Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
- Diseconomies of scale result from monthly bike sales of more than 400.
- Economies of scale = fewer than 300 bikes each month
- Monthly bike sales of between 300 and 400 bikes = Constant Returns to Scale.
<h3>What is Diseconomies of scale?</h3>
- Diseconomies of scale are the cost disadvantages that economic actors experience as a result of growing their organizational size or their output.
- Which leads to higher per-unit costs for the production of products and services.
- Economies of scale are opposed by the idea of diseconomies of scale.
<h3>What is Economies of scale ?</h3>
- The cost advantages that businesses experience as a result of their size of operation are known as economies of scale.
- And they are often quantified by the amount of output generated in a given amount of time.
- Scale can be increased when the cost per unit of output decreases.
<h3>What is Constant Returns to Scale?</h3>
- When a company's inputs, such as capital and labor, expand at the same rate as its outputs, or the value of their goods, this is known as a constant return to scale in economics.
- Returns to scale are measurements over a long time.
Learn more about Constant Returns to Scale here:
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Answer:
781 units
Explanation:
Under the CVP concept, the break-even point is calculated by dividing the fixed costs by the contribution margin per unit.
i.e., break-even point = fixed cost/ contribution margin per unit
Currently, fixed costs are $213,000, an increase of 10% will take to
=(10/100 x $213,000) + $213,000
=$21,300 + 213,000
=$234, 300
The selling price is $250, an increase of 40%
=$250 x 1.4
=$350
variable cost will remain the same this year and the following year
Current variable costs are 20% of sales
=20/100 x 250
=0.2 x 250
=$50
Contribution margin will be new selling price - variable costs
=$350-50
=$300
Break-eve point = $234, 300/300
=781 units
Answer:
WACC = 11.45 %
Explanation:
Weighted average cost of capital is the average cost of all of the long-term types of finance used by a company weighted according to the that amount of finance used in relation to the total pool of fund
WACC = (Wd×Kd) + (We×Ke) + (Wp × Kp)
After-tax cost of debt = Before tax cost of debt× (1-tax rate)
Kd-After-tax cost of debt = 11.1%(1-0.4) =6.66%
Ke-Cost of equity = 14.7%
Kp= Cost of preferred stock = 12.2%
Wd-Weight of debt =100/270=0.370
We-Weight of equity = 140/270=0.518
Wp= weight of preferred stock = 30/270=0.111
WACC = (0.518× 14.7%) + (0.370 × 6.7%) + (0.111×12.2) = 11.447%
WACC = 11.45 %
An insurance policy with a higher premium most likely has a lower deductible
