Answer:
Variable cost= $73.50
Explanation:
The high low method is used to get the fixed and variable cost of a business activity given limited data. It involves taking the highest and lowest points, then comparing the total cost at these points.
We use the following formula
Variable cost= (Highest activity cost - Lowest activity cost)/ (Highest activity unit - Lowest activity unit)
Variable cost= (207,250- 97,000)/ (5,900-4,400)
Variable cost= 110,250/ 1,500
Variable cost= $73.50
Answer:
Effect on income= $4,800 increase
Explanation:
Giving the following information:
Unitary variable cost= $18
A foreign wholesaler offers to purchase 4800 units at $21 each. Vaughn would incur special shipping costs of $2 per unit if the order were accepted.
Because it is a special order and there is unused capacity, we will not take into account the fixed costs.
Effect on income= 4,800*21 - 4,800*(18 + 2)= $4,800 increase
<span>Homeowner's insurance will pay for your home that is damaged, plus the belongings that are inside of the home. Most of the policies include the repair of your home if they are damaged in a fire. The insurer can even pay for you to have a place to stay, such as a hotel.</span>
Add back noncash expenses, such as depreciation, amortization, and depletion.
Explanation:
Answer:
Explanation:
Consider a portfolio consisting of: shares1option−+(Note: The delta, , of a put option is negative. We have constructed the portfolio so that it is +1 option and −shares rather than 1−option and +shares so that the initial investment is positive.) The value of the portfolio is either 355−+or 45−. If: 35545−+= −i.e., 0 5 = − the value of the portfolio is certain to be 22.5. For this value of the portfolio is therefore riskless. The current value of the portfolio is 40f− +where fis the value of the option. Since the portfolio must earn the risk-free rate of interest (400 5) 1 0222 5f + =Hence 2 06f=i.e., the value of the option is $2.06. This can also be calculated using risk-neutral valuation. Suppose that pis the probability of an upward stock price movement in a risk-neutral world. We must have 4535(1)40 1 02pp+−= i.e., 105 8p=or: 0 58p=The expected value of the option in a risk-neutral world is: 00 5850 422 10 + =This has a present value of 2 102 061 02=This is consistent with the no-arbitrage answer.
