Explanation:
Breakeven=fixed cost/selling price - variable cost
so 14,300000/380-250
14,300000/130 = 110,000 units to be able to make break even
<span>Given: -
Average variable cost/unit = $6
Average total cost/unit = $10
Units = 1000
To find: - Total fixed cost.
Solution:
Fixed cost = Total cost – Variable cost
Fixed cost = $10 - $6
Fixed cost = $4 = fixed cost per unit
Total fixed cost = $4*1000 =$4,000
Firm's total fixed cost is $4,000.</span>
Answer:
Residual income = $666,270
Explanation:
The residual income is the amount left after the opportunity cost of capital deducted from the net operating income
Operating income=Contribution margin -Fixed cost
Operating income= 1,050,000 - 325,500= $724,500
Residual income = Net income - (cost of capital × capital invested)
=$724,500 - (18% × 323,500)= 666270
Residual income = $666,270
<u>b. It can only be used for one variable at a time</u> is the false statement regarding the use of simulation in multinational capital budgeting.
<u>Explanation</u>:
The process of determining the net present value of the project is known as multinational capital budgeting. The capital budget can be determined by estimating the present value of cash flow in the project and subtracting the initial expenditure required for the projects.
When considering the use of simulation in multinational capital budgeting, it can be used for many variables at a time.
The flow of cash is focused in the long-term investment projects. Multinational capital budgeting can help in determining investment opportunity of the company.