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3 years ago

Which of the following is true about product markets?

Business

1 answer:

jeka943 years ago

6 0

Answer:

The correct answer is option D.

Explanation:

A product market deals with goods and services. In a product market goods and services are supplied by firms and businesses and purchased by households.

The households in exchange pay businesses and firms which is known as consumer spending for households.

A product market is concerned with the flow of finished goods and services, it does not involve trade in raw materials and other intermediate goods.

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High Flying takes tourists on helicopter tours of Hawaii. Each tourist buys a $190 ticket; the variable costs average $57 per pe

Dennis_Churaev [7]

Answer:

a. 450 tours per month

b. $850 per month

c. CM Ratio = 0.7

1. Increase

2. Decrease

3. No Effect

Explanation:

The questions are:

a. Compute the average number of tours the company must conduct per month to break even

b. Compute the average sales revenue needed per month to produce a target average profit of $53,200

c. Calculate the contribution margin ratio. (Round your answer to 2 decimal places.)

d. Determine whether the actions that follow will increase, decrease, or not affect the company's break-even point.

1. A decrease in tour prices.

2. The termination of a salaried clerk (no replacement is planned).

3. A decrease in the number of tours sold.

Solution:

Selling Price = 190

VC = 57

Unit Contribution Margin = $133

Fixed Cost = 718,200 yearly, so monthly is:

718,200/12 = 59,850

Break even occurs when by selling tours they will cover monthly fixed cost of 59,850 [each tour will get 133], thus:

59,850/133 = 450 tours per month

718,200 FC yearly, means, monthly:

718,200/12 = $59,850

Profit needed 53,200, so we would need to cover:

53200+59850 = $113,050

Each tour gives Unit CM to be $133, so we would need revenue of:

Rev = 113,050/133 = $850

Contribution margin ratio is the quotient of difference in sales and var expenses to sales.

So,

CM Ratio = (Sales - Var Exp) / Sales

CM Ratio = (190 - 57) / 190 = 0.7

If the tour prices, decrease, there will be less revenue coming in so the break even point would go higher.

So, break even point will increase

If a salaried clerk is terminated, it will decrease the salary costs of the company. This is decrease the fixed costs of the company (annual wages and salaries), thus it will be easier to cover the new, lower, fixed costs. Thus, the break even point will decrease

A decrease in number of tours sold would proportionally change the variables and other costs and revenues associated. If you look at the calculation above, you will see that "number of tours" won't affect the Break Even Point. Thus, this action will create "no effect".

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3 years ago

Write a persuasive essay on "Why We Should Start a Family Business?"

lesantik [10]

Honestly you should answer this one yourself it seems like a question that contains your own answer

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3 years ago

"For an investor seeking a tax sheltered investment, the primary advantage of a real estate direct participation program is the:

evablogger [386]

Answer:

ability of the program to generate losses for tax purposes but provide positive cash flow.

Explanation:

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3 years ago

Sanchez Company's output for the current period was assigned a $419,000 standard direct labor cost. The direct labor variances i

skad [1K]

Answer:

the actual total direct labor cost for the current period is $425,285

Explanation:

Reconciling Standard Cost to Actual Cost

Standard Cost $419,000

Add Unfavorable direct labor rate variance $10,475

Less Favorable direct labor efficiency variance ($4,190)

Actual Cost $425,285

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3 years ago

A manager should attempt to maximize the value of the firm by changing the capital structure if and only if the value of the fir

faust18 [17]

Answer:

Option a

Explanation:

In simple words, value maximization refers to the process under which the managers of an organisation tries to make or increase the existing economic profits, that is, the money left with the organisation after paying for the obligations of all the money providers including the lat in hierarchy, the equity shareholders.

Value maximization can be performed by changing the capital structure which affects the payment obligations. The value maximization affects all the stakeholders of the organisation therefore, the decision should be made by tasking into consideration them all.

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3 years ago

Which of the following is true about product​ markets?

Which of the following is true about product markets?