The Following Information Relates to Questions

question 5

Multiple Choice

The following information relates to Questions
A Ltd and B Ltd have established the AB Joint Operation. A Ltd has a 60% interest in the joint operation and B Ltd has a 40% interest.

A Ltd contributed an asset with a carrying amount of $90,000 and a fair value of $120,000 and B Ltd agreed to provide technical services to the joint operation over the first two years of operations. The fair value of the technical services was agreed to be $80,000 and the cost to provide the services was estimated at $65,000 at the inception of the joint operation.

-As part of its initial contribution entry A Ltd will record a:

• A) Debit against the Services Receivable in JO account of $32,000;
• B) Debit against the Plant in JO account of $54,000;
• C) Credit against the Plant of $120,000;
• D) Credit against the Gain on Sale of Plant of $18,000.

Explain the significance of fixed, variable, and mixed costs in decision-making.

Understand the use and importance of the cost-volume-profit (CVP) analysis for business decisions.

Calculate the margin of safety and understand its implications for business risk.

Interpret and perform calculations involving sales mix and the contribution margin of composite units.

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Definitions:

Ethical Financial Decisions

Choices related to finance that are made with consideration of moral principles and values, aiming to ensure fairness, transparency, and integrity.

Staff Turnover

The rate at which employees leave a company and are replaced by new hires, affecting an organization's continuity and resource allocation.

Employee Satisfaction

A measure of how pleased employees are with their job and work environment, which can impact productivity, loyalty, and overall company success.