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Mrrafil [7]
3 years ago
9

In order to remain competitive, Big Bus Lines must reduce its average ticket price by 15%. However, the firm still wants to rema

in profitable. Which of the following options would allow Big Bus Lines to remain profitable while dropping its ticket prices?
A : decreasing its variable costs by at least 15%
B : increasing its variable cost per ticket by at least 15%
C : decreasing its number of passengers by at least 15%
D : decreasing its total fixed costs by at least 15%
Business
1 answer:
Elza [17]3 years ago
8 0

Answer:

A : decreasing its variable costs by at least 15%

Explanation:

Variable costs depend on the number of passengers they transport as there will be a decrease of the 15 %in the income received by each passenger. Then, it must be an equal reduction on the expenses generated by each passenger in order to remain competitive.

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Which of the following statements about private club
algol [13]

Answer:

D: Guests must pay for any alcoholic beverages

they consume.

Explanation:

Guests in any establishment are expected to pay for any alcoholic beverages they consume. A private club is not necessary a profit-making venture, but a social or networking establishment. Membership to a private club is restricted. Members usually pay a membership to join and a regular subscription fee.

The club purchases foods and drinks served in its premises. The food and beverages are sold to members at fair prices. Members are required to pay for what they consume. Many clubs do not charge a service fee as it is catered for in the recurring subscription fees.

4 0
3 years ago
53:1
Fiesta28 [93]

Answer:

A. It may cause people to lose trust in you.

Explanation:

Unethical behavior is one where an individual behaves in such a way that it is bad for others or an action that may be morally wrong. It is an action that renders the wrong perception of others.

One thing true about unethical behavior is that it can cause people to lose trust in the person. It makes the person look bad and thus add to the dishonesty, the feeling of untrustworthiness in that person.

Thus, the correct answer is option A.  

5 0
3 years ago
Calistoga Produce estimates bad debt expense at 0.60% of credit sales. The company reported accounts receivable and allowance fo
liraira [26]

Answer: Calistoga's final balance in its allowance for uncollectible accounts at December 31, 2021 is $246.

Explanation: Calistoga Produce applies percentage of credit sales method to estimate its bad debt expense. So 0.60% of $331,000 (credit sales) = $1,986 and the balance in allowance for doubtful accounts is $1,520. The following journals would be recorded to adjust for the estimate:

Debit Bad debt expense                                      $466

Credit Allowance for doubtful accounts           $466

The $466 is the difference between $1,986 and $1,520

Now that the company writes off $1,740 accounts receivable, the following journal entries apply:

Debit Allowance for doubtful account              $1,740

Credit Accounts receivable                                $1,740

In summary, the allowance account movement is as follows:

Opening balance                                                 $1,520

Additional bad debt expense                                 466

Write-off during the year                                     (1,740)

Balance, end of the year                                       $246

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3 years ago
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2 years ago
Read 2 more answers
Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of
OLga [1]

Answer:

Turnbull’s weighted average cost of capital (WACC) will be higher by 0.64% if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of debt of 8.2%, and its cost of preferred stock is 9.3%. If Turnbull can raise all of its equity capital from retained earnings, its cost of common equity will be 12.4%. However, if it is necessary to raise new common equity, it will carry a cost of 14.2%. If its current tax rate is 40%, how much higher will Turnbull’s weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? (Note: Round your intermediate calculations to two decimal places.)

The explanation to the answer is now given as follows:

Step 1: Calculation of WACC when all of its equity capital is raised from retained earnings

This can be calculated using WACC formula as follows:

WACCR = (WS * CE) + (WP * CP) + (WD * CD * (1 - T)) ………………… (1)

Where;

WACCR = Weighted average cost of capital when all of its equity capital is raised from retained earnings = ?

WS = Weight of common equity = 36%, or 0.36

WP = Weight of preferred stock = 6%, or 0.06

WD = Weight of debt = 58%, or 0.58

CE = Cost of equity = 12.4%, or 0.124

CP = Cost of preferred stock = 9.3%, 0.093

CD = Before-tax cost of debt = 8.2%, or 0.082

T = Tax rate = 40%, or 0.40

Substituting the values into equation (1), we have:

WACCR = (0.36 * 0.124) + (0.06 * 0.093) + (0.58 * 0.082 * (1 - 0.40))

WACCR = 0.078756, or 7.8756%

Rounding to 2 decimal places, we have:

WACCR = 7.88%

Step 2: Calculation of WACC if it raises new common equity

This can also be calculated using WACC formula as follows:

WACCE = (WS * CE) + (WP * CP) + (WD * CD * (1 - T)) ………………… (2)

Where;

WACCE = Weighted average cost of capital if it raises new common equity = ?

WS = Weight of common equity = 36%, or 0.36

WP = Weight of preferred stock = 6%, or 0.06

WD = Weight of debt = 58%, or 0.58

CE = Cost of equity = 14.2%, or 0.142 (Note: This is the only thing that has changed compared to what we have in Step 1 above.)

CP = Cost of preferred stock = 9.3%, 0.093

CD = Before-tax cost of debt = 8.2%, or 0.082

T = Tax rate = 40%, or 0.40

Substituting the values into equation (2), we have:

WACCE = (0.36 * 0.142) + (0.06 * 0.093) + (0.58 * 0.082 * (1 - 0.40))

WACCE = 0.085236, or 8.5236%

Rounding to 2 decimal places, we have:

WACCE = 8.52%

Step 3: Caculation of how much higher will Turnbull’s weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings.

This can be calculated as follows:

Percentage by which WACC is higher = WACCE - WACCR

Percentage by which WACC is higher = 8.52% - 7.88%

Percentage by which WACC is higher = 0.64%

Therefore, Turnbull’s weighted average cost of capital (WACC) will be higher by 0.64% if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings.

5 0
2 years ago
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