Answer:
The correct answer is B.
Explanation:
Giving the following information:
Unit sales 50,000
Units Dollar sales $ 500,000
Fixed costs $ 204,000
Variable costs $ 187,500
First, we need to calculate the unitary selling price and variable cost:
Unitary Selling price= 500,000/50,000= $10
Unitary variable cost= 187,500/50,000= $3.75
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 204,000/ [(10 - 3.75)/10]= $326,400
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Answer:
a. demand for existing shares of the stock and the price will both fall.
Explanation:
The stock price is formed by the interaction of supply and demand of companies's shares and when a news like this is released is expected that the future cashflows of that company will drop. Being share buyers rational actors, the demand for the company's shares will drop, therefore the price of the company will drop as well.
Answer:
The operating income will increase by $13,000.
Explanation:
Giving the following information:
Sales revenue
Total= $490,000
Luxury= $360,000
Sporty= $130,000
Variable expenses:
Total= $355,000
Luxury= $235,000
Sporty= $120,000
Contribution margin
Total= $135,000
Luxury= $125,000
Sporty= $10,000
Fixed expenses:
Total= $78,000
Luxury= $39,000
Sporty= $39,000
Operating income (loss):
Total= $57,000
Luxury= $86,000
Sporty= $(29,000)
New Income Statement:
Sales= 360,000
Variable costs= 235,000 (-)
Contribution margin= 125,000
Fixed costs= 39,000 + 16,000= 55,000
Operating income= 70,000
The operating income will increase by $13,000.
