I need this question answer general Accounting ABS Fabricating Co. (ABS) and Xeno Corp. (Xeno) agreed orally thatABS would custom manufacture a compressing unit for Xeno at aprice of $120,000. After ABS completed the work at its own cost of$90,000, Xeno notified ABS that the compressing unit was no longerneeded. ABS is holding the compressing unit and has requestedpayment from Xeno. ABS has been unable to resell the compressingunit for any price. ABS has also incurred storage fees of $2,000 to holdthe compressing unit. If Xeno refuses to pay ABS and ABS sues Xeno,the most ABS will be entitled to recover is:A) 92,000B) 105,000C) 120,000D) 122,000

Step 1: Define Manufacturing CostManufacturing cost means the cost which is related to the…

Answered: ABS Fabricating Co. (ABS) and Xeno…

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter12: Contracts And Sales:introduction And Formation

Section: Chapter Questions

Problem 10QAP

See similar textbooks

Similar questions

Rex's Reclaimers entered into a contract with Dan's Demolition to manage the processing of recycled materials on Dan's various demolition projects. Services for the 3-year contract include collecting, sorting, and transporting reclaimed materials to recycling centers or contractors who will reuse them. Rex's incurs selling commission costs of $2,000 to obtain the contract. Before performing the services, Rex's also designs and builds receptacles and loading equipment that interfaces with Dan's demolition equipment at a cost of $27,000. These receptacles and equipment are retained by Rex's and can be used for other projects. Dan's promises to pay a fixed fee of $12,000 per year, payable every 6 months for the services under the contract. Rex's incurs the following costs: design services for the receptacles to interface with Dan's equipment $3,000, loading equipment controllers $6,000, and special testing and OSHA inspection fees $2,000 (some of Dan's projects are on government…
Rex's Reclaimers entered into a contract with Dan's Demolition to manage the processing of recycled materials on Dan's various demolition projects. Services for the 3-year contract include collecting, sorting, and transporting reclaimed materials to recycling centers or contractors who will reuse them. Rex's incurs selling commission costs of $2,000 to obtain the contract. Before performing the services, Rex's also designs and builds receptacles and loading equipment that interfaces with Dan's demolition equipment at a cost of $27,000. These receptacles and equipment are retained by Rex's and can be used for other projects. Dan's promises to pay a fixed fee of $12,000 per year, payable every 6 months for the services under the contract. Rex's incurs the following costs: design services for the receptacles to interface with Dan's equipment $3,000, loading equipment controllers $6,000, and special testing and OSHA inspection fees $2,000 (some of Dan's projects are on government…
Ortiz & CP signed a contract to priovide EverFresh Bakery with an ingredint weighing system for a price of 180,000. The system included finely tuned scaled that fit into Everfresh's authomated line. Ortiz's propiertary software modified to allow the weighing system to function in EverFresh's automated system, and a one-year contract to calibrate the equipment and software on an as-needed basis.(Ortiz competes with other vendors who offer ongoing calibration contracts for Ortiz's systems.) If Ortiz was to provide these goods and services separetly, it would charge 120,000 for the scales, 20,000 for the software, and 60,000 for the calibration contract. Ortiz delivered and installed the equipment and software on August 1, and thr calibration service commenced on that date. Assume that the scales, sofiware and calibration service are all separate performance obligations. How much revenue will Ortiz recognize by 12/31 of the first year for this contract?
Mott Company purchases a machine from Janelle Company. Installation of the machine requires specialized knowledge that Mott Company does not possess. Janelle Company regularly includes installation as part of its sales contracts. The machine has a stand-alone price of $50,000, and the value of the installation is estimated to be $5,000. Mott agrees to purchase the machine for $50,000. How much of the contract price should be allocated to the machine and installation respectively?
Jason's Reclaimers entered into a contract with Gary's Demolition to manage the processing of recycled materials on Gary's various demolition projects. Services for the 3-year contract include collecting, sorting, and transporting reclaimed materials to recycling centers or contractors who will reuse them. Jason's incurs selling commission costs of $2,180 to obtain the contract. Before performing the services, Jason's also designs and builds receptacles and loading equipment that interfaces with Gary's demolition equipment at a cost of $25,100. These receptacles and equipment are retained by Jason's and can be used for other projects. Gary's promises to pay a fixed fee of $12,850 per year, payable every 6 months for the services under the contract. Jason's incurs the following costs: design services for the receptacles to interface with Gary's equipment $3,220, loading equipment controllers $6,400, and special testing and OSHA inspection fees $2,180 (some of Gary's projects are on…
