Renew turf, inc., enters into a contract with sports park to provide surface material for sports park's baseball fields by october 1 for a series to begin october 5. the contract specifies an amount to be paid if the contract is breached. this is a liquidated damages clause if the amount is:

a. meant to pay for additional liquid sealant in the event of damage
b. a reasonable estimate of the loss on a breach
c. designed to penalize the breaching party
d. intended to quickly provide cash to the non-breaching party

b.

Explanation:

Based on the information provided within the question it can be said that this is a liquidated damages clause if the amount is a reasonable estimate of the loss on a breach. This a safety feature placed in order to recover money lost on the negligence of the party that breached the contract, so that the other party does not suffer much loss.

First question:

What is the cost effect of the growth component for conversion costs?

Conversion Cost growth component: 0

Second: Throughput contribution

Revenues minus all direct material costs of goods sold

Explanation:

1st: Q: What is the cost effect of the growth component for conversion costs?

Givens:                              2017          2018

Manufacturing capacity:   50,000       48,400

Conversion Cost        

per unit of capacity:                   25               25

As there is capacity for 50,000 units on 2017 there is no additional cost incurred for a capacity of 48,400

Thus, this makes the grow component effect for conversion cost equal to zero.

2nd Q: Throughput contribution is the difference between the sales revenue generated and the cost of the materials. It indicates the value added to the raw materials through the manufacturing process That's why his named "throughput contribution"

There is a difference with the common term "contribution margin" as this takes all variable cost into consideration.