Answer and Explanation:
a. The computation of operating profit is shown below:-
Profit per unit = Purchase price from outside per unit + variable cost of production internally
= $15 - $7
= $8
Total increment in operating profit = Profit per unit × Total number of units
= $8 × 24,000
= $192,000
b. Minimum transfer price = Variable cost = $7 (because polk has overcapacity and there is no change in fixed cost and polk minimum has to recover its variable production cost)
c. Maximum transfer price = purchase cost from outside supplier = $15 (because if the internal transfer piece is more than $15 Bishop will lose so he prefers to buy from outside and the company as a whole will lose $192,000 in incremental operating profit
Answer:
Explanation:
Below are some of the financial ratios he should consider:
a) Financial leverage ratios: This is used to measure the company earnings to service debt payments.
b) Return on investment: This is the ratio that is used to evaluate the profitability of the firm and the profit that is available to the stakeholders after all payments have been made.
c) Price to Earnings Ratio: This is an indicator of the price of the company's stock concerning the earnings per share. It is used to analyze if the stock price is over-priced or under-priced.
Answer:
True
Explanation:
Value-based marketing is a shift from product centered to customer centered approach. Customer values and ethics are the primary drivers of this strategy.
When value- based pricing is done, the customer's perception of the value of goods and services is taken into consideration.
This is different from basing price on product cost or historical price.
Answer:
Term bond $725,000
Debenture bonds $775,000
Explanation:
Calculation to determine the total amounts of term bonds and debenture bonds
TERM BONDS
6.5% unsecured convertible bonds of $225,000
Add 4.875% guaranty secured bonds of $500,000
TOTAL term bond total $725,000
($225,000+$500,00
DEBENTURE BONDS
5.375% registered bonds of $550,000
Add 6.5% convertible bonds of $225,000,
TOTAL Debenture bonds $775,000
($550,000+$225,000)
Therefore the total amounts of term bonds will be $725,000 and debenture bonds will be $775,000
