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jekas [21]
3 years ago
10

The world-famous discounter, Fernwood Booksellers, specializes in selling paperbacks for $7 each. The variable cost per book is

$5. At current annual sales of 200,000 books, the publisher is just breaking even. It is estimated that if the authors' royalties are reduced, the variable cost per book will drop by $1.
Assume authors' royalties are reduced and sales remain constant; how much more money can the publisher put into advertising (a fixed cost) and still break even?
Business
1 answer:
Ghella [55]3 years ago
4 0

Answer:

Advertising= $933,333

Explanation:

Giving the following information:

The world-famous discounter, Fernwood Booksellers, specializes in selling paperbacks for $7 each. The variable cost per book is $5. At current annual sales of 200,000 books, the publisher is just breaking even. It is estimated that if the authors' royalties are reduced, the variable cost per book will drop by $1.

First, we need to calculate the fixed costs:

Break-even point (units)= fixed costs/ contribution margin

200,000=  fixed costs/ (7 - 5)

200,000= fixed costs/ 2

fixed costs= $400,000

Now, we need to calculate the new break-even point in dollars and units:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 400,000 / (6/7)= $466,666.67

Break-even point (units)= fixed costs/ contribution margin

Break-even point (units)= 400,000/6= 66,667 books

Total cost= 400,000 + $66,667= $466,667

Current income= 200,000*7= $1,400,000

Advertising= 1,400,000 - 466,667= $933,333

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The Porch Cushion Company manufactures foam cushions. The number of cushions to be produced in the upcoming three months​ follow
Eddi Din [679]

Answer:

16,900

Explanation:

Ending Inventory = 30% x 12,000 = 3,600

Beginning Inventory = 30% x 19,000 =5,700

Thus;

19,000 + 3,600 – 5,700 = 16,900

Therefore the Porch Cushion Company need to purchase in​ August,900 pound of foam of Cushion.

5 0
3 years ago
A negative net present value means that the___________
Temka [501]

Answer:

D : project's rate of return is less than the required rate of return.

Explanation:

Net present value (NPV) is a projects evaluation technique that analyzes the present values of predicted future revenues and expenses. In other words, NPV is the current value of future inflows minus costs.  In calculating the NPV, future values are discounted with an appropriate discount rate to give the present value.

The NPV can be a positive, zero or negative. Projects with positive  NPV are preferred because they are considered profitable.  A negative NPV signals that the present value of the expected inflows is lower than the current value of the projected cost at the required discount rate. If the discount rate is maintained, the project is a loss-making venture.

The use of a very high discount rate may give any projects a negative NPV.

6 0
3 years ago
On November 10 of the current year, Flores Mills sold carpet to a customer for $8,000 with credit terms 2/10, n/30. How would Fl
Llana [10]

Answer:                                                                      

C.) Accounts receivable 7,840 Cash discounts 160 Sales 8,000

Explanation:

Assuming for now that credit customer will avail the cash discount, the following journal entry shall be made on November 10 by Flores mills in respect of credit sales made by it.

                                                                   Debit                 Credit

Accounts receivable                                  $7,840                          

Cash discount                                             $160

(8000*2%)

Sales                                                                                      $8,000                                                                        

Based on the above discussion, the answer shall C.) Accounts receivable 7,840 Cash discounts 160 Sales 8,000

6 0
3 years ago
December 31 2017 2016 Accounts receivable $43,060 $34,630 Inventory 30,370 39,870 Prepaid rent 16,820 15,120 Totals $90,250 $89,
morpeh [17]

Answer:

Net cash from operating activities is $57,220.

Explanation:

Using the indirect method, the Operating Activities section of the statement of cash flows can be prepared as follows:

Statement of Cash Flows

(Operating Activities Section Only)

<u>Details                                                                                          $         </u>

Net income                                                                            35,890

Adjustment to reconcile net income:

Depreciation expense                                                           18,040

(Increase) decrease in current assets:

Increase in accounts receivable ($34,630 - $43,060)        (8,430)

Decrease in inventory ($39,870 - $30,370)                          9,500

Increase in prepaid rent ($15,120 - $16,820)                        (1,700)

Increase (decrease) in current liabilities:

Increase in accounts payable ($25,610 - $19,430)                6,180

Decrease in income taxes payable ($5,970 - $10,500)      (4,530)

Increase in interest payable ($14,710 - $12,440)               <u>     2,270  </u>

Net cash from operating activities                                  <u>    57,220  </u>

5 0
2 years ago
When the sponsors of a charity golf tournament purchased commercial time on local television, the station's sales rep promised a
GaryK [48]

In other words, the gross impressions for the commercial would be 32,000. <span>Gross Impressions is sometimes confused with Gross Rating point which is the number of impressions rather than the number of audience. It is the total number of individual people or households represented by a given media schedule. </span>

 





4 0
3 years ago
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