An entrepreneur is considering starting a new business to produce and sell gourmet cookie dough. the entrepreneur estimates that average total costs per pack of dough would be $7, of which variable costs per pack would be $5.
an incumbent bakery in the neighborhood sells cookie dough for $10 per pack. the entrepreneur estimates that this bakery spends $8 in total costs on each pack of dough, $7 of which is variable costs.

should the entrepreneur start the new business?

a) the entrepreneur should start the new business only if customers are willing to pay at least $1 more for the new dough than for the incumbent's dough, so the entrepreneur can make some profit and grow the business.

b) the entrepreneur should start the new business as long as customers are willing to pay at least as much for his cookie dough as for the incumbent’s product.

c) the entrepreneur should definitely start the new business because his variable cost per pack of dough is already lower than that of the incumbent bakery.

d) the entrepreneur must be indifferent to starting the business because his average cost per pack is equal to his established rival’s variable cost per pack.

Paar corporation bought 100 percent of kimmel, inc., on january 1, 2012. on that date, paar’s equipment (10-year life) has a book value of $420,000 but a fair value of $520,000. kimmel has equipment (10-year life) with a book value of $272,000 but a fair value of $400,000. paar uses the equity method to record its investment in kimmel. on december 31, 2014, paar has equipment with a book value of $294,000 but a fair value of $445,200. kimmel has equipment with a book value of $190,400 but a fair value of $357,000. the consolidated balance for the equipment account as of december 31, 2014 is $574,000. what would be the impact on consolidated balance for the equipment account as of december 31, 2014 if the parent had applied the initial value method rather than the equity method? the balance in the consolidated equipment account cannot be determined for the initial value method using the information given. the consolidated equipment account would have a higher reported balance. the consolidated equipment account would have a lower reported balance. no effect: the method the parent uses is for internal reporting purposes only and has no impact on consolidated totals.

Emily spent her summer vacation in buenos aires, argentina, where she got plastic surgery for a fraction of what it would cost in the united states. this is an example of:

Acompany has $80,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. experience suggests that 6% of outstanding receivables are uncollectible. the current credit balance (before adjustments) in the allowance for doubtful accounts is $1,200. the journal entry to record the adjustment to the allowance account includes a debit to bad debts expense for $4,800. true or false