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xz_007 [3.2K]
3 years ago
12

Honda Motor Company is considering offering a $ 1 comma 800 rebate on its​ minivan, lowering the​ vehicle's price from $ 29 comm

a 400 to $ 27 comma 600. The marketing group estimates that this rebate will increase sales over the next year from 39 comma 700 to 53 comma 200 vehicles. Suppose​ Honda's profit margin with the rebate is $ 5 comma 090 per vehicle. If the change in sales is the only consequence of this​ decision, what are its costs and​ benefits? Is it a good​ idea?​ Hint: View this question in terms of incremental profits.
Business
1 answer:
zvonat [6]3 years ago
5 0

Answer:

The cost of the rebate is that Honda will sell more vehicles and lose on each additional vehicle sold.

Explanation:

The cost-benefit analysis is a systematic approach that involves finding the marginal costs and marginal benefits associated with a particular decision, and then compare the benefits against the costs to determine whether the decision should be pursued.

To determine the costs and benefits in terms of incremental profits;

Benefit = Profit of $5,090 per vehicle × 13,500 (53200 - 39700) additional vehicles sold = $68,715,000  

The cost of the rebate is that Honda will make less on the vehicles it would have sold:

Cost = Loss of $1,800 per vehicle × 39,700 vehicles that would have sold without rebate = $71,460,000.

There, Benefit - Cost = $ (68,715,000 - 71,460,000) = - $2,745,000 and offering the rebate does not look attractive.

The rebate being offered is not a good idea as the cost outweighs the benefit.

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timama [110]

Answer:

The amount of the cost of goods sold for this sale is $98.4

Explanation:

Marquis Company uses a weighted-average perpetual inventory system

August 2, 22 units were purchased at $3 per unit,

Total cost = $3 x 22 = $66

Average cost per unit: $3

August 18, 27 units were purchased at $5 per unit

Total inventory = $66 + $5 x 27 = $201

Average cost per unit = $201/(22+27) = $4.1

August 29, 24 units were sold

Cost of goods sold = 24 x $4.1 = $98.4

8 0
3 years ago
A faxed acceptance of a contract becomes effective instantaneously when the transmission lines are open and both sending and rec
mariarad [96]

Answer:

TRUE

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acceptance of a contract becomes effective, regardless of the medium of sending and receiving the information.

8 0
3 years ago
Paulson Company began the year with retained earnings of $500,000. During the year, the company issued $720,000 of common stock,
Murljashka [212]

Answer:

Revenue for the period = $2,100,000

Explanation:

Provided information,

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Closing balance of retained earnings = $520,000

Therefore increase in retained earnings = $520,000 - $500,000 = $20,000

Earnings for the period - Expenses for the period - Dividend for the period = $20,000

Now, putting values in above,

Earnings - $2,000,000 - $80,000 = $20,000

Earnings = $20,000 + $80,000 + $2,000,000 = $2,100,000

Revenue for the period = $2,100,000

6 0
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