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sukhopar [10]
3 years ago
6

A chemical company spent $ 530 comma 000 to produce 150 comma 000 gallons of a chemical that can be sold for $ 5.00 per gallon.

This chemical can be further processed into a weed killer that can be sold for $ 7.20 per gallon. It will cost $ 260 comma 000 to process the chemical into the weed killer. Which of the following is​ true A) If the company decides to process it further, it will increase operating income$578,000
B) If the company decides to process it further, it will increase operating income $390,000

C) If the company decides to process it further, it will decrease operating income by $1,380,000

D) To maximize operating income, the company should continue to sell the chemical as is.
Business
1 answer:
solmaris [256]3 years ago
5 0

Answer:

If the company decides to process it further, it will increase operating income $68,000

Explanation:

Selling the chemical on processing,

the Sales will be = Gallons of chemical produce × Selling price per gallon

                            = 150,000 × $5

                            = $750,000

Cost of Processing the chemical = $530,000

Operating Income on selling the chemical:

= Sales -  Cost of Processing the chemical

= $750,000 - $530,000

= $220,000

Total cost incurred to process the chemical into a weed killer:

=  Cost of Processing the chemical +

= $532000 + $260,000

= $792,000

Sales of 150,000 gallons of weed killer:

= Selling price per gallon × Chemical produce

= $7.20 × 150,000 gallons

= $1,080,000

Operating income on processing to weed killer:

= Sales of 150,000 gallons of weed killer - Total cost incurred to process the chemical into a weed killer

= $1,080,000  - $792,000

= $288,000

So, If the company decides to process it further, it will increase operating income by:

= Operating income on processing to weed killer - Operating Income on selling the chemical

= $288,000 - $220,000

= $68,000

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Answer:

adjusting entries:

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Dr Sales revenue 850

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c. There were no supplies listed in the balance sheet under assets. However, you discover that supplies costing $900 were on hand at December 31.

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4 0
3 years ago
Suppose that you deposit $4,500 in your bank and the required reserve ratio is 18 percent. the maximum loan your bank can make a
NNADVOKAT [17]

Suppose that you deposit $4,500 in your bank and the required reserve ratio is 18 percent. The maximum loan your bank can make as a direct result of your deposit is 3690.

<h3>What exactly is a bank loan and the required reserve ratio?</h3>
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Hence, The maximum loan your bank can make as a direct result of your deposit is 3690.

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6 0
2 years ago
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years.
mezya [45]

Answer:

Enterprise value of Heavy Metal= $1,080.766

Share price =  $18.945 per unit

Explanation:

<em>The value of a firm is the present value of the free cash flow discounted at the weighted average  cost of capital</em>

Year                                          PV

1        52.1 × 1.14^(-1)      = 45.70175439

2        68.6 × 1.14^(-2)  = 52.40073869

3          78.6 × 1.14^(-3) = 53.05276117

4         74.4×  1.14^(-4) = 44.05077264

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=  (1,080.766  - 304 )/ 41 million units= $18.945 per unit

Share price =  $18.945 per unit

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