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Sunny_sXe [5.5K]
3 years ago
12

Marvel Company estimates that the following costs and activity would be associated with the manufacture and sale of product Y: N

umber of units sold annually 23,000 Required investment $430,000 Unit product cost $22 Selling and administrative expenses $109,060 If the company uses the absorption costing approach to cost-plus pricing described in the text and desires a 17% rate of return on investment (ROI), the required markup on absorption cost for product Y would be closest to:
Business
1 answer:
Temka [501]3 years ago
8 0

Answer:

36%

Explanation:

The required markup on absorption cost shall be calculated using the following formula:

Markup on absorption cost=[( ROI*amount Invested) + total selling and admin expenditure]/(product cost per unit* number of units sold)

In the given question:

ROI=17%

Amount Invested=$430,000

Total selling and admin expenditure=$109,060

Product cost per unit=Unit product cost $22

Number of units sold=23,000

Markup on absorption cost=[( 17%*430,000) + 109,060]/(22* 23,000)

                                             = 36%

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Answer:

The second project should be chosen. Because the present value of the second project is greater than that of the first project.

Explanation:

The project that should be chosen can be determined by comparing the present value of both projects.

Present value is the cash flows from a project discounted at the discount rate.

Present value can be found using a financial calculator;

For project 1,

Cash flow each year from year one to six is  $52,000

Discount rate = 15%

Present value =$196,793.10

For project 2,

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Present value =$215,391.43

The second project would be chosen because its present value is greater than that of the first project.

I hope my answer helps you

6 0
3 years ago
True or false: A management contract is an arrangement in which one firm contracts with another to produce products to its speci
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The statement which states that a management contract is an arrangement in which one firm contracts with another to <em>produce products</em> to its specifications is false

According to the given question, we are asked to show whether a management contract is one where there is an arrangement between two firms to <em>produce its goods </em>to its specifications.

As a result of this, we can see that a management contract is one where one firm gives its management skills <em>in part or in full</em> to another firm.

With this in mind, we can see that contract manufacturing is one where there is an arrangement in which one firm contracts with another to <em>produce products</em> to its specifications but is in charge of the marketing.

Therefore, the correct answer is false.

Read more here:

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3 0
3 years ago
Under NASAA's Statement of Policy on Dishonest or Unethical Business Practices of Broker/Dealers and Agents, which of the follow
AlladinOne [14]

Answer:

Under NASAA's Statement of Policy on Dishonest or Unethical Business Practices of Broker/Dealers and Agents, which of the following is NOT considered when determining excessive trading in a client's account:

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  • NASAA stands for The North American Securities Administrators Association that ensure the safety of the investor.
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kkurt [141]

Answer:

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Explanation:

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What is revenue enhancement?

The objective of any successful revenue enhancement strategy is to build and improve on current payment levels and then recover arrear debt. As indicated, this document seeks to identify causes for non-payment and to develop a strategy to address those challenges.

Learn more about Cost reduction and revenue enhancement here:

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