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Andrews [41]
3 years ago
11

Jilk Inc.'s contribution margin ratio is 63% and its fixed monthly expenses are $44,000. Assuming that the fixed monthly expense

s do not change, what is the best estimate of the company's net operating income in a month when sales are $130,000?
Business
1 answer:
mart [117]3 years ago
6 0

Answer:

$37,900

Explanation:

The Net/operating income is the difference between the total sales and total costs, Total cost is made up of the fixed and variable cost.

Like the total sales, the total variable cost is also affected by the level of activities or units produced/sold.

Mathematically,

Net income = Total sales - variable cost - fixed cost

Contribution margin is the difference between the sales and variable cost. This margin divided by sales gives the contribution margin ratio. Also, Contribution margin less fixed cost gives the operating income.

63% = Contribution margin/$130,000

Contribution margin = .63 * $130,000

= $81,900

Estimated net operating income = $81,900 - $44,000

= $37,900

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True or false: A flexible budget reporting sales volumes at three different levels will have the same fixed costs.
lapo4ka [179]

Answer:

True

Explanation:

A flexible budget is a budget in which you modify the activity levels to reflect changes in sales to help the company adjusts to different circumstances that may occcur. Also, in this budget the fixed costs remain constant and the variable costs change with the activity levels. According to this, the answer is that the statement that says that a flexible budget reporting sales volumes at three different levels will have the same fixed costs is true.

5 0
3 years ago
What’s the term for a condition that must be met before closing? Contingency Exclusion Line item Option
Rashid [163]

Answer:

Contingency

Explanation:

A contingency clause is a condition stipulated in a purchase agreement that must be met before the closing date. Contingencies are normally included in the purchase of properties such as homes and land.  A contingency or condition usually relates to issues to do with financing, insurance, appraisal, or financing.  A contingency becomes part of the sales contract should the buyer, and the seller agree on the other terms.

6 0
3 years ago
The automobile industry was uniquely suited to the mass production of
insens350 [35]

Answer:

Military equipment.

Explanation:

American industry during wars required enough of industrial power to outstand other countries. To do this, the automobile industry was specifically equipped with raw materials to manufacture war vehicles such as tanks, jeeps, and trucks. Thus, this industry was uniquely suited to the mass production of 'Military Equipment'.

6 0
4 years ago
The TrunkLine Company will earn $60 in one year if it does well. The debtholders are promised payments of $35 in one year if the
Yuliya22 [10]

Answer:

The answer is a. $25.00

Explanation:

The bondholder's cash flow in one-year time from holding a TrunkLine's bond is calculated as:

(The possibility of TrunkLine doing well x Repayment receipt in case TrunkLine doing well) + (The possibility of TrunkLine doing poorly x Repayment receipt in case TrunkLine doing poorly) = (0.5 x 35) + (0.5 x 20) = $27.50.

The current price bondholders are willing to pay for a bond is equal to the present value of a bond's cash flow in one-year time, discounted at the interest rate on the bond 10% which is calculated as below:

27.50 / (1+10%)^1 = $25

Thus, the correct choice is a. $25.00

6 0
3 years ago
A firm produces output using capital and labor. The​ firm's marginal product of labor ​(MP Subscript Upper L​) is 40 and its mar
Anika [276]

Answer:

a. No, the firm is not minimizing the cost of production.

b. The firm should continue to increase the units of labor by reducing the unit of capital until when the ratio of Marginal product of labor to Marginal product of capital of is equal to the ratio of w to r.

Explanation:

a. Is the firm minimizing the cost of​ production?

The firm minimizing the cost of​ production where:

Marginal product of labor / Marginal product of capital = w / r

From the question, we have:

40 / 28 = 6 / 3

1.43 = 2

Since the ratio of Marginal product of labor to Marginal product of capital of 1.43 is not equal to the ratio of w to r, the firm is not minimizing the cost of production.

b. What should the firm​ do, if​ anything, to produce the same level of output at lower​ cost?

The firm should continue to increase the units of labor by reducing the unit of capital until when the ratio of Marginal product of labor to Marginal product of capital of is equal to the ratio of w to r.

The closest point at which this will happen is when the Marginal product of labor is 45 and Marginal product of capital is 23 where we have:

45 / 23 = 1.96, or 2 approximately.

6 0
3 years ago
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