Answer:
an increase in operating income of $ 40,000.
Explanation:
Consider the Savings and Costs that arise with the outsource decision.
Note : Fixed Costs are incurred whether or not outsource decision is made ( unavoidable) and are therefore irrelevant for this decision.
Savings :
Variable Costs ( 400,000 × $1.30) 520,000
Costs :
Purchase Price ( 400,000 × $1.20) (480,000)
Effect : Net Income / (loss) 40,000
If the Company decides to outsource there will be an increase in operating income of $ 40,000.
Answer:
(A) $425,000
(B) $24,350
Explanation:
(a) Average Operating Assets:
= (Beginning Operating Assets + Ending Operating Assets) ÷ 2
= ($390,000 + $460,000) ÷ 2
= $425,000
Therefore, the average operating assets is $425,000.
(b) Residual Income:
= Operating Income - (Minimum Rate of Return × Average Operating Assets)
= $66,850 - (10% × $425,000)
= $66,850 - $42,500
= $24,350
A company may discover additional sources of <u>sales volume</u> by investigating possible integration moves.
<h3>What is a sales volume?</h3>
Basically, the sales volume means the number of units that a firm sells during a specific reporting period. The said period could be a month, quarter, year, all depending on what level of sales volume that the firm is seeking to analyze.
Most time, an investors frequently look at sales volume to assess the health of a growing or contracting company. In conclusion, the company may discover additional sources of sales volume by investigating possible integration moves.
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Read more about sales volume
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Answer:
Total PV= $46,728.79
Explanation:
Giving the following information:
Cash flow:
Cf1= $8,000
Cf4= $16,000
Cf8= $20,000
Cf10= $25,000
Discount rate= 6%
To calculate the present value, we need to use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf1= 8,000/(1.06^1)= 7,547.17
Cf4= 16,000/(1.06^4)= 12,673.50
Cf8= 20,000/(1.06^8)= 12,548.25
Cf10= 25,000/(1.06^10)= 13,959.87
Total PV= $46,728.79
