies of Scale

A condition in which a company or business grows so large that the costs per unit increase.