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n200080 [17]
3 years ago
9

Company manufactures two products. Both products have the same sales​ price, and the volume of sales is equivalent.​ However, du

e to the difference in production​ processes, Product A has higher variable costs and Product B has higher fixed costs. Management is considering dropping Product B because that product line has an operating loss.
Total Product A Product B
Sales Revenue $140,000 $70,000 $70,000
Variable Costs 124,250 63,500 60,750
Contribution Margin 15,750 6,500 9,250
Fixed Costs 30,000 3,000 27,000
Operating Income/(Loss) $(14,250) $3,500 $ (17,750)


Required:
a. If fixed costs cannot be avoided, should Richardson drop Product B? Why or why not?
b. If 50% of Product B's fixed costs are avoidable, should Richardson drop Product B? Why or why not?
Business
1 answer:
Alex3 years ago
7 0

Answer:

a. No - Because Richardson will be worse off than what he was before.

b. Yes - Because Richardson will be better off than what he was before.

Explanation:

a. Analysis of Operating Income is Richardson drop Product B

Sales Revenue                  $70,000

Less Variable Costs        ($63,500)

Contribution                        $6,500

Fixed Costs                      ($30,000)

Total Operating Income  ($23,500)

Dropping Product B will result in Total Operating Loss of $23,500. This means Richardson will be worse off than what he was before. He should not drop the product in this case.

b. Analysis of Operating Income is Richardson drop Product B

Sales Revenue                  $70,000

Less Variable Costs        ($63,500)

Contribution                        $6,500

Fixed Costs                      ($15,000)

Total Operating Income   ($8,500)

Dropping Product B will result in Total Operating Loss of $8,500. This means Richardson will be better off than what he was before. He should  drop the product in this case.

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ASAP!!!!!!!!!!1
barxatty [35]

<u>Answer:</u>

<em>Elastic</em>

<u>Explanation:</u>

Price Elasticity of Demand (PED) is a method in economics which shows the demand quantity of a good or service, in response to a change in its price. PED is a percentage change in quantity demanded, when the price changes by one percent.

The demand is said to be inelastic for a good or service when the PED is less than 1. When it is greater than 1, then the demand is said to be elastic.

4 0
3 years ago
Dropshot Corporation stock currently sells for $64.53 per share. The market requires a return of 8 percent on the firm’s stock.
Debora [2.8K]

Answer:

D=$1.52914

The most recent dividend per share paid on the stock is $1.52914.

Explanation:

Formula we are going to use is:

P=D*\frac{1+g}{r-g}

Where:

P is the current selling price

D is he recent dividend per share

g is the growth rate

r is the rate of return

Above formula will become:

D=\frac{P*(r-g)}{1+g} \\D=\frac{\$64.53*(0.08-0.055)}{1+0.055}

D=$1.52914

The most recent dividend per share paid on the stock is $1.52914.

7 0
4 years ago
A ________ provides information to coordinate all of the business processes that deal with customers in sales, marketing, and se
Kay [80]

Answer:

A. Customer relationship management systems (CRM)

Explanation:

CRM is a technology that manages an organization's interaction with current market and future markets by organizing and coordinating sales, marketing, and service to optimize revenue, customer satisfaction, and customer retention. It aims at providing better technical support along with better customer services in order to improve business relationships. CRM enhances an organization ability to create and improve customer relationships.

6 0
3 years ago
George has considered selling franchises of his very successful hardware store. However, he is concerned that the franchisees wi
Artist 52 [7]

Answer:

The correct answer is Through the franchise agreement, he can ensure that the new stores are operated according to his own standards.

Explanation:

The Franchise Agreement is a binding contract that sets out in detail the responsibilities and expectations for the franchisor and the franchisee.

You have to keep in mind that Franchise Agreements are written to be generally more advantageous for the franchisor. Once signed you are legally bound to uphold all the provisions of the Settlement, therefore it is essential that your attorney has reviewed the contract and explained everything correctly to you in plain language and not in specific terms that may not be easy to understand.

Before signing, if any verbal promises have been made, make sure they are included in writing in the Agreement. Once signed, the Franchise Agreement determines your relationship with the franchisor, and any disagreement or misunderstanding will be subject to the terms of the Agreement.

Since it is a binding contract, there are certain critical elements found in all business contracts and others that are unique to franchising. Here are some aspects of the contract that you and your lawyer should review carefully to make sure you understand all that it entails.

7 0
3 years ago
Helen's cat Fluffy has run away, and she places reward posters throughout herneighborhood. Mark sees one of the reward posters a
Sphinxa [80]

Answer:

.b This is a bilateral contract, and Mark is entitled to nothing because he did not perform

Explanation:

The contract is bilateral as obligation to perform exist for both parties.

Helen is obligated to pay the reward to the person who finds the cat and bring her home.

As Mark didn't find the cat it didn't perform (find the cat) Helen is not obligated to payup the reward for Fluffy

7 0
3 years ago
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