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Cullumber Company has a unit selling price of $650, variable costs per unit of $450, and fixed costs of $319,800. Compute the br

saveliy_v [14]

Answer:

(a)

Mathematical Equation for break-even

F = QP - QV

Where

F = fixed cost

Q = Break-even quantity

P = Selling price

V = Variable cost

F = Q ( P - V )

Q = F / ( P - V )

Q = $319,800 / ( $650 - $450 )

Q = $319,800 / $200

Q = 1,599 units

(b)

Contribution Margin = Price per unit - Variable cost per unit

Contribution Margin = $650 - $450 = $200

Break-even Point in Units = Fixed Cost / Contribution margin per unit

Break-even Point in Units = $319,800 / $200 = 1,599 units

Explanation:

Mathematical equation use the the break-even equation which represent the behavior of each element towards the break-even point.

Contribution per unit method use the contribution of each unit to calculate the break-even point.

4 0

3 years ago

Take It All Away has a cost of equity of 11.08 percent, a pretax cost of debt of 5.38 percent, and a tax rate of 39 percent. The

Kipish [7]

Answer:

8.43 %

Explanation:

Weighted Average Cost of Capital (WAAC) is the Cost of long term permanent sources of finance. We consider WACC on the Market Weight of sources of Finance.

WACC = ke × E/V + kd × D/V

where,

ke = cost of equity

= 11.08 %

E/V = Market Weight of Equity

= 100 % - 34 %

= 0.66

kd = cost of debt

= interest × ( 1 - tax rate)

= 5.38 % × (1 - 0.39)

= 3.2818 %

D/V = Market Weight of Debt

= 0.34

Therefore,

WACC = 11.08 % × 0.66 + 3.2818 % × 0.34

= 8.43 %

4 0

3 years ago

Real versus Nominal Returns. You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-en

vitfil [10]

Answer:

a.

(i) Rate of return=(2+(38-40))/20=0%

(ii) Rate of return=(2+(40-40))/20=10%

(iii)Rate of return=(2+(42-40))/20=20%

b.

(i) Real rate of return=(1+0%/1+3%)-1=0%

(ii) Real rate of return=(1+10%/1+3%)-1=6.8%

(iii) Real rate of return=(1+20%/1+3%)-1=16.50%

Explanation:

a. The return on any stock can be calculated using the below formula

Return=(Dividend+Capital gain)/Opening value of stock

Where Capital gain=Closing value of stock- opening value of stock.

Using the formula above

(i) Rate of return=(2+(38-40))/20=0%

(ii) Rate of return=(2+(40-40))/20=10%

(iii)Rate of return=(2+(42-40))/20=20%

b. The Real rate of return can be calculated using the below formula:

Real rate of return=(1+ rate of return/1+inflation rate)-1

(i) Real rate of return=(1+0%/1+3%)-1=0%

(ii) Real rate of return=(1+10%/1+3%)-1=6.8%

(iii) Real rate of return=(1+20%/1+3%)-1=16.50%

7 0

3 years ago

GreenLawn Co. provides landscaping services to clients. On May 1, a customer paid GreenLawn $60,000 for 6-months services in adv

devlian [24]

Answer:

See answer below

Explanation:

Journal entry will be as follows.

Debit Cash Account $60,000

Credit Payables/Service Prepayment Account $60,000.

As service is being rendered on a monthly basis (monthly income = $\frac{60,000}{6} = 10,000$ ), the company will make the following journal entry.

Debit Payables/Service Prepayment Account $10,000

Credit Revenue $10,000.

3 0

3 years ago

Public choice theory suggests that politicians will be most likely to favor redistribution of income from the rich to the poor.

Murrr4er [49]

Answer:

The correct answer is unorganized taxpayers to well-organized interest groups.

Explanation:

Public choice theory seeks to study the problems of political science applied to economics. A positive public election means that the decisions of politicians face the needs of civil society. In the case of the example, it is easy to determine towards whom the work of people in political positions should be oriented, and it is by definition to unorganized communities with some type of unsatisfied basic need.

4 0

3 years ago

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