Answer:
Option 1 is wrong because in the case of multi-product, breakeven is weighted average which means the sales price will weighted average of sale prices of all the multi-products in the sales mix. If we change the weightings the weighted average costs and selling prices changes and so the contribution changes.
Option 2 is also sligthly wrong because Contribution margin per composite unit decreases if the volume of low contribution margin products increases in the sales mix. This means:
Breakeven Point=Fixed Cost/ Contribution per unit.........equartion 1
If the contribution per unit has been decreased the breakeven will rise.
Its impact depends upon the portfolio of products company is managing. It means it increases breakeven with high effects if the products in sales mix 2 to 3.
Option 3 is 100% right because equation 1 is
Breakeven Point=Fixed Cost/ Contribution per unit
Which says
If the contribution per unit has been decreased the breakeven will rise.
Option 4 is absolutely wrong because if we shift to higher volume in low contribution margin products, Contribution margin per composite unit decreases if the volume of low contribution margin products increases
which means Weighted average contribution has been decreased and as a result breakeven point according to equation 1 has been incresed.
The company utilizes a standard discount rate crosswise over various lines of business in light of the fact that the deliberate hazard over their distinctive business lines is the same. The financing cost charged to business banks and other store foundations for advances got from the Federal Reserve Bank's markdown window.
Answer:
It will take 4 years 6 months.
Explanation:
Required here is the period, n for an investment to grow to $50,000 and this is calculated as follows :
Pv = - $15,000
Pmt = - $4,500
P/yr = 1
r = 12 %
Fv = $50,000
n = ?
Using a Financial Calculator, the period, n for an investment to grow to $50,000 is 4.50 or 4 years 6 months.
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