Company W manufactures equipment that is used to make widgets. The widget-making process involves two pieces of equipment, both of which Company W manufactures. In an arrangement with a new customer, Company W sells both pieces of equipment, along with 10 days of training for the customer's employees, for a total fee of $400,000. Title to each machine transfers upon shipment. Company W does not grant general or specific refund rights to its customers. Company W also sells each piece of equipment separately. In addition, competitors manufacture machines that perform the same functions as Machine 1 and 2, and machines from different manufacturers are interchangeable. Company W sells Machine 1 separately for $200,000, and Machine 2 separately for $250,000. No amount of the arrangement consideration is contingent upon performance of undelivered components. Company W sells training services separately to customers who already have equipment installed and want additional training for new…
Sandhill Company manufactures equipment. Sandhill's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $225,000 to $1,500,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Sandhill has the following arrangement with Tamarisk Inc. Tamarisk purchases equipment from Sandhill on May 2, 2023, for a price of $1,034,000 and contracts with Sandhill to install the equipment. Sandhill charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Sandhill determines that the installation service is estimated to have a fair value of $66,000. The cost of the equipment is $700,000. (a) Tamarisk is obligated to pay Sandhill the $968,000 on delivery of the equipment and the balance on the completion of the installation. Sandhill delivers the equipment on June 1,…
Crane Company manufactures equipment. Crane's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $255,000 to $1,550,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Crane has the following arrangement with Shamrock Inc. Shamrock purchases equipment from Crane on May 2, 2023, for a price of $1,065,000 and contracts with Crane to install the equipment. Crane charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $700,000. (a) Shamrock is obligated to pay Crane the $1,009,000 on delivery of the equipment and the balance on the completion of the installation Crane delivers the equipment on June 1, 2023, and completes the installation of the equipment on September 30, 2023. Assume that the equipment and the installation are two…
Meeker Inc. trades its used machine for a new model at Grand Inc. The used machine has a book value of $8,000 (original cost of $12,000) and a fair value of $4,000. The new model lists for $15,000. Meeker gives Grand a trade-in allowance of $7,000 for the used machine, $3,000 more than its fair value. Prepare a journal entry for Meeker, assuming commercial substance.
Blossom Company manufactures products ranging from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 to $1,500,000 and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Blossom has the following arrangement with Sheridan Inc. Sheridan purchases equipment from Blossom for a price of $926,400 and contracts with Blossom to install the equipment. Blossom charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Blossom determines installation service is estimated to have a standalone selling price of $38,600. The cost of the equipment is $640,000. Sheridan is obligated to pay Blossom the $926,400 upon the delivery of the equipment. Blossom delivers the equipment on…
Precision Company is a public company manufacturing equipment, Precision's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $ 140,000 to $ 1,200,000 and are quoted inclusive of installation. The installation process does NOT involve changes to the features of the equipment to perform specifications. So installation can be performed by other vendors. Precision had the following transactions with Rose Inc. on June 20, 2020. • Rose signed a contract to purchase equipment from Precision for a price of $200,000 (installation included). Using market data, Rose determines installation service is estimated to have a fair value of $ 20,000. The cost of the equipment is $ 78,000 and the labor cost of the installation is $1,000. • The price of $200,000 includes a warranty guarantee that the equipment is free from any defects. The term of the assurance warranty is two years, with an estimated cost of $3,000. •…
Dylan Engineering Corporation has a contract with Marley Stores to provide customized software for Marley's inventory control system. Cliff Outlets, Inc., Marley's competitor, pays $2,500 to Costello, a Dylan subcontractor, who is writing code for the Marley software, to delay delivery of the code for one week. As a result, Dylan's delivery of the software to Marley is delayed, and Marley sustains $100,000 in lost profits. On what ground could Marley recover damages from Cliff? What would Marley have to prove to win their case? Fully discuss, including explaining what must be proven to establish any legal theories and how such issues are most likely to be resolved in court.

SEE MORE QUESTIONS

Recommended textbooks for you

Business Its Legal Ethical & Global Environment

Accounting

ISBN:

9781305224414

Author:

JENNINGS

Publisher:

Cengage

SWFT Essntl Tax Individ/Bus Entities 2020

Accounting

ISBN:

9780357391266

Author:

Nellen

Publisher:

Cengage

SWFT Comprehensive Vol 2020

Accounting

ISBN:

9780357391723

Author:

Maloney

Publisher:

Cengage

Business Its Legal Ethical & Global Environment

Accounting

ISBN:

9781305224414

Author:

JENNINGS

Publisher:

Cengage

SWFT Essntl Tax Individ/Bus Entities 2020

Accounting

ISBN:

9780357391266

Author:

Nellen

Publisher:

Cengage

SWFT Comprehensive Vol 2020

Accounting

ISBN:

9780357391723

Author:

Maloney

Publisher:

Cengage

Individual Income Taxes

Accounting

ISBN:

9780357109731

Author:

Hoffman

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SWFT Individual Income Taxes

Accounting

ISBN:

9780357391365

Author:

YOUNG

Publisher:

Cengage

SEE MORE TEXTBOOKS