Based on the discount offered by Next furniture, the discounted price of a sofa would be $669.33
<h3>What is the discounted price of the sofa?</h3>
This can be found as:
= Original price x (1 - discount rate)
Solving gives:
= 999 x (1 - 33%)
= 999 x 0.67
= $669.33
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Answer:
-$5,500
Explanation:
The computation of the overall effect on the company net operating income is as follows:
New Variable cost per unit is
= $44 + $11
= $55
Now the new contribution margin per unit is
= $220 - $55
= $165
New unit Monthly sales is
= 7,000 units + 500 units
= 7,500
Now
New total contribution margin :
= 7,500 units × $165
= $1,237,500
And, the Current total contribution margin is
= 7,000 units × $176
= $1,232,000
So, the change would be
= $1,232,000 - $1,237,500
= -$5,500
Answer:
$700
Explanation:
If a bond is issued at a lower price than the face value of the bond, then the bond is issued on the discount. This discount is amortized over the bond's life. This amortization will be expensed as Interest Expense.
Discount = Face value - Issuance price = $15,000 - $14,700 = $300
Bond's Life = 6 years
Amortization of discount = $300 / 6 = $50 annually = $25 semiannually
Coupon Payment = Face Value x coupon Rate = $15,000 x 9% = $1.350 annually = $675 semiannually
Interest Expense Includes both the coupon payment and discount amortization for the period.
Interest Expense = $675 + $25 = $700
The greatest risk of a low-cost provider strategy is getting lost with overly high price reduction and ending up with lower profit.
<h3>Low-cost / low-price advantage </h3>
It results in high profit only if;
- (1) prices are reduced by less than the size of the cost advantage or
- (2) the added volume is large enough to bring in a bigger total profit despite lower margins per unit sold.
Therefore, the greatest risk is a low profit.
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