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morpeh [17]
3 years ago
8

Devern Assurance Company provides both property and automobile insurance. The projected income statements for the two products a

re as follows: Property Insurance Automobile Insurance Sales $4,200,000 $12,000,000 Less variable expenses 3,830,000 9,600,000 Contribution margin $370,000 $2,400,000 Less direct fixed expenses 400,000 500,000 Segment margin $(30,000) $1,900,000 Less common fixed expenses (allocated) 100,000 200,000 Operating income (loss) $(130,000) $1,700,000 The president of the company is considering dropping the property insurance. However, some policyholders prefer having their property and automobile insurance with the same company, so if property insurance is dropped, sales of automobile insurance will drop by 12 percent. No significant non-unit-level activity costs are incurred.
1. As a supporting computation, prepare a segmented income statement for the keep-or-drop decision.

2.Assume that dropping all advertising for the property insurance line and increasing the corporate advertising budget by $450,000 will increase sales of property insurance by 10 percent and automobile insurance by 8 percent. Prepare a segmented income statement that reflects the effect of increased advertising.
Business
1 answer:
Jobisdone [24]3 years ago
6 0

Answer:

Explanation:

Severn Assurance company.

Decision to drop the Assurance division will result in the below group financials:

Property division:

Sales 10,560,000

Variable expense 8,448,000

Contribution Margin 2,112,000

Direct Fixed Expense 500,000

Segment Margin 1,612,000

Common fixed expense 300,000

Operating income $1,312,000

Prior to the decision to stop the property division, ney income for the group was $1,570,000

This decision leads to decrease in operating income I consider it not acceptable.

Decision: keep property insurance division.

B.

Decision to drop all Property advertising costs of $400,000

And take group advertising spend up by $450,000

Expected to see a growth in sales of property by 10% and automobile by 8%.

Property insurance division Income statement

Sales $4,620,000

Variable costs 4,213,000

Contribution Margin 407,000

Direct fixed expense 0

Segment Margin 407,000

Common fixed expense 250,000

Operating income $157,000

Automobile insurance division Income statement

Sales $12,960,000

Variable costs 10,368,000

Contribution Margin 2,592,000

Direct fixed expense 500,000

Segment Margin 2,092,000

Common fixed expense 500,000

Operating income $1,592,000

Total business net income = $1,749,000

Which is an increase of $179,000 over the original Net income projections.

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vesna_86 [32]

In economics, the Fisher equation is used to determine the relationship of the nominal interest rate and the real interest rate. This equation takes into account the effect of inflation. Mathematically this is expressed as:

Real rate = \frac{1+Nominal rate}{1+Inflation} -1

The values given are:

Nominal rate= 10% = 0.1

Inflation=5%=0.05

Substituting known values and by calculation:

<span>Real rate=0.0476 = 4.76%</span>


7 0
3 years ago
Harry's competitive math team has been ranked the number one team for the past 40 days. His team competes in a math competition
Ray Of Light [21]

Answer:

Answer for the question:

Harry's competitive math team has been ranked the number one team for the past 40 days. His team competes in a math competition at least once per day and competes in no more than 60 competitions in these 40 days. Show that there is some day $i$ and some day $j$ such that between $i$ and $j$, exactly 19 matches have been played.

is given in the attachment.

Explanation:

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3 years ago
The process of identifying other organizations that are best at some facet of your operations and then modeling your organizatio
TiliK225 [7]

Answer:

The correct answer is letter "E": benchmarking.

Explanation:

Benchmarking refers to a study a company makes of the best performers of its industry in an attempt to identify their strategies so they can be compared to the ones of the firm conducting the research. The comparison aims to spot improvement areas and to adapt the good practices according to the business operations. Benchmarking should be conducted periodically by institutions that attempt to keep up to the pace of leading competitors.

5 0
3 years ago
Name the four factors that affect population growth.
Alexxx [7]

Answer:

Factors affecting the population growth of a country are:

Explanation:

The population growth of a country are determined by many factors from which some are mentioned below:

  • CULTURAL ATTITUDE OF THE FAMILY: The attitude of the family towards population growth and their country plays a role in the population growth.
  • GOVERNMENT POLICIES: lack of the government policies and planing results in the population growth of a country.
  • COST OF EDUCATION: The higher the cost of education, the higher the illiteracy will be causing lack of education and awareness.
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6 0
3 years ago
Cameroon Corp. manufactures and sells electric staplers for $16.10 each. If 10,000 units were sold in December, and management f
Andrej [43]

Answer:

$165,975

Explanation:

The computation of sales budgeted is shown below:-

For computing the  Sales budgeted for February first we need to compute the January and February units.

January = 10,000 + (3% × 10,000)

= 10,000 + 300

= 10,300

February = 10,000 + (3% × 10,300)

= 10,000 + 309

= 10,309

Sales budgeted for February = For February × Each electric staplers

= 10,309 × $16.10

= $165,975

So, for computing the Sales budgeted for February we simply applied the above formula. The option is not available.

3 0
3 years ago
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