Answer: (1) $61,495
(2) $17,200
(3) $5,400
Explanation:
Given that,
sales = $275,000
costs = $188,000
other expenses = $7,900
depreciation expense = $15,200
interest expense = $13,600
taxes = $17,605
dividends = $10,500
new equity issued = $5,100
Net new long-term debt = $3,600
EBIT = sales - depreciation expense - costs - other expenses
= $275,000 - $15,200 - $188,000 - $7,900
= $63,900
EBT = EBIT - Interest
= $63,900 - $13,600
= $50,300
EAT = EBT - Taxes
= $50,300 - $17,605
= $32,695
Retained earnings = EAT - Dividends
= $32,695 - $10,500
= $22,195
(1) operating cash flow = EBIT - Taxes + depreciation expense
= $63,900 - $17,605 + $15,200
= $61,495
(2) cash flow to creditors = Interest - Net new long-term debt
= $13,600 - (-$3,600)
= $17,200
(3) cash flow to stock holders = Dividend - net new equity
= $10,500 - $5,100
= $5,400
Answer:
Brief summary of the case:
The case deals about the evolution of kindle by Company A. When the company decided to introduce kindle, its price was $399 in 2007. Company A understood that to be successful against the huge competitors, kindle must be priced low. It must be highly reliable, many features and elegance must be provided in the design of kindle. "Company A- designed kindle in State C where the research and development expertise is available.
Market research firm "IS," estimated that the manufacturing cost of kindle is about $185. The expensive components of the kindle are the display used in the Electronic ink technology and wireless cord. Company A contracted with Country C's company to produce the display. A manufacturer in Continent A produced a wireless cord of $13. Many components were contracted to the different countries to reduce the cost of the kindle to be competitive. Now, kindle became the competitor to the massive companies.
Determine if the company has decided to manufacture all the components of Electronic reader K in Country U:
If Company had decided to manufacture all the components in Country U, then it would have been more expensive. Company A cannot sell that at an affordable price. Increase in the cost of the components would increase the overall cost of the Electronic reader K. The most important strategy of Company A is to minimize the cost of the product to increase the number of sales.
Increase in the manufacturing cost will dilute their competitive advantage and it increases the cost of the product. It will lower the sales and the buyers would prefer to use the competitors' products, which are cheaper.
Determine if the company has decided to manufacture all the components of Tablet F in Country U:
It would be expensive if they decide to manufacture the components in Country U. It will not affect the sales number like Electronic reader K. as Tablet F is multipurpose. People will prefer quality and specifications than price.
Conclusion:
Manufacturing in Country U would be expensive and it increases the overall cost of the product. It would affect sales of the products.
Answer:
$28,000 and $12,000, respectively
Explanation:
Marginal cost = incremental cost from Plan C to Plan D
= total cost (plan D) - total cost (plan C)
= 72,000 - 44,000 = $28,000
Marginal benefit = incremental benefit from Plan C to Plan D
= total benefit (plan D) - total benefit (plan C)
= 64,000 - 52,000 = $12,000
Therefore marginal cost and benefits for Plan D = $28,000 and $12,000, respectively
Answer:
$76,100 net operating loss
Explanation:
The computation of the overall company net operating income (loss) is shown below:
= East sales - east Variable costs - east Traceable fixed costs - east Allocated common corporate costs - west Allocated common corporate costs
= $550,000 - $198,000 - $169,500 - $117,500 - $141,100
= -$76,100 loss
Since the west division is eliminated so all the items would be ignored except Allocated common corporate costs
Answer: The correct cash balance for Sooner Company is "(C) $7,150."
Explanation: The balance of the company before the settlement was $ 5000. The data to take into account to adjust the differences are:
Notes collected by the bank $ 2,200
Service fee $ 50
<u>Therefore: 5000 + 2200 - 50 = $7150</u>
