Grass Enterprises Just Closed a Good Year

question 130

Multiple Choice

Grass Enterprises just closed a good year. It had Sales of $10 million, EBIT of $1 million and Net Income of $500,000. The firm also paid dividends of $150,000 during the year. If Grass started the year with equity of $900,000, what will its year ending equity be?

• A)$1,900,000
• B)$1,400,000
• C)$1,250,000
• D)$850,000

Apply the high-low method to estimate variable and fixed components of costs from given data.

Analyze mixed costs using different approaches including the high-low method, least-squares regression, and account analysis.

Estimate the total cost, variable cost per unit, fixed costs, and contribution margin using cost-volume-profit (CVP) analysis.

Identify and analyze the limitations and strengths of various methods used in cost estimation.

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Definitions:

Debit Balance

An accounting entry that indicates the amount owed by a company, typically found on the left side of a ledger.

Work in Process Inventory

The value of partially completed goods that are still in the production process at a given point in time.

Underapplied Overhead

The situation where the allocated manufacturing overhead is less than the actual overhead incurred, leading to an adjustment need in accounting records.

Adjusting Entry

An accounting journal entry made to amend the preliminary financial records before preparing financial statements.