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Anna [14]
3 years ago
12

Data concerning Pellegren Corporation's single product appear below: Fixed expenses are $531,000 per month. The company is curre

ntly selling 4,000 units per month. The marketing manager would like to cut the selling price by $14 and increase the advertising budget by $35,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 500 units. What should be the overall effect on the company's monthly net operating income of this change? Select one: a. decrease of $18,000 b. increase of $38,000 c. decrease of $38,000 d. increase of $58,000

Business
1 answer:
GrogVix [38]3 years ago
6 0

Answer:

a. decrease of $18,000

Explanation:

The calculation of overall effect on the company's monthly net operating income is shown below:-

<u>Particulars          Current                  Proposed </u>

Sales               $800,000                 $837,000

                     ($200 × 4,000) (200 - 14) × (4,000 + 500)

Variable

expenses          $160,000               $180,000

                     (40 × 4,000)              (40 × (4,000 + 500))

Contribution

margin              $640,000                $657,000

Fixed

expenses           $531,000                 $566,000

                                               ($531,000 + 350,00)

Net operating

income                  $109,000              $91,000

Decrease in net operating income is

= $109,000 - $91000

= $18,000

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Archy [21]

Answer:

B) Save her money.

Explanation:

The girl's utility of saving her money = √$15 = $3.87

If the girl starts her lemonade business, the expected utility of her investment = (50% x √$5) + (50% x √$27) = (50% x $2.236) + (50% x $5.196) = $1.118 + $2.598 = 3.72

Since the utility of saving her money ($3.87) is > than the utility obtained by the investment ($3.72), the girl should save her money.

7 0
3 years ago
Company Baldwin invested $50,460,000 in plant and equipment last year. The plant investment was funded with bonds at a face valu
Zielflug [23.3K]

Answer:

a. true

b. false

c. true

d. false

e. true

f. false

g. true

h. true

Explanation:

a. we solve for depreciation

$50,460,000/15

= $3364000

this is true

b. retained earnings have no roles to play in this option. false

c. The long term debt has been sen to chaange by

50460000-16741282

= $33718718

true

d. This is false retained earnings have no role to play here.

e. This is true because this is the amount that was used to purchase the plant

f. false since retained earning has nothing to do here.

g. this is true also. the face value of the bond is $33,718,718.

h. this is true. since palnt and equipment is $5046000

8 0
3 years ago
Which is an example of an external factor that may affect purchase decisions?
koban [17]
I’m pretty sure it’s d sorry if it’s wrong!
5 0
3 years ago
Place and convenience are connected by a core linkage. While GoPro was able to get the product into locations where customers co
Serggg [28]

Question Completion with Options:

a. ignore convenience stores in its distribution network.

b. deliver fewer cameras than were needed during a holiday season.

c. miss the customer connection by emphasizing place over convenience.

d. exert too much power in the distribution network.

Answer:

GoPro

production problems forced it to

b. deliver fewer cameras than were needed during a holiday season.

Explanation:

Shortages are avoided by producers as much as possible in order not to cause disequilibrium in the market.  Shortages are not the same as scarcity.  They are temporary setbacks when the quantity demanded outstrips the quantity supplied at the equilibrium market price.  The backlashes result in lost sales and revenue for suppliers.  Shortages may clear ways for competitors to enter the market to meet the unsatisfied demand.

5 0
3 years ago
A major airline sells an aggressively low priced ticket compared to a new low-fare airline, which is trying to enter the market.
ankoles [38]

Answer:

The correct option is is A, predatory pricing

Explanation:

Predatory pricing is an illegal approach to pricing where a firm fixes a very low price in order to send competitors out  of business.

This is very applicable to a firm that has economies of scale where its cost per unit reduces as more and more units are produced, making it possible to undercut competitors without feeling much impact in profitability.

This approach is against the anti-trust law as it paves for a monopoly market,where only one firm operating in the market determines the price which is not likely to be favorable to consumers

8 0
3 years ago
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