Answer:
A. 12.1%
B. 8.9%
Explanation:
a. Calculation for What is the company's new cost of equity
Using this formula
New cost of equity=Cost of capital+[(Cost of capital- Debt interest rate ) *(Debt-equity ratio)*(1)]
Let plug in the formula
New cost of equity=[0.089+[(0.089-0.057)*(1)*1]
New cost of equity=[0.089+0.032*(1)*1]
New cost of equity=[0.121*(1)*1]
New cost of equity=0.121*100
New cost of equity=12.1%
Therefore the company's new cost of equity will be 12.1%
b. Calculation for What is its new WACC
Particular Weight Cost Weighted cost
Equity 0.5000 *12.1% = 0.0605
Debt 0.5000 * 5.7% =0.0285
WACC =0.089*100
WACC =8.9%
(0.0605+0.0285)
Therefore the new WACC will be 8.9%
The
necessary adjusting entry to record inventory shortage would be:
“Cost of
Merchandise Sold debit $5,000; Merchandise Inventory credit $5,000.”
Cost of Merchandise
Sold is the cost of goods and services that correspond to sales made to
customers. In this case, we need to decrease ending inventory by the quantity
of these goods ($5,000) that either were shipped to customers or assigned as
being customer-owned under a certain agreement. Meanwhile, the merchandise inventory is the cost of goods on hand and is available for sale ($5,000).
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Answer:
$531,000
Explanation:
For determining the contribution margin ratio, first we have the contribution margin per unit which is shown below:
Contribution margin per unit = Selling price per unit - Variable expense per unit
= $85 - $17
= $68
And, Contribution margin ratio = (Contribution margin per unit) ÷ (selling price per unit) × 100
So, the Contribution margin ratio is
= ($68) ÷ (85) × 100
= 80%
Now the break even point in sales dollars is
= $428,400 ÷ 80%
= $531,000
We simply applied the formulas
Answer:
The Heavy users of a business are those people who comprise about 20% of the business's consumers and yet buy so much that they bring in about 80% of the business's revenue.
Heavy users also have an impact on light users because they can market the goods to light users whether indirectly or directly when they use so much of a business's goods and services.
It is therefore very important that the business knows of these heavy users so that they can focus marketing strategies on them as well as to offer them incentives that will keep them satisfied and coming back for more because if they don't act and they lose their heavy users, their revenues will see a significant drop.
