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tresset_1 [31]
3 years ago
6

Data concerning Pony Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 200 100 % Variable exp

enses 40 20 % Contribution margin $ 160 80 % Fixed expenses are $531,000 per month. The company is currently selling 4,000 units per month. The marketing manager would like to cut the selling price by $14 and increase the advertising budget by $35,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 500 units. What should be the overall effect on the company's monthly net operating income of this change
Business
1 answer:
Luda [366]3 years ago
8 0

Answer:

$18,000

Explanation:

The computation of overall effect on the company's monthly net operating income is shown below:-

                                 Current                 Proposed

Sales                       $800,000               $837,000

                        (200 × 4000)     (200 - 14) × (4,000 + 500)

Variable expenses  $160,000             $180,000

                              (40 × 4000)  (40 × (4,000 + 500))

Contribution margin $640,000            $657,000

Fixed expenses     $531000                 $566,000

                                                  ($531,000 + $35,000)

Net operating

income                  $109,000                $91,000

Decrease in net operating income = Current - Proposed

= $109,000 - $91,000

= $18,000

So, for computing the overall effect on the company's monthly net operating income we simply applied the above formula.

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igor_vitrenko [27]

Answer:

Estimated manufacturing overhead rate (Meeting with clients)= $170 per hour

Explanation:

Giving the following information:

Activity Cost Pool -  Total Cost -  Total Activity

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Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate (Meeting with clients)= 1,270,410/7,473= $170 per hour

3 0
3 years ago
Suppose the price of gasoline in July 2004 averaged $1.35 a gallon and 15 million gallons a day were sold. In October 2004, the
Alenkinab [10]

Answer:

0.15

Inelastic

Explanation:

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price  

Midpoint change in quantity demanded = change in quantity demanded / average of both demands

change in quantity demanded = 14 million  - 15 million =  -1 million  

average of both demands = (14 million + 15 million  ) / 2 = 14.50 million

Midpoint change in quantity demanded =  -1 million  / 14.50 million = -0.069

midpoint change in price = change in price / average of both price

change in price = $2.15 - $1.35 = $0.80

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midpoint change in price = $0.80 /  $1.75 = 0.457

-0.069 / 0.457 = 0.15 demand is inelastic  

If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.  

Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one

Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.  

Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases  

Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.

 

6 0
3 years ago
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Sergio [31]

Answer:

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8 0
2 years ago
5
VLD [36.1K]

Answer:

FInd a co-signer with equivalent credit score.

Explanation:

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4 0
2 years ago
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You have $10,000 to invest - $3,500 in Company A, the remaining amount in Company B. The expected returns for these stocks are 2
mihalych1998 [28]

Answer:

The expected return on the portfolio is:

16.75%

Explanation:

a) Data and Calculations:

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Investment                  $3,500              $6,500      $10,000

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Expected return on

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6 0
3 years ago
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