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irakobra [83]
3 years ago
6

Last month when Holiday Creations, Inc., sold 44,000 units, total sales were $302,000, total variable expenses were $232,540, an

d fixed expenses were $35,800. Required: 1. What is the company’s contribution margin (CM) ratio? 2. What is the estimated change in the company’s net operating income if it can increase total sales by $1,200? (Do not round intermediate calculations.)
Business
1 answer:
Zinaida [17]3 years ago
8 0

Answer:

(1) contribution margin ratio = 0.23 or 23%

(2)The operating Income will increase $276

Explanation:

302,000 sales

232,540 variable cost

69,460 contribution margin

35,800 fxed cost

33,660 net income

(1) contribution margin ratio

\frac{Contribution Margin}{Sales Revenue} = $Contribution Margin Ratio

69,460/302,000 = 0.23 = 23%

This means, for every dolalr of sale, the company has $0.23 of contribution margin, AKA money to cover fixed cost and make a gain.

(2) income if sales increase

↑Sales x CMR = ↑Operating Income

↑1,200 x 00.23 = ↑276

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3 years ago
The following materials standards have been established for a particular product: Standard quantity per unit of output 4.2 pound
Maru [420]

Answer: $18,224 unfavourable

Explanation:

The materials quantity variance for the month will be calculated thus:

= Standard Cost per unit × ( Actual materials Used - Actual output)

= 13.4 × [( 4,300 - 700) × 4.2]

= $18,224 unfavourable

Therefore, the materials quantity variance for the month is $18,224 unfavourable

8 0
3 years ago
Jumbuck Exploration has a current stock price of $2.00 and is expected to sell for $2.10 in one year's time, immediately after i
fiasKO [112]

The equity cost of capital for the Jumbuck Exploration is 22%

Explanation:

Equity cost refers to the return offered to the customers in place of their investment in the organisation stocks. It is calculated by the formula

Rₐ = (D₁/P₀)+g

Where Rₐ= cost of equity

D₁= dividends announced

P₀=share price (current)

g= growth rate

Now given details-

Dividend announced (D₁)- $ 0.26

Current market price (P₀) - $ 2.00

Expected price= $ 2.10

growth rate= expected price- current price

growth rate (g) =$ 0.10

Putting the values to find Rₐ

Rₐ=(0.26/2.00)+0.10

Rₐ=0.23 or 23%

Nearest answer is 22%

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4 years ago
If the price level decreases,
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Answer:

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Option A and C are wrong because change in price levels cannot cause the curve to shift right or left. Whenever the curves shift to the right or left it is because of non price reasons.

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3 years ago
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