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Furkat [3]
3 years ago
8

Burns Industries currently manufactures and sells 23,000 power saws per month, although it has the capacity to produce 38,000 un

its per month. At the 23,000-unit-per-month level of production, the per-unit cost is $71, consisting of $43 in variable costs and $28 in fixed costs. Burns sells its saws to retail stores for $83 each. Allen Distributors has offered to purchase 5,300 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs.
14.

Required information

Assume that Allen Distributors offers to purchase the additional 5,300 saws at a price of $50 per unit. If Burns accepts this price, Burns' monthly gross profit on sales of power saws will:

Increase by $265,000.

Decrease by $174,900.

Increase by $37,100.

Decrease by $111,300.

15.

Required information

Using an incremental analysis approach, Burns should consider accepting this special order only if the price per unit offered by Allen is at least:

$28.

$71.

$83.

$43.

16.

Required information

Burns decides to accept the special order for 5,300 units from Allen at a unit sales price that will add $106,000 per month to its operating income. The unit price Burns charging Allen is:

$43.

$63.

$71.

$83.
Business
1 answer:
Dmitrij [34]3 years ago
6 0

Answer:

Increase by $37,100.

It will accept any time the price is above $43 with the condition it will not incur in additional fixed cost.

$63. is the sales price that generates 106,000 dollar of operating income

Explanation:

As the units will not inccur in any additional fixed cost we should check for the contribution margin this units will provide:

50 dollars - 43 dollar of variable cost = 7 dollars

5,300 saws x $7 = 37,100

The sales reveues will increase by that amount.

(5,300 x $43 dollars each in cost + 106,000 contribution )/5,300 = sales price

sales price = 63

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Answer:

C. Fall, 30%, Rise

Explanation:

  • Price Elasticity of Demand is responsive change in demand, due to change in price.

P.Ed = % change in demand / % change in price.

Given : Price rise by 50% , P.Ed = 0.6

So, % change in demand = P.ed x % change in price

% change in demand = 0.6 (50)

% change in demand = 30%

Law of demand states negative relationship between price & demand, so P.ed is negative. Price rise 50% reduces demand by 30%.

  • P.Ed can be : Elastic ( > 1 ), or Inelastic ( < 1 ).  If P.Ed is Elastic, price & total revenue are inversely related. If P.Ed is Inelastic, price & total revenue are directly related.

So, Given PEd = 0.6 (i.e < 1 ) : Inelastic Demand implies price & total revenue are directly related related to each other. So, price fall lead to TR fall & price rise lead to TR rise.

6 0
3 years ago
Wildhorse Co. entered into these transactions during May 2017, its first month of operations. 1. Stockholders invested $31,500 i
ANEK [815]

Answer:

Kindly refer to the attached file for the tabular solution

Explanation:

Every transaction flows through the balance sheet and most times the stockholders equity.

This table carefully highlights the impact of each entry to the stockholders equity

?

5 0
3 years ago
Should I still Go?
german
If the date of the appointment has been rescheduled, it's only logical not to show up on the day it was moved. Go to the appointment next week.
7 0
3 years ago
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Presweetened breakfast cereals would most likely be in the __________ stage of the product life cycle.
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A pre-sweetened breakfast cereal would most likely be in the DECLINE stage of the product life cycle.
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3 years ago
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A U.S. firm holds an asset in Great Britain and faces the following scenario:
Lady_Fox [76]

Answer:

C) Sell £2,278.13 forward at the 1-year forward rate, F1($/£), that prevails at time zero.

Explanation:

given data

                     State 1           State 2               State 3

Probability      25%            50%                      25%

Spot rate      $ 2.50 /£    $ 2.00 /£            $ 1.60 /£

P*                   £ 1,800       £ 2,250             £ 2,812.50

P                     $4,500          $4,500               $4,500

solution

company holds portfolio in pound. so to get hedge, they will sell that of the same amount.

we get here average value of the portfolio that is

The average value of the portfolio = £ (0.25*1800 + 0.5*2250 + 0.25*2812.5)

The average value of the portfolio = 2278.13

so correct option is C) Sell £2,278.13 forward at the 1-year forward rate, F1($/£), that prevails at time zero.

3 0
3 years ago
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