1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
QveST [7]
3 years ago
6

The company that you manage has invested $5 million in developing a new product, but the development is not quite finished. At a

recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to $4.5 million. If it would cost $3 million to finish development and make the product, youshould go ahead and do so. The most you should pay to complete development ismillion.
Business
1 answer:
Elis [28]3 years ago
7 0

Answer:

The company should be willing to invest the cost of $3 million to complete the development of the new product.

Explanation:

First, the correct completion of the question

If it would cost $3 million to finish development and make the product, should you go ahead and do so? What is the most that you should pay to complete the development?

Answer

To determine the cost: It is important to critically consider which costs are already sunk and which are still to come.

First, and foremost, $5 million already invested into the new product represents a sunk cost or a cost that has already been spent. This means that to stop the project or continue the project ,either options will still mean that $5 million has been spend already. It will not affect the future decision.

Therefore, if you decide to stop the production, the cost of the entire project of development is already $5 million

However, if you decide to continue the project

Sunk Cost = $5 million

Cost of continuation = $3 million (This is current relevant cost to consider against the sales).

Expected Sales of the finished product = $4,500,000

Therefore $4,500,000- $3,000,000= $1,500,000

If stopped, the loss to the company is $5 million

If continued, removing the sunk cost, the company can still make a profit of $1,500,000 of the cost of continuation.

The company should finish development and make the product.

You might be interested in
True or False: Increasing the number of stocks in a portfolio reduces market risk.Consider two stock portfolios. Portfolio B con
nikitadnepr [17]

Answer:

The correct answer is False.

Explanation:

A basic principle of investments is the creation of portfolios (or portfolios) for diversification purposes. At any given time, investors simultaneously hold a set of assets that make up their investment portfolio. A basic principle in finance is that an investor should not place all of his resources in a single asset or in a relatively small number of assets, but in a large number of investment instruments. In this way, the possible bad results in certain assets would be offset by the good results of others. Diversification allows the investor to lower the risk of his portfolio without sacrificing returns or, alternatively, increase the return on his portfolio without increasing his risk. Of course, diversification does not guarantee profits under any circumstances, but it does help to dampen the variability of returns on individual assets.

7 0
3 years ago
The gap between exports and imports in a nation's economy is called the ___________. trade surplus trade balance trade deficit t
labwork [276]
Trade balance should be right
7 0
3 years ago
Read 2 more answers
Gorton's sells Gorton's Fish Sticks, Gorton's Fish Fillets, and Gorton Grilled Fish. This is an example of
dimaraw [331]

Answer:

The correct answer is letter "A": family branding.

Explanation:

Family branding is a strategy entrepreneurs follow by naming the same or partly equal different businesses with diverse markets to take advantage of the reputation one of those businesses have obtained. The naming is legal and in most cases represents a partnership between those businesses or a license given by the main company to allow others to use part of the same name in exchange for a fee.

6 0
3 years ago
There are two machines for sale that you are considering purchasing for your sawmill to produce hardwood flooring. You want to f
vladimir2022 [97]

Answer:

1. The Cpk of machine 1 would be 0.952

2. The Cpk of machine 2 would be 1.111

3.  I would buy machine 2, because the Cpk value is more than 1.

4. The Cpk would be 2.222

Explanation:

1. In order to calculate the Cpk of machine 1 we would have to use to following formula:

Process capability index: Cpk= Min [(mean-L spec)/3sd; (U spec-mean)/3sd]

According to given data:

In machine 1, mean= 48mm

L spec= 46

U spec= 50

Standard deviation sd= 0.7

Therefore, Cpk of machine 1= [0.952;0.952]= 0.952

1. In order to calculate the Cpk of machine 2 we would have to use to following formula:

Process capability index: Cpk= Min [(mean-L spec)/3sd; (U spec-mean)/3sd]

According to given data:

In machine 2, mean= 47

L spec= 46

U spec= 50

Standard deviation sd= 0.3

Therefore, Cpk of machine 2= [1.111;3.333]= 1.111

3. If my goal is to be capable, I would buy machine 2, because the Cpk value is more than 1.

4. If you combine the best of both machines to calculate the cpk we to make the following calculation:

Combination specification, mean= 48 and L spec= 46 and U spec= 50, Standard deviation sd= 0.3

Therefore, Cpk= [2.222;2.222]= 2.222

5 0
3 years ago
The payroll register for D. Salah Company for the week ended May 18 indicated the following:
Tema [17]

Answer:

a. May 18

Dr Salaries expense $615000

Cr Social security tax payable $36900

Cr Medicare tax payable $9225

Cr Employment federal income tax payable $165000

Cr Salaries payable $403875

b. May 18

Dr Payroll tax expenses $48915

Cr Social security tax payable $36900

Cr Medicare tax payable $9225

Cr State unemployment taxes payable $2430

Cr Federal unemployment taxes payable $360

Explanation:

a. Preparation of the journal entry to record the payroll for the week of May 18.

May 18

Dr Salaries expense $615000

Cr Social security tax payable $36900

(615000*6%)

Cr Medicare tax payable $9225

(615000*1.5%)

Cr Employment federal income tax payable $165000

Cr Salaries payable $403875

($615000-$36900-$9225-$165000)

(To record the payroll for the week of May 18)

b. Preparation of the journal entry to record the payroll tax expense incurred for the week of May 18.

May 18

Dr Payroll tax expenses $48915

($36,900+$9225+$2430+$360)

Cr Social security tax payable $36,900 (615000*6%)

Cr Medicare tax payable $9225

(615000*1.5%)

Cr State unemployment taxes payable $2430 (45000*5.4%)

Cr Federal unemployment taxes payable $360 (45000*0.8%)

(To record the payroll tax expense incurred for the week of May 18)

8 0
2 years ago
Other questions:
  • Sosa Corporation recently reported an EBITDA of $31.9 million and net income of $9.7 million. The company had $6.8 million in in
    10·1 answer
  • Jim wants to buy some new shoes. a local shoe shop has a pair for $59.95 with a 10% discount. another shop has the same pair for
    6·1 answer
  • Select the examples that best represent Architecture and Construction customers. Check all that apply. a supermarket company tha
    7·2 answers
  • Consider the investment project with the following net cash flows. What would be the value of X if the project’s IRR is 25%? End
    7·1 answer
  • Finish the sentence, gym is to healthy as book is to ?
    14·1 answer
  • A master plan is devised for
    11·1 answer
  • You discover that credit information on you is inaccurate. which principle does this violate?
    5·2 answers
  • Four years ago, on January 1, California Creamery bought a new delivery truck for $30,000. The company planned to use the truck
    5·1 answer
  • Which of the following is not a benefit of marriage, according to the U.S. Department of Health and Human Services?
    14·1 answer
  • The FED is often referred to as the "_________________" Bank.
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!