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kirill [66]
3 years ago
8

Wallyworld Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: Di

rect materials $12 Direct labor 36 Variable manufacturing overhead 18 Fixed manufacturing overhead 24 The company has the capacity to produce 90,000 units. The product regularly sells for $120. If a wholesaler offered to buy 4,500 units for $100 each, the effect of the special order on income would be a
Business
1 answer:
atroni [7]3 years ago
5 0

Answer:

Income increased by $315,000

Explanation:

Since there is spare capacity available, we assume there are no incremental fixed costs and as such we only analyze relevant variable costs that vary with the order to identify the possible income effect.

Profit per unit = Order Selling price - Direct + Variable costs

Profit = 100 - 12 - 18 = $70

Total profit from the order = 70*4500 = $315,000

We do not include fixed costs as these will have to be paid regardless of the order. These fixed overheads are probably already absorbed fully given the current production level of 84000 units.

Hope that helps.

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1 . Perpetuities Perpetuities are also called annuities with an extended or unlimited life. Based on your understanding of perpe
Dmitrij [34]

Answer:

(A) A perpetuity is a stream of regularly timed, equal cash flows that continues forever

(B) The value of a perpetuity is equal to the sum of the present value of its expected future cash flows

the bank offers 1.6%

in the alternative scenario it offers 1.067%

Explanation:

(A) A perpetuity is a stream of regularly timed, equal cash flows that continues forever

The perpetuity is an annuity in which time tends to infinity, to be qualified as an annuity the cash payment must be regular.

(B) The value of a perpetuity is equal to the sum of the present value of its expected future cash flows

As state above the perpetuinty is an annuity, the annuities return the present value of the expcted future cash flow.

Given the annuity formula

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

if times tends to infinity then the expression:

\lim_{n \to \infty} (1+r)^{-n} = 1

Nexti n the annuity formula we got:

C \times \frac{1-1 }{rate}= PV\\

So we end up with C / rate = PV

which s the perpetuity formula

800/50000 = 0.016       = 1.6%

800/75000 = 0.0106667 = 1.067%

7 0
3 years ago
You've lost a lawsuit that requires you to pay $1,500 per month for 120 months starting next month. How much would you have to i
Lady bird [3.3K]

Answer:

PV = $155,343

Explanation:

This question requires application of PV of annuity, according to which:

PV = p [1-(1+r)^-n/r]

P= Periodic Payment

r = rate of period

n = number of periods

r = 3%/12 = 0.25% (monthly), n = 120, P = $1500

PV = 1500 * [\frac{1 - (1 + 0.0025)^{-120}}{0.0025}]

PV = 1500 * 103.5618

PV = $155,343

6 0
2 years ago
How can business activity affect the government?
algol13
Businesses often engage in a variety of tactics to influence government policy. This includes lobbying, political contributions, and interest group politics.
8 0
2 years ago
Suppose Musashi and Rina are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix
natulia [17]

Answer:

a) Dominant strategy is for Rina to choose Right.

b) Musashi chooses left and Rina chooses right

Explanation:

As per the data given in the question,

a).

A winning strategy is the tactic a player selects regardless of the tactic other player selects.

When Rina selects left, Musashi selects right because  (7>4)

When Rina selects right, Musashi selects left because  (6>4)

When Musashi selects left, Rina selects right because (6>1)

When Musashi selects left, Rina selects right because  (7>6)

So only dominant strategy is for Rina to choose Right

b)

In a Nash equilibrium, the players decide their strategies taking in consideration other strategy.

Hence, Musashi chooses left and Rina chooses right, (payoff: 6,1)

4 0
3 years ago
Accounts receivable from sales transactions were $45,427 at the beginning of the year and $61,370 at the end of the year. Net in
ZanzabumX [31]

Answer:

The cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method would be $108,099

Explanation:

Cash Flow from Operating Activities adjusts the Net Income for the Year with (1) Non-Cash Items, (2) Items Appearing Elsewhere (3) Changes in Working Capital.

From the given data Net Cash flow from Operating Activities is Determined as follows:

<u>Cash flow from Operating Activities</u>

Net income                                                              $124,042

<em>Adjustment for Changes in Working Capital.</em>

Increase In Trade Receivables (61,370-45,427)    ($15,943)

Net Cash flow from Operating Activities              $108,099

6 0
3 years ago
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