The fact that the machine building company identifies all potential buyers of wood lathes in the area and estimates the number of lathes each one might buy means that the company is using the market-build up to estimate market potential. This market-build up method produces accurate results if <span>the company has a list of all potential buyers and a good estimate of what each will buy.</span>
Answer:
b. Purple Hedgehog Forestry's annual dividend will be greater if it goes forward with this decision.
Explanation:
In any company, interests on debts must be paid before dividend is paid. This implies that the higher the amount of debt, the will be the interest on debt to pay; and the lower will be the amount that will be left to pay dividend assuming that all other factors are held constant. Also, the lower the amount of debt, the lower will be the interest on debt to pay; and the greater will be the amount that will be left to pay dividend assuming that all other factors are held constant.
Based on the above explanation, Purple Hedgehog Forestry's annual dividend will be greater if it goes forward with this decision.
Answer:
Effect on income= $73,600 increase
Explanation:
Giving the following information:
Contribution margin $ 112
Increase in variable cost= $8 per unit.
Decrease in fixed costs= $100,000 per month.
Increase in sales unit= 500 units
<u>To calculate the effect on income, we need to use the following formula:</u>
Effect on income= effect on total contribution margin + decrease in fixed costs
Effect on income= 500*104 - 9,800*8 + 100,000
Effect on income= $73,600 increase