Copa Cabana Corporation is considering the purchase of a new machine costing $30,000. The machine would generate net cash inflow
1 answer:
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Answer:
b. In the first economy, the spending multiplier is greater than in the second economy. In the third economy, the spending multiplier is undefined
Explanation:
This can be easily understood by going through some calculations in a spending multiplier formula.
WORKINGS
The formula for Spending Multiplier =
Spending Multiplier
Economy 1: Multiplier = = 2
Economy 2: Multiplier = = 1
Economy 3: Multiplier = = undefined
Note: MPS can be abbreviated as Marginal propensity to save
As we can see here economy 1 is 50% greater than economy 2 and economy 3 is undefined because they spend whole dollar they earn additionally.
On behalf of the above calculations, option B is a perfect match!
Answer:
A.$75,000
B.$60,000
C.$30,000
D.33%
E.$15,000
F.$3,500
G.$18,000
H.$34,500
I.31%
J.$18,000
K.$116,300
L.$90,300
M.31%
Explanation:
Payleast Shoes Company
2020
1.Net sales = $90,000
2.
Beginning Inventory = $12,000
Add Purchase (Gross) = $70,000
Less Returns/Allowance = $6,000
Less Purchase discounts = $4,000
Add Freight-in = $3,000
Cost of goods available for sale = $75,000
Less End inventory = $15,000
Cost of Sales = $60,000
3. Gross profit = $30,000
4. Gross Profit % = 33%
2021
1.Net sales = $110,000
2.
Beginning Inventory = $15,000
Add Purchase (Gross) = $82,500
Less Returns/Allowance = $5,000
Less Purchase discounts = $2,500
Add Freight-in = $3,500
Cost of goods available for sale = $93,500
Less End inventory = $18,000
Cost of Sales = $75,500
3. Gross profit = $34,500
4. Gross Profit % = 31%
2022
1.Net sales = $130,000
2.
Beginning Inventory = $18,000
Add Purchase (Gross) = $99,000
Less Returns/Allowance = $8,800
Less Purchase discounts = $1,900
Add Freight-in = $10,000
Cost of goods available for sale = $116,300
Less End inventory = $26,000
Cost of Sales = $90,300
3. Gross profit = $39,700
4. Gross Profit % = 31%
