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ivolga24 [154]
3 years ago
14

Socks unlimited produces sport socks. the company has fixed expenses of $ 85 comma 000 and variable expenses of $ 1.20 per packa

ge. each package sells for $ 2.00. the number of packages socks unlimited needed to sell to earn an $ 22 comma 000 operating income was 133 comma 750 packages. if socks unlimited can decrease its variable costs to $ 1.00 per package by increasing its fixed costs to $ 100 comma 000​, how many packages will it have to sell to generate $ 22 comma 000 of operating​ income? is this more or less than​ before? why? begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. ( + ) / = sales in units
Business
1 answer:
aivan3 [116]3 years ago
6 0

Answer:

Contribution margin per unit = Sales price per unit – Variable cost per unit

$2 - $1.20=$0.80

The contribution margin per package is $ 0.80.

Breakeven sales in units = Fixed expenses + Operating income ) / Contribution margin per unit $85,000 + $22,000/0.80 = 133,750 packages

Contribution margin per package = $2 - $1.00 = $1.00

Breakeven sales in units = Fixed expenses + Operating income ) / Contribution margin per unit

$100,000 + $22,000/$1= 122,000 packages

The firm will have to sell 122,000 packages to generate $22,000 of operating income. Socks unlimited would have to sell 11,750 less packages of socks to earn $22,000 of operating income. The increase in fixed costs was completely offset by the decrease in variable costs at the prior target profit volume of sales. Therefore, the firm will need to sell less units in order to achieve its target profit level.

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Answer:

Based solely on a difference of values between the counselor and the client.

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MBO works by objectives moving through the organization; that is, top managers set general organizational objectives, which are
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Answer:

D. cascade down

Explanation:

Based on the information provided within the question it seems that this is an example of MBO working as objectives cascade down through the organization. This can be said since the organizational goals/objectives start at the top of the organization (executives and managers) and move down through the organizational hierarchy to the lower level employees. Thus cascading down.

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6 0
3 years ago
Two investment opportunities are as follows:________. Alt A Alt B First Cost 200 100 Uniform annual benefit 32 27 End of useful
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Answer:

Since the 4.34 NPV of Alt A is greater than the 2.35 NPV of Alt B, it therefore implies that Alt A should be selected.

Explanation:

Note: The data in the question are merged together. They are therefore sorted before answering the question as follows:

                                                          Alt A              Alt B

First Cost                                           200                 100

Uniform annual benefit                       32                   27

End of useful life salvage value         20                    0

Useful life, in years                              10                     5

The explanation to the answer is now given as follows:

a. Calculation of NPV of Alt A

First Cost = 200

PV of uniform annual benefit = P * ((1 - (1 / (1 + r))^n) / r) ……………………. (2)

Where;

P = uniform annual benefit = 32

r = MACC = 10%, or 0.10

n = number of useful years = 10

Note: The formula for calculating the present value of ordinary annuity is being used here to calculate the Present Value (PV) of uniform annual benefit.

Substitute the values into equation (1) to have:

PV of uniform annual benefit = 32 * ((1 - (1 / (1 + 0.10))^10) / 0.10) = 32 * 6.14456710570468 = 196.63

PV of Salvage value = FV / (1 + r)^n ..................... (2)

Where;

FV = End of useful life salvage value = 20

r = MACC = 10%, or 0.10

n = number of useful years = 10

Note: The normal formula for calculating the present value (PV) is being used here to calculate the PV of Salvage value

Substitute the values into equation (2) to have:

PV of Salvage value = 20 / (1 + 0.10)^10 = 20 / 2.5937424601 = 7.71

Net present value (NPV) of Alt .A = PV of uniform annual benefit + PV of Salvage value - First cost = 196.63 + 7.71 - 200 = 4.34

b. Calculation of NPV of Alt B

First Cost = 100

PV of uniform annual benefit = P * ((1 - (1 / (1 + r))^n) / r) ……………………. (3)

Where;

P = uniform annual benefit = 27

r = MACC = 10%, or 0.10

n = number of useful years = 5

Note: The formula for calculating the present value of ordinary annuity is also being used here to calculate the Present Value (PV) of uniform annual benefit.

Substitute the values into equation (3) to have:

PV of uniform annual benefit = 27 * ((1 - (1 / (1 + 0.10))^5) / 0.10) = 27 * 3.79078676940845 = 102.35

NPV of Alt B = PV of uniform annual benefit - First cost = 102.35 – 100 = 2.35

c. Decision

Since the 4.34 NPV of Alt A is greater than the 2.35 NPV of Alt B, it therefore implies that Alt A should be selected.

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