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OLga [1]
3 years ago
10

Papa Roach Exterminators, Inc., has sales of $644,000, costs of $345,000, depreciation expense of $54,000, interest expense of $

26,000, and a tax rate of 35 percent. If the firm paid out $71,000 in cash dividends. What is the addition to retained earnings
Business
1 answer:
IRINA_888 [86]3 years ago
8 0

Answer:

$71,350

Explanation:

We have the following income statement:

Sales                                $644,000

Costs                                ($345,000)

Depreciation expense    ($54,000)

Interest expense             ($26,000)

Taxable Income               $219,000

Tax rate                            35% ($76,650)

After tax income              $142,350

Dividends paid                ($71,000)

Retained earnings           $71,350

So, as we can see, the addition to retained earnings is $71,350

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One guideline is

the degree of risk should not be greater than the seriousness of the problem that needs to be solved.
6 0
3 years ago
Suppose that XYZ Company hires labor and capital in competitive input markets. Assume that labor costs $200 per day and that a u
GuDViN [60]

Answer:

a) Yes, the firm is minimizing the cost of current production. This is because MRPL / w = MRPC / r = 0.20.

b) The long run adjustments that the firm would likely make in response to the wage increase is to use more labor and less capital until MRPL / w = MRPC / r, which is the condition for the cost minimization of a firm.

Explanation:

a) Given the information provided, is the firm minimizing the cost of current production? Explain why or why not.

The condition for the cost minimization of a firm is as follows:

MRPL / w = MRPC / r ……………………………. (1)

Where:

MRPL = Labor's marginal product = 40

w = Cost of labour = $200

MRPC = Capital's marginal product = 30

r = Cost of capital = 150

Therefore, we have:

MRPL / w = 40 / 200 = 0.20

MRPC / r = 30 / 150 = 0.20

Since MRPL / w = MRPC / r = 0.20, this implies that these conditions are consistent with equation (1). Therefore, the firm is minimizing the cost of current production.

b) If the daily wages were to increase, explain the long run adjustments that the firm would likely make in response to the wage increase.

If the daily wages were to increase, the MRPL / w in equation (1) in part a above will fall and we will have:

MRPL / w < MRPC / r …………………… (2)

Since equation (2) is no longer consistent with equation (1), the firm is NOT minimizing the cost of current production.

Therefore, the long run adjustments that the firm would likely make in response to the wage increase is to use more labor and less capital until MRPL / w = MRPC / r, which is the condition for the cost minimization of a firm.

7 0
2 years ago
A member in a cartel can earn more profits byA) charging a slightly lower price and raising production.B) producing less than th
zavuch27 [327]

Answer:

The correct answer to the following question is option A) charging slightly lower price and raising production .

Explanation:

A cartel can be defined as a group of firms , that join forces together to decide what level of output should be produced and at what prices they should be sold at. A cartel generally forms in oligopoly market where there are few firms in the market and they all have significant share in the market.

Reason why firms join forces together is because they want to have more dominant position in the market and increase the market power. So these type of cartels forms a monopoly n the market and earn high profits. But there are always chance of firms cheating each other in market, by either increasing the production or decreasing the price by a small percent, which will allow them to earn more profits.

7 0
3 years ago
On the basis of the following data for Garrett Co. for Years 1 and 2 ended December 31, prepare a statement of cash flows using
Liono4ka [1.6K]

Answer:

Garrett Co. cash flows from operating activities is $61,000.

Explanation:

Garrett Co.

Statement of cash flows (extract)

Net income                                                    $56,000

Add Loss on disposal of equipment                5,000

Cash flows from operating activities            $61,000

Loss on disposal of the equipment was calculated as Proceeds - net book value, that is $15,000 - $20,000.

Note that purchase of equipment belongs to investing part of the cash flows while proceed from stock issuance and dividend payment belong to financing part of the cash flows

4 0
2 years ago
Product/service management is a marketing function that involves obtaining, developing, maintaining, and improving a product or
amm1812

Product/service management is a marketing function that involves obtaining, developing, maintaining, and improving a product or service mix in response to market opportunities.

A company's offers are shaped through the process of product service management, also known as product/service management, in response to customer demand brought on by changes in the marketplace. A product service manager (PSM) foresees consumer needs and then directs the creation of products to address them.

Discovering new product opportunities, maintaining current products, and getting rid of items that have turned into liabilities are all part of product service management. advantages

The following are some advantages of product service management:

  • Provides customers with things they desire to buy, hence improving a business's earnings.
  • With novel and cutting-edge items, it can increase the number of customers
  • When products are properly managed, there is less risk of failure and more potential for success.

The market opportunity is unrealized market potential that enables companies to take advantage of untapped markets.

Learn more about Product/service management here:

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3 0
10 months ago
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