1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
raketka [301]
2 years ago
12

sells authentic Amish quilts on her website. Suppose Sally expects to sell 1 comma 800 quilts during the coming year. Her averag

e sales price per quilt is $ 350​, and her average cost per quilt is $ 150. Her fixed expenses total $ 135 comma 000. Compute Sally​'s operating leverage factor at an expected sales level of 1 comma 800 quilts. If sales volume increases 15​%, by what percentage will her operating income​ change? Prove your answer by calculating operating income at a sales volume of 1 comma 800 and at a sales volume of 2 comma 070.
Business
2 answers:
fomenos2 years ago
4 0

Answer:

It will increase by 37.5%

Explanation:

<u>we solve for the variable cost first:</u>

135,000 fixed cost / 1,800 units = 75

average cost 150

less unit fixed cost of 75

variable cost 75

contribution: (350 - 75)/ 350 = 0,7857

Now we construct the operating income at the given sales level

sales revenue 1,800 x 350 = 630,000

variable cost 1,800 x 75 =    <u>  (135,000)</u>

contribution                            495,000

fixed  cost                            <u>    135,000  </u>

operating income                  360,000

increase of 15% in sales 1,800  x 1.15 = 2,070

sales revenue 2,070 x 350 =   724,500

variable cost   2.070 x   75  =<u>  (155,250)  </u>

contribution                              569,250

fixed  cost                               <u>  (135,000)  </u>

operating income                     434,250

Now, we solve for the operating leverage

495,000 / 360,000 = 1.375

360,000 x (1 + 1.375 x 0.15) = 434,250

Serjik [45]2 years ago
3 0

Answer:

1) Operating Leverage Factor = Contribution margin / net income

                                                = $360,000 / $225,000

                                                = 1.6

2 ) % change in Net income = 1.6 *15%

                                              =24%

PROOF  

Income Statement                              1,800 units            2,070 units

Sales                                                 $630,000               $724,500

Variable cost                                   -$270,000              -$310,500

Contribution                                     $360,000               $414,000

Fixed Cost                                       -$135,000               -$135,000

Net Income                                       $225,000               $279,000

change = 279,000 - 225,000 = $54,000

% Change = $54,000 / $225,000

                 = 0.24 *100 = 24%

Explanation:

1) Income Statement    

Sales (1,800 *$350)                                                     $630,000

Variable Cost (1,800*$150)                                        -$270,000

Contribution                                                                $360,000

Fixed Cost                                                                 -$135,000

Net Income                                                                 $225,000

You might be interested in
Marketing activities today are completed in much the same way they have always been done. True False
lesya692 [45]

Answer:

False

Explanation:

Marketing have evolved over the years, centuries and as such, marketing activities are now completed differently. With the advent of technology and its ever increasing innovations, marketing has transcended door to door and the likes obtainable in the times of old and today we have telemarketing, Direct mail marketing, brochures, websites, press releases, trade fair participation,etc. These marketing activities has ensured that businesses are not restricted to its locale and a  limited population but rather a very large and global population.

Today, some businesses have marketing as their main activity; which goes to show the changes that marketing and its activities have undergone to be able to become a stand-alone business in itself.

Cheers.

6 0
3 years ago
A $1,000 par bond is currently selling for $1,100. It has a 9% coupon rate, fifteen years remaining to maturity, and pays intere
DanielleElmas [232]

Answer:

$54.17 per bond

Explanation:

the journal entry to record the issuance of the bond:

Dr Cash 1,100

    Cr Bonds payable 1,000

    Cr Premium on bonds payable 100

The bond premium amortization using straight line amortization:

$100 / 30 = $3.33 per coupon payment

journal entry to record coupon payment:

Dr Interest expense 41.67

Dr Premium on bonds payable 3.33

    Cr Cash 45

the yearly interest expense = $41.67 x 2 = $83.34 x (1 - tax rate) = $83.34 x 0.65 = $54.17

5 0
3 years ago
RKI Instruments borrowed $4,300,000 from a private equity firm for expansion of its facility for manufacturing carbon monoxide m
timofeeve [1]

Answer:

21.51%

Explanation:

RKI instruments borrowed $4,300,000 from a private equity firm to expand its facility.

A year after the loan was repaid with a single payment of $5,225,000

Therefore the interest rate on the loan can be calculated as follows

= 5,225,000-4,300,000/4,300,000 × 100

= 925,000/4,300,000 × 100

= 0.2151 × 100

= 21.51%

Hence the interest rate of the loan is 21.51%

3 0
3 years ago
Assume Canada has a financial account of negative 40 billion Canadian​ dollars, and its capital account is 10 billion Canadian d
Lina20 [59]

Answer:

B) 30 BILLION Canadian dollars.

Explanation:

The balance of payments (BOP) formula is:

BOP = current account + financial account + capital account + balancing item

BOP always = 0

so if Canada's financial account is -$40 billion, its capital account is $10 billion, and there is no balancing item, then:

0 = current account - $40 billion + $10 billion

current account = $40 billion - $10 billion = $30 billion

6 0
3 years ago
A person who can afford a monthly payment of and signs a loan agreement with a monthly payment of is most likely a victim of pre
JulsSmile [24]

Answer:

A. $800; $1100

Explanation:

Predatory lending is an unfair and sometimes illegal practice by lenders of imposing expensive loans to borrowers. In predatory lending, the lender withholds critical information or deceives the customer into signing a loan that they cannot afford to repay. Lender employs dirty and unjust tricks to get the customer sigh for the loans.

If a lender can afford to pay a maximum of $800 per month, advancing them a loan requiring payment of $1100 per month is putting a lot of financial strain on them. It is an example of predatory lending as it imposes an unfair burden on the borrower

4 0
2 years ago
Other questions:
  • What is the connection, if any, between comparative advantage (CA) and foreign direct investment (FDI)? Nothing. CA has nothing
    10·1 answer
  • You have a $13,500 loan with a 7% interest rate and a term of 4 years what is the future value of the loan if the loan isnt paid
    7·1 answer
  • What do analysts and briefers use to alert policymakers to the level of confidence they have in their judgments, based on the av
    7·1 answer
  • Prospective utilization review is:
    6·1 answer
  • Aggregate demand is more likely to _________________ than aggregate supply in the short run. A. shift substantially B. remain un
    13·1 answer
  • Doug Bradford owned a restaurant and an adjoining parking lot.The city of Medford has been working on a project to prevent flood
    14·2 answers
  • Which of the following statements is​ false?A. In a​ make-to-order environment, the forecasts tend to be for groups of products.
    9·1 answer
  • Wallace Company provides the following data for next year: MonthBudgeted Sales January$ 120,000 February 108,000 March 132,000 A
    13·1 answer
  • I know this is impossible but can you guys help? Doesn’t have to use fancy words and doesn’t have to be long, I’m not English na
    9·1 answer
  • Can you empathize with customers concerns.
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!