All categories

3 years ago

Data for Hermann Corporation are shown below:

Business

1 answer:

timama [110]3 years ago

8 0

Answer:

1) Yes monthly advertising budget should be increased as it increases the sales by $ 9000 even then there would be profit of $ 4000

2) the net operating income will increase by (38,000-24,000) = $ 14,000

Explanation:

Given

Sales 2000 units for $ 90 = $ 180,000

Variable Expenses = $126,000

Contribution Margin = $ 54,000

Less Fixed Expenses = $ 30,000

Operating Income = $ 24,000

1) Yes monthly advertising budget should be increased as it increases the sales by $ 9000 even then there would be profit of $ 4000

2) the net operating income will increase by (38,000-24,000) = $ 14,000

Sales 2000 units for $ 99 = $ 198,000

Variable Expenses (63 +2= $65) = $130,000

Contribution Margin = $ 68,000

Less Fixed Expenses = $ 30,000

Operating income = $ 38,000

You might be interested in

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the

vfiekz [6]

Answer:

both taxes would fall more heavily on the buyers than on the sellers

Explanation:

Here are the options:

a. both taxes would fall more heavily on the buyers than on the sellers. b. the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers c. the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers O d. both taxes would fall more heavily on the sellers than on the buyers.

Tax is a compulsory sum levied on goods and services. Taxes increases the price of goods and services

Supply is elastic if a small change in price leads to a greater change in the quantity supplied.

Demand is inelastic if there's little or no change in demand when price is increased.

More burden of tax should fall on the consumers because their demand is inelastic. So, if prices rise as a result of the tax, there would be little or no change in quantity demanded.

But in the case of suppliers, they are sensitive to price and a rise in price would cause quantity supplied to fall and revenue would fall.

I hope my answer helps you

5 0

3 years ago

Consider the following three stocks. (a) Stock A is expected to provide a dividend of $10 a share forever. (b) Stock B is expect

Archy [21]

Answer:

The stock A is most valuable as the fair value of Stock A is $100 which is more than the fair value of Stock B ( $83.33) and Stock C ($34.28).

Explanation:

to calculate the fair price of the stocks, we will use the DDM or dividend discount model. The DDM bases the value of a stock on the present value of the expected future dividends from the stock.

Let r be the discount rate which is 10%.

The stock is like a perpetuity as it pays a constant dividend after equal intervals of time and for an indefinite period.

The price of this stock can be calculated as,

Price or P0 = Dividend / r

P0 = 10 / 0.1 = $100

The constant growth model of DDM can be used to calculate the price of this stock as its dividends are growing at a constant rate forever.

P0 = D1 / r - g

Where,

D1 is the dividend for the next period
r is the cost of equity or discount rate
g is the growth rate in dividends

P0 = 5 / (0.1 - 0.04)

P0 = $83.33

The price of this stock can be calculated using the present of dividends.

P0 = 5 / (1+0.1) + 5 * (1+0.2) / (1+0.1)^2 + 5 * (1+0.2)^2 / (1+0.1)^3 +

5 * (1+0.2)^3 / (1+0.1)^4 + 5 * (1+0.2)^4 / (1+0.1)^5 + 5 * (1+0.2)^5 / (1+0.1)^6

P0 = $34.28

3 0

3 years ago

A portfolio is consisted of two stocks:$1,000 in stock X and $3,500 in stock Y. The expected return on stock X is 12%, and 6% fo

oksano4ka [1.4K]

Answer:

Portfolio return = 7.3%

Explanation:

<em>The portfolio expected rate of return would be the weighted average expected rate of return</em>

Weighted average expected rate of return=

12%× (1000/(3500+1000) + (3,500/(1000+3500)× 6%= 0.073333333

Expected rate of return = 0.073333333 × 100 = 7.3%

Portfolio return = 7.3%

6 0

3 years ago

Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an ann

Bas_tet [7]

Answer:

25%

Explanation:

Accounting rate of return =( Net income from investment ÷ Cost of investment ) × 100

Net income from investment = $100,000

Cost of investment = $400,000

Required rate of return = ($100,000 / $400,000 ) × 100

= 0.25 × 100

= 25%

7 0

2 years ago

A food manufacturer reports the following for two of its divisions for a recent year.

Over [174]

Answer and Explanation:

1. Return on investment is

= Operating Income ÷ Average invested Assets

here, average invested assets is

= (Invested assets, beginning + Invested assets, ending) ÷ 2

For Beverage Division

= $349 ÷ (($2,662 + $2,593) ÷ 2)

= $349 ÷ $2,628

= 13.28%

For Cheese Division

= $634 ÷ (($4,455 + $4,400) ÷ 2)

= $634 ÷ $4,428

= 14.32%

2. Profit margin = (Operating income ÷ sales) × 100

For Beverage Division

= ($349 ÷ $2,681) × 100

= 13.02%

For Cheese Division

= ($634 ÷ $3,925) × 100

= 16.15%

3. Investment turnover = Sales ÷ Average Operating Assets

For Beverage Division

= $2,681 ÷ (($2,662 + $2,593) ÷ 2)

= $2,681 ÷ $2,628

= 1.02 times

For Cheese Division, it would be

= $3,925 ÷ (($4,455 + $4,400) ÷ 2)

= $3,925 ÷ $4,428

= 0.89 times

6 0

3 years ago