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gayaneshka [121]
3 years ago
9

Armstrong Valley Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is

$138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.50 per unit, and avoid 30% of the fixed costs. If Armstrong Valley Bicycles makes the part, how much will its operating income be?
Business
1 answer:
scoundrel [369]3 years ago
7 0

Answer:

It is cheaper to make the part.

Explanation:

Giving the following information:

The cost of producing 40,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.50 per unit and avoid 30% of the fixed costs.

<u>The cost of making the part is $138,000. That will be the cost in the income statement. </u>

We can calculate the effect on income if they buy the part.

Buy:

Selling pirce= 3.5

Savings in fixed costs= (0.3*70,000)= 21,000

Total cost= 3.5*40,000 + 70,000 - 21,000= $189,000

It is cheaper to make the part.

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Answer:

correct option is a. $617,911

Explanation:

given data

issued = $600,000

rate = 10 %

time 5 year

amount  = $648,666

effective-interest rate =  7%

solution

we get here carrying value so first we get here Interest paid per semiannual period that is

Interest paid per semiannual period = $600000 ×10% × \frac{6}{12}  

Interest paid per semiannual period = $30000

and

Interest expense on 30 June = $648666 × 7% × \frac{6}{12}  

Interest expense on 30 June = $22703

and

Interest expense on 30 December = $641369 × 7% × \frac{6}{12}  

Interest expense on 30 December = $22448

so

Interest expense on 30 June  = ($641369 - $7552) × 7% × \frac{6}{12}  

Interest expense on 30 June = $22184

and

Interest expense on 30 December = ($633817 - $7816) × 7% × \frac{6}{12}  

Interest expense on 30 December = $21910

so as that we get Carrying value of 1st January that is

Carrying value of January 1 =  $633817  - $7816-8090

Carrying value of January 1 = 617911

so correct option is a. $617,911

7 0
3 years ago
I need help What is an IPO?
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8 0
2 years ago
With respect to the environment in which a business operates, factors such as competition, political and legal forces, and econo
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With respect to the environment in which a business operates, factors such as competition, political and legal forces, and economic climate would all be classified as uncontrollable elements.

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2 years ago
The operators of adult bookstores got together and each agreed to contribute $1,000 to a fund for use in lobbying the city counc
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Answer:

The operators have not violated the antitrust laws because they are only collaborating to lobby the government

Explanation:

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The antitrust law aims to collusive activities that suppress trade, any merger and acquisition that would reduce competition, and prevent the the abuse of monopoly power.

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3 0
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Suppose you buy a 7 percent coupon, 20-year bond today when it’s first issued. If interest rates suddenly rise to 15 percent, wh
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Answer: The value of the bond will decrease

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The Interest rate has a negative inverse relationship with the value of a bond . When the interest rate increases the value of a bond decreases and when interest rate decreases  the bond value increases. Bonds with low coupon rates tend to be more sensitive to interest rate changes this is known has coupon effect.

Bonds with long time frame (long term bonds), they also  tend to be are more sensitive to changes in the interest rate this is known has the maturity effect.  Therefore a change in the interest rate will cause a huge change in the value of a Bond with low coupon rate and long time period.

The Bond is a 20 year Bonds which qualifies it to be a long term bond and the coupon Rate is 7%, with these facts and knowing that  long term bonds are more sensitive to interest rate changes we can conclude that the sudden increase of the interest rate to 15%  will cause a huge decrease in the value of the bond

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