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Bad White [126]
3 years ago
6

Fowler Company is a priceminustaker and uses target pricing. Refer to the following​ information: Production volume 602 comma 00

0 units per year Market price $ 30 per unit Desired operating income 17​% of total assets Total assets $ 13 comma 900 comma 000 Variable cost per unit $ 17 per unit Fixed cost per year $ 5 comma 600 comma 000 per year With the current cost​ structure, Fowler cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable costs. Assuming that variable costs cannot be​ reduced, what are the target fixed costs per​ year? Assume all units produced are sold.
Business
2 answers:
frosja888 [35]3 years ago
8 0

Answer:

The target fixed cost per year for Fowler company is $5,463,000

Explanation:

In this question, we are asked to calculate the target fixed cost for a company assuming that variable costs cannot be reduced and also all units produced are sold.

We start by calculating the revenue generated by the company.

602,000 units were produced and sold at a market price of $30. This means total revenue is;

602,000 * 30 = $18,060,000

We then proceed to subtract the desired operating income from the revenue. From the question, we can identify that the desired operating income is 17% of total asset, with total asset being $13,900,000

Desired operating income = 17/100 * $13,900,000 = $2,363,000

Subtracting desired operating income from recent yields: $18,060,000 - $2,363,000 = $15,697,000

To get the target fixed cost per year, we simply subtract variable cost from the difference.

Summarily, this mathematically means that; target fixed cost per year = Revenue - Desired operating income - variable cost

Variable cost = $17 per 602,000 units per year = 17 * 602,000 = $10,234,000

Target fixed cost per year = $15,697,000 - $10,234,000 = $5,463,000

NISA [10]3 years ago
5 0

Answer:

The answer is $5,463,000

Explanation:

Assuming all units are sold, we have:

Total units produced = 602,000 units

Market price = $30

Revenue generated by Fowler Company = $30 x 602,000 = $18,060,000.

Now we calculate the desired operating income:

17% x $13,900,000

= $2,363,000

Next, we subtract desired operating income from revenue:

$18,060,000 - $2,363,000

= $15,697,000

Now, we calculate the variable cost:

$17 x 602,000 units

= $10,234,000

Next, to calculate the target fixed cost per year:

Target fixed cost per year = Revenue - Desired operating income - variable cost

= $18,060,000 - $2,363,000 - $10,234,000

= $5,463,000

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Find the future values of these ordinary annuities. Compounding occurs once a year. Do not round intermediate calculations. Roun
Dimas [21]

Answer:

a. Futuere Value = $19,245.86

b. Futuere Value = $3,060.86

c. Futuere Value = $0

d-1. Futuere Value = $21,170.44

d-2. Futuere Value = $3,213.90

d-3. Futuere Value = $0

Explanation:

Note: The data in the question are merged. They are therefore sorted before answering the question as follows:

Find the future values of these ordinary annuities. Compounding occurs once a year. Do not round intermediate calculations. Round your answers to the nearest cent.

a. $900 per year for 12 years at 10%. $ 19,245.85

b. $450 per year for 6 years at 5%. $ 3,060.86

c. $200 per year for 6 years at 0%. $

d. Rework parts a, b, and c assuming they are annuities due.

Future value of $900 per year for 12 years at 10%: $ 21,170.43

Future value of $450 per year for 6 years at 5%: $ 3,213.90

Future value of $200 per year for 6 years at 0%: $

Explanation of the answer is now provided as follows:

The formula for calculating the Future Value (FV) of an Ordinary Annuity given as follows:

FV = M * (((1 + r)^n - 1) / r) ................................. (1)

Where,

FV = Future value of the amount =?

M = Annuity payment

r = Annual interest rate

n = number of periods years

This formula is now applied as follows:

a. $900 per year for 12 years at 10%. $ 19,245.85

Therefore, we have:

FV = ?

M = $900

r = 10%, or 0.10

n = 12

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

FV = $900 * (((1 + 0.10)^12 - 1) / 0.10)

FV = $900 * 21.38428376721

FV = $19,245.855390489

Rounding the nearest cent, we have:

FV = 19,245.86

b. $450 per year for 6 years at 5%. $ 3,060.86

Therefore, we have:

FV = ?

M = $450

r = 5%, or 0.05

n = 6

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

FV = $450 * (((1 + 0.05)^6 - 1) / 0.05)

FV = $450 * 6.8019128125

FV = $3,060.860765625

Rounding the nearest cent, we have:

FV = $3,060.86

c. $200 per year for 6 years at 0%. $

Therefore, we have:

FV = ?

M = $200

r = 0%, or 0

n = 6

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

FV = $200 * (((1 + 0)^6 - 1) / 0)

FV = $200 * ((1^6 - 1) / 0)

FV = $200 * ((1 - 1) / 0)

FV = $200 * (0 / 0)

FV = $200 * 0

FV = $0

d. Rework parts a, b, and c assuming they are annuities due.

The formula for calculating the Future Value (FV) of an Annuity Due is given as follows:

FV = M * (((1 + r)^n - 1) / r) * (1 + r) ................................. (2)

Where,

FV = Future value

M = Annuity payment

r = Annual interest rate

n = number of periods years

This formula is now applied as follows:

d-1. Future value of $900 per year for 12 years at 10%: $ 21,170.43

Therefore, we have:

FV = ?

M = $900

r = 10%, or 0.10

n = 12

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

FV = $900 * (((1 + 0.10)^12 - 1) / 0.10) * (1 + 0.10)

FV = $900 * 21.38428376721 * 1.10

FV = $2,1170.4409295379

Rounding the nearest cent, we have:

FV = $2,1170.44

d-2. Future value of $450 per year for 6 years at 5%: $ 3,213.90

Therefore, we have:

FV = ?

M = $450

r = 5%, or 0.05

n = 6

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

FV = $450 * (((1 + 0.05)^6 - 1) / 0.05) * (1 + 0.05)

FV = $450 * 6.8019128125 * 1.05

FV = $3,213.90380390625

Rounding the nearest cent, we have:

FV = $3,213.90

d-3. Future value of $200 per year for 6 years at 0%: $

Therefore, we have:

FV = ?

M = $200

r = 0%, or 0

n = 6

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

FV = $200 * (((1 + 0)^6 - 1) / 0) * (1 + 0)

FV = $200 * ((1^6 - 1) / 0) * 1

FV = $200 * ((1 - 1) / 0) * 1

FV = $200 * (0 / 0) * 1

FV = $200 * 0 * 1

FV = $0

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viktelen [127]

Answer:

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Explanation:

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Answer:

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