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sattari [20]
3 years ago
8

Harlan Bikes wants to close an unprofitable division with an expensive mortgage, high advertising costs, and high raw material c

osts. Harlan estimates annual savings of $450,000 if it closes the division versus an annual loss of $235,000 if it keeps it. How do the quantitative factors involved in this decision differ from the qualitative factors?
Business
1 answer:
Rudiy273 years ago
7 0

Answer:

Quantitatively, Harlan Bikes is justified in deciding to close the department, but there are other qualitative factors that need to be considered which may result in the company loosing much more that they can save if the department is closed, such as for example a decrease in employee morale, a negative signalling effect to other stakeholders, a drop in sales in related products etc.

Explanation:

A decrease in employee morale can result especially if workers  in other departments are no-longer sure about their future in the company, resulting from fears of their departments being closed. This can negatively affect productivity resulting in lower profits in other department.

A negative signalling effect means that other stakeholders such as investors and creditors may start questioning managements ability to profitably run the business, and the company will be perceived as more risky. Cost of debt and cost of equity capital for example, may go up, due to this higher perceived risk, and  which may reduce the number of positive net present value projects that the company can undertake due to an increase in cost of capital.

If the company carries related products in other departments, it may also see a drop in sales in those sales, which will effectively reduced the savings that are estimated  to be gained from closing the division.

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Select best example below illustrative of transaction costs.a. All of the above b. The costs of various dinners during which a c
vaieri [72.5K]

Answer:

The correct option is A

Explanation:

Transaction costs are the whole array of costs associated with selling, buying, transferring goods etc.

Transaction costs can be of different types which are:

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4 0
2 years ago
3. Suppose that all households hold all their wealth in assets that automatically rise in value when the aggregate price level r
alexira [117]

Answer:

What happens to the wealth effect of a change in the aggregate price level as a result of this allocation of assets?

  • The consumers' wealth effect will rise since the slope of the aggregate demand curve increases as the prices of assets increases, i.e. the slope of the aggregate demand curve becomes steeper as customers become wealthier.

Will aggregate demand still be downward sloping? Why or why not?

  • The aggregate demand curve sill still be downward sloping because as the price of a good or service increases, the quantity demanded will still decrease. An inverse relationship exists between price changes and quantity demanded.
8 0
3 years ago
Suppose that the bankruptcy law firm had previously loaned $20,000 to Henry Anderson. The law firm filed a financing statement s
pantera1 [17]

Answer: This loan would would have priority over the other unsecured claims in this bankruptcy case.

Explanation:

Since the trucks are secured collateral the loan is a secure loan. It will be the priority in the bankruptcy case since the other claims were unsecured. The law firm would have a right to the trucks since he owed them 20,000$ and put them up as collateral.

Everything that was an unsecured loan does not have anything to take from and will be a loss for the other companies who filed against Henry Anderson.

8 0
3 years ago
What is the answer I chose the one I thought was the answer
asambeis [7]

Answer: I think that ones the answer too

4 0
2 years ago
Read 2 more answers
Charles, the president of an IT company, is friends with Levi, the CEO of Cyber Industries, a company that develops and manufact
Akimi4 [234]

Answer: Option A

 

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In the given case, Levi deceited Charles by making him believe of a strategy that may or may not exist in his organisation. Thus, he will pay charles from the money that he will gain from the market after the announcement of the new processor.

Hence from the above we can conclude that the correct option is A.

7 0
3 years ago
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