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1 year ago

The break-even point calculation is affected by:

1 answer:

3 0

The break-even point is determined by total cost rather than revenue, hence revenue has no direct impact on it. However, whether a business truly crosses its break-even point depends on its sales revenues. If sales are less than total costs, preventing a business from breaking even, it suffers a loss.

Revenue is the collective income from sales of goods and services that are directly connected to a company's basic business operations in the context of accounting. Two more phrases for commercial revenue are sales and turnover. Some companies get money from interest, royalties, and other payments. The phrase "income" is commonly used in place of revenues. Sales, service revenues, fees collected, interest revenue, and interest income are a few instances of revenue accounts. Revenue accounts are credited when services are provided and billed, and as a result, they frequently have credit balances. The break-even point in economics, business, and particularly cost accounting is the point at which total cost and total revenue are equal, or "even." There is no net loss or gain, and one has achieved "break even" even if opportunity costs were paid and capital obtained the projected return after accounting for risk.

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(Bond valuation) You are examining three bonds with a par value of $1 comma 000 (you receive $1 comma 000 at maturity) and

Anna71 [15]

Answer:

Bond A, 5 years to maturity, semiannual coupons, 8%

Bond B, 10 years to maturity, annual coupon, 8%

Bond C, 15 years to maturity, semiannual coupon, 8%

a) market rate 8% semiannual

Bonds A and C will be worth $1,000 (par value)

price of bond B:

effective interest rate = 1.04² - 1 = 8.16%
PV of face value = $1,000 / 1.04²⁰ = $456.39
PV of coupon payments = $80 x 6.66192 (PV ordinary annuity factor, 8.16%, 10 periods) = $532.95

market price = $989.34

b) price of bond A:

PV of face value = $1,000 / 1.025¹⁰ = $781.98

PV of coupon payments = $40 x 8.75206 (PV ordinary annuity factor, 2.5%, 10 periods) = $350.08

market price = $1,132.06

price of bond B:

effective interest rate = 1.025² - 1 = 5.0625%
PV of face value = $1,000 / 1.025²⁰ = $610.27
PV of coupon payments = $80 x 7.69817 (PV ordinary annuity factor, 5.0625%, 10 periods) = $615.85

market price = $1,226.12

price of bond C:

PV of face value = $1,000 / 1.025³⁰ = $476.74

PV of coupon payments = $40 x 20.93029 (PV ordinary annuity factor, 2.5%, 30 periods) = $837.21

market price = $1,313.95

c) price of bond A:

PV of face value = $1,000 / 1.075¹⁰ = $485.19

PV of coupon payments = $40 x 6.86408 (PV ordinary annuity factor, 7.5%, 10 periods) = $274.56

market price = $759.75

price of bond B:

effective interest rate = 1.075² - 1 = 15.5625%
PV of face value = $1,000 / 1.075²⁰ = $235.41
PV of coupon payments = $80 x 4.91292 (PV ordinary annuity factor, 15.5625%, 10 periods) = $393.03

market price = $628.44

price of bond C:

PV of face value = $1,000 / 1.075³⁰ = $114.22

PV of coupon payments = $40 x 11.81039 (PV ordinary annuity factor, 7.5%, 30 periods) = $472.42

market price = $586.64

d) If the market rate is lower than the coupon rate, then the bonds will sell at a premium. The longer the maturity date, the larger the variations in market price due to different interest rates. E.g. the 15 year bond is more affected than the 5 year bond.

7 0

3 years ago

What do you think of the decision made by Adelaide Ladywell?

Neporo4naja [7]

Answer:

Incomplete question. Here's likely the complete question;

In this, the first case, Lee High, the newly hired cost accountant, computes the variable cost and the fixed cost per unit at a volume of 500 units of Great Heath per week. He uses this information to develop some guidelines for pricing. His boss, Charlton Blackheath, endorses the guidelines and adds a feature: a higher commission on sales at a higher price.

When both High and Blackheath are away, the file clerk, Adelaide Ladywell, accepts an order below the guidelines and is fired...Evaluate the decision made by Adelaide.

<u>Explanation:</u>

Although Adelaide Ladywell acted presumptuously (without permission), her decision was still profitable. By looking at the costs per unit presented, the product's selling price wasn't lower than the fixed costs, therefore her actions were not a totally bad one.

3 0

3 years ago

A value-based pricing strategy most likely begins with ________.

noname [10]

A value-based pricing strategy most likely begins with looking at their customers needs.

When you have a value-based pricing strategy, you are determining price based on the value you think your good or service will be valued at to the customer. Retailers can generally sell their items for more than cost of the product if the value is perceived by the customer to be high.

7 0

4 years ago

On January 1, 2018, Jay Company acquired all the outstanding ownership shares of Zee Company. In assessing Zee’s acquisition-dat

raketka [301]

Answer:

consolidated income statemnt interest expense: 14,500

net long-term debt consolidaded: 232,500

Explanation:

Jay thinks the long-term debt carries a discount.

Which makes the fair value 20,000 less, thus increasing hte interest expense.

amortization on discount: 20,000 / 8 = 2,500

interest expense in the consolidated statement:

12,000 + 2,500 = 14,500

adjusted balance ofthe discount: 20,00 - 2,500 = 17,500

long term debt: 250,000

discount on debt<u> 17,500 </u>

net 232,500

5 0

3 years ago

Formal written promises to pay suppliers or lenders specified sums of money at definite future times are known as a.accounts rec

IrinaVladis [17]

Answer:

B)Notes payable.

Explanation:

Notes payable can be regarded as written agreements which is a (promissory notes) whereby there is agreement by one party to pay other party a definite amount of cash. Note payable can as well be regarded as loan between two parties. A note payable usually consist information such as the amount to be paid as well as interest rate. It should be noted that Formal written promises to pay suppliers or lenders specified sums of money at definite future times are known as Notes payable.

7 0

3 years ago