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leva [86]
3 years ago
9

The president of the Micro Brewing Corporation asks you, as the company economist, to forecast changes in consumer beer purchase

s associated with a proposed price change. You conduct a survey and find that if the price of a six-pack increases from $5.50 to $7.50, the quantity demanded will decrease from 2200 units to 1800 units a month. Should the Micro Brewing Corporation raise its price? Explain the economic basis for this recommendation to the president
Business
1 answer:
umka21 [38]3 years ago
7 0

Answer:

It is more profitable to raise the selling price by $2.

Explanation:

To determine whether the company should raise the selling price, we need to determine the effect on income. <u>The best option is the one with the higher sales revenue.</u>

Sales revenue= selling price * number of units

<u>Current:</u>

Sales revenue= 5.5*2,200= $12,100

<u>Proposal:</u>

Sales revenue= 7.5*1,800= $13,500

It is more profitable to raise the selling price by $2.

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The Silverside Company is considering investing in two alternative​ projects: Project 1 Project 2 Investment ​$400,000 ​$280,000
shepuryov [24]

Answer:

The Silverside Company

Project 1's Payback Period

= Initial Investment/Annual cash flows

= $400,000 / $90,000

= 4.44 years.

Explanation:

Project 1:

Initial Investment = $400,000

Useful life = 5 years

Annual cash inflows for useful life = $90,000

The Silverside Company's payback period calculates the time or number of years that it would take the company to recover from its initial investment in Project 1.  This is the simple payback period calculation.  There is also the discounted payback period calculation.  This method discounts the annual cash inflows to their present values before the calculation is carried out.  This second method gives a present value perspective on the issue.

4 0
2 years ago
Department F had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,200. Of
Verdich [7]

Answer:

$2.27

Explanation:

Unit Cost =

If the average cost method is used, the materials cost per unit (to the nearest cent) would be: $2.27

5 0
3 years ago
The following information is available for Armstrong Company: Net income $450 Increase in plant and equip. $170 Depreciation exp
strojnjashka [21]

Answer:

$505

Explanation:

Armstrong Company

Cash flow from operating activities

Adjustments to reconcile net income to operating cash flow.

Net income

$450

Less : Increase in plant and equipment

($170)

Add : Depreciation expenses

$80

Add : Payment of dividends

$10

Add : Decrease in accounts receivable

$20

Add : Increase in long term debt

$100

Less : Increase in Inventories

($15)

Add : Decrease in Account payable $30

Net Cash flow from operating activities

$505

8 0
3 years ago
For a multi-product company with a limited resource, company-wide net income will be maximized if A : fixed costs equal the doll
sesenic [268]

Answer:

D : production capacity is prioritized to the product with the highest unit contribution margin.

Explanation:

The poduct with the highest unit contribution margin is key to calculate the Gross Profit Margin .

"Gross profit margin analyzes the relationship between gross sales revenue and the direct costs of sales. This comparison forms the first section of the income statement. Companies will have varying types of direct costs depending on their business. Companies that are involved in the production and manufacturing of goods will use the cost of goods sold measure while service companies may have a more generalized notation.

Overall, the gross profit margin seeks to identify how efficiently a company is producing its product. The calculation for gross profit margin is gross profit divided by total revenue. In general, it is better to have a higher gross profit margin number as it represents the total gross profit per dollar of revenue. "

Reference: Beers, Brian. “Gross, Operating, and Net Profit Margin: What's the Difference?” Investopedia, Investopedia, 14 Sept. 2019

6 0
3 years ago
Bailey Industries expects sales for​ January, February, and March to be​ $220,000, $260,000, and​ $300,000 respectively. It is e
OlgaM077 [116]

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Sales:

January=$220,000

February= $260,000

It is expected that​ 75% of its sales will be collected in cash during the month of​ sale, and the remaining​ 25% will be collected in the month following the sale.

<u>Cash collection:</u>

From January= 220,000*0.25= 55,000

From February= 260,000*0.75= 195,000

Total cash collection= $250,000

3 0
2 years ago
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