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snow_lady [41]
3 years ago
12

Chris Co. has three segments - Surfing, Mountain Biking, and Fly Fishing. The Surfing segment is currently producing 1000 units

annually. The units sell for $500 each. The cost of each unit is $400. The Surfing segment spends $110,000 on product design each year. The segment also is allocating $100,000 of annual facility-level costs. Calculate the avoidable cost of Chris Co. were to eliminate the Surfing segment.
Business
1 answer:
zaharov [31]3 years ago
6 0

Answer:

The tennis department relevant costs (avoidable costs) are variable manufacturing costs ($400,000) and product design ($110,000).

Explanation:

First of all Chris Co. should eliminate its surfing department (since it is not profitable) only if it can use their production facilities to make something else that does generate profit or just sell that facility.

surfing department net profit = $500,000 - $610,000 = -$110,000 or $110,000 net loss

The department's major loss comes from the allocation of $100,000 in facility level costs, but these costs are not relevant or avoidable. Relevant costs are costs that can be avoided by making a business decision like closing a business department.

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Answer:

Total estimated cost $148,680

Fixed cost $20,680

Explanation:

Using the high-low method to estimate the amount of fixed cost that is incurred each month

Units Cost

High 207 153,160

LOW 38 45,000

Difference 169 108,160

Variable cost per unit= 108,160/169

Variable cost per unit= 640

Fixed cost = 153,160-207*640

Fixed cost = 20,680

Total estimated cost= 200*640+20,680

Total estimated cost=128,000+20,680

Total estimated cost=148,680

Therefore Total estimated cost will be $148,680 and Fixed cost will be $20,680

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4 years ago
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5 0
3 years ago
Suppose you are committed to owning a $203,000 Ferrari. If you believe your mutual fund can achieve an annual rate of return of
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Answer:

the present value is $88,087.08

Explanation:

The computation of the present value is shown below:

As we know that

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$203,000 = Present value × (1 + 0.11)^8

So, the present value is $88,087.08

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In business, which of the following tones should be part of every written communications? a. Funny b.Vague c.Sarcastic d.polite​
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Answer:

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