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Free_Kalibri [48]
3 years ago
11

Dybala Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Sel

ling price $ 125 100 % Variable expenses 75 60 % Contribution margin 50 40 % The company is currently selling 5,320 units per month. Fixed expenses are $240,000 per month. The marketing manager believes that a $7,600 increase in the monthly advertising budget would result in a 330 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? rev: 08_18_2016_QC_CS-57562 increase of $8,900 decrease of $7,600 increase of $16,500 decrease of $8,900
Business
1 answer:
Tanya [424]3 years ago
5 0

Answer:

  • Increase of $8,900

Explanation:

  • It means that if the investment in advertising generate an increase of 330 units of sales it would have an increase in the income of the company of $8,900.

  • Initial Situation

Dybala  

5,320      Quantity

$ 125,0     Unit Price

$ 665,000 Total Net Sales

100%        Percentage

-$ 75,0     Unit Variable Cost

-$ 399,000 TOTAL Variable Cost

60%         Percentage

$ 50,0      Unit Cont Margin

$ 266,000 Contributing Margin

40%                % Contribution

-$ 240,000 Anual Fixed Costs

$ 4,9        Unit Segment Margin

$ 26,000 Segment Margin

4%            % Contribution

  • New Situation with the incremental sales.

Dybala  

5.650       Quantity

$ 125,0     Unit Price

$ 706.250 Total Net Sales

100%        Percentage

-$ 75,0      Unit Variable Cost

-$ 423.750 TOTAL Variable Cost

60%         Percentage

$ 50,0      Unit Cont Margin

$ 282.500 Contributing Margin

40%         % Contribution

-$ 247.600 Anual Fixed Costs

$ 6,2        Unit Segment Margin

$ 34.900 Segment Margin

5%             % Contribution

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Answer:

A) Job simplification.

Explanation:

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Answer:

Ayala Architects

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April 1

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Credit : Salaries Payable $1,524

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April 3

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April 10

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April 11

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Debit  : Cash $2,842

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3 years ago
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8 0
3 years ago
High flyer, inc., wishes to maintain a growth rate of 16 percent per year and a debt-equity ratio of 0.90. the profit margin is
Xelga [282]

Answer: The dividend payout ratio is 46.19%.

We follow these steps in order to arrive at the answer:

We begin with the DuPont identity of RoE.

<u>DuPont Identity:</u>

RoE = Net Profit Margin * Asset Turnover Ratio * Equity Multiplier

Now,  

Equity Multiplier = \frac{1}{Debt Ratio}

And Debt Ratio is also expressed as:

Debt Ratio = \frac{D/E}{1+D/E}

where D/E represents the Debt-Equity Ratio.

Substituting the value of D/E ratio from the question in the debt ratio formula above we get,

Debt Ratio = \frac{0.9}{1+0.9}

Debt Ratio = \frac{0.9}{1.9}----(1)

Substituting (1) in the equity multiplier formula above we get,

Equity Multiplier = \frac{1}{\frac{0.9}{1.9}}

Equity Multiplier = \frac{1.9}{0.9}

Substituting Equity Multiplier from above and the relevant numbers from the question in the DuPont identity we get,

RoE = 0.048 * 1.08 * \frac{1.9}{0.9}

RoE = 0.10944

The relationship between RoE and earnings growth rate g is given by the following formula:

RoE = \frac{g}{(1-p)}, where p is the dividend payout ratio.

Plugging in the values in the formula above we get,

0.10944 = \frac{0.16}{(1-p)}

1-p = \frac{0.16}{0.10944}

1-p = 1.461988304

p = 0.461988304 or 46.19%

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3 years ago
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