***PLEASE DO ALL AND SITE WEBSITE/SOURCE*** SkinFX Corporation Management Decisi
ID: 2394545 • Letter: #
Question
***PLEASE DO ALL AND SITE WEBSITE/SOURCE***
SkinFX Corporation Management Decisions SkinFX Corporation manufactures the special materials used to create face masks and realistic body parts for the movie industry. The company is preparing its projected financial statements for the upcoming year, and hopes to use them to secure a bank loan. The proceeds of the loan will be used to increase capacity at the plant. At current capacity, total overhead is about $1.2M, with about 170,000 total direct labors hours. If the company expands, the increased capacity will generate total overhead of $1.7M, with 195,000 direct labor hours. Questions Which amounts would you use to calculate the overhead rate, and why? What are the advantages of using the high or low estimates? Are there any ethical issues in selecting the estimates? What are the ramifications or under- or overestimating the overhead? Be sure to support your responses with credible sources and cite your sources using APA.Explanation / Answer
1. we will use overheads amount of $ 1.20 million and labour hours of 170,000
2. It is informal so accurate data is not required and only requires two sets of numbers to calculate the fixed and variable costs (http://smallbusiness.chron.com/advantages-disadvantages-highlow-method-accounting-24444.html)
3. Yes, issues are regarding their suitability is always there.
4. Consequence of under estimation is that it can topple the budgets prepared when actual expenditures exceeds the budgeted expenditures. Whereas over estimate can lead to increased expenditures which may not be fulfilling and the impact is the task might take longer than it ‘should’ do.(https://strategicppm.wordpress.com/2010/06/11/which-is-worse-under-estimation-or-over-estimation/)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.