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Arlecino [84]
3 years ago
14

It costs Sheffield Corp. $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A for

eign wholesaler offers to purchase 2000 scales at $15 each. Sheffield would incur special shipping costs of $1 per scale if the order were accepted. Sheffield has sufficient unused capacity to produce the 2000 scales. If the special order is accepted, what will be the effect on net income?
Business
1 answer:
Natasha2012 [34]3 years ago
4 0

Answer:

the effect on pre-tax net income will be an increase for 4,000.

Explanation:

This is a case for Relevant cost:

The company has sufficient capacity to produce this scales, without increasing the fixed cost.

we need to check if the offer covers the variable cost and the additional shipping cost.

15$ sales price - $12 variable cost - $1 shipping cost = $2 contribution margin

2000scales *2 CM = 4,000 effect on net income

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Which of the following is not a correct way of calculating a liquidity ratio?
aleksley [76]

Option C -Operating Cash Flow = Current Liabilities / Operating Cash Flow s not a correct way of calculating a liquidity ratio.

Liquidity ratios are a measure of a company's ability to settle its short-term payments. A company has the ability to quickly exchange its revenues and is using them to pay his obligations is dictated by its liquidity ratios. The potential to pay back debts and keep engaged on installments is simpler the better the ratio. Since this can vary by industry, and current ratio of 1.0 usually signals that a group's debt do not exceeding its liquid assets. In enterprises in which there is a quicker product changeover and/or shorter payment cycles, ratings below 1.0 may be acceptable.

Absolute liquidity ratio =(Cash + Marketable Securities)÷ Current Liability.

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3 0
1 year ago
Define incentive. Provide an example of a financial and a non financial incentive....
Montano1993 [528]

An incentive is a thing that motivates or encourages one to do something.

Financial incentives can include things like bonuses, raises, paid time off, and other things that involve money.

Non-Financial incentives include things like recognition, respect, career development opportunities, retirement planning assistance, improved work environment, etc.

7 0
3 years ago
Read 2 more answers
John and Sally Claussen are considering the purchase of a hardware store from John Duggan. The Claussens anticipate that the sto
Marina CMI [18]

Answer:

Explanation:

Calculate maximum that should pay:

Compute present value of cash flows from the store, year 1 to 5 :

Annual cash flows are $70,000

Desired rate of return on investment for 1 to 5 years is 7%

Number of years is 5

Present value of cash flows generated during 1 to 5 years =

= $287,013.82

Compute present value of cash flows from the store for years 6 to 10

Annual cash flows are $70,000

Desired rate of return on investment for 6 to 10 years is 10%

Desired rate of return on investment for 1 to 5 years is 7%

Number of years is 5

Present value of cash flows generated during 6 to 10 years = annual cash flows x PVIFA (10%,5) x PVIF (7%,5)

= $70,000 x 3.79079 x 0.7130 = $189,198.33

Compute present value of cash flows from the store for years 11 o 20

Annual cash flows are $70,000

Desired rate of return on investment for 11 to 20 years is 12%

Desired rate of return on investment for 6 to 10 years is 10%

Desired rate of return on investment for 1 to 5 years is 7%

Number of years is 10

Present value of cash flows generated during 11 to 20 years = [annual cash flows x PVIFA (12%,10)] x PVIF (10%,5) x PVIF (7%,5)

= $70,000 x 5.65022 x 0.62092 x 0.7130  = $175,100.98

Calculate present value of estimated sale amount to be received for sale of store

Present value of estimted sale amount to be received = [Estimated sale amount x PVIF (12%,10)] x PVIF (10%,5) x PVIF (7%,5)

=$400,000 x 0.32197 x 0.62092 x 0.7130=

=$57,016.50

Calculate total maximum amount that should be paid

Particulars Amount ($)

Present value of cash flows during 1 to 5 years         $287,013.82

Present value of cash flows during 6 to 10 years $189,198.33

Present value of cash flows during 11 to 20 years $175,100.98

Present value of estimated sale value                  $57,016.50

Maximum amount that C should pay to JD for store $708,329.63

Therefore, Maximum amount that should be paid $708,329.63

4 0
3 years ago
Why there is limited foreign investment in Ethiopia?​
matrenka [14]

Answer:

mainly because of the countries negative trade balance, but also because it is strictly regulated by the central bank which is the National bank of Ethiopia.

5 0
1 year ago
lisette’s laptop needs a unique battery, and a local computer parts company is the only place that sells it. given the demand fu
Allushta [10]

Answer:

-5000

Explanation:

3 0
2 years ago
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