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Bogdan [553]
3 years ago
7

QS 23-10 Sell or process further LO A1 Holmes Company produces a product that can be either sold as is or processed further. Hol

mes has already spent $74,000 to produce 1,325 units that can be sold now for $79,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $280 per unit. If Holmes processes further, the units can be sold for $460 each. Compute the incremental income if Holmes processes further.
Business
1 answer:
Allushta [10]3 years ago
5 0

Answer:

It is more profitable to continue processing and sell the units for $460.

Explanation:

Giving the following information:

Sell as-is:

Selling price= $79,500

Continue processing:

Selling price= $460

Unitary incremental cost= $280

Units= 1,325

<u>The firsts $74,000 is a sunk cost, this means that the cost will remain the same in both options. It is irrelevant to the decision-making process.</u>

Sell as-is:

Effect on income= $79,500

Continue processing:

Effect on income= 1,325*(460-280)= $238,500

It is more profitable to continue processing and sell the units for $460.

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<span>The difference may lie in the project life, sometimes referenced as the planning horizon. A project may have a large internal rate of return (irr), but a very short project life. A second project might have a lower irr, but a much longer life. In that case, the second project will return less per year, but will provide a return for many more years, resulting in a higher pw.</span>
8 0
4 years ago
You are the account manager for an Internet service provider. A customer contacts you and complains that her recent billing stat
Darya [45]

Answer: a. Anticipate the effect your message will have on the receiver.

b. Analyze the bad-news situation

Explanation:

In the Phase 1 of the writing process, it is required that one should analyze the bad-news situation, and then anticipate the effect that such news will on have on the receiver. After this has been one, the message will then be adapted accordingly.

In a scenario whereby it's anticipated that the reader will be upset about the news, then the message might be reshaped so that the reader won't be angry.

3 0
3 years ago
XYZ Corp owns a 3-year $10 million par floating rate bond. The coupons on the bond are 12-month LIBOR. XYZ would like to hedge a
malfutka [58]

Answer:

 2.45%

Explanation:

The computation of the fixed rate is shown below:

Years to maturity   Zero coupon  bond price  YTM      Forward rate

1                                 0.99                     1.01%  

2                                      0.97                             1.53%       2.06%

3                                      0.93                            2.45%     4.30%

The fixed rate should be equivalent to the YTM of the 3 year bond i.e. 2.45% the same is to be considered

3 0
4 years ago
Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on
kolbaska11 [484]

Answer:

The answer is

Dr: Notes Receivable $4,800

Dr: Interest Receivable $120

Cr: Sales $4,920

Explanation:

The yearly interest rate is 10%

So the interest rate for 90 days(assume 360 days make a year?

90/360 x 10%

2.5% is the interest rate for 90 days.

The interest payment for 90 days will be;

2.5% x $4,800

= $120

The entry will now be:

Dr: Notes Receivable $4,800

Dr: Interest Receivable $120

Cr: Sales $4,920

3 0
4 years ago
Suppose a large country experiences economic growth which results in a reduced willingness to trade. The country’s terms of trad
eimsori [14]

Answer:

The correct answer is letter "B": improve; rise.

Explanation:

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<em>Given the case that there is no willingness to trade in an economy after a growth, the most possible scenario to take place is that the trade terms will </em>improve <em>as a result of the decrease in the demand of imports and assuming the level of exports keeps at the constant level that allowed the economic growth or if it even </em>rises<em>.</em>

4 0
4 years ago
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