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According to the text, the relationship between environmental and organizational challenges differs from the relationship between organizational and individual challenges in that:
The environmental-organizational relationship goes only one way (few organizations can impact the environment), while organizational-individual challenges have a two-way relationship (each affects the other reciprocally).
The total of Konrad's purchases ledger balances was $57,400. Later, these errors were found:
| Discount allowed overcast in cash book | $2,000 |
| Returns outwards omitted in a supplier's account | $350 |
| Payments to trade payables undercast in cash book | $137 |
| Purchases journal overcast | $500 |
What is the corrected total of the trade payables balances?
Only errors affecting individual supplier accounts change the purchases ledger total.
1. Returns outwards omitted: $57,400 - $350 = $57,050.
The others (Discount allowed, payments undercast in cash book, journal overcast) affect the Control Account or other ledgers, but not the individual ledger balances until corrected there.
Induced emf in 1m copper rod moving at 20 m/s perpendicular to 0.6 T field:
Which of the following statements about marginal costing are correct?
- It assists in resource optimization when a limiting factor is present.
- It ensures decisions are based on the full absorption cost.
- It includes the apportionment of service department costs.
- It typically results in a lower inventory valuation compared to absorption costing.
Marginal costing focuses on variable costs (contribution), making it ideal for limiting factor analysis (1). Because it excludes fixed overheads from inventory, valuation is lower than absorption (4). Statements 2 and 3 refer to absorption costing.
L and M are partners sharing profits 3:2. Data at year-end:
| Item | L ($) | M ($) |
|---|---|---|
| Capital | 200,000 | 150,000 |
| Interest on Capital (8%) | - | - |
| Drawings | 30,000 | 20,000 |
| Interest on Drawings (5%) | - | - |
| Salaries | 22,000 | 17,000 |
If L's share of residual profit was $24,000, what was the total profit for the year before appropriation?
1. Total Residual Profit = $24,000 / 0.6 = $40,000.
2. Total Interest on Capital = ($200k + $150k) $\times$ 8% = $28,000.
3. Total Salaries = $22k + $17k = $39,000.
4. Total Interest on Drawings = ($30k + $20k) $\times$ 5% = $2,500.
Profit = Residual ($40,000) + Interest on Cap ($28,000) + Salaries ($39,000) - Interest on Drawings ($2,500) = $104,500.
Which row correctly describes marginal costing vs absorption costing?
| Option | Gives higher profits when inventory levels are increasing | Charges overheads to expenses rather than products |
|---|---|---|
| A | Absorption | Absorption |
| B | Absorption | Marginal |
| C | Marginal | Absorption |
| D | Marginal | Marginal |
Option B is correct.
- Higher profits when inventory rising → Absorption costing: Fixed overheads deferred in closing inventory, reducing the charge to profit.
- Charges overheads as period costs → Marginal costing: All fixed overheads expensed in the period incurred.
Y Limited purchased a motor van with these costs: Purchase price $50,000; Delivery $4,500; Engine upgrade $6,000; 2-year maintenance contract $4,000; Annual licence fee $1,200. Depreciation: 20% straight-line. What are the total expenses in the statement of profit or loss?
Option B ($15,300) is correct.
Capital expenditure: $50,000 + $4,500 + $6,000 = $60,500
Depreciation = $60,500 × 20% = $12,100
Revenue expenditure: Maintenance (year 1 only) $4,000 ÷ 2 = $2,000 + Licence $1,200 = $3,200
Total expenses = $12,100 + $3,200 = $15,300
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