You are considering an investment in fields and struthers, Inc, and want to evaluate the firm's free cash flow From the income s
1 answer:
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Answer:
Part a
Ultimate Audio Company
<u>Sales Budget </u>
<u>For the Month Ending June 30</u>
Product and Area Unit Sales Volume Unit Selling Price Total Sales
Model U500 :
Northeast Region 140,000 $45 $6,300,000
Southwest Region 160,000 $45 $7,200,000
Total $13,500,000
Model U500 :
Northeast Region 100,000 $80 $8,000,000
Southwest Region 125,000 $80 $10,000,000
Total $18,000,000
Total Revenue from Sales $31,500,000
Part b
Ultimate Audio Company
<u>Production Budget </u>
<u>For the Month Ending June 30</u>
Model U500 Model S1000
Expected Units to be Sold 300,000 225,000
Add Desired Closing Inventory 30,000 15,000
Total 330,000 240,000
Less Desired Opening Inventory (25,000) (10,000)
Total Production 305,000 230,000
Explanation:
<em>Note : I have attached the complete question as images below !</em>
A Sales Budget shows the Total Expected Revenue from sale of budgeted units.
Total Revenue = Total Expected Units Sales x Selling Price Per Unit
A Production Budget shows the number of units to be produced to meet the Sales and Inventory targets
Total Production = Expected Sales + Desired Closing Inventory - Desired Opening Inventory
Answer:
b. In the first economy, the spending multiplier is greater than in the second economy. In the third economy, the spending multiplier is undefined
Explanation:
This can be easily understood by going through some calculations in a spending multiplier formula.
WORKINGS
The formula for Spending Multiplier =
Spending Multiplier
Economy 1: Multiplier = = 2
Economy 2: Multiplier = = 1
Economy 3: Multiplier = = undefined
Note: MPS can be abbreviated as Marginal propensity to save
As we can see here economy 1 is 50% greater than economy 2 and economy 3 is undefined because they spend whole dollar they earn additionally.
On behalf of the above calculations, option B is a perfect match!