As of July 1, 2017, the Village of Boiling Springs decided to purchase a privately operated swimming pool and to create a swimming pool (enterprise) fund. During the year, the following transactions occurred:
A permanent contribution of $600,000 was received from the general fund.
Revenue bonds were sold at par in the amount of $1,200,000.
Several items were purchased for cash, with a cost breakdown as follows: land, $300,000; building, $400,000, land improvement, $400,000; equipment, $200,000; and supplies, $150,000.
Charges for services amounted to $600,000, all received in cash.
Cash expenses included salaries of $200,000; utilities of $100,000; and interest of $72,000.
Supplies were consumed in the amount of $120,000.
Depreciation was recorded as follows: building, $20,000, land improvement, $20,000; and equipment, $20,000.
The books were closed. Close all accounts to net position.
Prepare, in good form using the trial balance provided a Statement of Revenues, Expenses, and Changes in Fund Net Position for the Village of Boiling Spring Swimming Pool Fund for the Year Ended June 30, 2018.
Prepare, in good form using the trial balance provided in this module, a Statement of Fund Net Position for the Village of Boiling Springs Swimming Pool Fund as of June 30, 2018.
Village of Boiling Springs Trial Balance
Land improvements 400,000
land improvements $20,000
Accumulated depreciation-equipment 20,000
Revenue bonds payable 1,200,000
Transfers in 600,000
Operating revenues-charges for services 600,000
supplies used 120,000
A) Production expense that changes with the quantity of output produced .
Explanation: Variable cost is that part of 'Total Cost' of output production , which directly varies with the level of output .
Total Cost = Total Variable Cost + Total Fixed Cost
TVC since directly varying with level of output , is zero at zero level of output .
Eg - Cost of Raw Materials , Fuel etc
(This is unlikely Fixed Cost which is not related with output production & isn't 0 at 0 level of income , eg - cost of plant , machine )
Answer and Explanation:
The Preparation of water and sewer fund Statement of Revenues, Expenses, and Changes in Fund Net Position for the year ended December 31, 2017 is shown below:-
Water and Sewer fund
Statement of Revenues, Expenses,
and Changes in Fund Net Position
for the year ended December 31, 2017
Operating revenue - Charges for
Personal services $6,177,000
Contractual services $2,995,000
Repair and Maintenance $1,992,000
Total operating expenses $17,474,000
Operating income $613,000
Non operating revenues
Interest revenue $29,000
Interest expenses ($434,000)
State aid $100,000
Total of non operation revenue ($305,000)
Capital contribution $1,632,000
Transfer to general fund ($365,000)
Change in net assets $1,575,000
Jan 1 Net assets $2,700,000
Dec 31 Net assets $4,275,000
We simply deduct all expenses from revenue to arrive ending net assets
c) Statement of Net Position; Statement of revenues, expenditures, and changes in fund balances; Statement of Cash Flows
Proprietry funds are accounts that are part of governmental institutions and non profits organizations and these require a high standard of transparency and accountability, so they are require to provide to the government the next statements: tatement of net assets; a statement of revenues, expenses, and changes in fund net assets; and a statement of cash flows.
This is accordingly to the summary of statements N. 34 from the Governmental Accounting Standards Board.
assets:Cash95,000Accounts receivable47,000Due from general fund40,000Materials and supplies18,000Total current assets200,000Noncurrent assets:Capital assets700,000Total noncurrent assets700,000Total assets900,000LiabilitiesCurrent liabilities:Accounts payable115,000Accrued interest payable4,000Total current liabilities119,000Noncurrent liabilities:Revenue bonds payable625,000Total noncurrent liabilities625,000Total liabilities744,000Net PositionNet investment in capital assets30,000Unrestricted69,000Total net position99,000
Net Income $308,000
Net Funds Position $3,967,000
Income Statement for the year ended December 31, 2017
State Aid $100,000
Personnel services ($6,177,000)
Contractual services ($ 2,995,000)
Repairs and maintenance ($1,992,000)
Income before interest and tax $713,000
Interest Expense ($434,000)
Interest Income $29,000
Net Income $308,000
Changes in Net Funds Position for the year ended December 31, 2017
Opening Funds $2,700,000
Transfer to general funds ($365,000)
Capital Contributions $1,632,000
Net Funds Position $3,967,000
Statement of Revenues, Expenses, and Changes in Net Position
Particulars Amount $
Auxiliary enterprise revenue 4,200,000
Student tuition and fee revenue 8,450,000
Scholarship tuition and fee contra revenue 300,000
State and local grants and contracts revenue 900,000
Total Operating revenue 13,850,000
Depreciation expense 1,400,000
Employee Benefits 1,975,000
Nonexempt wages 1,500,000
Other operating expenses 900,000
Salaries-exempt staff 2,300,000
Scholarships and fellowships ex 315,000
Total Operating Expenses 14,890,000
Operating Profit (1,040,000)
Non-Operating Revenue / (Expenses)
State appropriation for operation 4,970,000
State appropriations for capital additions 250,000
Interest on capital-related debt (450,000)
Federal grants and contracts revenue 2,000,000
Investment income 220,000
Additions to permanent endowments 400,000
Capital grants and gifts 300,000
Total non-operating income/expenses (8,390,000)
Net Position 7,350,000
(Total non-operating income - Operating Profit)
Net position, beginning of year 11,450,000
Net Position at the end of the year 18,800,000
The answer is: A) a production expense that changes with the quantity of output produced.
Variable costs are costs that vary in proportion to production output. Variable costs increase if the production output increases, and decreases if the production output decreases.
For example, packaging costs depend on the amount of final goods produced. If the amount of goods increases, then more packaging will be needed (increasing the variable costs).
The correct answer is option A.
In the process of production, several inputs are used to create outputs. These inputs may or may not be varied in the short run. Those inputs that can be varied are called variable inputs, for instance, labor.
Those inputs that cannot be varied in the short run are called fixed inputs. For instance, capital, machinery, etc.
The cost incurred on variable inputs is called a variable cost. This cost changes with the change in the quantity of output produced. The quantity of output varies with the quantity of input employed and so does variable cost.
Anywho, to answer your question the choice that seems fair would be: B
answer; measurable outcome;