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Vlad1618 [11]
3 years ago
15

Willa and Westley are siblings who built a hair salon business from the ground up. They are now contemplating opening an additio

nal salon location. The estimate to open an additional salon would mean adding $1 milion in expenses with their profit increasing by $400,000 each year for the next 5 years (all other things equal), Willa and Westley decide
A. to open a second salon because the marginal cost of the new salon is low compared to other simlar projects

B. to not open a new salon because the marginal costs prove to be too high

C. to take on the new salon because the expected marginal benetit ($2 mlton over 5 years)
Business
1 answer:
lorasvet [3.4K]3 years ago
8 0

The correct option is C

<u>Explanation:</u>

The annual profit increase = $400,000

<u>The following formula is to be used in order to calculate the total profit enhancement in five years </u>

The total profit increase in 5 years = 400000 multiply with 5 = $2,000,000 = $2 million , As compared to cost of $1 million.

Thus, The correct option is answer (C) To take on the new salon because the expected marginal benefit ($2 million over 5-years) is greater than the estimated marginal cost ($1 million).

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Land is purchased for​ $300,000. Back taxes paid by the purchaser were​ $8,500; total costs to demolish an existing building wer
koban [17]

The land was purchased for $300,000.00; however, after back taxes the total was $308,500.00.

The cost of demolishing an existing building, clearing the land and paving the parking lot had a grand total of $42,100.00.

<u>Answer:</u> The cost of land is​ $308,500 and the cost of land improvements is​ $42,100.

8 0
3 years ago
Bonita Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis. Item N
riadik2000 [5.3K]

Answer:

Explanation:

Amount of Bolton Company inventory = 38,972

Calculations are attached

1. Find net realizable value, which is selling price - cost of disposal;

2. Then subtract normal profit from net realizable value = [g];

3. Find designated market value by choosing the middle value of cost to replace, net realizable value and [g];

4. Choose lowest between designated market value and selling price;

5. Multiply by quantity.

7 0
3 years ago
Tim Urban, owner/manager of Urban's Motor Court in Key West, is considering outsourcing the daily room cleanup for his motel to
nlexa [21]

Answer:

Based on the given information related to costs for each of the options, the crossover point for Tim = <u>6,000</u> room nights (round your response to the nearest whole number). If the number of room nights is less than the crossover point, then <u>OUTSOURCING (Duffy's Maid Service)</u> is the best option available to Tim. Based on the given room nights that Tim expects to rent (18, 250), the best option is to keep doing the service <u>INSOURCING (doing it himself)</u>.

Explanation:

Currently, before outsourcing, Tim's total cost = $228,125 + $61,000 = $289,125. On average, he spends $15.84247 per room.

The Duffy's Maid Service offer would represent a total cost of $337,625 + $25,000 = $362,625 for the same occupation level.

the crossover point for Tim:

12.5x + 61,000 = 18.5x + 25,000

36,000 = 6x

x = 6,000 room nights

(6,000 x 12.50) + 61,000 = (6,000 x 18.50) + 25,000 = $136,000

7 0
3 years ago
First​ Class, Inc., expects to sell 22,000 pool cues for $12.00 each. Direct materials costs are $4.00​, direct manufacturing la
MatroZZZ [7]

Answer:

budgeted costs for direct​ materials

  • $88,000

budgeted direct manufacturing​ labor

  • $132,000

budgeted manufacturing​ overhead

  • $18,480

Explanation:

Direct materials costs are $4.00 per pool cue.

Direct manufacturing labor is $6.00​ per pool cue.

Manufacturing overhead is $0.84 per pool cue.

total budgeted direct materials = 22,000 x $4 = $88,000

total budgeted direct labor = 22,000 x $6 = $132,000

total budgeted manufacturing overhead = 22,000 x $0.84 = $18,480

The information about the beginning and ending inventories is not relevant to this question since it only deals with budgeted or estimated costs which may or may not differ from actual costs.

3 0
3 years ago
The valuation calculating the present value of a future cash flow to determine its value today is called __________ valuation.
nydimaria [60]

Answer:

Discounted cash flow(DCF).

Explanation:

This is explained to be an investment analysis model which is seen to calculate the value of investment on the basis of its future value. Thus evaluation model is seen to be discounted back to a present value in which time value of money is been used as a factor and is been put into consideration. It is also explained that investment’s worth is equal to the present value of all projected future cash flows. Cases directs us to see that boards are seen to subtract the amount spent on the investment from the present value of future cash flows to calculate the net present value of the investment. Therefore, they can easily sum how much the investment will make in today’s dollars and compare it with the cost of the investment.

3 0
3 years ago
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