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mars1129 [50]
3 years ago
6

A study has been conducted to determine if Product A should be dropped. Sales of the product total $400,000 per year; variable e

xpenses total $270,000 per year. Fixed expenses charged to the product total $160,000 per year. The company estimates that $70,000 of these fixed expenses are not avoidable even if the product is dropped. If Product A is dropped, the company's overall net operating income would:
A. decrease by $40,000 per yearB. increase by $40,000 per yearC. decrease by $30,000 per yearD. increase by $30,000 per year
Business
1 answer:
klio [65]3 years ago
3 0

Answer:

Option (A) is correct.

Explanation:

Contribution Margin:

= Total sales of the product - variable expenses

= $400,000 - $270,000

= $130,000

Avoidable fixed cost = Total fixed cost - Unavoidable fixed cost

                                  = $160,000 - $ 70,000

                                  = $90,000

Net Margin :  

= Contribution Margin - Avoidable fixed expense

= $130,000 - $90,000

= $40,000

Hence, if product A is dropped, the company's overall net operating income would decrease by $40,000 per year.

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2 years ago
The Super Toy Stores inventory records at December 31, revealed the following: Inventory on hand, December 31 $350,000 Merchandi
enyata [817]

Answer:

The correct answer is $543,000

Explanation:

According to the given scenario, the calculation of the ending inventory is as follows:

= Inventory on hand + merchandise purchased F.O.B shipping point + F.O.B destination

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= $543,000

The goods held on consignment i.e. not involved is not relevant

Thus, the  calculation of the ending inventory is $543,000

8 0
3 years ago
Private solutions to correct for externalities consider the following scenario:________.
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Answer: Charities; coordinating negotiations among all of the parties too costly

Explanation:

From the question, we are told that that a chicken farm uses a nearby stream to dispose of the wastes that is released by its chickens and that the wastes flow downstream into a lake that has become polluted due to the waste matter. The local office of a nonprofit environmental organization then collects enough donations in order to stop the farm's pollution.

The type types of private solutions to the pollution externality which has occured is charity. This is because it is a voluntary activity. The money collected is meant for a specific objective which is to tackle the issue of pollution.

It is also vital to note that sometimes the private solutions to externalities might not work. For example, this occurs when communications barriers or social customs are important enough relative to the potential gains involved that coordinating negotiations among all of the parties too costly.

6 0
3 years ago
"when the price goes down, the quantity demanded goes up. the price elasticity of demand measures:"
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7 0
3 years ago
Dalton Industries makes all purchases on account, subject to the following payment pattern: Paid in the month of purchase: 25% P
sladkih [1.3K]

Answer:

The firm's budgeted payments in March is $206,500

Explanation:

The purchase pattern is categorized into three percentage  : 25%, 55% , and 20%

Here, following month is considered to be a month which is before than actual month.

The firm's budgeted payments in March is computed below:

= 25% of march month + 55% of February month + 20% of January month

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