What must happen to the market price in order for a shortage to be eliminated?

Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a

LUCKY_DIMON [66]

Answer:

A. 37,500 balls

B.2.67

Explanation:

A. Compution for the CM ratio and the break-even point in balls.

First step is to calculate the Contribution margin

Selling price $25 100%

Variable expenses $15 60%

Contribution margin $10 40%

($25-$15)

Now let calculate the CM ratio and the break-even point in balls using this formula

Unit sales to break even=Fixed expenses/Unit contribution margin

Let plug in the formula

Unit sales to break even=$375,000/$10

Unit sales to break even= 37,500 balls

Therefore the CM ratio and the break-even point in balls will be 37,500 balls

b. Computation for the degree of operating leverage at last year

Using this formula

Degree of operating leverage =Contribution margin/Net operating income

Let plug in the formula

Degree of operating leverage=$600,000/$225,000=

Degree of operating leverage = 2.67 (rounded)

Therefore the degree of operating leverage at last year will be 2.67

5 0

3 years ago

A company has 360,000 shares authorized, 200,000 shares issued, and 100,000 shares outstanding. The balance in its Common Stock

Alona [7]

Answer:

$1 par value

Explanation:

The computation of the par value of the stock after the split is given below:

= $200,000 ÷ (100,000 × 2 )

= $200,000 ÷ 200,000

= $1 par value

Hence, the par value of its stock after the split is $1 par value

We simply divide the balance by the number of outsanding shares so that the par value could come

5 0

3 years ago

On January 1, 2016, Lester Company purchased 70% of Stork Corporation's $5 par common stock for $600,000. The book value of Stor

Soloha48 [4]

Answer:D. $0

Explanation:

Goodwill is the excess of the purchasing price of a company value of indentifiable net assets.. The purchasing price in this example is less than the value of the.

3 0

3 years ago

The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders

Arada [10]

Answer: Has competitively valuable value chain match-ups with the company's present businesses such that its businesses can perform better together than apart.

Explanation:

The better-off test of diversification is that the company must gain a return that is higher than incremental growth. Incremental growth is usually defined a 1 + 1 = 2 formula and this test argues that Diversification must provide more than this such that the company achieves synergistic growth ( 1 + 1 = 3) which is what happens when different entities work better together than alone.

Diversification should therefore be into an area that will be able to match-up with the company's present businesses such that its businesses can perform better together than apart and produce even greater returns.

5 0

3 years ago

The following production data were taken from the records of the Finishing Department for July:Inventory in process, June 1, 30%

zepelin [54]

Answer:

Conversion Cost Equivalent units FIFO 39, 125

Explanation:

Beginning WIP 5,000 30% completed

transferred units 39,500

ending WIP 4,500 25% completed

<u>The equivalent units will be:</u>

the transferred units

- complete portion for the beginning WIP

+ complete portion of the ending WIP

transferred out 39,500

work in previous period

5,000 x 30% = (1,500)

worked but not complete

4,500 x 25% = <u> 1, 125 </u>

Equivalent units FIFO 39, 125

5 0

3 years ago