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mihalych1998 [28]
3 years ago
7

Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that w

as popular in the 1930s. The retro-look cycle would be sold for $14,000 and at that price, Thad estimates 600 units would be sold each year. The variable cost to produce and sell the cycles would be $9,800 per unit. The annual fixed cost would be $1,890,000.
a. What is the break-even in unit sales?
Break-even in unit sales
b.
What is the margin of safety in dollars (Omit the "$" sign in your response.)


Margin of safety in dollars $
c. What is the degree of operating leverage? (Round your answer to 2 decimal places.)
Degree of operating leverage
Business
1 answer:
soldi70 [24.7K]3 years ago
3 0

Answer:

a. Break-even in units = 450 units

b. Margin of Safety in Dollars = 2,100,000

c. Degree of Operating Leverage = 4

Explanation:

a. Break-even in units = 1,890,000 / (14,000 - 9,800) = 450 units

b. Margin of Safety in Dollars = (600 - 450) * 14,000 = 2,100,000

   This calculates the amount by which Sales exceed the break-even level of sales.

  • Sales = 14000 * 600 = 8,400,000
  • Variable Costs = 9800 * 600 = 5,880,000
  • Fixed Costs = 1,890,000

c. Degree of Operating Leverage = (Sales - Variable cost) / (Sales - Variable Cost - Fixed Costs )

   Degree of Operating Leverage = (8400000 - 5880000) / (8400000 - 5880000 - 1890000) = 4

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An optimum that occurs as a corner solution A. cannot exhaust the budget constraint. B. includes only one good. C. cannot be an
bazaltina [42]

Answer:

B. includes only one good.

Explanation:

A corner solution is a microeconomics concept, which is used to illustrate the graphical representation of a situation where an individual wouldn't do some things at any cost or for any price.

Optimum is usually experienced on the consumer graph at the point where the indifference curve (IC) is just tangential to the consumer's budget constraint. Thus, the corner solution lies at the non-zero interior, which then means that none of the other goods is contained in the optimum.

Hence, an optimum that occurs as a corner solution includes only one good.

<em>For instance, Tracy saying she wouldn't buy a XYZ phone for any price, or Sarah saying she would visit a museum no matter how much it will cost her are some examples of corner solution. </em>

4 0
3 years ago
"Smythe Co. invested $200 in a call option for 100 shares of Gin Co. $.50 par common stock, when the market price was $10 per sh
Ann [662]

Answer:

$100

Explanation:

The inherent value of a share or option or any other asset which an investor expects to have. In options it refers to the difference between it's current and the strike price.

The intrinsic value of options is calculated using the following formula:  

Intrinsic value of option = Number of share options × ( Market price of the stock on the date of the grant - exercise price of the share option )

Intrinsic value of option = 100 × ( $10 - $9 )

Intrinsic value of option = 100 × $1

Intrinsic value of option = $100

So, the intrinsic value of the call option at the time of the initial investment was $100.

6 0
4 years ago
PRODUCT POSSIBILITIES QUESTION 20 point
Nina [5.8K]
The answer is all but D. 
the company cannot produce a combination of x,y when the plot is outside the line 
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3 years ago
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In reviewing his company's operations, a risk manager noticed that all of the company's finished goods were stored in a single w
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Answer:risk control

Explanation:Risk control is a step in the hazard management process. It involves finding a way to neutralize or reduce an identified risk.

Risk control begins with a risk assessment to identify the presence and severity of workplace hazards. Employers must then implement the most effective controls available.

In order of effectiveness (from most effective to least), risk control methods include:

Elimination: removing the risk entirely

Substitution: swapping an item or work process for a safer one (for instance, switching to an industrial cleaner that poses fewer respiratory risks)

Engineering controls: modifications to the environment or equipment that poses the risk (such as installing mirrors in warehouses or machine guards on circular saws)

Administrative controls: modifications to the workflow or work process (for example, rotating employees through several different work tasks to prevent repetitive stress injuries)

Personal protective equipment: safety gear worn by the workers, such as hard hats, safety glasses, and chemical-resistant gloves

6 0
3 years ago
Mcclelland's research suggests that the need for achievement is?
goldenfox [79]

It is the desire to attain an aim that pushes a person to work and even fight. People with high success needs strive to attain their goals by avoiding low-reward, low-risk scenarios and difficult-to-achieve, high-risk ones.

<h3>When was McClelland's theory of needs developed?</h3>
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  • This idea is still widely used in psychology and academics, but it is also beneficial to business leaders and managers.
  • The more you understand about the psychology of human motivation, the more prepared you will be to motivate your staff effectively.
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Learn more about McClelland's theory refer

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2 years ago
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