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Elden [556K]
3 years ago
5

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the following independe

nt situations, calculate the amount(s) required.
Required:

a. At the break-even point, Jefferson Company sells 115,000 units and has fixed cost of $349,600. The variable cost per unit is $4.56. What price does Jefferson charge per unit?
b. Sooner Industries charges a price of $120 and has fixed cost of $458,000. Next year, Sooner expects to sell 15,600 units and make operating income of $166,000. What is the variable cost per unit? What is the contribution margin ratio?
c. Last year, Jasper Company earned operating income of $22,500 with a contribution margin ratio of 0.25. Actual revenue was $235,000. Calculate the total fixed to the nearest whole dollar.
d. Laramie Company has a variable cost ratio Of 0.56. The fixed cost is $103,840 and 23,600 units are sold at break-even. What is the price? What is the variable cost per unit? The contribution margin per unit? Note: Round answers to the nearest cent.
Business
1 answer:
lorasvet [3.4K]3 years ago
8 0

Answer:

The calculations are shown below.

Explanation:

The computation is shown below:

a. The price charged per unit is

= Variable cost per unit + Contribution margin per unit

where,

Variable cost per unit is $4.56

And, the contribution margin per unit is      

Contribution margin per unit = Fixed cost ÷ Break even units  

$349,600 ÷ 115000

= $3.04 per unit

So, the price charged is  

= $4.56 + $3.04

= $7.60 per unit  

b. The variable cost per unit is

= Selling price per unit - contribution margin per unit

where,

Selling price per unit = $120  

And, the Contribution margin per unit is

= ($458,000 + $166,000) ÷ 15,600 units

= $40 per unit  

So, the variable cost per unit is

= $120 - $40

= $80 per unit

And, the contribution margin ratio is  

= Contribution margin per unit ÷ Selling price per unit  

= $40 ÷ $120 × 100

= 33.33%  

c. The total fixed cost is

= Contribution - Net income  

= $235,000 × 0.25 - $22,500

= $58,750 - $22,500    

= $36,250  

d. Contribution margin per unit is

= $103,840 ÷ 23,600 units

= $4.40 per unit

And,  Selling price per unit is

= $4.40 ÷ 44%

= $10 per unit  

And, Variable cost per unit is

= $10 × 56%

= $5.60 per unit  

Since the variable cost ratio is 0.56

So, we assume the sales is 0.100

And, the contribution margin ratio is 0.44

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Here are returns and standard deviations for four investments. Return (%) Standard Deviation (%) Treasury bills 4.5 0 Stock P 8.
Jlenok [28]

Answer:

a. Standard deviation of the portfolio = 7.00%

b(i) Standard deviation of the portfolio = 30.00%

b(ii) Standard deviation of the portfolio = 4.00%

b(iii) Standard deviation of the portfolio = 21.40%

Explanation:

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

Here are returns and standard deviations for four investments.

                                  Return (%)           Standard Deviation (%)

Treasury bills                4.5                                    0

Stock P                          8.0                                   14

Stock Q                        17.0                                  34

Stock R                       21.5                                    26

Calculate the standard deviations of the following portfolios.

a. 50% in Treasury bills, 50% in stock P. (Enter your answer as a percent rounded to 2 decimal places.)

b. 50% each in Q and R, assuming the shares have:

i. perfect positive correlation

ii. perfect negative correlation

iii. no correlation

(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

The explanation to the answer is now provided as follows:

a. Calculate the standard deviations of 50% in Treasury bills, 50% in stock P. (Enter your answer as a percent rounded to 2 decimal places.)

Since there is no correlation between Treasury bills and stocks, it therefore implies that the correlation coefficient between the Treasury bills and stock P is zero.

The standard deviation between the Treasury bills and stock P can be calculated by first estimating the variance of their returns using the following formula:

Portfolio return variance = (WT^2 * SDT^2) + (WP^2 * SDP^2) + (2 * WT * SDT * WP * SDP * CFtp) ......................... (1)

Where;

WT = Weight of Stock Treasury bills = 50%

WP = Weight of Stock P = 50%

SDT = Standard deviation of Treasury bills = 0

SDP = Standard deviation of stock P = 14%

CFtp = The correlation coefficient between Treasury bills and stock P = 0.45

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

Portfolio return variance = (50%^2 * 0^2) + (50%^2 * 14%^2) + (2 * 50% * 0 * 50% * 14% * 0) = 0.49%

Standard deviation of the portfolio = (Portfolio return variance)^(1/2) = (0.49%)^(1/2) = (0.49)^0.5 = 7.00%

b. 50% each in Q and R

To calculated the standard deviation 50% each in Q and R, we first estimate the variance using the following formula:

Portfolio return variance = (WQ^2 * SDQ^2) + (WR^2 * SDR^2) + (2 * WQ * SDQ * WR * SDR * CFqr) ......................... (2)

Where;

WQ = Weight of Stock Q = 50%

WR = Weight of Stock R = 50%

SDQ = Standard deviation of stock Q = 34%

SDR = Standard deviation of stock R = 26%

b(i). assuming the shares have perfect positive correlation

This implies that:

CFqr = The correlation coefficient between stocks Q and = 1

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

Portfolio return variance = (50%^2 * 34%^2) + (50%^2 * 26%^2) + (2 * 50% * 34% * 50% * 26% * 1) = 9.00%

Standard deviation of the portfolio = (Portfolio return variance)^(1/2) = (9.00%)^(1/2) = (9.00%)^0.5 = 30.00%

b(ii). assuming the shares have perfect negative correlation

This implies that:

CFqr = The correlation coefficient between stocks Q and = -1

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

Portfolio return variance = (50%^2 * 34%^2) + (50%^2 * 26%^2) + (2 * 50% * 34% * 50% * 26% * (-1)) = 0.16%

Standard deviation of the portfolio = (Portfolio return variance)^(1/2) = (0.16%)^(1/2) = (0.16%)^0.5 = 4.00%

b(iii). assuming the shares have no correlation

This implies that:

CFqr = The correlation coefficient between stocks Q and = 0

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

Portfolio return variance = (50%^2 * 34%^2) + (50%^2 * 26%^2) + (2 * 50% * 34% * 50% * 26% * 0) = 4.58%

Standard deviation of the portfolio = (Portfolio return variance)^(1/2) = (4.58%)^(1/2) = (4.58%)^0.5 = 21.40%

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Explanation:

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True or False - Taxation is the most obvious disruption to the circular flow free market model.
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Answer:

True

Explanation:

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Which of the following is a false completion of the following: "Congress has the authority to declare war..."
Yakvenalex [24]

Answer: E. and exercise this authority with great frequency

Explanation:

The Congress has the authority to declare war but has not been exercising this authority with great frequency most times they are reluctant to declare war and has only declared eleven wars in the history of America.

They have rarely exercise this power one of the reasons being to cut down funding of war, they preferred to authorize presidential military action without a declaration of war.

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Matthew​ Liotine's Dream Store sells water beds and assorted supplies. His​ best-selling bed has an annual demand of 395 units.
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Answer:

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Explanation:

Data provided in the questions

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Holding cost per unit per year = $5

The computation of the economic order quantity is shown below:

= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}

= \sqrt{\frac{2\times \text{395}\times \text{\$38}}{\text{\$5}}}

= 77.48 units

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