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inn [45]
3 years ago
14

Swan Textiles Inc. produces and sells a decorative pillow for $98.00 per unit. In the first month of operation, 2,200 units were

produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:
Variable manufacturing costs............ $23
Variable marketing costs.................... $6
Fixed manufacturing costs................$13
Administrative expenses, all fixed.....$19.5

Ending inventories:
Direct materials................................... 0
WIP....................................................... 0
Finished goods................................... 450units

What is the ooeratina income usina variable costing?

a. $59,750
b. $74,375
c. $131,250
d. $108,500
Business
1 answer:
Sonja [21]3 years ago
5 0

Answer:

Net operating income= 60,500

Explanation:

Giving the following information:

Variable manufacturing costs............ $23

Variable marketing costs.................... $6

Fixed manufacturing costs................$13

Administrative expenses, all fixed.....$19.5

<u>Under the variable costing method, the unitary product cost is calculated using only the manufacturing costs.</u>

First, we need to calculate the total fixed costs:

Fixed manufacturing costs= 2,200*13= 28,600

Fixed administrative expense= 1,800*19.5= 35,100

Total unitary variable cost= 23 + 6= 29

Now, we can calculate the income statement:

Sales= 1,800*98= 176,400

Variable cost= 1,800* 29= (52,200)

Contribution margin= 124,200

Fixed manufacturing costs= (28,600)

Fixed administrative expense= (35,100)

Net operating income= 60,500

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Answer:

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Explanation:

WACC is the average cost of capital of the firm based on the weightage of the debt and weightage of the equity multiplied to their respective costs.

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We can calculate cost of equity using CAPM

Capital asset pricing model measure the expected return on an asset or investment. it is used to make decision for addition of specific investment in a well diversified portfolio.

Formula for CAPM

Cost of Equity = Risk free rate + beta ( market return - risk free rate )

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Cost of Equity = 5.5% + 1.21 ( 6% )

Cost of Equity = 12.76%

Cost of Preferred stock = 4.6%

We need to calculate the yield to maturity

Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]

Placing value in the formula

Yield to maturity = [ 34 + ( $1,000 - $1,110 ) / 48 ] / [ ( $1,000 + $1,110 ) / 2 ]

Yield to maturity = 3% semiannually = 6% annually

Placing values in the formula

Weighted Average Cost of Capital = (12.76% x $36,400,000 / $59,583,000 ) + ( 4.6% x $2,093,000 / $59,583,000 ) + (6% (1 - 0.24 ) x $21,090,000 / $59,583,000 )

Weighted Average Cost of Capital = 7.80% + 0.16% + 1.61% = 9.57%

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Explanation:

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Answer:

D

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