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LenaWriter [7]
3 years ago
9

The Engine Division of MurphyMotor Corporation uses 5,000 carburetors per month in its production of automotive engines. It pres

ently buys all of the carburetors it needs from two outside suppliers at an average cost of $100. The Carburetor Division of MurphyMotor Corporation manufactures the exact type of carburetor that the Engine Division requires. The Carburetor Division is presently operating at its capacity of 15,000 units per month and sells all of its output to a foreign car manufacturer at $106 per unit. Its cost structure (on 15,000 units) is: Variable production costs $70 Variable selling costs 10 All fixed costs 10 Assume that the Carburetor Division would not incur any variable selling costs on units that are transferred internally. Refer to MurphyMotor Corporation. If the two divisions agree to transact with one another, corporate profits will:__________:
a. rise by $50,000 per month
b. drop by $30,000 per month
c. rise or fall by an amount that depends on the level of the transfer price
d. rise by $20,000 per month
Business
1 answer:
r-ruslan [8.4K]3 years ago
3 0

Answer:

The correct option is d. rise by $20,000 per month.

Explanation:

Since it is assumed that the Carburetor Division would not incur any variable selling costs on units that are transferred internally, this implies that the variable selling costs is NOT relevant to the determination of the transfer price per unit to be used in calculating corporate profit. Therefore, the transfer price per unit can be calculated as follows:

Transfer price per unit = Price to foreign car manufacturer per unit = Price to foreign car manufacturer per unit - Variable selling costs per unit = $106 - $10 = $96

Rise in corporate profit per month = (Average cost per unit from the two outside suppliers - Transfer price per unit) * Number of carburetors used per month = ($100 - $96) * 5,000 = $20,000

This shows that if the two divisions agree to transact with one another, corporate profits will: <u>rise by $20,000 per month</u>.

Therefore, the correct option is d. rise by $20,000 per month.

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ycow [4]

Answer:

ENCOUNTER

Explanation:

Seth appears to be taken aback by the number of files on his desk and his coworker’s comments about his boss. This reaction depicts the Encounter stage of the socialization process.

4 0
3 years ago
What makes online payment services necessary? A. Individuals who sell items online cannot afford to deal with credit card compan
shepuryov [24]
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2 years ago
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Personal finance skills have the most significant impact on an individual's
ryzh [129]

Answer:

Quality of life.

Explanation:

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Such skills are used in the professional line by accountants, financial analysts, etc.

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So, the correct answer is quality of life.

7 0
3 years ago
You observe the following term structure: Effective Annual YTM 1-year zero-coupon bond 5.2 % 2-year zero-coupon bond 5.3 3-year
Lisa [10]

Answer:

Explanation:

a. If you believe that the term structure next year will be the same as today’s, calculate the return on (i) the 1-year zero and (ii) the 4-year zero.

b. Which bond provides a greater expected 1-year return? O 1-year zero-coupon bond O 4-year zero-coupon bond

The return on one year bond is = 5.2%

The price of 4 year bond today

=\frac{ 1000}{ (1.055)^4}

Price of 4 year bond today = 807.22

If yield curves is unchanged, the bond will have 3-year maturity and price will be

=\frac{  1000}{(1.054)^3}

If yield curves is unchanged, the bond will have 3-year maturity and price will be = 854.04

Return

=\frac{ (854.04 - 807.22)}{807.22}

Return = 5.8%

The longer term bond has given the higher return in this case at it's YTM fell during the holding period(4 -year)

8 0
3 years ago
Jilk Inc.'s contribution margin ratio is 61% and its fixed monthly expenses are $47,500. Assuming that the fixed monthly expense
JulsSmile [24]

Answer:

$36,070

Explanation:

Given that,

Contribution margin ratio = 61%

Fixed monthly expenses = $47,500

sales = $137,000

Contribution margin:

= Sales × Contribution margin ratio

= $137,000 × 61%

= $83,570

Net income = Contribution margin - Fixed monthly expenses

                    = $83,570 - $47,500

                    = $36,070

Therefore, the best estimate of the company's net operating income in a month is $36,070.

8 0
3 years ago
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