You want to buy an annuity that will pay you $1000 per year for 20 years. You find an account that will pay 4% per year, compoun
1 answer:
You might be interested in
Answer:
Option (a) is correct.
Explanation:
Contribution margin per marketing plan = Sales - Variable cost
= $3,000 - $2,000
= $1,000
A.
(1)
Break even in marketing plan = 400
(2) Break-even in dollars:
= Break-even in marketing plan × Average rate per plan
= 400 × 3,000
= 1,200,000
(3) Margin of safety = Actual sales - Break-even sales in dollars
= 1,500,000 - 1,200,000
= 300,000
= 20%
B.
(1) Contribution margin per marketing plan = Sales - Variable cost
= $4,000 - $2,000
= $2,000
Break even in marketing plan = 200
(2) Break-even in dollars:
= Break-even in marketing plan × Average rate per plan
= 200 × 4,000
= 800,000
(3) Margin of safety = Actual sales - Break-even sales in dollars
= 1,500,000 - 800,000
= 700,000
= 47%
Therefore, option (a) would achieve the margin of safety ratio more than 45%.
4,000,000 units should be sold a company
<u>Explanation:</u>
<u>Calculating the sales in units:</u>
It has been given that the toal market demand is $20 million, average quantity purchased by buyer per year is 2 units, price average is $50, and the desired share of the market is 10%.
Where:
Q = Total market demand,
N = number of buyers in the market, q = average quantity purchased by the buyer per year,
P = price of average unit
= $2,000,000,000
Market share =
= 4,000,000 units
Hence, the company should sell 4 million units to achieve 10 percent market share.