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DerKrebs [107]
3 years ago
10

The following data pertains to activity and maintenance costs for two recent years: Year 2 Year 1Activity Levels in units 12,000

8,000Maintenance Cost $15,000 $12,000Using the high-low method, the cost formula for maintenance would be:___________
Business
1 answer:
iragen [17]3 years ago
7 0

Answer:

Total cost= 0.75x + 6,000

Explanation:

Giving the following information:

Year 2:

Units= 12,000

Cost= $15,000

Year 1:

Units= 8,000

Cost= $12,000

To determine the cost formula, first, we need to calculate the unitary variable cost and fixed cost.

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (15,000 - 12,000) / (12,000 - 8,000)= $0.75 per unit

Fixed costs= Highest activity cost - (Variable cost per unit * HAU)

Fixed costs= 15,000 - (0.75*12,000)= $6,000

Fixed costs= LAC - (Variable cost per unit* LAU)

Fixed costs= 12,000 - (0.75*8,000)= $6,000

Now, the cost formula is:

Total cost= unitary variable cost + fixed cost

Total cost= 0.75x + 6,000

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How can you estimate the total sales volume you can expect in your location? You can forecast your sales by figuring out your market. Depending on your market you can estimate how mant people are likely to purchase your product and how often. By using market trends and product testing it allows for a forecast of total sales over time and can let a business know how much to produce so that they are meeting demand.

4 0
3 years ago
Mobray Corp. is experiencing rapid growth. Dividends are expected to grow at 24 percent per year during the next three years, 14
White raven [17]

Answer:

$1.25

Explanation:

dividend growth:

year               growth rate        dividends

1                          24%                  Div₁ = 1.24Div₀

2                         24%                  Div₂ = 1.24²Div₀ = 1.5376Div₀

3                         24%                  Div₃ = 1.24³Div₀ = 1.906624Div₀

4                          14%                  Div₄ = 1.906624Div₀ x 1.14 = 2.17355136Div₀

indefinite              8%                  Div₅ = 2.17355136Div₀ x 1.08 = 2.347435Div₀

required rate of return = 10%

current stock price = $86

stock price for terminal growth rate = Div₅ / (10% - 8%) = Div₅ / 2% = 117.3717734Div₀

current stock price = $86 = 1.24Div₀/1.1 + 1.5376Div₀/1.1² + 1.906624Div₀/1.1³ + 2.17355136Div₀/1.1⁴ + 117.3717734Div₀/1.1⁴ = 1.12727Div₀ + 1.27074Div₀ + 1.43247Div₀ + 1.48456Div₀ + 80.1665Div₀ = 85.48154Div₀

$86 = 85.48154Div₀

Div₀ = $86 / 85.48154 = $1.006065

Div₁ = 1.24 x $1.006065 = $1.2475 ≈ $1.25

8 0
3 years ago
To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For
Gnesinka [82]

Answer: See explanation

Explanation:

A bond’s (face value) is generally $1,000 and represents the amount borrowed from the bond’s first purchaser.

A bond issuer is said to be in (default) if it does not pay the interest or the principal in accordance with the terms of the indenture agreement or if it violates one or more of the issue’s restrictive covenants.

A bond contract feature that requires the issuer to retire a specified portion of the bond issue each year is called a (sinking fund provision).

A bond’s (call provision) gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions.

The face value is the dollar value of a security, or a stock's original cost. Default means when the bond issuer doesn't agree with the stated terms of the bond.

4 0
3 years ago
Grateful Eight Co. is expected to maintain a constant 4.6 percent growth rate in its dividends indefinitely. If the company has
ad-work [718]

Answer:

11%

Explanation:

To address this exercise, we need to recall the formula for dividend discounted model (DDM). The DDM is stated as below:

Stock intrinsic value = Next year dividend/(Required rate of return - Long term growth)

Rearrange a bit this formula, we have:

Next year dividend/Stock intrinsic value = Required rate of return - Long term growth, or

Dividend yield = Required rate of return - Long term growth

Putting all the number together, we have:

6.4% = Required rate of return - 4.6% or Required rate of return = 11%

7 0
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trapecia [35]

Answer:

Producer

Explanation:

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8 0
3 years ago
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