Answer:
a.) The proportional up movement , u, for the currency can be calculated using the following formula:
u = eStd Dev * Square root of t
u = e0.06*square root of 0.25
u = 1.0305
b.) Probability of up movement, p , = (a - d) / (u - d)
where a = ert where r = 0.025, t = 0.25
a = e0.025*0.25 = 1.0063
d = 1 / u = 1 / 1.3050 = 0.7663
p = (1.0063-0.7663) / (1.3050-0.7663)
p = 0.46
1-p = 1-0.46 = 0.54
c) Price of an American Call Option on the currency : we use binomial tree for that , as follows: The amounts below line indicate the option price and figures above line indicate the underlying asset price which is 0.55555
<u>Solution:</u>
The price per variable unit is set at 1.5 times the cost; the VC / unit is estimated at $2.50.
Price = 2.5 * 2.50 = $6.25
Variable cost = $2.50
Fixed cost = $220,000
Break-Even Volume = Fixed cost / (Price - Variable cost)
= $220.000 / (6.25 - 2.50)
Break-Even Volume = 58,667 units
Answer:
$29,000
Explanation:
Given that:
- Draw per week: $1,100
- Commission rate: 12%
- Sales for Jim were $205,000 for the month.
- 4 weeks in a month
Assuming a four-week month, Jim's commission :
Commission on revenue + commission of total draws
= $205,000*12% + 4*$1,100
= $24,600+ $4,400
= $29,000
Hope it will find you well.
Answer:
$270,000
Explanation:
The first step is to calculate the overhead cost of the material handling parts
Since each wind stock require 3 parts then the overhead cost can be calculated as follows
= 3 × 20,000
= 60,000
The overhead cost of machining hours can be calculated as follows
Since 5 minutes is spent in the machining department then overhead cost is
= 5× 20,000
= 100,000
The overhead cost of packaging number of finished units can be calculated as follows
= 2 × 20,000
= 40,000
Total overhead cost= 100,000 + 60,000 + 40,000
= 200,000
The total cost of direct materials and labor can be calculated as follows
= 3.5 × 20,000
= 70,000
Therefore the total cost of producing 20,000 windstocks is
= Total overhead cost + total cost of direct materials and labor
= 200,000 + 70,000
= $270,000
Hence the total cost of producing 20,000 windstocks is $270,000
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