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Anna007 [38]
3 years ago
14

Martha’s Quilt Shop sells homemade quilts. Martha buys the quilts from local artisans for $300 each and sells them in her shop f

or $500 each. Martha pays a sales commission of 4% of sales revenue to her sales staff. Martha pays $6,000 in rent each month and pays $1,900 per month in payroll expenses in addition to the sales commissions. Martha sold 250 quilts in March. Martha’s Quilt Shop prepares her income statement using both the traditional method and the contribution margin method. What is Martha’s Quilt Shop’s March net income under these two methods?
Business
2 answers:
Cerrena [4.2K]3 years ago
6 0

Answer:

$37,100

Explanation:

the traditional method:

total revenue = $500 x 250 quilts =                   $125,000

<u>- COGS =                                                               ($75,000)</u>

gross profit =                                                          $50,000

- sales commissions = $500 x 4% x 250 quilts = ($5,000)

- rent =                                                                     ($6,000)

<u>- salaries =                                                               ($1,900)</u>

net profit                                                                 $37,100

contribution approach:

total revenue = $500 x 250 quilts =                   $125,000

- variable product costs = $300 x 250 =            ($75,000)

<u>- sales commissions = $500 x 4% x 250 quilts = ($5,000)</u>

contribution margin =                                            $45,000

<u>fixed administrative expenses =                           ($7,900) </u>

net profit =                                                               $37,100

GuDViN [60]3 years ago
5 0

Answer:

<u>Martha’s Quilt Shop’s gross margin for March is = $50000. </u>

Explanation:

Gross margin = Sales revenues- Cost of goods sold

= ($500 per unit*250 units)- ($300 per unit*250 units)

= $125000-$75000

= $50000

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2 years ago
The concept of risk and return is subjective for different people, as well as for corporations.
Juli2301 [7.4K]

Answer:

Risk and Return

1. Joe is an average investor. His financial advisor gave him options of investing in stock A, with a σ of 12%, and stock B, with a σ of 9%. Both stocks have the same expected return of 16%. Joe can pick only one stock and decides to invest in stock B.

Good Financial Decision?

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2. Marcie works for an educational technology firm that recently launched its employee stock option plan (ESOP). Marcie allocated all her investments in the ESOP.

Good Financial Decision?

Yes

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3. rin wants to invest in a hedge fund that has had a very strong performance track record. The hedge fund has given its investors a return of over 60% for the past five years. Although Erin is tempted to put her money in the fund, she decides to conduct due diligence on the hedge fund’s assets, because she is aware that past performance is no guarantee of future results.

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1. Joe's decision to invest in stock B is a good financial decision.  Since both investments have the same returns, the decision on which investment to take shifts to the standard deviation of the returns, which specifies the variability of the returns.  Invariably, the investment with less standard deviation should win the vote.  Therefore, Joe's decision is a good financial decision because investment in B has a standard deviation of 9% unlike A's 12%.

2. Putting all eggs in one market as Marcie had done by allocating all her investments in the ESOP is not a good financial decision, theoretically.  It is always best to spread the risks, though higher-yielding investments (returns) bear higher risks.

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3 0
3 years ago
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Answer:

Income will increase by $84.

Explanation:

<u>The break-even point is the number of units required to cover the fixed costs. Net income is zero.</u>

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<u>Now, the unitary contribution margin:</u>

unitary contribution margin= 120 - 36

unitary contribution margin= $84

Income will increase by $84.

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Answer:

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Answer:

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