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Ratling [72]
3 years ago
5

A small business produces a single product and reports the following​ data: Sales price ​$8.50 per unit Variable cost ​$5.25 per

unit Fixed cost ​$22,000 per month Volume ​10,000 units per month The company believes that the volume will go up to​ 12,000 units if the company reduces its sales price to​ $7.50. How would this change affect operating​ income?
Business
1 answer:
ozzi3 years ago
8 0

Answer:

The correct answer is Decrease by $5,500.

Explanation:

According to the scenario, the computation of the given data are as follows:

First we calculate the previous operating income, by using following formula:

Previous operating income = ($8.5 - $5.25) × 10,000 units - $22,000

= $10,500

Now, we will calculate the current operating income by using following formula:

New operating income = ($7.5 - $5.25) 12,000  units - $22,000

= $5,000

So, the change in operating income can be calculated as

Change in operating income = New operating income - Previous operating income

= $5,000 - $10,500

= -$5,500 ( Negative shows Decrease)

= Decrease by $5,500.

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When Apple, Inc. opened retail stores to sell its computers and iPods, this was an example of:
soldier1979 [14.2K]

Answer:

The correct answer is letter "A": forward vertical integration.

Explanation:

Forward integration happens when a business takes over functions that were originally performed by its partners in the supply chain. Forward integration can be horizontal and vertical. Forward horizontal integration takes place when one company takes over another at the same level of the supply chain. In forward vertical integration, a firm takes charge of the businesses located farther down the supply chain.

4 0
3 years ago
Which of the following are sources of​ income-based payments that domestic residents make to​ foreigners? ​(Check all that apply
alina1380 [7]

Answer:

options (b),(c) and (e).

Explanation:

Okay let us take the options one after the other;

(a). People in Oregon send money to help cyclone victims in Bangladesh: this is WRONG because the question asked us to identify an INCOME-BASED payment and it is not.

(b). A resident of Maryland buys a car produced by Toyota in Japan: this is CORRECT. The person making the payment is a US resident making payment to a Japanese firm.

(c). Apple corporation pays a stock dividend to a resident of India: This is also CORRECT because Apple is a US based company making payment to Indian(a foreigner).

(d). A foreign exchange student from Paris comma France comma sends wine and cheese to her host family in Columbus comma Ohio : this WRONG because the student is also a foreigner.

(e). Orange Telecom comma a French company comma pays a stock dividend to a resident of Kansas City: this is CORRECT. Orange Telecom is a France company paying income to a foreigner (a U.S resident).

4 0
3 years ago
What is the dirty price of a bond? the bond's price less an adjustment for changes in interest rates the bond's price based only
Sophie [7]

Answer:

The dirty price of a bond is referred to:

  • The actual price of the bond.
  • Also the cash flows in futureand its values.

Explanation:

Dirty price of bond: The dirty price of bond is referred to the actual and present value of the bond.

Also is referred to the present value of the bonds or the future cash flows.

In financial terms a dirty price of bond is said to be the bond's price which is including all the interests which has been added up since the most recent payment of the coupon.

Price quote of a bond: The price quote of a bond is referred to bond's clean price as it does not affects or reflects on all the interests which have been calculated for the bond since of its most recent coupon payment.

Bonds gets always quotes in terms of clean price but the financial investos always pay them in terms of Dirty price until the bond has to be purchased on the given date of coupon's payment.

7 0
3 years ago
All of the following costs are likely to decrease as a result of better quality except:
swat32

Answer:

The correct answer is (d)

Explanation:

Better quality can help to reduce many costs such as customer’s dissatisfaction cost, inspection cost and warrant and service cost. When customers don't like the quality of the product they are likely to buy the same product from somewhere else that is the dissatisfaction cost. Still, maintenance cost is likely to incur no matter how good the quality is. Maintenance cost helps to keep the product clean and fresh for long-term use.

5 0
3 years ago
Bond j has a coupon rate of 5 percent and bond k has a coupon rate of 11 percent. both bonds have 13 years to maturity, make sem
aleksley [76]

To find the change in the price of the bonds, first need to find the price of individual Bond.

Bond Price is directly related to the change in the YTM of the bond. If the YTM rises by 2%, the price of the bond will fall.

Bond J :

(WHEN YTM IS 8%)

Coupon Rate: 5%

Coupon Amount (PMT): $1,000 * 5% = $50/2 = $25 (Semi annual coupon amounts)

Number of years (NPER) = 13*2 = 26

YTM (rate) = 8%/2 = 4%

Face Value: $1000

Price (PV0) : ?

To find the price of the bond, can either use excel or with formula.

When input the below formula in excel,

PV =pv(rate,nper,pmt,fv,type)

P0 =pv(4%,26,-25,-1000)

When input the formula in excel, we get PV as $760.26

(WHEN YTM RISES BY 2%, NEW YTM IS 10%)

Coupon Amount (PMT): $25 (Semi annual coupon amounts)

Number of years (NPER) = 26

YTM (rate) = 10%/2 = 5%

Face Value: $1000

Price (PV1) : ?

To find the price of the bond, can either use excel or with formula.

When input the below formula in excel,

PV =pv(rate,nper,pmt,fv,type)

P1 =pv(5%,26,-25,-1000)

When input the formula in excel, we get PV as $640.62

CHANGE IN THE BOND PRICE OF BOND J DUE TO THE CHANGE IN THE YTM

%change = (P1 – P0)/P0

%change = ($640.62 - $760.26)/$760.26

%change = -18.68%

Therefore, with the increase in 2% YTM of BOND J, the price falls by 18.68%

Bond K :

(WHEN YTM IS 8%)

Coupon Rate: 11%

Coupon Amount (PMT): $1,000 * 11% = $110/2 = $55 (Semi annual coupon amounts)

Number of years (NPER) = 13*2 = 26

YTM (rate) = 8%/2 = 4%

Face Value: $1000

Price (PV0) : ?

To find the price of the bond, can either use excel or with formula.

When input the below formula in excel,

PV =pv(rate,nper,pmt,fv,type)

P0 =pv(4%,26,-55,-1000)

When input the formula in excel, we get PV as $1,239.74

(WHEN YTM RISES BY 2%, NEW YTM IS 10%)

Coupon Amount (PMT): $55 (Semi annual coupon amounts)

Number of years (NPER) = 26

YTM (rate) = 10%/2 = 5%

Face Value: $1000

Price (PV1) : ?

To find the price of the bond, can either use excel or with formula.

When input the below formula in excel,

PV =pv(rate,nper,pmt,fv,type)

P1 =pv(5%,26,-55,-1000)

When input the formula in excel, we get PV as $1,071.88

CHANGE IN THE BOND PRICE OF BOND K DUE TO THE CHANGE IN THE YTM

%change = (P1 – P0)/P0

%change = ($1071.88 - $1239.74)/$1239.74

%change = -13.54%

Therefore, with the increase in 2% YTM of BOND k, the price falls by 13.54%

SIMILALRY IF THE BOND PRICES FALLS BY 2%, the YTM WILL BE 6%/2 = 3% **(REFER THE IMAGE ATTACHED)

5 0
3 years ago
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